Social housing policy in the Social-Democratic welfare regimes: universalism in decline?
Calum Kennedy, MSc Public Policy 2023/24, University of Edinburgh
Social housing policy in the Nordic countries has historically aligned with universalist ideals. In Sweden and Denmark, social housing is provided by public housing companies, and is allocated mostly through waiting lists open to all citizens. However, recent developments in the Nordic welfare states such as the aftermath of the financial crisis and the influence of pro-market neoliberal ideology have helped build pressure towards a process of residualisation of social housing, marked by lower supply and increased eligibility criteria for this tenure.
Due to its complexities, housing policy has not always fitted neatly into the classic categorisation of welfare states into three distinct regimes – Social-democratic, liberal and conservative. Nevertheless, the universalist character of the approach to social housing policy in the Nordic countries generally conformed to what would be expected of a social-democratic welfare regime, with good quality homes accessible to all citizens regardless of income or class and a strong role for the public sector in meeting the nation’s housing needs. This contrasts with social housing policy of a liberal welfare regime such as the UK, where the role of the public sector has been scaled back, and the remaining social housing stock is increasingly reserved for only the most deprived or low-income groups.
Recent policy trajectories in the Nordic countries suggest the universalist nature of these social housing systems could be in decline, in favour of a more targeted approach. The potential implications of such developments in the Nordic countries are important to understand as changes to housing policy can have significant impact on wider social policy outcomes and future priorities.
Sweden and Denmark: social-democratic housing regimes
Sweden was long seen as an archetype of a social-democratic welfare regime, characterised by universal provision of welfare services and a greater role for the public sector. Applied to housing policy this entailed publicly owned municipal housing companies providing homes to people across different income groups in a society. Sweden’s universalist approach to public housing policy was also a means to achieve socially inclusive ends with municipal housing companies obliged to fulfil a duty of social responsibility to promote good wellbeing outcomes for all residents.
In Denmark, the literal translation of the name given to the system of social housing is ‘general housing’ which indicates the nature of this tenure as an option for all sectors of the population. Around 1 million people live in the social housing sector in Denmark, reflecting its role as a desirable tenure across different social class and income groups.
Recent pressures:
Retrenchment of social housing has been a common theme across Europe in recent decades, as previously publicly owned housing has increasingly been subject to market forces and policy influenced by neoliberal ideologies of privatisation.
The influence of pro-market, neoliberal approaches to welfare and housing policy has been increasing across Europe in recent decades, including in Nordic countries like Sweden. Historically, social housing in Western and Northern Europe was considered an important part of the welfare state with local government providers aiming to ensure a supply of adequate housing for the population. However, the liberalisation of financial markets in the 1980s created new imperatives for expanding home ownership as a tenure, and national housing policies became geared towards reducing the role played by the state sector in meeting housing supply.
The aftermath of the 2008 financial crisis has also put further pressure on public housing systems, even in Sweden and Denmark whose housing markets recovered relatively quickly from the crisis. The tendency towards austerity policies in many developed nations in this period strengthened the case for scaling back public housing in favour of greater means testing to make this a sector of last resort for people unable to secure their own housing through the market and promotion of an increased role for the private sector.
Sweden and Denmark have also taken in higher numbers of refugees and asylum seekers than other EU countries, and the social housing system has played a large role in housing these new residents. While this has been an important task, it has also concentrated large numbers of refugees in relatively deprived housing estates, which can impact on the extent to which they are able to integrate into society.
The European Commission has also placed pressure on universalist housing systems, as competition regulations limits the extent to which municipal housing companies can receive public subsidies to avoid giving them a favourable position over private companies. In response to such developments, Sweden attempted to maintain a nominally universalist ethos to social housing but withdrew subsidies and tax benefits to municipal housing companies, effectively forcing them to compete on market terms with private actors. This process of marketisation based reforms in the public housing sector was cemented by legislation in 2011 obliging municipal housing companies in a business-like manner on equal terms with private actors, leaving them struggling to fulfil their obligations for social responsibility in the way they previously did.
Decline of universalism?
There are some indications that the Nordic countries may be shifting away from their traditional social-democratic approach to social housing policy. In 2016 the Danish housing minister declared the public housing system should be focussing more on housing the most deprived tenants who cannot access other options rather than trying to attract a balanced proportion of residents across different income groups, indicating a shift away from a universalistic model of social housing. The rent setting model of the Danish social housing system also undermines universalist character of this system, as rent prices are charged in part based on the construction costs of the estate meaning new builds are charged at a roughly similar rent to new builds in the private rented sector due to higher construction and land costs in the modern era. This serves to encourage many middle-class tenants to seek housing in the private sector as there is little difference in cost and quality and less time spent on a waiting list.
In Sweden, while in theory the municipal housing system is still accessible to all residents regardless of income, these new pressures have created an incentive to move towards a more targeted approach by focussing social housing for those on the lowest income. In 1993, households in the lowest income quintile in Sweden made up 30% of public housing residents, but by 2012 this had increased to 40%, indicating a trend towards greater concentrations of lower income households in this sector.
Implications:
The process of increasing residualisation of social housing, whereby access to this tenure is increasingly targeted towards lower-income groups, can have a variety of effects. It can lead to the creation of spatial concentrations of poverty and deprivation, which can pose further social policy challenges.
A national housing policy aimed at reducing the overall role of the public sector may also serve to increase housing costs across the board. A universalist system based on a high level of availability and affordability of social housing can pressure private sector rents to decrease to compete with the public sector, bringing savings to households reliant on private renting. Therefore, any effort to reduce the role played by the public sector in meeting housing needs in the Nordic countries must take into consideration the potential consequences for overall housing costs for residents.
At EU level, the European Green Deal has committed to ensuring greater energy efficiency of homes across Europe, which will also inevitably include a campaign to retrofit older buildings to ensure they meet efficiency targets for the future. This is particularly important given many nations social housing stock is made up of a large share of concrete housing built in the post-war era on the premise of cheap carbon-based energy to heat these draughty homes. However, the disjointed nature of a post-privatisation social housing environment, with a higher number of private actors and individual owner-occupiers involved, will make coordination of any mass retrofitting scheme inevitably more complex. Therefore, a continuation of the trend towards greater involvement of the private sector in housing in the Nordic countries may also make meeting climate targets an even tougher challenge.
The evolving landscape of social housing policies in Nordic countries reflects broader socio-economic and political trends, with signs of a shift away from universalist social-housing allocation. Understanding the implications of targeted housing policies will be essential for meeting existing social policy challenges and future priorities. Universalist based social housing systems are generally better equipped to address goals such as poverty reduction and social inclusion, and limiting involvement of the private sector in meeting a nations housing need may help with both reducing costs for renters and in addressing future challenges such as retrofitting existing housing stock. Therefore, these recent developments in Nordic social housing policy may create new problems in an attempt to address existing pressures.