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Michael McDowell: Bedsit ban offers a warning on future income supports

Unintended consequences can cancel out positive effects of well-meaning initiatives

The pandemic unemployment payment (PUP) was a wholly necessary and socially just intervention by the State to help the most economically vulnerable survive the calamitous effects of the lockdowns.

Some may argue that it was unfair at the edges, insofar as deserving cases between jobs and other similar exclusions were harsh. Others claimed that PUPs were overly generous and sapped the will to participate. Improper claims have been identified in a minority of cases.

But I think most people would accept that the PUP payments were socially and economically just, if imperfect. The question that arises now is whether PUP payments are having some form of economic and social afterlife which is contributing to what are termed “labour shortages” or what might be called “reduced incentive for economic participation”.

I don’t think that all the post-pandemic disruptions can be or should be laid at the door of the PUP. The causes of those disruptions are more complex and varied. An interesting point for consideration and research is the effect of such widespread payments on motivation to participate in the paid sectors of the economy.

For years, Social Justice Ireland (previously operating under the aegis of the Conference of Major Religious Superiors and, later, the Conference of Religious in Ireland) has advocated payment of a universal basic income. Its best-known champion, Seán Healy, has consistently argued for a model which would marry welfare and taxation systems in the provision of basic income.

For years too, others, including myself, have challenged that idea on the basis that the inevitable consequence of a universal basic income would be a significantly higher tax rate on earnings and that the scheme would result in a much higher rate of opt-out from the paid economic sector.

While it would be unfair to judge the basic income concept by the outcome of PUP, there still is some room for reflection here. Would it provide a disincentive to work in an employment market where higher taxation was imposed on earnings? Put another way, is economic participation partly or mainly motivated by necessity? And if you subsidise non-participation and increase taxes on participation, what would the social and economic consequences be?

Unintended consequences

We have to be alert to the possibility of unintended consequences for well-motivated, simple-sounding policy changes.

Take, for example, the demise of the urban bedsit. Threshold, the homeless charity, lobbied successive governments for the introduction of rented accommodation standards that would prohibit the letting of bedsit-type accommodation where the tenants shared common bathroom or cooking facilities. Such a prohibition, they argued, would persuade private landlords to improve the living conditions and dignity of tenants at the lowest end of the property market. That sounded plausible and good.

And so the then minister for the environment, John Gormley, with the best of motives, made such regulations with a delayed implementation period of four years to allow landlords to reconfigure their premises to comply.

For many very vulnerable tenants, the result was eviction, dislocation and joining the queue for social housing

The problem was that many older buildings with, say, eight or 10 bedsits, simply couldn’t – physically or economically – be transformed into anything like that number of individual dwellings. The easier option for the landlord was to sell the building with vacant possession when the four-year implementation period was over.

The well-intentioned reform probably had the effect of ending the letting of 10,000-20,000 bedsits in urban Ireland. This effectively extinguished the lowest rung of the private rented accommodation ladder for many vulnerable people.

Gentrification

Having seen the very poor standards of many bedsits in my time as a TD, I understood what Threshold and Gormley were trying to achieve. But a curious side-effect of the policy has been the wholesale gentrification of bedsit land as trophy homes for the wealthier bourgeoisie in inner-city areas. Older houses that had accommodated 12 or 15 or more people in bedsits or flatlets with shared facilities have been transformed into opulent, now fashionable and spacious homes for families of four.

It became perfectly legal and commonplace to let out an entire house to a number of people who had an individual bedroom but shared the bathroom and the kitchen. House-sharing was legal but bedsits were illegal. The difference, (with Yale locks on bedroom doors) was minimal. It even became possible to change from bedsit tenancies to joint tenancies of entire buildings including the common areas without altering the building at all. And now we have the dubious return of the “shared living” market.

But for many very vulnerable tenants who were content with their bedsit or flatlet homes, the result was eviction, dislocation and joining the queue for social housing far away from their communities.

Who gained from all of this? The wealthy bourgeoisie who gentrified the vacated houses? The landlords who were forced to sell out? The tenants who were forced to clear out? The homeless who faced even longer queues? Students who could not live in bedsits? Single, elderly and sometimes separated people who were uprooted?

My point is that we should think carefully before making some variant of PUP a permanent part of the system.

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