Funding social housing through bust, boom and bust

There is a lot of debate about the impact of the shortage of social housing at the moment, so I thought that this UCD Geary Institute for Public Policy working paper on the funding of this sector might be of interest:

https://ideas.repec.org/p/ucd/wpaper/201615.html

In it my colleague Mick Byrne and I argue that the causes of our current difficulties in funding and delivering social housing are older and more complex than is commonly understood.  Rather than policy decisions made during our most recent economic crisis, they are the result of reforms to social housing financing methods initiated during our last major economic crisis in the mid 1980s.

For most of the 20th Century social housing was funded by local government borrowing which were repaid using rents (which reflected the cost of providing housing), rates (local government property taxes) and central government subsidies.  This financing method made social housing delivery affordable for government by spreading out the cost over an extended period and drawing on several sources of funding.  This enabled government to build large numbers of social rented dwellings even during periods when the economy was weak such as the 1950s and to use social house building as a counter cyclical economic intervention.

The replacement of this funding method with central government capital grants as part of Ray MacSharry’s package of budgetary reforms in 1987 changed social housing into a pro cyclical intervention.  From then on central government has paid all the cost of building/buying social housing in an up-front lump sum and to paraphrase another finance minister this meant that ‘when we have it we spend it’ and vice versa.  In relative terms social housing output was well below historic norms in the 1990s; although it rose again during the property boom, the value for money achieved in return for housing investment at this time is open to question and of course output collapsed in tandem with the economic collapse from 2007.  Inadequate social housing output also necessitated increased reliance on rent supplements and other housing allowances for benefit dependent private renting tenants which help to inflate rents and enabled the radical expansion in buy-to-let lending which was a key driver of the house price boom.

Merry Christmas and happy new year everyone.  I hope 2017 will finally see homes provided for those who are without them this Christmas.

Counting the cost of last winter’s flooding: Evidence from disruptions to the road network

[Post co-authored by Paul Kilgarriff and Tom McDermott]

This time last year Ireland was in the middle of its wettest winter on record [PDF]. A series of Atlantic Storms battered the country, beginning with Storm Desmond in early December, followed by Eva and Frank. Rainfall levels in some areas were up to 300% of normal levels. Extensive flooding around the country caused widespread damage – hundreds of homes and businesses were flooded, and thousands more were cut off by flood waters. In many places the floods did not recede until well into the new year.

Various impacts of the flooding are detailed in the recent report by the National Directorate for Fire and Emergency Management (NDFEM)[PDF]. Almost €1.8million in humanitarian assistance was paid out to affected households; close to €1m to farmers; local authorities received special funding of €18m for clean-up costs; while damage to the road network was estimated at over €100m. Aside from damages, the flooding also caused substantial disruptions to everyday life — 350,000 customers suffered disruptions to electricity supply, and 23,000 households were placed on boil water notices. The flooding also resulted in substantial travel disruptions – in particular as a result of flooding on the road network.

Continue reading “Counting the cost of last winter’s flooding: Evidence from disruptions to the road network”

The UK House of Lords on Brexit and Ireland

This very welcome report by the UK House of Lords is available here, and it is good to see an official British document recognising that “Ireland now faces challenges that are not of its own making” — we might perhaps put things less politely on this side of the Irish Sea. Well done to all concerned.

I do have a couple of nitpicks.

  1. Beware of Britons suggesting bilateral negotiations. The report suggests that the UK and Ireland should negotiate bilaterally on UK-Irish issues. The problem is that UK strategy more generally appears to have been to try to open up divisions between member states by starting bilateral conversations with individual countries. The EU 27 have been very consistent in emphasising that we will be negotiating as a bloc, which is the only sensible way to proceed. In my view Ireland shouldn’t facilitate this long-standing British aim: not only do we share a common interest in getting the best possible deal for the EU27, and in preserving the cohesion of the EU; but as part of the EU 27, we will be in a stronger negotiating position vis à vis the UK than if we were to negotiate on our own. Ireland is already one of Michel Barnier’s top negotiating priorities, suggesting that our diplomats are succeeding in getting our message across to the rest of the EU. They should keep up the good work.
  2. Besides: how could Ireland and the UK agree on arrangements concerning the Border before we know what the eventual nature of the UK’s relationship with the EU will be?
  3. I am genuinely baffled by the following recommendation in the report:

    In the event that the UK leaves the customs union, a customs and trade arrangement between the two countries, subject to the agreement of the EU institutions and Member States.

    What does this mean? Ireland can’t be part of a customs union with both the EU and the UK, unless the UK chooses to stay in the EU customs union.  A bilateral trade deal between Ireland and the UK, not involving the rest of the EU, is impossible, both legally and as a practical matter, and it’s very important that everyone in Ireland understand this. If what is meant is that Northern Ireland should remain within the EU customs union (and, preferably, the Single Market also), then that is another matter — this would require customs controls between the two islands, but that would be far preferable from our point of view than customs controls along the Border. But I am not sure that that is what is meant, and so some clarification on this would be helpful.

But well done to the House of Lords for raising these issues, and for appearing to take them seriously, which is more than can be said for the vast majority of the British political establishment.

100 Years of T.K. Whitaker

Establishment of Whitaker Institute at NUI Galway Photograph by Aengus McMahon

T.K. Whitaker, voted the Irishman of the 20th Century, is widely regarded as the architect of modern Ireland. A brilliant and dedicated public servant, his seminal 1958 blueprint for economic development transformed the Irish economy and set the course for an open Ireland to prosper in a globalised world. Dr Whitaker also played a pivotal role in the search for peace in Northern Ireland, and in the modernisation of Ireland’s public sector.

Today marks a very special occasion as we honour and pay tribute to 100 years of T.K. Whitaker. In today’s Irish Times, I write about why Whitaker’s work is as relevant as ever to today’s Ireland. And at the Whitaker Institute, leading academics speak about Whitaker’s legacy. And there is this great video from the Central Bank of Ireland celebrating 100 years of Whitaker. Breithlá Sona!