If you want policy to fail announce first, think later
The lead story in today's Herald is based on our continuing pursuit of evidence of what prompted the Scottish Government to reintroduce a 'help to buy' scheme to 'help young people get on the housing ladder'. Despite not telling us anything much we didn't already know, this development has told us quite a lot.
The background to this story is straightforward; one of the common policy responses to the rising house price to wage ratio that started in the 1990s was to offer subsidies to help get first time buyers 'onto the housing ladder'. These generally took the form of some sort of subsidy of the deposit that a first time buyer had to pay, generally one of the big barriers to ownership.
The problem is that these schemes went out of fashion for a good reason – they not only don't work, they are significantly more likely to make the problem worse than better. There are three main problems. First, the subsidy actually allowed property developers to increase prices, since increasing liquidity in a fixed market will raise cost inflation.
Second, this did not result in the creation of more housing; again, developers were better able to increase profits by rationing supply and increasing price. Third, an awful lot of the money was spent very wastefully. For example, in the Scottish scheme only about one in three recipients said they wouldn't have bought a house without it. This was subsidising the people who were going to win anyway.
And we knew all of this because there have been multiple studies examining the impact of different schemes (for example there have been schemes in London, Dublin and Scotland in the last 20 years) and they show consistent results.
That means that when the Scottish Government announced yet another iteration of this scheme, there was so much available data that Common Weal was able to put together a briefing explaining how counterproductive this idea was in only a matter of hours (we’v e written it top a number of times, for example here). This is a bad policy and widely known to be a bad policy.
We submitted Freedom of Information Requests not to find the basis on which the Scottish Government made this decision because basically we knew there wasn't one. We submitted them to find out whether this policy had been put in place without any evidence or despite the available evidence.
Our first request came back ludicrously redacted, page after page of blacked-out text. We appealed and the Scottish Government accepted that a large proportion of these redactions were not justified (which begs the question of why they were made in the first place). Which means we now have at least some of the policy advice.
And it shows both elements of what we suspected. The details of what emerged can be found in the news reporting but what is important is the overall message. First, there appears to have been very little or no actual policy consideration of impact assessment done before it was announced. Then, the policy assessment that was made mostly appeared to argue against the policy.
Officials quite clearly tell Ministers that only about 28 per cent of those who accessed the fund last time wouldn't have bought a house anyway. That makes this an all-but unjustifiable policy. They also raise concerns that this is a significantly worse scheme than the preceding one and will work less well.
But this policy had been announced in public and it seemed unlikely they were going to reverse on it, so no proper impact assessment was made (which would need to be presented) and at one point a Scottish Government is actually shown to be using an AI chatbot to come up with some kind of justification for the scheme.
What this shows is what we already knew – this was ill-informed policy-making on the hoof that no-one would back down from once the evidence showed it was a bad idea. It also shows that more effort was made to cover up the flaws in this policy than to impact assess it.
This is important. We are in a period where it feels like discussion of what is wrong with government and officialdom in Scotland and why things keep going wrong is ubiquitous. The sad reality is that for the most part it isn't that tricky to understand.
What this saga reveals is politicians making policy they think will sell well to upper middle class voters and the newspapers they read and which will also be popular with commercial interests which they announce without any evidential background, civil servants knowing it is a bad idea but quickly falling in line anyway, scraping together justifications and disguising doubts.
Common Weal knew this was bad policy-making but we wanted to be able to demonstrate it. This is why government doesn't work – because it announces first and thinks later.