There’s one fundamental reason why we have a housing crisis

The State is happier when it’s spending money to keep people in bad circumstances than it is when it’s spending to make their lives better. This is not some playful paradox. It’s the reason we have a housing crisis.

In 1990, local authorities in Ireland spent the equivalent of €600 on emergency bed and breakfast accommodation for homeless people. That’s not €600 a night or €600 a week. It’s for the whole year. It covered the cost of putting up all the families who would otherwise be on the street. The number of such families was five.

This was at the end of a pretty dire decade of the Irish economy. But then a funny thing happened. As the economy improved through the 1990s, and the Celtic Tiger began to stalk the land, we added four zeros to the amount of money spent on emergency B&Bs for homeless families, turning €600 into €6 million. The number of families needing this dire intervention went from five in 1990 to 1,202 in 1999.

The richer we got, the more homelessness rose. The explanation was obvious enough. In the late 1980s, the State embarked on austerity programmes that were highly praised by right-thinking people at home and abroad. One of the cost-cutting measures was a drastic reduction in the provision of social housing. Local authority housing output fell by two-thirds in the late 1980s. Combined with the selling off of existing social houses, this meant that the available stock of public housing fell by 15 per cent between 1988 and 1996.

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There’s one fundamental reason why we have a housing crisis

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[ Ireland is spending big on housing. So why is the sector still in crisis? ]

The moral of this story was clear: austerity, especially when it’s applied to the provision of public housing, doesn’t work. It’s a moral disaster because it inflicts utter indignity on vulnerable citizens, and especially on children. But even in narrow fiscal terms, it’s grossly inefficient. If the State builds houses, it has assets. If it doesn’t, it forks out more and more money to private landlords to put people up in unsuitable and unstable conditions.

So obviously we weren’t going to do that again. But we did. In 2011, the total expenditure by all local authorities on emergency accommodation for homeless families was €73.5 million. Then the State stopped building social housing – cheered on, again, by all right-thinking people. Expenditure on social housing was slashed from €1.7 billion in 2008 to €680 million in 2014, a decline of 60 per cent.

And guess what? Annual expenditure on emergency accommodation ballooned. By 2023, it had increased to €345 million – a rise of almost 75 per cent. This reflected the relentless rise in the number of people in need of emergency housing, which, as of last Friday stands at more than 14,000, not including asylum seekers.

These figures, scandalous as they are, are merely the most dramatic symptoms of a social disease of pandemic proportions. But they highlight the great irony of the Irish economic miracle: the wealthier the State has become, the more money it shells just to find homeless families a bed for the night.

In 1990, we had about 1.1 million people at work in the Irish economy and the State had tax revenue of €12 billion. Now, we have 2.7 million at work and the State rakes in €87 billion. Yet over that period, we’ve gone from having a handful of homeless children in 1990 to 1,262 in 1999, to 2,505 in 2016, to 3,873 in 2019, to 4,206 now.

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If you wanted to be cynical about this, you might even say that the rise in homelessness has been allowed to happen, not in spite of the State’s increasing wealth, but because of it. Yes, the cost to the State has risen and risen – but it has also become more affordable. Throwing public money at the problem is the equivalent of an aristocrat throwing coins from her gilded carriage at the paupers – except that the money is thrown, not at the tenants but at their landlords.

And for them, it’s been a bonanza. In 2014, the State gave a private landlord an average of €14,000 to house a family. By 2022, the figure was about €34,000 – a rise of 143 per cent in eight years.

And yet this kind of runaway spending doesn’t feature in mainstream discourse about “fiscal responsibility”. Has the official budgetary watchdog, the Irish Fiscal Advisory Council, ever examined the appalling waste of public money on sustaining homelessness?

It’s a similar story with the wider costs of not building social housing. The State has become the biggest source of income for private landlords, with the amounts it shovels out in subsidies to private renters growing year by year. The cost of the Housing Assistance Payment rose by a staggering 80 per cent between 2018 and 2021 alone. Alongside the related Rental Accommodation Scheme it cost us €654 million in 2022.

But who cares? A report by the Comptroller and Auditor General that same year found that the HAP Oversight Group that is supposed to monitor the scheme was meeting only once a year, that on average only half the members attended and that “Neither of the two co-chairs – the secretaries general of the Department of Housing, Local Government and Heritage and the Department of Social Protection – have attended a meeting of the group since October 2018″.

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Even leaving aside the terrible personal cost for children and parents, this is a dire use of public money. It turned capital expenditure into current spending. And now, in an attempt to undo the disaster, the State is paying both ways – trying to build social housing while continuing to meet the spiralling costs of homelessness.

The question is, though, whether we’d do it all again. Why not? We cut spending on social housing in the 1980s, suffered the consequences in the 1990s, learned nothing and repeated the folly in the 2010s. What is there to suggest that, if there were another crisis in the public finances, the social housing budget would not be slashed again? And that all right-thinking people would not applaud again?