Housing and Welfare Regimes

In Chap. 3, we provided an introductory review of an important literature in the comparative study of policy frameworks governing social welfare issues in general and housing specifically. Distinct types of welfare and housing regime were identified and characterised, and shown to have emerged from the predominant governance structures in the economic sphere during the post-war period of reconstruction and development. Although these regimes are subject to common global forces, it was argued that these forces for convergence were tempered by a considerable degree of path-dependence. We go on further to argue that this phenomenon is particularly important also in the sphere of planning.

Over the last 20 years or so, these regimes have been subject to strong common forces associated with economic and financial globalisation. These forces have tended to place upper limits and downward pressures on taxation and hence on the ability of states to finance continually expanding welfare entitlements, despite growing demand associated with ageing populations. Institutional reforms towards more market- based systems have been reinforced by both world-scale and regional trade agreements and by the EU ‘single market’, which, for example, act increasingly to regulate ‘state aid’ and regional policies. In this context, governments in most countries have felt obliged to act to enable their economies to maintain competitiveness through more ‘flexible’ labour markets. Partly for this reason and partly because of economic restructuring entailing the decline of traditional manufacturing industries in the advanced western countries and the growth of service-based economies, the role and pervasiveness of trade unions have been reduced, with significant implications for welfare regimes of a more corporatist or social democratic character. Some would argue that this leads inevitably towards a convergence on the ‘Liberal’ type of welfare regime and associated features in the housing arena, namely a decline in social/public housing and growth of a more dualistic rental system with a substantial revival in less regulated private renting.

More recently, these tendencies have been overlaid by the experience and aftermath of the GFC. The GFC may be regarded as a major existential crisis for contemporary capitalism, and particularly its leading sector of finance, and could have been expected to lead to some reversal of the above tendencies and some rowing back from the strong emphasis on deregulation. To some extent, this is the case, as one can see in many countries a reinstatement and reinforcement of financial market regulation, as well as a range of direct state interventions to counter the recessionary impact of the crisis. On a global scale, the response of key economies (not least the USA and China) did represent a form of Keynesianism in action. However, the picture is more complex and, in the longer term, this episode may turn out to be more of a pause than a reversal. Firstly, some countries (Australia, Canada) were less implicated in lax financial regulation and more able to weather the economic storm thanks to strong demand for their extractive products. Secondly, in many countries, particularly in Europe, the financial/banking crisis quickly morphed into a public sector financial crisis, and in some cases a sovereign debt crisis. The extent to which this was inevitable, rather than a deliberately chosen political strategy, may be debated, and in the Eurozone, in particular, it may be argued that the path chosen was one which put severe pressures on the weaker members. But the outcome was that in many countries, the dominant discourse has been one of public sector fiscal crisis and the need for austerity measures to bring public debt under control. This has reinforced tendencies towards more privatisation and reduced welfare entitlements.

Some contributors to the welfare regimes and housing debate emphasise the significant role of owner occupation in modifying the story, most obviously for the high home ownership societies, and suggest that key issues for the future would revolve around the use of housing wealth to support both general living standards and welfare provision for the ageing population. However, one striking consequence of developments over this period has been the very widespread decline of home ownership rates, particularly amongst younger people, and the associated rise of private renting, typically mainly involving small-scale individual investors rather than corporate or institutional landlords. This crisis of home ownership is now feeding into the discourse on housing policy and provoking a further wave of policy initiatives and reorientations as governments seek to respond.

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