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Ineffective state support for increased housing construction

Since 2016, the State has invested more than five billion kronor in grants to municipalities to increase housing construction. The Swedish National Audit Office’s audit shows that the support has been ineffective and should have been designed differently.

Housing construction, cranes and construction workers.

Photo: Heléne Grynfarb

In 2016 financial support to municipalities was introduced to promote housing construction. Part of the support was intended specifically to increase construction in municipalities that receive newly arrived immigrants. About SEK 1.4–1.8 billion was paid out annually in 2016–2018.

The Swedish NAO has audited the support. The overall conclusion is that it has not effectively stimulated measures for increased housing construction either generally or in municipalities that receive newly arrived immigrants.

“The Government did not design the support to clearly steer in the direction of increased housing construction. For example, no requirements were stipulated concerning what the money should be used for,” says Vanessa Liu, Project Leader for the audit.

In addition, it was difficult for municipalities to plan for the support, since they could not predict how much money they would receive.

“Consequently, few municipalities have actively used the support for further measures for housing construction. The money was rather seen as a general grant to the municipality. In the cases where the money was actually used for housing planning measures, it is not possible to determine whether the measures would have been taken even without state support,” says Vanessa Liu.

The Swedish NAO considers that the inefficiency of the support is partly due to the Government’s inadequate background data prior to implementation. For example, there was no analysis of the obstacles to housing construction that the support would remedy, or the expected outcome. Nor was there any analysis of how the support would interact with other policy instruments for housing construction.

The Swedish NAO also notes that the way in which the support is designed makes it impossible to monitor how the money has been spent by the municipalities.

“The Government’s planning of the support was insufficient. The fact that the support is almost impossible to follow up also means that it is not possible to determine if the money was used for housing construction. Thus it is not possible either to report the outcome of the support as requested by the Riksdag Committee on Civil Affairs,” states Auditor General Helena Lindberg.

The audit shows that the support may have had some significance, as an increasing number of municipalities have drawn up guidelines for their housing provision, which they are already obliged to do by law.

Recommendations

In parallel to the implementation of the audit by the Swedish National Audit Office, the Riksdag decided to discontinue the support as of 2019. However, the majority of municipalities still have a tight housing market, in particular in the metropolitan regions.

If, in future, the Government considers new support, the Swedish NAO recommends therefore that the support be more adapted to the municipalities’ planning conditions. The Government should also consider directing the money precisely towards housing construction, and ensuring that the outcome of the support can be subsequently followed up.

Press contact: Olle Castelius, phone: +46 8-5171 40 04.

Presskontakt: , telefon: 08-5171 42 06.

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Updated: 06 August 2019

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