The scholarly discourse on targeting versus universalism in social protection has significantly influenced the evolution of global welfare states over the past century and a half. Recently, surging energy prices across Europe have reignited the debate over choosing between universal household support or targeted relief, mirroring a similar discussion on the trade-offs between efficiency and equity in providing renovation subsidies. This vocabulary entry delves into the advantages and disadvantages of each approach, while exploring various attempts to find middle ground between the two (e.g., ‘targeted universalism’), particularly in the context of affordable and sustainable housing.

Historic context

In the 1880s, Germany established one of the earliest forms of the modern welfare state with its Bismarckian system (Manow, 2020). It introduced social insurance programmes to address workers' issues such as healthcare, insurance, and pensions for the elderly. While revolutionary for its time, the system was modest in scope and initially limited to workers and their dependents. In the decades that followed, social welfare programmes across Western Europe expanded to cover a wider range of risks, gradually incorporating non-working populations into social protection schemes. The Great Depression catalysed the recognition of the state's crucial role in social welfare, a stance prominently advocated by economists such as Keynes. Following WWII, there was a widespread consensus on the importance of improving working-class living conditions to avert future disasters.

The Beveridge Report, authored by Sir William Beveridge (1942), played a crucial role in reshaping the British welfare state and influencing welfare policies worldwide. It proposed an expansive social security system with universal coverage in areas like health and unemployment insurance. Many of the Beveridge Report's recommendations were implemented in the UK and significantly shaped the post-war social landscape after WWII under the government of Clement Attlee (Reeves & McIvor, 2014). Although the Report appeared to favour universalism, it did incorporate means-tested elements for specific benefits, creating a nuanced approach that combined universalism with targeted support to address poverty and meet specific needs. In the latter half of the 20th century, the evolution of different welfare states led to varying housing outcomes. The UK's liberal regime shifted to a more targeted dualist rental system with an increasing focus on homeownership, in contrast to corporatist and particularly social democratic regimes with a unitary rental system that aligned more with universalism (Esping-Andersen, 1990; Kemeny, 2001).

Interestingly, housing presented a unique challenge in Beveridge's pursuit of universalism. He dedicated nine pages to the 'problem of rent', acknowledging significant geographical variations in rent levels while recognising that they were often not a matter of choice (Lund et al., 2021). Beveridge considered covering actual rent costs but realised this conflicted with his principle of flat-rate benefits. His solution was to recommend a national average rent allowance, differing only for working and pensioner households. Given the rent disparities, larger families' higher rent needs, and poor housing conditions, Beveridge's plan risked falling short of providing universal subsistence. To address this, he suggested post-war housing improvements in later publications (Beveridge, 1949, 1952), including increased supply and better quality of housing in order  to reduce rent disparities across the UK. He advocated for the creation of New Towns and incentivising voluntary housing associations, hoping that enhancing housing quality would lead to  improvements in relative affordability.

Advantages and disadvantages of approaches

Beveridge’s ‘problem of rent’ mirrors a core dilemma central to the debate on universalism and targeting. While a universal approach aims for inclusivity by covering all households, ensuring that no one is left out, the support offered in a universal system may not be as substantial as in a targeted approach. This could potentially fall short of providing adequate relief to those with the most significant needs.

The universalist approach offers numerous advantages (Thompson & Hoggett, 1996). It not only promises inclusivity but also enjoys greater public acceptance. Furthermore, its simplicity in administration streamlines implementation and reduces administrative complexities. By eliminating the need for means testing or eligibility criteria, it simplifies the delivery of benefits. However, universalism also comes with its share of drawbacks. The cost implications of providing benefits universally can be substantial, potentially straining government budgets, without necessarily providing sufficient support to those in need. Additionally, responding to crises and price shocks with universal support, often referred to as ‘helicopter money,’ can cause substantial inflationary pressure. In the context of affordable and sustainable housing, there is a particular disadvantage to this approach. Universal energy subsidies may diminish the incentive for high-income homeowners, who typically spend the most on energy, to reduce consumption or invest in energy efficiency (Lausberg & Croon, 2023). Simultaneously, low-income households in energy-inefficient dwellings may hesitate to use heating due to leakages and financial concerns (Betto et al., 2020), potentially making them ineligible for support.

In his influential essay on the ‘Political Economy of Targeting’, Amartya Sen (1998) describes the pros and cons of targeting. A major benefit is cost-effectiveness, directing resources efficiently to the most vulnerable and ensuring maximum impact for the targeted groups. However, the approach is impaired by potential exclusion errors, wherein genuinely disadvantaged households might be overlooked due to stringent eligibility criteria. Additionally, the stigma associated with being a beneficiary can lead to negative social consequences. Furthermore, the administrative complexity involved in identifying and reaching the right households is a significant hurdle, requiring comprehensive and accurate systems. This final complication is especially evident in the government's response to the energy crisis in Europe, as policymakers have cited a shortage of data, time constraints, and rigid social compensation mechanisms to explain why they could not effectively assist those who are most vulnerable (Natili & Visconti, 2023).

Finding middle ground

Universal and targeted approaches coexist in most social welfare systems (Jacques & Noël, 2021). Many European countries have implemented a universally accessible pension system, ensuring entitlement to benefits for everyone of a certain age, supplemented by targeted support for elderly individuals lacking private income. Moreover, several European countries approach housing renovation in a comparable manner, offering general subsidies to all residents while also implementing means-tested subsidies for households considered vulnerable.

Another branch of public policy emphasises ‘targeted universalism,’ focusing on designing support policies and interventions that prioritise and address the specific needs of disadvantaged households while still providing benefits to everyone (Powell et al., 2019). In other words, these policies are available to all but particularly important to some. One example would be the reduction in the cost of public transport, a service that is available to everyone but predominantly used by households with lower incomes. Other examples include childcare subsidies and job training programmes, which are particularly beneficial for low-income families struggling to access quality childcare and for disadvantaged individuals looking to improve their job prospects, respectively (Coote & Percy, 2020).

While the European Commission places a strong emphasis on targeting in its criteria for funding from the Social Climate Fund (SCF), Member States could consider strategies to implement policies that embody the principles of targeted universalism. For instance, in many Western European countries, a potential approach could involve prioritising the renovation of social housing. Given that energy poverty is prevalent among social tenants in these housing regimes, it would be logical to extend financial support or fiscal incentives to their landlords, such as tax deductibility of renovation costs or government guarantees for low-interest loans (Seebauer et al., 2019).

On the other hand, the majority of energy poor households in the Mediterranean and Eastern Europe own their homes. In this context, an effective strategy that combines targeted and universalistic elements would entail investing in ‘one-stop-shops’ that offer comprehensive renovation services (Bertoldi et al., 2021). These establishments would provide bundled services such as energy audits, renovation works, and financing. By leveraging economies of scale and specialised expertise, they can effectively reduce costs and offer affordable renovation solutions to disadvantaged groups. Although one-stop-shops are accessible to all, they can be targeted at households experiencing specific information deficits, such as those confronted with language barriers, digital illiteracy, or limited expertise within their social networks. The EU explicitly states that Member States can use the SCF for “targeted, accessible and affordable information, education, awareness and advice on cost-effective measures and investments, available support for building renovations and energy efficiency” (European Parliament, 2023, p. 16)