Blog: The government’s housing benefit u-turn: evidence and sound economic analysis return to housing policy?

Professor Chris Leishman reflects on whether last week’s government u-turn on housing benefit for 18 to 21-year-olds signals a return of evidence based housing policy.

There is a well established connection between individuals’ experience of homelessness – particularly rough sleeping – and mental health problems. Indeed, a homelessness case worker recently remarked to me that for most individuals having to repeatedly sleep rough, if mental health problems were not an issue at the outset then it would not be long before they became one. For me, this poignant observation reveals what is commonly missing from many public policy decisions, including those in the housing and homelessness arenas.

The costs and consequences of not taking action, or intervening, to prevent individuals experiencing adverse housing outcomes are difficult to articulate and evidence, and are actually quite well hidden from the general public. For example, what actually happens when an individual or household is unable to access decent affordable housing? People will respond in a variety of different ways, but tracing through the consequences of their decisions to measure economic impacts is very difficult. Yet, it is more than likely that other consequences will follow on from people having to locate in over-crowded, poor quality housing, or in housing that entails long, expensive commutes and losses of time spent with families. These consequences clearly have impacts on individuals, but they also impact on the productivity of the economy, hence imposing economic costs.

The good news is that things are slowly changing. Last week, the UK government announced a major u-turn on a flagship housing reform first proposed by former Prime Minister David Cameron in 2012 and introduced in 2017 by Theresa May. The removal of automatic entitlement to the housing element of Universal Credit (the controversial successor of Housing Benefit) for 18-21 year olds was a contentious policy, heavily criticised by homelessness and youth charities. Arguably driven by ideological arguments rather than any sound basis in evidence or economic analysis, the apparent financial savings to be had from the proposed policy were revised repeatedly and fell from an initial estimated £128 million, to perhaps £78m after accounting for a range of categories of exempt individuals (Leishman and Young, 2014), including young people leaving care, fleeing domestic violence, or suffering from mental health problems, for example. By the time of the introduction of the policy in 2017, the government was hoping to save a mere £40m.

The UK government has now given up on the policy altogether, with Patrick Butler noting in the Guardian the stark tension between their stated objective of reducing homelessness in the form of the Homeless Reduction Act, and the probability that curbing housing payments to young people will increase youth homelessness. The economic analysis published nearly four years ago (Leishman and Young, 2014) shows, quite simply, that the meagre financial savings resulting from such a policy are easily offset by the economic costs arising from additional homelessness cases.

The UK government’s decision represents a victory not just for social justice and common sense, but for sound research and evidence-based policy. As awareness of the social and economic impacts of housing policy choices rises in the United Kingdom, Australia and elsewhere, let us hope that we are able to meet the challenge of providing sound research-based evidence of a quality that keeps politicians honest.

This article was originally published on the I-SPHERE website.