HOUSING AND URBAN MATTERS: A CHANGING AGENDA IN THE EUROPEAN UNION?

Plenary I - Housing issues in the EU: Do they Matter? HOUSING AND URBAN MATTERS: A CHANGING AGENDA IN THE EUROPEAN UNION? Iván Tosics tosics@mri.hu Paper presented at the ENHR conference "Housing in an expanding Europe: theory, policy, participation and implementation" Ljubljana, Slovenia 2-5 July 2006

HOUSING AND URBAN MATTERS: A CHANGING AGENDA IN THE EUROPEAN UNION? ENHR conference Housing in an expanding Europe Plenary presentation Ljubljana, 2 July 2006 Iván Tosics Metropolitan Research Institute Budapest Outline of the presentation Globalization and changing European strategies from the end of the 1990s Urban and housing matters in the EU by the end of the 1990s Lisbon agenda, approved in 2000 and revised in 2005 Enlargement in 2004 (and 2007) Policy development in urban and housing issues in the last years Background to the debates on urban and housing matters: different philosophies, potential methods, conflicts between institutions The outcome: urban and housing elements in the Structural Funds regulation (adopted in 2006) Conclusion: how can the new opportunities be turned into concrete programmes. 1

The urban agenda In the 1990s urban matters remained very weak, compared to the regions, the outermost areas, etc. Beginning of changes: 1997 Commission Communication Towards and Urban Agenda in the EU, emphasizing the need to combat socio-economic and environmental problems of cities. 1998 Vienna Urban Forum: mayors of strong cities argued for more attention to the urban dimension. 1999: the European Parliament saved the URBAN initiative for 2000-2006 (low budget but important integrated area-based programmes, direct city- Commission links). The housing agenda The EC Treaty gives no legal basis for EU competences in housing. There are some indirect effects (e.g. EU nationals employed in another EU country have the same housing rights than country nationals), but no comprehensive EU approach exists. Housing is accepted as part of the strategy against poverty and social exclusion and also for economic prosperity and employment. Although before 2006 housing was not explicitly excluded from the Structural Funds, practically it was not allowed to spend EU funding on housing. In URBAN housing was explicitly excluded and renovation of buildings was only allowed for non-residential purposes. 2

The Lisbon agenda (2000) 2000 Lisbon Council, ambitious decision Aims: the EU should become by 2010 the most dynamic and competitive knowledge-based society. It is essential to raise growth and employment to underpin social cohesion and environmental sustainability. Tools: to raise public and private research spending, completing the single market, to improve climate for business, ensure more flexibility in the labour market by raising educational and skill levels, ensure environmental sustainability of growth. Methods: besides EU legislations, Open Method of Coordination for areas in which the EU had no constitutional competence Midterm review of the Lisbon agenda Kok report, November 2004: hard critics based on the real processes. Achievements were far from targets, in employment, in job creation, in R&D spending, in environment (road congestions are increasing, Kyoto targets are not fulfilled). The Kok proposals call for more commitment and political will, for better targeting of the EU budget, for better communication. Focus and growth and employment is needed to underpin social cohesion and sustainable development. The OMC should be improved, based - instead of the original 100 - on a core set of 14 indicators. The Commission should present league tables with rankings (1 to 25) for all of the key indicators. 3

Basic suggestions of the Kok report Realising the knowledge society (researchers should be attracted, European Research Council should be established, eeurope and broadband, Community patent) Develop the internal market (free movement of persons, goods, services and capital, approve legislation on free movement of services, create an EU market for wholesale financial services) Creating the right climate for entrepreneurs (reduce administrative and financial burdens of setting up business, increase risk capital, decrease legal and social consequences of honest bankruptcy) Building an inclusive labour market for stronger social cohesion (more people in employment; lifelong learning to be extended, active ageing strategies needed giving workers incentives to work longer) Working towards an environmentally sustainable future (climate change, decoupling economic growth from resource use; foster eco-efficient innovations, greening of public procurement) Enlargement in 2004 Enlargement has made the achievement of the Lisbon goals even harder, as the new Member States have lower employment rates and productivity levels and lower spending on R&D Cities of the NMS have lower infrastructure levels (except for urban public transport) and have much larger housing problems than cities in the old member states. Accession countries argued from the beginning with their special problems, such as the decline of the well organized urban public transport and the topic of large housing estates. 4

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Policy development in urban and housing issues EU Spring Council, 2005: Revised Lisbon Strategy, emphasizing the need for growth and jobs in sustainable development. National Reform Programmes are required from each Member State. Social partners and civil society should better be involved in the preparation. Critics by Eurocities Spring 2005: even the revised Lisbon strategy has no regional and local dimension, although cities already do a lot to achieve progress in growth and jobs. Cities should be involved as basic partners, not only as stakeholders in communication. It is not possible to move up the gear if the car has no engine. Most member states do not even consult their cities when puting together their National Reform Programme. OMC mechanisms are weak and do not include local actors. 6

Commission data about the performance of cities related to Lisbon Cities are radically different from their countries. Disparities between cities are far greater than the differences between countries or regions. Even within the same country gowing and declining cities can be found. Every third job in cities goes to someone living outside the city. High level of car ownership does not correspond with a high share of car trips. European cities concentrate both the jobs and the jobless. 3/4 of cities have a smaller proportion of employed residents than their country, 2/3 of cities have higher unemployed rate than the national average. Cities have high share of residents with tertiary education and without secondary education. In the old member states the suburbs have a higher share of employment than the cities themselves. Cities concentrate foreigners, and have marked disparities between neighborhoods. Community Strategic Guidelines Commission: CSG, with three pillars, 2005 Making Europe and its regions more attractive places to invest and work Improving knowledge and innovation for growth More and better jobs Commission Staff Working paper: The urban contribution to growth and jobs in the regions (November 2005) The paper takes account of the non-economic factors of cities which play decisive role in the competitiveness of cities. Guidelines for action are phrased, including arguments for city-region cooperation and suggestion to Member States to delegate funds addressing urban issues within Structural Funds Operational Programmes. 7

Eurocities proposals to strengthen the urban agenda It is crucial to integrate the major statements of the Commission working paper into the Community Strategic Guidelines. This should be done as soon as possible, to be able to influence the Member States in the preparation work of their National Strategic Reference Frameworks and their Operational Programmes. It would be even better to ask Member States in a more direct way to support cities in achieving these goals through the Structural Funds. Eurocities proposes a fourth pillar for the SCG on Reinforcing the urban contribution to growth and jobs in the regions. This new pillar contains specific guidelines targeting cities, ensuring that cities can fully contribute to the achievement of the Lisbon goals. Guidelines suggested by Eurocities foster multilevel governance by including cities and their functional urban areas in both the development and the delivery of the National Strategic Reference Frameworks and the operational programmes improve deprived neighbourhoods through rehabilitation of the physical environment, stimulation of entrepreneurship and social economy, and measures to ensure social inclusion target and develop economic opportunities for those at the lower end of the job market, and the informal economy, improving the situation of the working poor address the specific problems of young people, immigrants and excluded groups, and create opportunities for the nonworking population enable cities to develop services to meet the challenges of the changing demographic structures andtoimprovetheoverall quality of life of citizens support the preservation and improvement of natural and cultural heritage. 8

Debates about a housing agenda In the EU direct housing expenditures were never allowed, residential buildings could not be renovated. As part of area-based integrated redevelopment (URBAN) only the following interventions were allowed: demolition, improvement of public space, renovation of ground floors for commercial use, image regeneration of building exteriors, sidewalks, renovation/installation of boiler rooms The new Member States have much larger housing problems than the EU-15: Around 40% of the urban population lives in the high rise prefabricated housing estates The share of run down inner city housing is also high with quick physical deterioration and increasing social problems High share of poor owners New member states: housing has to be included into the Structural Funds The deterioration of urban areas has to be addressed with integrated improvements. Housing interventions are needed for the required economic, sustainability and social outcomes, job creation in itself is not enough Energy saving is also largely a matter of renovation of residential buildings International experience: to achieve lasting results in a deteriorating area at least 50% of investments has to go to residential buildings Countries with largest housing problems have the smallest public budget, crowded out by cofinancing other EU programmes 9

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Big debate about a small item New member states are not asking for more money but for more flexibility in the use of the already calculated money If housing would be eligible, only a very small part of Structural Funds money would go for this purpose EU contribution to housing would increase the chances of new member states for successful absorbtion of the SF money EU arguments against SF support for housing In the view of the Commission to make housing eligible would be inconsistent with the aims of the Structural Funds lead to unhealthy influencing of peoples preferences mean unfair subsidies for home owners endanger the scarce EU resources as having a potential to absorb a disproportionate share be politically unjust as the new member states have cheaply sold off their housing stock not be necessary at all, as alternative sources of finance do exist and loan finance is generally highly developed 12

Unhealthy influencing of peoples preferences? Cohesion policy should serve investments, making people richer, broadening out their choice where to live German example: subsidies gave false signals, by now many renewed buildings are empty However, housing is not similar to simple consumption goods The German case is very different from the situation in the other new member states Prefab housing in the NMS will exist for decades Unfair subsidies for home owners? EU taxpayers money should not be spent on housing renewal, as this leads to value increase of flats, i.e. makes owners richer Value increase should be taken back, e.g. in the form of introducing shared ownership However, without subsidies no renovation will happen and the long-term problems (physical, sustainability, social) will be much larger URBAN and other programmes also caused value increase, which was never claimed back so far This effect can be minimised if the level of housing support is limited in amount and is strictly targeted (used in deteriorated, low income areas of cities) 13

Politically unjust? Eastern Europe has cheaply sold off the housing stock, thus it would be unjust to renovate it now on the money of Western taxpayers In some countries many new units are empty, thus the demolition of large housing estates would not cause housing shortage However, the eventual mistakes of the past can not determine the solutions of today The buildings to be renovated and those new ones staying empty belong to different parts of the housing market 14

Let s try to create a good address together! The result: new regulation for housing Expenditure on housing shall be eligible for the period 2007-13 for the Member States entering the European Union on or after 1 May 2004 only and in the following circumstances: expenditure shall be programmed within the framework of an integrated urban development operation or priority axis for areas experiencing or threatened by physical deterioration and social exclusion; the allocation to housing expenditure shall be either a maximum of 3% of the ERDF allocation to the Operational Programmes concerned or 2% of the total ERDF allocation; expenditure shall be limited to multi-family housing or buildings owned by public authorities or non-profit operators for use as housing designated for low-income households or people with special needs The Commission shall adopt the list of criteria needed for determining the areas referred to under (i) and the list of eligible interventions in accordance with the procedure referred to in Article 104(3). 15

The philosophy of the debates: how much weight to efficiency, sustainability, inclusion? If Lisbon means competitiveness as the main aim (to be achieved by increasing productivity and the number of jobs) there is a Lisbon gap : many sectors, companies, citizens do not benefit from innovation and growing competitiveness. The high-tech development does not solve the problems of normal residents. Moreover, efficiency methods are not functioning well without social elements. Employment is not the only and most important factor to ensure economic growth, as 25% of people in jobs are at risk of poverty. If Lisbon means inclusive labour market, the main problem is not with productivity but with the fact that the number of working people is too low. For this, traditional social work, is not good. New emphasis is needed to get people in their active ages, and the disadvantaged groups to work. To achieve that some conditions have to be met, e.g. child-care institutions (to allow women to work), social housing (to give chances to homeless), Also new approach is needed regarding minimum standards of jobs. The methodology question: how to carry out an integrated strategy? It is not easy to ensure that economic goals are closely linked with social and environmental aims. City-region agenda suggesting the functional urban areas as a scientifically and practically better defined alternative to the NUTS 2 regions Contradictions of GDP/capita based NUTS classification Contradictions of locally applied EU directives (e.g. local implementation of air quality directive prevent multifunctional land use and stimulate urban sprawl) Doubts about the strength of less centralizing methods (OMC and CAF) to promote new EU-wide ideas New ideas to iinclude private financing (Jessica, etc) 16

The power game: Commission, Parliament, Council, Member States The ideas of the Commission to strengthen the urban agenda was more or less backed by the European Parliament However, the reaction in the Council was not enthusiastic on the Commission proposal to make the urban axis compulsory in the CSG. Many thought the EC is going too far, interfering into issues which should be decided by the national states. Rejection was more on principles than on practical grounds (example: Netherlands also rejected this) The danger is that without any specific measure (as Urban was) many member states will not apply this and even less will be spent on urban areas The current situation: the status of urban and housing issues Commission, Council, Parliament: Financial Perspective adopted, Structural Funds regulations finalized The Structural Funds for the 2007-2013 planning period: urban regulation not compulsory but strongly required, housing only allowed in the new Member States Tasks for experts, consultants: urgent tasks to do: push forward and control urban and housing dimension in the National Strategic Reference Framework and in the bilateral talks, tasks to do after national programmes adopted: contribute to the fulfilment of the potentials for urban and housing programmes and projects 17

Conclusions (1) The important change of the 2000s is that environmental and social matters are not considered any more as direct opponents to economic development. The unfortunate changes in the global environment and the social unrests in larger cities have proved that there is a need for faster economic development in Europe but not at the expense of the environment and not separately from the basic social aims. Housing and urban aspects are of key importance in this new agenda. For European competitiveness the integration of policy fields and the integration of cities and their functional areas are needed. Cities in this double integration can really act as engines of the regional and national development. Experts in urban and housing fields should better link their professional knowledge to the broader context, contributing to the economic development through innovative linking of social and environmental considerations. Housing scholars should cooperate more with urban experts and economists, as decisions on housing sector issues heavily influence the development of urban areas and the chances of deprived strata of society to become part of the job market. The urban agenda has developed in the last years but could still not achieve strong position in EU policy making. Although urban development aims (e.g. prevent segregation) might not become directives in the near future, the basic elements of an European Urban Policy should be determined as long term targets. From housing policy point of view the Lisbon strategy should be surveyed in details: how could the best researchers be kept in Europe, how can marginalized people be brought back to the job market, how could the housing markets of city-regions better serve as engines of economic growth, ensuring basic environmental and social criteria The ENHR should play a role in developing indicators and methods towards the European urban and housing development models (at least assigning major trends, if the development of unified and exactly defined values proves to be too difficult). There are two scenes on which work has to continue: to develop EU-wide policies and to develop national/regional programmes. 18

There are two readings of the Lisbon strategy possible. According to the first neither the output (CSG and the EU Structural Funds regulation 2007-2013) nor the likely reactions, the national strategies do take a balanced view between economic, social and environmental aspects. Correspondingly, urban and housing matters have lower priorities than needed integrated programmes have limited chances to get EU support. According to the second reading the Lisbon strategy, with its a widened growth and jobs agenda creates important opportunities for social and environmental policies, provided that these are connected to economic considerations. In that way innovative urban and housing considerations are needed and could play play important role in the future development of the European Union. The Lisbon strategy and the Structural Funds are EUwide framework documents, which will be filled with concrete content by national (and regional) programmes. It depends also on us, researchers and consultants, whether we take a positive view and push the urban and housing elements into the national programmes. Thanks for your attention! Iván Tosics tosics@mri.hu 19