A wasted opportunity – the Smith Commission and Housing

Professor Mark Stephens
Professor Mark Stephens

The Smith Commission, set up in the aftermath of the referendum on Scottish independence, issued its report yesterday (27 November).

Lord Smith was charged with reaching all party agreement on which additional powers should be devolved to the Scottish Parliament, following the “Vow” to extend such powers was made by the leaders of the three unionist parties in the closing days of the referendum campaign.

During that campaign, the devolution of Housing Benefit assumed some significance because of the potency of the ‘bedroom tax’ – the reduction in Housing Benefit for tenants of social landlords judged to be underoccupying their properties. Although the Scottish Government has been able to mitigate its impact through the use of Discretionary Housing Payments, it has assumed symbolic importance since it is widely perceived to represent an attack on the poor introduced by an uncaring Tory-led government that enjoyed little electoral support in Scotland.

During the campaign, the Labour Party indicated that it supported the devolution of Housing Benefit, whilst the Conservatives were sympathetic because of its close relationship with housing policy, which was devolved as part of the devolution settlement that led to the creation of the Scottish Parliament in 1999.

It might therefore seem surprising that Smith contains no recommendation to devolve Housing Benefit. Rather, the Commission recommends that the Scottish Parliament will be able to pay landlords directly and vary the housing cost elements of Universal Credit, including the bedroom tax, local housing allowance rates, eligible rent, and deductions for non-dependents. The costs of more generous treatment of Scottish tenants would be borne by the Scottish taxpayer.

Therefore the Scottish Government has been given powers to mitigate some of the cuts to Housing Benefit introduced since 2010, including the power to ‘abolish’ the bedroom tax.

The decision not to devolve Housing Benefit was doubtless influenced by its intended absorption into Universal Credit, at least for the working age population. Running a separate Housing Benefit system alongside Universal Credit would create some difficulties and would require it to be redesigned to prevent Scottish tenants from being disadvantaged by being means-tested twice on the same income. But it is entirely possible to do so – after all, what was Council Tax Rebate will operate outside Universal Credit across the whole of Great Britain.

Moreover, after this week’s damning National Audit Commission report that records the glacial progress made in implementing Universal Credit (just 0.25% of the target group has been moved on to Universal Credit, and almost all of these are non-complex cases) there must be doubt over whether it will be implemented in full. Never popular with the Treasury, Universal Credit has been a tale of hubris and IT failures, and is increasingly identified as being the Secretary of State’s personal vanity project.

The Smith Commission leaves the Scottish Parliament with no ability to redesign Housing Benefit – something that admittedly would have required the devolution of the means-tested benefits that largely dictate key elements in its current design. As such it leaves unresolved the anomaly whereby housing policy has been devolved to the Scottish Parliament, but the largest housing subsidy remains controlled by Westminster.

Consequently, it is difficult to conclude other than that the Smith Commission has been backward looking, and addressed immediate political imperatives at the expense of any vision of the future.

The Scottish Parliament still has no strategic control over housing.

As such the Smith Commission is a wasted opportunity.