The pledge of more devolution for Scotland after the No vote in the independence referendum has sparked a constitutional debate across the UK. WHQ analyses the far-reaching implications for housing in Wales and in Scotland itself
WHAT DOES WALES WANT?
Jules Birch asks where Wales and Welsh housing stand in the devolution debate
Acting together
What about Wales? Or for that matter England and Northern Ireland in the wake of the independence referendum in Scotland?
While a Scottish Yes would have led to much more fundamental questions, the clamour for answers to these questions has increased in the wake of the No vote. At a national level, first minister Carwyn Jones has called for a constitutional convention to determine a new settlement for Wales. Plaid Cymru has called for parity with Scotland to ‘bring our Government home’.
However, one of the key themes that emerged from a conference organised by the Institute of Welsh Affairs (IWA) is that Wales needs to decide what it really wants. Economist and IWA trustee Gerry Holtham argued: ‘If we want anything different we’ve got to get out and act together and decide what we want.’ Columnist and National Trust chairman Simon Jenkins put it like this: ‘The problem for Wales is that nobody knows what Wales really wants. In Scotland you know what the end game is, in Wales you get no sense of it.’
However, the terms of the debate are changing rapidly. All three main Westminster parties signed ‘The Vow’ to transfer more powers to the Scottish Parliament and maintain the Barnett Formula that treats Scotland more generously than Wales and England. The Conservatives are determined to hold out for ‘English votes for English laws’ at Westminster, with MPs from the rest of the UK excluded from votes on devolved matters like health and education. And English regions and cities are demanding the same powers as Scotland.
The Welsh context
In the wake of Part 1 of the Silk Commission, Wales is already being offered devolution of some tax and borrowing powers plus a referendum on limited control over income tax (with a lockstep over the rates). The Part 2 report from Silk recommended the transfer of more powers plus a change in the devolution settlement from a reserved powers model (Westminster says what the Assembly can do) to the conferred powers model that already applies in Scotland (Westminster says what it can’t do).
It’s not yet clear how the No vote and ‘Scottish Home Rule’ will change the dynamics of the debate for Wales. Gerry Holtham summed up what he sees as a modest record on devolution so far: ‘There have been no disasters but it’s very difficult to point to a policy that’s had a real material effect on outcomes. We’re a bit of a non-story after devolution. Our steady refrain is give us more money but why would they listen to us? My advice to ministers is to use the powers we’ve got.’
cost of the bedroom tax in full but in future it will be able to abolish it. However, it may not be as simple as that, as Northern Ireland has discovered with political deadlock on welfare reform.
Housing benefit is demand-led, so how will London and Edinburgh, Cardiff and Belfast (or even Manchester and Leeds under some of the more radical devolution proposals for England) come to an agreement about the costs that will not disadvantage one side or the other? And how can the universal credit really be universal if housing benefit is devolved?
Disadvantaged by the Barnett formula, Wales did not have the same scope to mitigate against the bedroom tax as Scotland. Silk 2 rejected the devolution of housing benefit on the grounds that this could undermine the ‘social union’ whereby people receive the same benefits wherever they live in the UK.
Conclusions
Or take stamp duty. It’s already devolved to Scotland and it will be devolved to Wales under the Wales Bill. However, Boris Johnson is now demanding control over the billions of pounds of stamp duty raised in London. That could leave Wales on the rough end of English devolution. As Silk Commission member Rob Humphreys put it at the IWA conference: ‘On Silk we recommended that Wales got stamp duty but we hoped that London wouldn’t get it?’
It’s a reminder of the broader context for housing in the debate about devolution. Lurking in the background (and sometimes front and centre too) is continuing UK Government austerity. IWA director Lee Waters had this sobering thought at the recent Big Question event: ‘For every effective pound the Welsh Government has to spend this year there might only be 75- 80 pence by the end of the decade.’
CONTINUITY AND CHANGE
Ken Gibb asks what the No vote will mean for housing in Scotland
Does No mean Yes?
In the few days since the Referendum result, the debate in Scotland remains firmly about the constitution, there is blame and praise to allocate and a fundamental sense of what to do next to sustain the incredible political enthusiasm demonstrated by the depth of interest in the vote. Aside from the status of the ‘Vow’ to extend devolution powers through the UK Parliament, there is of course renewed interest in how these powers might play out in specific areas of public policy, not least progressive reforms in the housing sector.
The Scottish Context
First of all, housing policy in Scotland is a hybrid of devolved and reserved elements. It is reserved in the sense that mortgage market policy, social security, public spending rules, monetary policy and many of the relevant taxes (for example, the treatment of home ownership and private renting as well as corporation tax rules) are set and run from London. On the other hand, housing policy as it affects rental housing, the planning system, homelessness, regulation of social housing, local taxation and the funding of social and affordable housing are all substantively devolved. While housing policy is diverging in important respects, such as the legislated abolition of the right to buy, the underlying hybridity makes it difficult to think about housing policy holistically.
Second, there is the Scottish approach to public policy. Since the election of the SNP minority government in 2007 Scotland has operated an evolving, consensual but broadly consistent outcomes-based performance framework. The 2011 Christie Commission on public service reform supported this direction of travel. The distinctive approach is characterised by integration across all parts of government, the aforementioned focus on outcomes and indicators of performance but also an emphasis on preventative spending, co-production partnership and collaboration, and on assets-based whole place policies. These are to be delivered locally by enhanced community planning partnerships. Housing has to be a full partner in this process.
Issues for housing in Scotland
Home ownership remains shaped by UK policies on interest rates, policy and practice innovations in the UK lending and home building sectors. However, a No vote also means that the Scotland 2012 Act will be enacted and this will increase the proportion of income tax devolved to Scotland, provide new limited borrowing powers to the Scottish Government and devolve stamp duty. The borrowing changes widen the scope to raise funds for infrastructure and the proposed Land and Buildings Transactions Tax will remove the slab nature of the UK stamp duty and change the rates and exemptions levels applied (rates are still to be confirmed).
Fundamentally, however, austerity and long-term controls on public spending remain and social landlords in Scotland, as elsewhere, will have to balance out the risks they confront as they try to plot ways through to a more resilient future. The only small comfort from the referendum outcome is that there is now a degree of certainty about continuity of the status quo – hardly good news but many decisions held back till the result was known will now proceed.
The highest profile issue is the devolution of housing benefit. The three unionist parties are committed, though this might be viewed as good politics and bad policy. Devolving the administration of housing benefit may help abolish the bedroom tax but how will it be reformed progressively (and how paid for)? And how, if intended, will it be separated from Universal Credit? It may also all be largely redundant if the UK general election brings an early termination to the bedroom tax.
Conclusions
This year Scotland has had an RICS Commission on housing report and I have a small role in a parallel Shelter Scotland Commission on Housing and Well-Being that reports next year. The former makes a strong case for a national integrated housing strategy, arguing that the current set-up, including the more recent measurement of outcomes for housing and regeneration in the national performance framework, hardly constitute a system-wide comprehensive strategy. Such a focus should be undertaken and be fully compliant with the Christie and Scottish approach.
A No vote does not imply mean-reversion to the status quo. New powers are coming as a result of the 2012 Act and, one hopes, through the plans to extend devolution further as a result of last week’s decision. More of housing policy will be devolved and there should be greater scope for innovation but if recent reform is a guide it will take several years to implement. The two commissions plus the considerable volume of housing policy work done prior to the run-up to the September 18 vote can all help to shape and further the policy debate.
Professor Ken Gibb is director of Policy Scotland at the University of Glasgow. He blogs about housing, economics, academia, culture and public policy at kengibb.wordpress.com