The fight for housing subsidies: Why Ukrainians may face a shortage of funds

The government has made changes to the process of calculating housing and communal subsidies in order to simplify the procedures for providing this social benefit to citizens.

The Cabinet of Ministers has simplified the procedure for providing subsidies for housing and communal services. This is stated in decree of November 14, 2023 (No. 1201).

“The Pension Fund of Ukraine has been given the opportunity to assign housing subsidies to citizens on a declarative basis to the household address specified in the simplified application for the appointment and provision of a housing subsidy,” Taras Melnichuk, the permanent representative of the Cabinet of Ministers in the Verkhovna Rada, wrote in his telegram channel.

Also, according to him, the resolution changed the logic of identifying the list of available housing and communal services by household address, when the comparison of the addresses of potential and actual recipients of housing subsidies will be carried out by the Pension Fund, and not by those who provide them.

Among other things, the resolution provides for the possibility of extending the period for consideration of an application for a subsidy by ten working days if facts are identified that require additional verification.

New old simplification

Any simplification of bureaucratic procedures can only be welcomed. But is this really an improvement in the provision of housing and utility subsidies to citizens? After all, the calendar winter is just around the corner, but in fact it has already arrived, and therefore the issue of subsidies is becoming of primary relevance.

The first thing that catches your eye is that subsidies will be provided on a declarative basis, which, of course, is a fairly progressive step.

“But the declarative principle is not an innovation ,” said Andriy Reva, Minister of Social Policy of Ukraine in 2016-2019, in a conversation with Apostrophe. “ This principle has been applied when calculating subsidies since 2014. ”

According to him, after the annexation of Crimea and the outbreak of hostilities in Donbass, quite a lot of people were forced to leave their homes and move to other regions of Ukraine.

“No one entered into agreements with them (on renting housing) , that is, they lost the right to a subsidy because they could not confirm their place of residence ,” said Reva. “ And then the government proposed a mechanism whereby internally displaced persons could receive a subsidy based on a declaration that they were living at a certain address. They were given a subsidy, and subsequently an inspector from the social security authorities came to their home to make sure that they were really present there. This was the declarative principle .

The former minister did not rule out that the government has now decided to extend this procedure to all citizens, but warned that this could cause great difficulties.

But there are still problems with assigning subsidies. And it doesn't look like the government regulation in question will make much of a difference.

“Previously, the declarative principle was that a subsidy was assigned according to certain standards, and then it was completely recalculated. This is not visible now ,” said another former minister of social policy, as well as Deputy Prime Minister in 2014-2019, Pavel Rozenko, in a conversation with the publication. “At the same time, the Pension Fund is allowed to continue considering applications for ten days - that is, officials simply give yourself extra time .

According to him, the transfer of functions for providing subsidies from social protection authorities to the Pension Fund from December 1, 2022 was a grave mistake. However, instead of correcting this mistake, the authorities are simply giving officials an additional ten days to resolve the issues.

“The Pension Fund is not ready to process all people’s applications on time and in full. he was burdened with benefits, social payments, and now even the provision of firewood ,” says Rosenko. – Therefore, the life of the Pension Fund turned into Armageddon. And employees are simply presented with the reality of ridiculous management decisions .

He added that now that the heating season has already begun and there will be more work to provide subsidies, some people have not yet received them for the summer months.

“One click” for pensioners

There is one more point that is not directly a novelty of the above-mentioned Cabinet resolution, but is related to simplifying the procedure for processing applications for subsidies.

We are talking about an experiment that has been carried out since the summer of this year, within the framework of which it is possible to submit simplified applications for a subsidy “in one click,” in particular through the “Diya” portal.

Again, digitalization of bureaucratic processes is certainly a progressive step. But will this help potential subsidies?

“Issuing a subsidy through Diyu is unlikely to ease the situation ,” Andrey Reva is convinced. “A subsidy is government assistance to the poorest segments of the population. In most cases these are pensioners. And they, as a rule, do not have the necessary equipment and skills to work with electronic documents. So in this case, this initiative will not find the target audience .

Thus, digitalization in the provision of subsidies is more likely to harm than help.

“It seems that this is being done deliberately - so that fewer people can receive subsidies, benefits and other types of social assistance. And thus save budget funds ,” sums up Pavel Rozenko.

And you will most likely have to save money. After all, social expenditures of the state budget now, when there is a war, are financed primarily from financial assistance from our allies. However, there is a risk that in 2024 Ukraine will not receive all foreign aid, which is planned at about $40 billion. At the very least, the provision of 10 billion dollars from the United States is in big doubt.

There are not enough subsidies for everyone

In Ukraine, for the duration of martial law, a moratorium has been introduced on increasing housing and communal services tariffs, but not all, but only for gas, heating and hot water supply. So, from June 1, 2023, electricity tariffs for the population were increased almost twice.

The government is aware that this will cause the number of subsidy recipients to increase. Back in June, Minister of Social Policy Oksana Zholnovich said that rising prices for electricity would lead to an increase in the number of subsidies by about 1 million (assuming that today about 2 million households receive subsidies, then we can say that in the near future time their number will grow to 3 million).

At the same time, the number of people in need of subsidies this winter may be even greater - after all, payments for heating will be added, which, despite the moratorium, remains the most expensive utility service for many. In addition, the size of subsidies will increase.

If the money planned in the budget for subsidies is not enough, the government plans to take it from other areas. But, as already noted, the necessary funds may simply not be available.

“From the very beginning of its work, the current government has taken a course towards reducing social programs, including housing subsidies ,” former people’s deputy and member of the Verkhovna Rada Committee on Social Policy and Labor Andrei Pavlovsky said in a commentary to Apostrophe. “ Recently the conditions for calculating subsidies were greatly tightened. As a result , the number of households receiving subsidies has decreased several times. At the end of 2019, about 7 million families received subsidies , at the moment there are just over 2 million left. Therefore, I think the government’s statements that the availability of subsidies will increase are ordinary declarations that will not be followed by real actions . ”