Incentives to house vulnerable people - if this is what it costs this is what it costs

A complaint that local councils are having to make extra payments to landlords to house vulnerable people:

Cash-strapped London councils are paying private landlords more than £14m a year in “incentives” simply to persuade them to house homeless people, the Guardian can reveal.

The sweetener payments of up to £8,300 each were made to landlords more than 5,700 times in 2018 to house people who were either homeless or considered at risk of homelessness, freedom of information requests have revealed. The payouts are made in addition to rent and have been branded as ludicrous by housing campaigners and intolerable by councils.

If this is what it costs to house people then this is what it costs to house people.

“It is ludicrous councils have to resort to handing out cash sweeteners to secure housing for desperate families, when there’s a much more sustainable solution: build social housing on an ambitious scale,” said Polly Neate, the chief executive of the Shelter housing charity, which is campaigning for a national social housing programme for 3.1m homes.

Building social housing doesn’t make those costs go away it just disguises them. For social housing is, almost by definition, at less than market rental. Meaning there’s an opportunity cost to the provision of social housing. There’s some amount that is the difference between market rent and the lower one being charged, money that could be but isn’t collected. That’s a cost to the system.

Sure, it’s possible to say that this isn’t a cost in the same manner but that is to ignore that very concept of opportunity costs. And whatever it is that we might be talking about while ignoring opportunity costs it’s not economics.

Our own preference, insistence perhaps, is that such opportunity costs should be made explicit. It’s far better that we pay for housing the poor openly, through housing benefit and such sweetners, rather than disguised in the opportunity costs of social housing. Simply on the basis that this way we can see quite how much it is costing to house the poor.

And if we see in the accounts that full and horrendous cost then that will increase the pressure to actually solve the problem properly - free planning permissions so that more houses are built and thus market rents come down. We actually need to see those proper costs so that we end up, eventually at least, doing the right thing.