On the background of the Urban Agenda and what to expect from it without any change in EU policy?


The stakes of the discussion on the Urban Agenda were, in a simplified way:

  • should the role and power of cities (and thus the money they can get) increase in EU policies?

  • if their power increases, which EU institution should coordinate this process?

In this process there was a contradiction between the European Commission (within that the DG Regio) and the Council. The EC typically supports cities and regions as opposed to the member states; while the Council is the forum of state leaders – who are against giving more power to cities.

The idea of the Urban Agenda was initiated in 1997 with a paper produced by the EC, entitled “Towards an Urban Agenda” – then there was a negotiation of around 20 years on whether the EC or the Council should dominate the urban process. One of the main actors driving the process on the Council side has always been the Netherlands – it is not by chance that they are signing it now, during the period of Dutch presidency; the Dutch government also aims to promote Dutch cities through the Agenda. (This probably means the „victory” of the Council – it is telling that the ministers and not cities are adopting the Pact of Amsterdam. Plus the cities are organizing a parallel event to the ministerial meeting where the Pact will be signed.)

Meeting of cities and regions: http://www.uia-initiative.eu/en/cor-forum-on-eu-urban-agenda

Meeting of ministers where they sign the Pact: http://english.eu2016.nl/events/2016/05/30/informal-ministrial-meeting-urban-agenda

 

Thematics of the Urban Agenda

On the website of the Urban Agenda 3 main tracks are identified:

  • improving regulation, that is „removing unnecessary regulations”

  • creating more workable financial instruments

  • creating a European platform for urban imagination and knowledge; promoting innovation, contributing to economic growth

These are clearly elements of neoliberal urban policies, and determine the whole approach of the Urban Agenda – even though then the concrete thematics/ partnerships that are listed in the Pact of Amsterdam include more social elements. In the Dutch programme for the current EU presidency they state that „The Agenda’s aim is to better align EU policy and legislation with urban practices so that cities can contribute more to maximising the potential for jobs and growth in Europe.”

The Urban Agenda is organized around 12 thematic priorities. So-called partnerships are supposed to be realized along these 12 thematics (including cities, governments, experts, European organizations, other stakeholders). Each „partnership” will be coordinated by a different city/ state, and will go on for 3 years. It is interesting that Slovakia will be coordinating the partnership on housing (given their very problematic practices of housing segregation and very low ratio of public housing - as in all CEE1 countries). This can be the result of the fact that Slovakia will be taking on the presidency in the next semester and housing is considered as a „current”/ „popular” topic. (They also hosted a preparatory event of Habitat III.) The fact that Slovakia is coordinating the partnership on housing could be a possibility to push this issue in CEE countries.

It is important that the Urban Agenda does not provide new sources of financing – this was the explicit prerequisite of member states. The document thus states that the aim is only to use funds already available to urban development in a more efficient way, and that there will be no new competencies delegated to the EU level. Since member states have very broad leeway in deciding how much of the structural funds they „pass on” to the local level, this means that in countries where the national government does not want to increase funds to urban development (or does not want to decentralize decisions about funding to local governments).

On who sets the agenda on urban issues in the EU more generally speaking:

The agenda of cities (and governments) from Central and Eastern Europe is generally less present in EU decision making and in determining funding priorities. Apart from Western countries’ bigger economic (and demographic) weight this is in part due to the fact that France, Germany, UK, the Benelux countries have a strong professional presence in urban and regional policy-related issues, who also manage to thematize what is present in EU policies. Plus there is geographical vicinity and generally bigger economic and lobbying power of these cities compared to CEE cities. Due to stronger personal and professional presence and networks, the issues of big Western European cities are much more present in the EU agenda.

It is interesting that the possibility to finance housing-related projects from EU structural funds was a result of the lobbying of CEE countries.2 (Also, they only succeeded when they managed to get a Western ally for this agenda.) This is because the situation is structurally different in Central and Eastern Europe – governments don’t spend money on housing, thus if cities want to realize urban development projects including a housing element (which is necessary if one wants to do any kind of socially oriented urban development), they need to be able to finance the housing element from EU funds.

About the EU’s effects on housing

The EU doesn’t have competencies in housing, but has an indirect impact through various channels. The one that has received most attention is the issue of restricting state support to housing associations with reference to EU competition law. However, it is important to see that this theme is so present also because the big housing associations of a few Western European countries have strong lobbying power. This is something that is not at all an issue in countries that do not have housing associations or significant state subsidies to social housing (which is the case in the Eastern and Southern European countries).

In Hungary, similar to the case of Romania the EU can actually sometimes provide resources for developing social housing. Currently in Hungary the government is not spending any money on social housing, and local municipalities are only spending the strict minimum necessary for maintenance. Hungarian public authorities generally are willing to spend money on social housing only if it is not their „own money”. Thus, in recent years the vast majority (almost totality) of funding going into the renovation of social housing has come from the EU in the frame of „social urban regeneration” programs. At the same time, these programs can be quite problematic since they are often used by local municipalities to promote gentrification strategies. In the 2007-2013 programming period for instance, 6 times as many „mainstream” urban regeneration programs were realized from EU funds than „social” urban regeneration programs. Cities mostly just wanted to use this money to renovate their main squares.3

We can generally say that almost all funding going into the housing of lower social classes in Hungary comes from the EU, and EU funds are exclusive in territorially focused programs against marginalization. Government-funded housing-related programs are dominantly channelled into financing housing for the middle classes (through a state-subsidized mortgage program, for instance). At the same time, due to the structure in which these funds have to be spent, these programs are often counterproductive in their effects.

If we look at the broader context: cohesion policy of the EU has generally shifted in a neoliberal direction, decreasing funding available for socially sensitive interventions. Funding priorities are related to economic growth, competitiveness and innovation. Compared to these bigger policies that result in growing socio-spatial inequalities, the funds that can be spent on housing are extremely small.

Through the channel of funding the EU thus has a very important influence in CEE countries on what urban development projects can be realized and on how much money goes into public housing. This is a fundamentally different situation than in Western European countries – a differentiated approach would probably be necessary in EU regulation and funding relating to urban development and housing.

((One concrete example in the Hungarian case is that EU money for energy efficient renovation of housing is only available through a zero-interest loan scheme – which is not going to be used by Hungarian authorities, because it was deemed „too complicated”. Plus it wouldn’t help poor populations, since it is a loan scheme. If EU funds for energy efficiency would be available in a way that allows for renovating the housing of poor people, it could mean a significant help in Hungary, where a large part of the housing stock is in extremely bad condition. But of course, this also goes against the basic logic of the EU, and it would not be a very profitable field for German „green” companies either…))

To sum up:

  • there is very little money that goes into social housing or more generally into supporting the housing of lower social classes

  • however, what little amount goes into supporting the housing of the poor, comes almost exclusively comes from the EU through projects supported by the structural funds (the government does not finance housing for poor people from its own budget)

  • it would be beneficial from our point of view if there would be more funds available specifically for housing-related projects (and if local governments were made more strictly accountable for how they spend this money – for this it would be necessary to have stricter rules and more monitoring of how the money is spent)

The important point is that the EU has quite differentiated effects in different places: where there is practically no existing social housing stock (like in most CEE countries), EU funds could possibly be used for creating some. However, current trends of using funds available in CEE cities for urban regeneration projects do not go in this direction at all – but this could be a point to demand from the EU institutions.

Before accession, the EU had a strong effect on the housing market through the liberalization of financial markets and the banking sector. This lead to a very problematic mortgage-situation in diferent countries after the crisis (with soaring levels of indebtedness and defaulting mortgages) was to a large extent the result of liberalization policies of the EU, which mostly served the financial interests of Western European financial institutions.

EC maintained that the support for public housing distorts competition unless it is limited to socially disadvantaged groups, in which case it is considered a service of general economic interest (SGEI). So it pushed for the understanding of public housing exclusively as social housing and the functioning of housing associations on business like principles, leading to the subsequent privatization of the housing stock.

 

What to expect from the EU Urban Agenda without any change in EU policies?

The Pact of Amsterdam, to be adopted at an informal European Council of Ministers of the Cities on May 30th, will officially launch the European Urban Agenda. The aim is to better take into account and involve urban areas in the definition of laws and the implementation of the EU's priorities. But what are these priorities?

The document endorses a list of 12 priority themes of work around which will be set up “partnerships” lasting up to three years associating cities, states, experts, european organizations and stakeholders that can be enterprises or NGO's. This pact also doesn't provide any new form of financing and has public private partnerships as a central aspect.

Among the priorities are Housing, Urban Poverty and Rights of Migrants and Refugees, however how can they face these challenges without changing anything in the European background policy, wich is one important cause that had led us to 1) more urban poverty, with the promotion of austerity packages and privatization policies; 2) has contributed to the deterioration of the rights of immigrants and refugees, investing more in the policy of border control than in the integration, creating for workers and immigrants the perception that they have to compete for social support and rights in regression; 3) and finally, has been neglecting the right to housing with the commodification of housing turning it more difficult to access by the working class, liberalization of the market and lack of protection of families from different types of evictions.

EU promotes the very ideological assumption of private property and market-driven capitalism. It promotes privatizations and the deregulation of finances and housing, which are very much connected. That is the main ideology we have to confront with if we want to develop social housing solutions. There are very concrete examples about the defense of the market paradigm and EU regulations with direct consequences on the provision of housing. It also blocks state aid to housing solutions at national or subnational levels. The market competition paradigm undermines all EU regulations.

The austerity imposed by EU is also reducing the expenditure availability for social services and housing by national and local budgets. This paradigm is in the Maastricht Treaty and in the fiscal compact and other treaties. So it is not just about a change of one policy but confronting with the EU's constitutional elements. Even the social rights guaranteed in the European constitutional frame doesn't recognize the right to housing, except for housing assistance in the Lisbon Treaty.

The Troika's dictates had disastrous consequences on countries like Greece, Portugal and Spain. They openly forced the liberalization of rental market and the non-performing loans market. It was a direct pressure over housing conditions.

EU promotes commodification and financialization, which leads to inequality and exclusion from the housing market of an important part of the working class.

In EU, the growing influence of owner-occupation, with access secured through incorporation of households into mortgage markets, is part and parcel of the same process of residualisation of social housing. Mortgage loans and the rise of mentality of homeownership, gave rise to a spectacular expansion of mortgage markets, which accounts for the recent evolution of household indebtedness in the EU. But, by the same mechanism of homeownership through debt – that increases the prices of homes in general – for a significant part of the lower strata working class, financialisation has instead meant less affordable housing, rendering housing a more important mechanism of inequality production and of marginalisation of those excluded from financial (mortgage) markets and the private rental sector. This points to financialisation that push further the disadvantaged groups into the margins, and a shift in approaches to social policy. Even the EU funds are oriented to urban regeneration programs that upgrade the cities for profit and not for social inclusion, giving subsidies to rehabilitation that, within liberal market, is raising the cost of houses and rents and is promoting gentrification.

The promotion of cut in social politics and obligations to sell the public provisions of housing in different countries – Netherlands was obliged by the EU to sell a part of the social housing sector in the name of market competition (there is also pressure on Austria to do the same) – transforms social housing in residue in the sense that it is treated as the exception not the norm, and is not part of a broader commitment to collective housing provision. On the contrary, its provision is couched in a narrative of personal responsibility, which takes material form in the under-resourcing of social housing. The result is that social housing tends to be of poor quality and in short supply, and hence does not reduce inequality, being far from a redistributive housing policy.

So what should we expect of this pact? Or why should we expect anything? We advise the Ministers and the EU to reflect on the structural policies and change it if they really want to address this issues. Here are some concrete testimonies from the ones who are experiencing what is going on in our cities in different parts of Europe and explain the impacts of EU policy in the deterioration of right to housing:

Italy

Italy is experiencing a dramatic housing emergency that the ongoing financial crisis has been exacerbating. Data provided by Ministry of Internal Affairs in 2015 clearly demonstrate it: 150 000 requests of evictions, 77 000 eviction measures emanated through judicial officers, 36 000 households evicted in 2014. This situation has been exacerbating by the concomitant dismissal of public housing system. Indeed, the latter currently corresponds to a residual stock, amounting to about 4% of national housing system and being totally inadequate to satisfy the increasing demand of affordable housing. The EU countries’ common trend toward the marketization of social housing sector is demonstrating to be failed, excluding progressively the most vulnerable share of people in housing need. At the same time, the austerity measures imposed by EU institutions have led to the extreme cost-cutting in the field of Italian social expenditure, being reduced of 91% between 2008 and 2012, depriving families under eviction of fundamental social protections. In this context, the Mortgage Credit Directive 2014/17/EU is going to accelerate the process of urban expulsion being related to the extraordinary increase of evictions, confirming the priority given to the stability of financial system to the detriment of citizens. Coherently with it, a new Italian Decree Law has thus stated the banks’ faculty to directly acquire the apartments of people in arrears without any guarantees for the latter.

Portugal

Portugal met with the Masstricht Agreement and the opening of EU financial capital market an unprecedent process of housing financialization that led to the increase of household debt as well as a huge externa private debt of the country wich gave rise to intervention of troika later. The more credit the more expensive the houses would be and become less accessible to those who stayed out of the mortgage credit market. 30% of the people with less than the medium wage (700 euros) is spending more than 40% just on housing rent, It is very hard to live with the rest.... Many people live in overcrowded houses, many are still in shanty towns and the number of evictions are increasingly in all the housing sectors. With the entrance of Troika, Portugal is forced to a full liberalization of rentalk market opening space for fast eviction (with any social support) and the entry of investment funds operating through speculative real estate activities. Portugal has 2% of social housing, enormous waiting lists of people that will never have an answer. However, there is no EU funds for social housing, but to urban regeneration with direct and indirect subsidies to private owners and medium long term gentrification

Hungary

Due to a lack of resources, urban regeneration projects are almost exclusively implemented using EU structural funds in Central and Eastern European countries. Investment in social housing is only realized through these projects; Hungary’s government does not spend money on the housing of lower classes. Thus, the EU has a responsibility regarding the kind of urban regeneration projects that are made possible in these countries. While local housing movements are constantly putting pressure on their local municipalities and governments; denouncing urban regeneration projects that promote gentrification and diminish the stock of social housing, EU funding priorities could also play an important role in orienting how these funds are used. The European Commission should take a stronger stance on the „social” usage of funds available for urban regeneration, and the funds available for the housing of poor urban populations should be significantly increased to the detriment of financing projects related to „competitive”, „innovative” and „smart” urban development.

Romania

Since 2014, several Romanian cities are competing for the 2021 title of European Capital of Culture. Critical perspectives on the project show us that in fact it accelerates processes of marginalization, gentrification and impoverishment, in the race to clean and embellish city centers to attract more investors and tourists. It actually amounts to the cleansing of the poor and undesirable from our smart pretty cities. The shortlisted cities, Bucharest, Cluj, Baia Mare and Timisoara are well known for the fast forward massive evictions of the last years, unaccompanied by any sort of relocation and social housing policies. These, of course, had little consequences in terms of outrage and sanctions. Moreover, in Bucharest, ECoC 2021 targets with priority poor, working class neighborhoods, aiming, beneath the cultural masquerade, to smoothen the way of real estate business. EU should maybe just stop the hollow talk about rights and inclusion considering that the neoliberal urban projects it promotes deepen social inequalities and segregation and deny for the many the very right to a dignified life.

Ireland

In Ireland the housing crisis has now risen to the top of the political agenda in Ireland. The numbers of families and children who are now homeless has increased substantially in recent years. The figures for the Dublin Region tell us that they have increased by 100% in the last twelve months. The numbers of people on housing waiting lists has also grown dramatically and we now have over 100,000 people on waiting lists, over forty thousand of them are in Dublin. The cost of renting privately has also soared and has led to many evictions of people who are told either you pay the increase or you leave. There are also new cases of vulture funds buying housing stock in blocks of units and then informing all of the tenants they must leave. this happened recently to forty two families, many of them immigrants living in west Dublin. There are also thousands of families who are in mortgage arrears and who have already been or who remain at real risk of eviction. The biggest problem we have here is one of SUPPLY mainly due to the fact that during the recent years of austerity, the social housing budget was cut from 1.3 billion euros in 2008 to 300 million in 2013, the Irish state was starved of resources to build or supply new social housing. The EU has done nothing to help member states provide solutions to the problem. The rules of the fiscal compact are very important in that they effectively prevent states from borrowing money to invest in public housing. The EU insisted that all of the debts of the major banks must be paid and we will be doing that for many years to come but it did nothing to address housing need in member states. So from where we sit the EU has acted much more in the interests of capital and money and has not acted in the interests of the 'classes populaires', the ordinary people of the European union. Here in Ireland we think that the European Union should act in the interests and the needs of the majority of its citizens and should provide practical support for member states to address the housing crisis. The simples of these measures would be to provide funding at low or zero per cent interest rates

France

In France, as in many countries around Europe, the pillar called “housing” is threated and 3,642,177 people were homeless or were experiencing a precarious housing situation in 2013; 1/3 of the population had troubles to pay their rent. Indeed, half of the rents increased by 50% since the 2000’s and doubled since 1990. While incomes dropped for low-incomes renters and that rent raised, indebt people and people with rent arrears increased as well. As a result, evictions increased by 33% in 10 years.

Although there isn’t any model of social housing in Europe, some tendencies are common to many countries such as the shrinking of social housing stock. In France, the social housing stock reaches 18,5% of the total. Step by step, this sector started to be the target of private investors and many dwellings in working class neighborhoods have been demolished, which led to “land merchandising”. As a result, social renters are displaced to some other areas, relocated to smaller and more expensive housing, and the gentrification process supplies rent and land increase in the working class neighborhoods.

Meanwhile, there is a tendency which aims at redirecting social housing on the poorest and although the law called “DALO” (2007) enables some people who experience a precarious housing situation to set up a file in order to be relocated, the effects are underwhelming (in 2011 only 39% of the cases were successful).

Finally, instead of protecting the rental status, the French government chose to destroy it through the “loi Boutin” introduced in 2009. This law contributes to create a new precarious class: the temporary residents who don’t have any right, nor any rental protection. This law is the result of the ploy engaged between companies and governments.

1Central and Eastern European

2 See: Tosics Iván (2008): Negotiating with the Commission: the debates on the ‘housing element’ of the Structural Funds. In: Urban Research & Practice 1 (1): 93-100.

3 On this topic see: „Lakhatási célú támogatások a 2007-2013-as stratégiai id?szakban” in the report of Habitat for Humanity Hungary: http://www.habitat.hu/files/HABITAT_2014_lakhatasi_jelentes_hosszu_1109.pdf



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