Chapter 13 - Pyrite Remediation Scheme.

Mr. Graham Doyle (Secretary General, Department of Housing, Local Government and Heritage) and Mr. John O'Connor (CEO, The Housing Agency) called and examined.

This is the second day of our two-day engagement with officials from the Department of Housing, Local Government and Heritage. I welcome all of our witnesses.

The matters for examination today are from the Comptroller and Auditor General's report on the accounts of the public services 2019; chapter 11 - measuring performances for Exchequer spend on social housing;chapter 12 - progress under the land aggregation scheme; and chapter 13 - the pyrite remediation scheme. To assist us in our examination of these matters, and with regard to public health guidelines, we are joined in person by Mr. Graham Doyle, Secretary General of the Department, Mr. John O'Connor, chief executive of the Housing Agency and Ms Marguerite Ryan, finance officer. We are also joined remotely by the following officials from the housing delivery division: Mr. Barry Quinlan, assistant secretary; Ms Sarah Neary, principal adviser; Mr. David Kelly, principal officer; and by Ms Clare Costello from the housing Vote section at the Department of Public Expenditure and Reform. I welcome all of our witnesses and I thank staff in the Department for the briefing material they prepared for the committee.

Witnesses are protected by absolute privilege in respect of the presentations that they make to the committee. This means that they have an absolute defence against any defamation for anything that they say at the meeting. Witnesses are expected, however, not to abuse that privilege and it is my duty as Chairman to ensure that this privilege is not abused. If statements by witnesses are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks, and it is imperative that witnesses comply with such directions. While we expect witnesses to answer questions asked by the committee clearly, frankly and concisely, because we are under time constraint in terms of health regulations, witnesses can and should expect to be treated fairly and with respect and consideration at all times in accordance with the witness protocol.

Members are reminded of the provisions of Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government, or the merits of the objectives of such policy. Members are also reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to him or her identifiable. I ask that members and witnesses remove their masks when speaking to ensure that they can be heard and that when members are leaving and taking their seats they sanitise their area.

I now invite the Comptroller and Auditor General, Mr. Seamas McCarthy, to make his opening statement.

Mr. Seamus McCarthy

I resume my opening statement at chapter 11. Departments are obliged to demonstrate that they have used funding provided by or under the authority of Dáil Éireann for the purposes intended and to good effect. This requires them to have relevant and reliable measures of their performance that are linked to identified lines of funding. The annual appropriation accounts present details of the amounts made available by the Dáil in the Estimates for each programme and how much was spent. Information about what has been achieved with that spending is more difficult to find and to understand. For this report, I wanted to look at the €2.4 billion housing programme, to assess the kind of performance information that is available in social housing delivery. The main objective of the assessment was to establish if the performance measures used and published by the Department provide a complete and accurate account of what is being achieved by the spending in a timely way.

At the outset, I want to acknowledge that monitoring and reporting on the performance of the various public bodies involved in social housing support is a complex process. Authorities in many jurisdictions are working to improve their own performance measurement systems in this area and those systems evolve over time. As part of the annual Estimates process, the Department reports on a range of key housing-related output and activity measures. The data presented indicate that the Department has achieved or substantially achieved most of the performance targets it has set. These are predominantly output targets that measure aspects of the programme-funded activity. However, we found that the measures used are not well aligned with the nature of the activity that is funded. Some substantial funding lines in the Vote have no output or activity measures associated with them. Some measures appear to relate to a number of funding lines, so it is difficult to see what contribution each spending channel is making. A number of the measures and targets relate to incremental values rather than to the full scale of support provided through the funding stream. For example, one measure relates to the number of new housing assistance payment, HAP, tenancies put in place in the year. A better measure relating to the annual spend on HAP would be the average weekly number of HAP tenancies supported in the year. We found that none of the measures focus on economy or efficiency aspects of performance. There was more focus on target outputs than on planned outcomes for households in need of support.

The report makes a number of recommendations for improvement in the Department’s performance reporting. For example, we propose that they could develop new outcome and effectiveness metrics; they could express targets in percentage terms to facilitate benchmarking; and they could examine the potential to introduce qualitative indicators. The report also highlights some performance measurement issues, with implications across all votes.

Turning to chapter 12, progress under the land aggregation scheme, LAGS, the scheme was established in 2010 to provide assistance to local authorities with land purchase loans that were maturing. The local authorities had bought the land for social and affordable housing purposes but were not in a position to go ahead with housing development. In return for LAGS funding paid from the Vote, local authorities were required to transfer the related land to a special purpose body called Housing and Sustainable Communities Ltd., known as the Housing Agency. No new applications for site transfers under the scheme were accepted after December 2013.

The position at September 2020 was that 68 of the 73 sites approved under the LAGS had been fully transferred by local authorities and registered in the ownership of the Housing Agency. For the remaining five sites, beneficial ownership had transferred to the agency but title registration had not yet been completed. In a 2018 strategic development plan, the Housing Agency categorised 36 of the LAGS sites as ready for immediate development. Those sites were assessed as having the potential to accommodate 3,370 housing units. At the time the report was signed off, 98 social housing units had been completed on the sites and a further 792 units were at various stages of development.

The 2018 development plan stated that the remaining 37 sites were not suitable for immediate development for housing.

Chapter 13 deals with the pyrite remediation scheme. As members may know, pyrite is a common mineral found in certain types of rock that can swell and lead to structural problems in buildings. Towards the end of the development boom over a decade ago, pyrite-related damage emerged as a problem for homeowners. The majority of the identified cases were located in two local authority areas: Fingal and Meath. In 2013, the Pyrite Resolution Board was established to direct and oversee the implementation of a pyrite remediation scheme. The Housing Agency is responsible for the administration of the scheme, on behalf of the board.

Initial estimates were that over 10,000 homes might be in need of expensive repairs. The outturn has been significantly less. Up to the end of 2019, 2,110 applications had been approved for inclusion in the scheme and a further 301 were at the application or assessment stage. By the end of 2019, remediation works were completed on 1,890 properties and the scheme had cost the Exchequer nearly €126 million. Costs per home remediated have averaged around €65,000. Future projections up to 2023 indicate the scheme will cost approximately €210 million and will remediate approximately 3,140 dwellings.

Under the Act, the board may recover from any party with a liability, and the capacity to pay, all or part of the costs of remediating damaged dwellings. Costs of the scheme recouped from third parties to the end of 2019 amounted to just under €1.8 million, representing 1.4% of total costs.

Support to the value of a further €1.8 million had been received from HomeBond, which had provided structural defect guarantees or warranties for an estimated 74% of the eligible scheme applications. This support was in the form of technical and project management services.

The board estimated that by the end of 2019, it had spent just over €887,000 on remediating non-pyrite related defects that it could potentially claim from HomeBond. Just 6% of that amount had been recovered from the company. The report recommended that the board and the Housing Agency put in place a more robust process to quantify and recover the cost of remediating such non-pyrite related defects.

I thank the Comptroller and Auditor General. The Secretary General delivered his comprehensive opening statement yesterday. I understand that today he will deliver some preliminary remarks about the matters under discussion, which will be followed by an introduction by Mr. John O'Connor, the chief executive of the Housing Agency. I call Mr. Doyle.

Mr. Graham Doyle

I thank the Chairman and the members of the committee for the engagement on the wider Vote yesterday evening. We will come back on any items that were identified during the course of that engagement.

I am pleased to be here as Accounting Officer to assist the committee in its examination of the three areas covered in chapters 11 to 13, inclusive, of the Comptroller and Auditor General’s report, that is: performance measurement for Exchequer funding on social housing; progress under the land aggregation scheme; and the pyrite remediation scheme. We have Mr. John O’Connor, chief executive of the Housing Agency, with us. Given the role the agency plays in the implementation of both the land aggregation scheme and the pyrite remediation scheme we thought it would be very useful to have Mr. O'Connor give a presentation to the committee. I am joined by a number of experts to assist with that on these three particular areas. The Chairman has already introduced them so it might be useful if Mr. O'Connor took us through his presentation now.

The presentation was circulated to members last Friday. Do the members want a quick rerun on it?

Mr. Graham Doyle

Mr. O'Connor has said it will take about four or five minutes.

We will proceed with that.

Mr. John O'Connor

I thank the Chairman. In the four minutes I will give an overview of the pyrite remediation scheme and the land aggregation scheme.

I will first give a quick overview of the pyrite remediation scheme. Pyrite is a mineral that is found in rock and it affects the hard core. If we take the floor of this committee room, it would be the stone underneath the floor. It expands and starts pushing up the floor, which causes damage to the floor and begins to cause cracks in the walls. The damage can be very significant. It causes many cracks in the walls of houses of a structural nature and the floors start to be pushed up, which is very distressing for homeowners.

The pyrite remediation scheme applies to certain parts where pyritic heave is being caused. The majority of cases where we have remediated houses have been in Fingal County Council and Meath. They account for 90% of all the houses remediated.

To be eligible for one's house to be remediated, it has to be damaged to a certain level. It is called a damage condition rating of 2 and it has to be as a result of pyritic heave. The work we have to carry out in a house is very intrusive. On the screen are some pictures of that. We have to dig out the entire ground floor slab, take out all the stone underneath the ground floor slab, put the stone back in and the floor back down. We then finish the house in that we put back the floor finishes and paint the walls so the ground floor of the house is handed back to homeowners in show house condition. To date, we have remediated 2,029 homes and handed them back to homeowners. That is an overview of the pyrite remediation scheme.

I will give a quick overview of the land aggregation scheme. Arrangements were put in place to clear the loans for 73 sites and they have been transferred to the Housing Agency. There are 247 ha in total. That is 600 acres around the country. The diagram shows where the sites are located across the country. As I said, 73 sites in all were transferred and every number of years we do a strategic plan in respect of those sites, in conjunction with the Department of Housing, Local Government and Heritage, in terms of plans to develop those sites.

I will give the members some examples of what has been done with the sites. The first one is in Portlaoise town. It is a development of 33 houses provided for social housing by Laois County Council. On the slide is another example of a social housing development. It is the largest social housing development in Galway city, on the Ballymoneen Road, which is being done. Phase 1 is complete and phase 2 is under construction. Another example is in Craddockstown, Naas, which is part of a wider bundle under a public private partnership, PPP, project undertaken by the National Development Finance Agency, in conjunction with local authorities. All of those are for social housing. Other parts of that site we will use for other purposes. The slide shows another one in Stepaside, Dublin. It is a development of 155 homes done in conjunction with Dún Laoghaire-Rathdown County Council, Respond and two housing associations. There will be 105 for social housing and 50 for cost rental. That development will be completed next year.

Some sites are more appropriate for mixed use. The site on the screen is in Fermoy where a school has been constructed on half of the site. We have transferred that to the Department of Education. On the other part of the site housing has been completed by the Respond housing association, again for social housing.

The last example is the Devoy lands in Naas, which are beside the Kildare County Council offices. Part of that land is being used for an enterprise building for start-up businesses.

This is for start-up businesses being built by Kildare County Council. Part of the site will be used for housing development. The Housing Agency is working with the Land Development Agency to develop that for over 200 houses and apartments. They will all be either for social or affordable housing.

At a very high level, in terms of any lands under the land aggregation scheme to date the plans are to use it for public purposes for social housing, affordable housing and other public purposes. In terms of the remit, everything has to be sanctioned by the Minister for Housing, Local Government and Heritage. The focus has been on using it for social housing, affordable housing and for all our public uses. That is a very quick overview.

I thank Mr. O'Connor for the useful information he provided on the land aggregation scheme. Pyrite was a major issue during the 31st Dáil and many of us were scratching our heads over how it might be resolved. It is good to see that level of progress on it for the people caught up in that unfortunate situation.

The lead speaker is Deputy McAuliffe, who will have 15 minutes, followed by Deputy Colm Burke with ten minutes and five minutes for everyone else. Due to the time restrictions, I will be keeping people to the time allowed and will allow people in for a second round if we move fairly efficiently through the meeting. To give the committee the best chance to deal with the issues in hand, I ask the witnesses to keep their answers concise because we have a two-hour limit.

I welcome our guests, Mr. Doyle, Mr. O'Connor and Ms Ryan in the room, and all those who are joining us via Teams. I hope to keep my questions short and hope the witnesses can keep their responses short so that we can cover as much territory as possible. I hope to cover Chapters 11, measuring performance for Exchequer spending on social housing; Chapter 12, progress under the land aggregation scheme; and Chapter 13, the pyrite remediation scheme, which both witnesses covered in their opening remarks.

I start with measuring performance. The Comptroller and Auditor General made a very clear assessment in believing that the measurements were not well aligned with the nature and activity of the funding that was being spent. A different way of saying that is that the targets might have been too easily achieved. The value for money and the overall impact of the spending was not taken into account. How has the Department responded to that? What relevant targets does it intend to include in future accounts?

Mr. Graham Doyle

I thank the Deputy for that. I am not quite sure that is what the Comptroller and Auditor General said in terms of the targets being easy to achieve. I know I am new to the Department, but I know a huge amount of effort has gone into achieving targets and, obviously, more has to be done given the nature of the situation around housing - certainly the issue on aligning the targets that are published with the actual spend categories, as the Deputy says.

I know people say this, but the chapter is genuinely useful to us. I am a chartered accountant by profession. I came into the Civil Service a number of years ago into another Department. I am very focused on the need for good performance indicators and that what gets done gets measured, and the importance of numbers as we look at what is now a really considerable spend. The Comptroller and Auditor General pointed out in his report that on social housing from, I think 2016 to 2019, the spend is about two and a half times greater. It is very important that we measure appropriately.

The chapter is largely focused on the REV, which is published each year. We have gone from about nine performance indicators in 2016 to 19 now. We are now reviewing what is there and how we can add to it. It is coming quite quickly, but in the REV that is coming out shortly we will probably have a couple of additional indicators in taking account of the report. Over the course of this year, we will look at that in greater detail with a view to the next REV having a more comprehensive set.

While the indicators measure the output, in some cases there was a failure to understand the economic element and the value-for-money element. Let me take two examples. A housing assistance payment, HAP, tenancy has an indicator. Many of us in the room would have dealt with a family who might have become homeless, availed of emergency accommodation, exited emergency accommodation, taken up a HAP tenancy and after 12 months or another period found themselves back in emergency accommodation and back in a second HAP tenancy. That is very clearly bad value for money, albeit market driven. Many of us would like to see greater focus on value for money and less on counting what is effectively two exits from homelessness.

Mr. Graham Doyle

I think the HAP example is a particularly good one. When we talk about the number of additional tenancies that would be supported in a particular year when the budget comes around or whatever, we lose sight of the fact, and do not necessarily automatically point out, that this chunk of money is actually covering this number of tenancies. That is a very valid point.

In his initial intervention, the Deputy talked about the variety of schemes. In coming to the Department, I have tried to get my head around all the different ways a house can be delivered and all the different funding mechanisms. It is quite a challenge. They are all tools in the box, as we talked about yesterday. There are multiple funding streams and we have to report on the funding streams, but tying that to the outputs is a challenge and is a diifficult process. I know the Comptroller and Auditor General certainly accepted the complexity of it. We have to try to crack that and align those things better. Given my own background, it is particularly important that we do that given the amount by which we have ramped up spending.

I do not want to delve too deeply into the policy area. In highlighting those issues, we are highlighting that the policies were revenue intensive and, in many ways, they were short-term because of the immediate shortage. Their value for money and efficiency, and the more holistic aspect in terms of being more than just a home were not considered by the policy. The accounting is really just a reflection of what was actually happening in the policy.

Mr. Graham Doyle

Some of the measures were adopted in the sense of the emergency that existed. We did a little bit of talking yesterday evening on that in terms of what was available to the State, what kind of armoury was available to the State as the housing problem emerged and the speed of it. Certainly, the answer has to be much more build and direct delivery. We need to be showing the balance. We talked yesterday about needing to reduce the HAP numbers over time as delivery improves. Delivery has significantly improved over the last number of years. It still has a long way to go and we have to focus on that so the measures we use and the way we report it has to acknowledge that, exactly as the Deputy says.

I am sure many people in the political space would agree that HAP is a total waste of taxpayers' money over a long period. Our failure to wean ourselves off HAP over the past ten or more years has been a failure of policy.

Mr. Doyle spoke about the supply of housing. I ask about the land aggregation and Mr. O'Connor might like to answer some of these questions. Let us cast our minds back to the financial crisis because that was the context of it. Somebody described this scheme to me as NAMA for local authorities. One would imagine some drop in value as a result of that context. A total of 73 sites were identified, with 72 of them purchased for a total of €125 million. In 2018 they were valued at €55 million which represents a halving of value. There are bigger questions on land values and so on at the time.

The bigger issue for me is that it was a scheme that was intended to deliver just under 3,500 units and we have only delivered 98.

That is a major issue. It appears that more than half the sites transferred from local authorities to the land aggregation scheme were not suitable for housing. One would have to ask why they were purchased in the first place if they are not suitable.

Mr. John O'Connor

On the lands that were bought, the loans were cleared. The value has gone down. That would be the same for nearly all lands bought during that period. On using the lands, it takes time to come up with plans, to develop them. Our first focus was on getting the sites, having them transferred and putting plans in place to develop them. The smaller sites have been used first. At the end of 2019, there were approximately 100. That has increased to well over 200. Very quickly next year up to 900 will be delivered, so delivery in respect of those sites is accelerating.

Even with 900, that is still less than one third of the total potential of those sites.

Mr. John O'Connor

Several sites are very large. We need to get them properly planned to get a proper mix of housing and the right types of housing. It is not just about the mix, but also about having one-, two- or three-bedroom homes, and we need to make sure they are developed properly. The larger sites in particular take a good number of years to be taken through. The one thing we do not want to do is underutilise sites that we paid a lot of money for. They are coming through and the Deputy will see a very rapid acceleration in the coming years.

The point about the mix echoes a point I previously raised regarding the range of policy measures. As a former local authority member, I have some experience of how it can be really difficult delivering a mix on big sites. Can Mr. O'Connor answer the criticism of why it has not proved possible to deliver on so many of the sites transferred to the Housing Agency? I think 37 were categorised as unlikely to be suitable for near-term development. I realise I am asking Mr. O'Connor to second-guess the local authorities' decision but why were the latter purchasing lands that had huge debts attaching to them, which the State was then forced to take over under the land aggregation scheme, and that are not deemed suitable? Will we see some of those lands handed back the lands to local authorities for parks or other purposes?

Mr. John O'Connor

Some 36 sites were identified for immediate development. There are plans in respect of 32 of those, which have either been built on or with which we are progressing. Another group of sites from those secondary sites is being developed. We went out to the local authorities and to approved housing bodies, in terms of the suitability of developing those sites. Ultimately, a small number may not be suitable for housing and other community uses may be more suitable.

Is Mr. O'Connor saying that the figure of 37 sites, with 25 having low demand, is not correct?

Mr. John O'Connor

No, the Comptroller and Auditor General's report provides a very good overview of the land aggregation scheme. The 36 sites were identified for immediate development. What we did with the other sites was that we went to the local authorities and approved housing bodies and asked if any of the sites were suitable for the delivery of social or affordable housing? Both approved housing bodies and local authorities have identified several sites as being suitable. There are other sites that will take longer.

Let us focus on those other sites, because I have asked that question twice. I appreciate that the Housing Agency is dealing with issues decided outside its remit. Is it the case that there were sites bought by a local authority, because it wished to develop them, which had the potential to deliver 50% of the total estimate, that the Housing Agency asked was it interested and the local authorities said there was no demand? There is a massive issue where sites were purchased for housing, we are asking if local authorities wish to develop them and they are saying "No".

Mr. John O'Connor

Let us look at an example. In County Cork, there is a small piece of land in a village called Meelin where Cork County Council thought it had a need for a certain amount of social housing and purchased the site. Having assessed it some years later, it found that it did not have the need and the site has been sold and transferred for community use.

How can any local authority suggest that it either has low demand or no need in the midst of the current housing crisis? It seems an amazing assessment.

Mr. Graham Doyle

It is less a sense that these sites will not be developed but rather that the primary need is elsewhere. It is a completely valid and understandable question but I do not think it is necessarily as stark that these sites will not be developed on. They will be developed over time through a mix of the various delivery mechanisms whether approved housing bodies or local authorities.

The idea of low demand strikes me as a complete lack of ambition by many local authorities to solve the housing crisis. If it is not possible to do it in this decade when numbers were so difficult and if it was not possible to do it in the in the past decade for the same reason, I cannot imagine a time when they would be ambitious. I accept that the authority is effectively dealing with the outcomes of those decisions. I thank the witnesses for their time with us today.

Mr. Graham Doyle

Many of these sites involve quite small numbers. When it comes to bang for buck or focus on a development, people are going for the ones that deliver more units.

I wish to go through some of the sites that were purchased. In Goleen in west Cork, a lovely part of the country, €393,000 was paid for 0.82 ha. That is phenomenal money for west Cork. The second is Dripsey, where I come from myself, where over €500,000 was paid for 1.5 acres, which now has a value of €47,500. The third that really sticks out in my mind is the one for Sligo where €11 million was paid for 13 acres of land, the value of which is now estimated at €420,000. It sounds phenomenal that that kind of money was paid out without a clear plan for a reasonable period. This was before 2008, so more than 12 years have passed and none of that land has been used. How do we make local authorities accountable in that situation?

Mr. Graham Doyle

The whole country feels frustration about some of the decisions that were made at the time of the boom. It is very hard to rationalise them today when one looks at the types of numbers quoted by the Deputy. This particular scheme was to partially deal with the indebtedness in which some local authorities found themselves, to enable them to get on with their other important work. A range of controls is now in place to ensure that we do not do that again, such as controls on local authority borrowing, how sanction is delivered, and particularly around the strategic planning and area development plans within local authorities, in terms of where there will be housing and so on.

Eleven million euro for 13 acres is almost €1 million per acre.

Mr. Graham Doyle

I am certainly not going to try to justify that this morning.

Even close to Cork city, which is a fairly big urban area, we were not paying €1 million an acre. I am not taking from Sligo but it seems a phenomenal amount of money.

Mr. Graham Doyle

The figures the Deputy mentions were very high at that time and there is no way somebody could try to defend that today.

Mr. John O'Connor

If I can come in on that, some of this goes back to what was identified for Sligo in terms of the national spatial strategy. There are two parts in terms of the lands. There is Ballinode and Lisnalurg. There were significant plans for large developments on the Ballinode lands, where the larger amount was paid. There was considered to be a big demand at the time the land was purchased by Sligo County Council.

The sum of €1 million an acre was a lot of money at that time. That kind of money was not being paid for land in bigger urban centres like Limerick, Cork and Galway.

Mr. John O'Connor

In hindsight, it seems a very high price to have paid for the land but it was in the context of national plans concerning the development of Sligo.

Regarding that, I will go back to what my colleague referred to earlier, that is, the timeframe involved. In particular over the past four years major efforts have been made to build more local authority houses. The timeframe from when the local authority decides to build to getting the building completed is running now at nearly four years. Can we do something to try to change the process within the local authority? I refer to the time required from design, getting the project out to tender, getting the tenders in for the building and getting it completed. Surely the Department must have looked at a better way of delivering in a faster turnaround time. All of this land is pre-2008, yet in real terms a very small proportion of it has been built on.

Mr. Graham Doyle

There are two elements to that. There is the scheme itself and there is probably a slightly broader question. My colleague, Ms Sarah Neary, who is in the other room, has done a huge amount of work on the delivery process, so I might just ask her to come in if she can.

Ms Sarah Neary

Over the past four years we have done a huge amount in order to streamline the approval process for local authorities bringing forward building projects. We have worked on a 59-week target programme from conception to starting on site. That is a little over a year from concept to signing contracts and getting on site. That compares very favourably with the private sector. A report done by the Royal Institute of the Architects of Ireland, RIAI, in 2017 shows that, on average, a housing project would take up to three years from start to completion. Since we worked with local authorities on that at the back end of 2017 and implemented it in 2018 we have seen good results in terms of meeting the 59-week programme and in many cases beating it.

One of the very successful ways of beating it has been to use design and build contracts. We have supported local authorities in developing frameworks for that, which reduce the procurement period for the contract. Design and build also shifts the detailed design, post-planning, onto the contractor rather than the local authority. We have seen the four Dublin local authorities using it, and a number of other local authorities including Wicklow and Cork are in the process of adopting it now. The pre-construction programme is reduced. In one case we have seen a project go from conception to starting on site in 43 weeks and we have seen very good results in terms of construction on site with 30-unit and 40-unit projects being delivered within about a year. That is as good as any private sector delivery, and it beats it in many cases.

Where does an estimate of the cost of building come in? When the tenders come in there is quite a big variation. There is a reluctance by the Department to respond in a timely manner. I have come across that on a number of occasions where there is an estimate of what the cost will be and then when the tender comes in it is way above the estimated cost. It appears that there is quite a delay in the process then to try and make a decision on it.

Ms Sarah Neary

I would be very happy to look at specific projects but, in general, once the tendering process is over, the local authorities submit a tender report. The whole concept is to have the designs to a point where one can do an accurate estimate before tendering and then if something is way off, following the tendering process, it is worth looking to see where those problems are. I would say that is more the exception rather than the rule. If there are specific projects the Deputy wants to share with us, we can talk to him about them.

I thank Ms Neary. I wish to go back to the sites which have now gone down in value. One of the sites in my area, in Dripsey, which is 1.5 acres, is now valued at €47,500. I know the area and I think that is an under-valuation. What has been done with local authorities to try to get these sites moving again?

Mr. John O'Connor

To be clear, the areas are shown in hectares.

That is grand.

Mr. John O'Connor

So, in terms of the size, one could multiply those figures by 2.5. Going back to Sligo, the price paid per acre was significantly less. It is more of the order of €400,000 per acre. The areas shown are in hectares so that might be confusing. All those pieces are a bigger size.

What has been done by the local authorities with the lands, for which we now have a very low valuation, that were bought originally for housing? I know the area very well. The site to which I referred in Dripsey, which now only has a valuation of €47,500, is suitable for development. Why are these areas not being prioritised, as regards getting local authorities to work with the Department to try to deal with the situation?

Mr. John O'Connor

On the very large amount of land in Cork County Council, including the Dripsey site, we engage with the local authorities regularly on this land. We go through the sites it is developing and then we ask about the ones for which there are not plans at the moment. We ask the council if there is potential for the sites to be developed. It is a question of when the local authority considers it suitable for development.

The Deputy is over time.

Could I ask one question?

Very briefly.

Is the delay in getting sites developed due to a lack of services from Irish Water on some of these sites?

Mr. John O'Connor

In terms of the availability, it can be an issue. When we talk about Irish Water, it may be to do with a long-term plan for treatment works not just water supply. It is to do with how investment is being focused or what the priorities are.

I will touch on a few points regarding value for money with the Department. There was a reference in the opening statement to the fact that part of the reason for the large current expenditure was due to EU fiscal rules.

Given recent developments and unprecedented low interest rates, has the Department advised the Government to borrow to rebalance social housing policy away from current expenditure and towards capital expenditure?

Mr. Graham Doyle

The comments in the opening statement reflected the situation at that point and the mix of capital and current expenditure at that time. Since then the State has been in a position to increase borrowing for capital expenditure. The mix has changed in the last several years as the delivery programme has progressed.

Does the Department advise the Government on this?

Mr. Graham Doyle

Each year we negotiate with the Minister for Public Expenditure and Reform through the Estimates process. The source of the money he gives us is not our remit.

Has he acted on that to any great extent? We do not really see that in the figures.

Mr. Graham Doyle

A lot of money has been allocated in the last several years. As the Comptroller and Auditor General pointed out-----

I am talking about capital expenditure, not current expenditure.

Mr. Graham Doyle

Ms Marguerite Ryan will have the figures closer to hand.

Ms Marguerite Ryan

The last five years have seen a shift from 30% capital spending and 70% current spending to 70% capital spending and 30% current spending. There has been a significant increase. Yesterday the Deputy referred to the increase under subhead A3, the local authority building programme. In 2019, more than €800 million was spent on building activity. As we intensify the output of units that balance will continue to shift. Our colleagues in the Department of Public Expenditure and Reform work very closely with us on this Vote to ensure that the money we use is primarily focused on the objectives of the programme for Government, which are about maximising building.

More than €1.4 billion has been allocated to current expenditure for next year. Am I correct in saying that this money is for the housing assistance payment, HAP, the rental accommodation scheme, RAS, and leasing?

Ms Marguerite Ryan

That figure includes the HAP, the RAS and leasing. It includes new tenancies and ongoing support for the existing households. The leasing programme also includes the ongoing current costs of the buildings delivered by approved housing bodies under the capital advance leasing facility, CALF.

I wish to ask about leasing. I am talking about lease-to-lease arrangements, not lease-to-buy. It is the most expensive approach by far. There is nothing to show for it in the end. It is certainly not value for money. How much of that budget is spent on lease-to-lease arrangements, as opposed to lease-to-buy arrangements? What happens to the families when the lease expires?

Ms Marguerite Ryan

I do not have the specific amount spent on leasing.

I asked for figures and percentages on that yesterday and they were not forthcoming.

Ms Marguerite Ryan

I will have the figures in a moment. While I am assembling them I will answer the Deputy's question about the end of the lease. As I said yesterday, most of the leases are lease-to-lease arrangements. They will not remain in the ownership of the State at the end of the term. The tenants are in allocated dwellings.

Who owns the leases?

Ms Marguerite Ryan

Yesterday the terms "lease-to-buy" and "lease-to-own" were used. At the end of the term the property reverts to the owner. It does not belong to the State.

Who holds it in most cases?

Ms Marguerite Ryan

I am not aware of other lease-to-buy arrangements, but I will check.

There was some confusion about this yesterday. Am I correct in saying that the majority of leases are lease-to-lease arrangements? In other words, they do not revert to the State after 25 years. Very well.

Ms Marguerite Ryan

These are allocated dwellings. The responsibility to continue housing support for that tenant therefore rests with the local authority. The local authorities will put plans in place to accommodate those tenants. We do not know what the objective of the owners of the property will be at the end of the lease. They may seek to sell the properties. There may be opportunities for the local authorities to buy them in that case.

Generally speaking, when a lease-to-lease arrangement expires after a long period the family is back where they started. They have no guaranteed place to go. I could cite numerous incidents proving this. They are certainly not housed. The State has paid the lease for 25 years and has nothing to show for it. The family that was in the property has nothing to show for it. The cycle continues. This is a waste of public money. Can Ms Ryan find out the figure for lease-to-lease arrangements?

This is astounding. If the money given to private landlords and developers in the last decade was spent elsewhere we could have had the capacity to build tens of thousands of permanent public homes. The State would have housing stock to show for that. Despite this the policy continues. Looking at the figures for next year, it seems it will continue indefinitely. Given the amount of money that has been spent and what we could have had, unless one has rocks in one's head the only conclusion one can come to is that Rebuilding Ireland has failed, particularly where value for money is concerned.

Mr. Graham Doyle

We spoke yesterday about the need to use all the tools in the box to put roofs over people's heads. We can take the ideal position, and I know there are delivery mechanisms that are preferred-----

That is the point. Lease-to-lease arrangements are not delivering. They deliver housing temporarily, but the family and the State both get nothing at the end. I await the figures for lease-to-lease arrangements.

Mr. Graham Doyle

It delivers a solution over a 25-year period. It is part of the armoury of tools which we use to house people. A 25-year period is adequate time for the relevant local authority to put a plan in place to cater for the family at the end of that period.

It is a ludicrous waste of public money.

Mr. Graham Doyle

Absolutely not.

I will allow the Deputy to comment again. Ms Ryan is looking for the figures. Perhaps she could hold onto them. We should have a second session today.

I would like to have them now, because I have another meeting.

Ms Ryan can have them before the end of the meeting. I have to be fair to the other Deputies.

Ms Marguerite Ryan

According to the Estimate, €190 million will be spent on leasing in 2020. That includes all the existing tenancies, not just new tenancies this year.

Is that the figure for lease-to-lease arrangements?

Ms Marguerite Ryan

No, it is for the-----

I asked for the cost of lease-to-lease arrangements.

Ms Marguerite Ryan

My apologies. That figure is the total cost of the social housing current expenditure programme. I will get the team to extract the portion of that spent solely on leasing and I will have it shortly.

I would like the figure for last year, the expected figure for this year and the figure to date.

Mr. Graham Doyle

We will be assembling data in response to the questions on that topic asked by the Chair yesterday. We will include this information as part of that response.

I want to return to the pyrite remediation scheme. The Comptroller and Auditor General has estimated that the total cost of remediation will be €210 million by 2023. What do we expect to recoup from the various parties involved, either as a percentage or an absolute sum?

Mr. John O'Connor

We will probably recoup about €7 million.

That is less than 1%.

Mr. John O'Connor

A sum of €7 million would be more than 1%, but-----

Of €210 million?

Mr. John O'Connor

Yes. The pyrite remediation scheme is mainly aimed at households that do not have another avenue for recovering money.

Other moneys have been recovered outside the scheme in terms of remediation.

I believe we have had this conversation during the programme for Government. To my mind, over the past decade there has been a real and noticeable relaxation of building regulations. I have particular concerns, as Mr. O'Connor well knows, about the recent decisions on fire prevention in build-to-rent schemes, for example.

We take a risk-based approach to certification in the construction industry, which is valid in its own right, I suppose. It is, however, a model of certification which is based on the UK system, SIBC certification and all those kinds of things. It relies a lot on information from private providers. I assume the Department of Housing, Local Government and Heritage has been following the Grenfell reports and that a manufacturer there has actively misled a building control body. I am not suggesting that is what happened with pyrite, but will Mr O'Connor outline the recourse of the Department in those situations?

Mr. John O'Connor

I will bring Ms Neary in again on the standards question as she is an expert in that area.

Ms Sarah Neary

On the building regulations, pyrite is an example of the defects that occurred during the first decade of the 20th century and only really came to light towards the end of that period. It is a dreadful situation for people to find themselves in having bought, at that time, very expensive houses only to find there was a defect with them. In response to that, a group was set up early in the following decade to identify what the problems were with the system, and-----

Can I stop Ms Neary there? I have very limited time. We are all aware of the pyrite issue, but my question is on what our recourse is when the building control body has been misled by a certification provided by a private manufacturer. Has the Department ever pursued a case against a manufacturer? How often does the Department independently certify or test products?

Ms Sarah Neary

It is necessary to be a contracting party to be able to take a legal action. Within the pyrite remediation scheme, the law provided for the board to be able to take legal actions against developers or builders on behalf of the homeowners. There was a legal provision to do that and it-----

It has no active role in ensuring the certification process.

Ms Sarah Neary

-----has accumulated in or around half a million euro to date. I know there was a significant case this year that brought in another €2.5 million, so the State has been successful in that regard.

My time is about to run out. When it comes to the Safe as Houses Oireachtas report, has the Department taken on board that it would set up a new building standards and consumer protection agency which would undertake certification, particularly on social housing, and that would bar from tenders contractors with a record of breaching building regulations?

Ms Sarah Neary

It is in the programme for Government to investigate the establishment of an independent regulator for-----

Yes, I am aware.

Ms Sarah Neary

That will be pursued.

Has the Department begun work on that?

Ms Sarah Neary

Yes, we have.

What stage is that work at?

Ms Sarah Neary

Much of that work is happening in the national building control office embedded in Dublin City Council, and that is an administrative basis for a model for that.

When can we expect to see the fruits of that?

Ms Sarah Neary

I cannot say at this point.

Is there any schedule for completion?

Ms Sarah Neary

Not at the moment.

I would like some information about when we can see that.

Perhaps Ms Neary will come back to the Deputy on that because it is an important matter.

I thank the witnesses for coming in today. I will focus initially on the performance-related piece of work by the Comptroller and Auditor General in terms of delivering target setting. We all took the view that there should be strong transparency on which local authorities are performing well, and that they should be recognised for performing well. Equally, it is not clear to me exactly how that is measured and assessed or what constitutes performing well in terms of build and what does not. Will the witnesses talk me through how the Department assesses that? How does the Department deal with local authorities that are perceived not to be performing well on their build target?

Mr. Graham Doyle

There are a number of ways, I suppose. There are a number of layers of assessment around the various programmes, for example, the Comptroller and Auditor General's audit, the work of other groupings and the targets we put out. I know the Comptroller and Auditor General's report focused very much on what goes into the Revised Estimates Volume each year. There are a wide range of statistics and pieces of information, and I have folders full of them here, on the various elements of delivery among various programmes that are in place.

I said earlier that my background is as a chartered accountant, so I am keen that we have strong performance indicators which allow us to measure. Some of the points in the Comptroller and Auditor General's report are well made. We have significantly increased the number of indicators in the Revised Estimates Volume itself. We have gone from approximately nine indicators to 19 over recent years. We will add some more, a small number, because the timeframe is tight for the upcoming Revised Estimates Volume. Over the course of this year, we will work on improving the measures and linking them, most importantly to the spend, although as the Comptroller and Auditor General has acknowledged, that is complex.

It is complex, and it is more multifaceted than that. Mr. Doyle has come into the Department, however, as a new Secretary General and has seen the work that has been done and the efforts to re-equip local authorities to build, in addition to the partnership arrangements they have for building. We have reams of briefing materials, which is helpful to a point, but if there is too much, it is almost unhelpful. Therefore, let us talk straight, as it were. What proportion of local authorities does Mr. Doyle think are delivering, or delivered as expected, in 2019 and might be expected, notwithstanding the difficulties of Covid-19, to deliver in 2020?

Mr. Graham Doyle

There is a particular challenge this year around the delivery and meeting of targets in terms of Covid-19, but delivery has been coming through. Undoubtedly, some local authorities have delivered more and some have delivered less.

Mr. Graham Doyle

In terms of proportion, I have been around this such a short period now, that it is a hard thing to answer, but I certainly have a sense that many are delivering well. There are some that we need to work with more closely.

Mr. Doyle has been there for a reasonable period as the Accounting Officer and has exceptional public service experience before that. He is well placed, therefore, and as he said, he is well placed as a chartered accountant to perform that sort of analytical task. Is it his view that the same local authorities are performing well and the same ones are not, or does he see it as a variable thing in his analysis to date?

Mr. Graham Doyle

It is probably a variable thing. When a scheme is being launched on a particular day and somebody is cutting a ribbon on it, it is a moment where suddenly the local authority delivering that has done tremendously well. With any of these projects, we are talking about the delivery of infrastructure. I come from the transport side. The delivery of infrastructure does not happen overnight; it happens over a period. It is largely the same in housing.

I only have a minute left. I appreciate what Mr. Doyle has said. There are, therefore, different targets the Department sets along the different elements of it. It is capable of being assessed, not just when a ribbon is being cut but at various stages along the path. How does the Department deal with local authorities that are not performing well enough?

Mr. Graham Doyle

We now have the housing delivery co-ordination office, which is working closely with the local authorities around the delivery space, the individual targets and the setting of those. That is already making a difference from what I have seen so far, and I believe it will make a greater difference over time.

I welcome the speakers again. I will go back to Deputy Burke's point about the Sligo site. What part does the Department play in purchasing a site of that value pre-purchase?

Mr. Graham Doyle

Ms Ryan might like to come in at this point.

Ms Marguerite Ryan

The local authority can make the decision on a purchase when using its own resources. If it is looking for funding or sanction to borrow, it must come to the Department for pre-approval of that borrowing. That sanction goes through a process where it is checked by the relevant teams. It is run by both the housing and planning teams in the Department to assess whether the application is consistent with what is required for that area and the strategic priorities for that borrowing.

From what I understand, Mr. O'Connor is saying that that site now may not be developed for housing.

Mr. John O'Connor

There are two sites in Sligo, namely, Ballinode and Lisnalurg.

I appreciate that but-----

Mr. John O'Connor

To correct the record, the amount paid by Sligo County Council for the Ballinode site was €250,000 per acre, not €1,000,000. Some developments can be done on the Ballinode site in the nearer term. It is closer to Sligo town.

When was the site purchased?

Mr. Graham Doyle

It was March 2008, which is going back a very long time.

That was when €11 million was a serious amount of money, as was €250,000 per acre. How have we gotten to a stage where that kind of money has been invested and a site has not been developed? From what I am hearing from the witnesses, it is as if the need is not there.

Mr. John O'Connor

There is no large, immediate need. Sligo County Council still wants to develop the area in the longer term and it is still zoned for housing.

Ultimately, the Exchequer has paid the price for this site. It was taken over. To refer back to what Deputy O'Rourke said, are there no repercussions for that type of scenario?

Mr. Graham Doyle

Going back to what the Deputy said-----

I acknowledge that Mr. Doyle cannot justify it as he was not there. It is not justifiable, but surely there should be more intervention. It was the council's money then and it is now the public coffers. I appreciate Ms Ryan's point that the Department does not get involved if it is the authority's money but surely if we have ended up in a scenario where it is now coming from the public purse, there must be a change in policy.

Mr. Seamus McCarthy

These sites were all purchased with borrowing from the Housing Finance Agency.

In other words, there was intervention.

Mr. Seamus McCarthy

Effectively, they were bought in anticipation of development. At the end of a period of about five years, they matured for payment. The debt that was outstanding on this site had to be paid and that was done by accessing the LAG scheme. It would have had to have approval initially.

There would have been intervention. The mind boggles as to how we have ended up in this scenario. Has something changed significantly to prevent this happening again?

Ms Marguerite Ryan

If we take a step back to that time, local authorities more generally would have had other strategic plans in place. These lands may have required other activities to occur before they got to that point. The authority could not have anticipated the lack of development around the site. Some of those lands-----

I know that but we have county development plans that take hours of people's time to develop. That does not add up. What is in place now to prevent this?

Ms Marguerite Ryan

The sanction requests that come in through the local government finance team are now checked against planning and housing teams before that borrowing is sanctioned. There are also limits-----

I have grave concerns about transparency on these issues. In Wexford, I hear the intimation from people that a bigger price was paid because of who owned a site and this, that and the other. We need to look at this in order that those allegations do not arise, from a public purse perspective. What has happened makes no sense.

I will move on because I have limited time. As regards HomeBond and pyrite, can someone please explain how we have only been reimbursed €52,000? I assume HomeBond is the insurance company.

Mr. Seamus McCarthy

To be helpful, that money relates to non-pyrite damage, or other defects that were discovered when the pyrite work was being done.

They were identified on top of it.

Mr. Seamus McCarthy

The estimate is that €887,000 is claimable from HomeBond but only €52,000 has been collected.

Mr. John O'Connor

Regarding HomeBond's involvement in pyrite remediation, there are agreements between the Pyrite Resolution Board and HomeBond. It has been providing technical and testing services to the pyrite remediation scheme and is paying for those. They are very beneficial in terms of-----

That process did not go to tender but went back to the people who signed off on the original properties. Is that what Mr. O'Connor is saying to me?

Mr. John O'Connor

It was making a contribution towards some of the costs. That is for the pyrite remediation scheme. Separately, there is also non-pyrite work. When we are carrying out the remediation works and we find something is wrong, like an issue with the foundations-----

I know. I have read the report so I know where the figure comes from. I am asking why we have received only 6% of what is due.

Mr. John O'Connor

There are potential liabilities on HomeBond and we are pursuing it. Following on from the report, we have upped our engagement with HomeBond to recover whatever it is due to pay back to us.

That is not really an answer. I am asking why we have recovered so little. It is only 6% of what is due. Over what time period has that been done? I will have to come back on that.

I do not profess to be an expert on this matter but we dealt with it extensively back in the 31st Dáil. I think the answer lies in the fact that the terms of the insurance provided by HomeBond were completely inadequate. That is what happened.

That is the answer I would have expected from Mr. O'Connor.

That is my recollection of it. Unfortunately, the certification from HomeBond was not worth the paper it was written on as regards pyrite. That is the issue.

It is beyond me that we have it providing technical expertise and stuff.

I thank the witnesses for their attendance. I will return to an issue my colleague, Deputy McAuliffe, raised. I refer to HAP and homeless HAP in particular. Some applicants who have been approved for HAP have had their payment reduced if they accepted a property with a particular approved housing body, AHB. In a recent incident, a single individual had been approved for the full amount and just by virtue of the AHB they were approved to be housed with, their payment was to be reduced. I do not know how that would happen. I do not expect the witnesses to know the intricacies of these issues, but is there a policy or a mechanism within the Department whereby one gets a reduced homeless HAP for certain AHBs? I would have thought it was standard right across the board.

Ms Marguerite Ryan

Generally the AHBs are not engaged in the HAP market. There can be some unusual situations with moving from the capital assistance scheme, CAS, to HAP and top-ups with the rental accommodation scheme, RAS, to CAS and different arrangements where people accessing long-term rent supplements are transferring across to HAP. It is more to do with the differential in rent. We can look into any specific cases but there are no different treatments of tenants because they are homeless. If anything, there are additional supports available to them.

That is what I would have thought. I am flushing that out because the Comptroller and Auditor General's report delves deeply into HAP expenditure. I would like to ensure there is no differential, particularly for people who are homeless. The assistance of the State must be there to ensure they have a roof over their heads. It took quite a bit of effort to get to the bottom of this case and the anxiety caused to the individual concerned is unacceptable. I might submit further correspondence to the Department to try to deal with that issue.

Deputy Verona Murphy alluded to the pyrite remediation scheme. I ask the witnesses to advise the committee on the progress made between the Housing Agency and HomeBond. I heard what the Chairman said about the previous Committee of Public Accounts and the Oireachtas committee on housing dealing with this issue. I ask the witnesses to update the committee on that work. The report makes note of the non-pyrite related damage. I am not referring to the damage identified when dealing with the pyrite issue, but properties constructed in the last decade or two, or even three, where there are general defects.

What remediation policies or procedures are there for the Department to deal with those individuals?

Mr. John O'Connor

All of the non-pyrite remediation work where we are looking to recover money from HomeBond is scheduled and we are pursuing HomeBond in respect of receiving-----

Is there any timeframe on that?

Mr. John O'Connor

HomeBond has given an undertaking to us to come back within the next month in terms of what it is prepared to pay in respect of the claims we have made of it so far.

Claimed so far or is there-----

Mr. John O'Connor

-----claims so far - as we continue the pyrite remediation work. There will be other houses where we might have to undertake non-pyrite remediation works.

Are there remediation schemes for non-pyrite properties with general defects that have come to the attention of the Department?

Ms Sarah Neary

With regard to non-pyrite defects, generally, defects are a matter for the contracting authorities and as much effort as possible should be made with them to work things out. In some cases, insurance is in place and that covers a certain amount of defects. The situation is fundamentally different when we go from pre-2014 to post-2014. I will address the pre-2014 situation first. A significant problem arose in Donegal and Mayo in respect of defective concrete block work. A report on that was done in 2016. Following that, the Government made a decision to create a grant scheme for both local authorities to administer for private housing affected by defective concrete blocks. Deputy Hourigan mentioned the Safe as Houses? report from 2017, which outlines an approach to general defects as well, in addition to the two about which we have spoken. The programme for Government contains a commitment to examine defective housing in a broader sense. Work on that has progressed. We are working on terms of reference and establishing a working group to examine that.

Has money been allocated within the Department for 2021 to deal with those properties?

Ms Sarah Neary

A total of €40 million has been allocated for 2021 between pyrite, as in pyrite in hardcore, and mica and pyrite in Donegal and Mayo.

That only deals with those particular ones. Is there a fund generally for properties to which Ms Neary has not alluded?

Ms Sarah Neary

No, there is no general fund for remediation. The report of the pyrite panel from 2012 was probably the most specific in saying that the State does not have an actual liability for dealing with defective work in private housing.

We are over time. I will let Deputy Devlin back in again.

I welcome the witnesses. I will focus on the Department's funding stream for rural water investment under the multiannual rural water programme. It is a significant issue in Mayo. Can the witnesses tell me how much was allocated last year or through the accounts in 2019 for the multiannual rural water programme and the number of projects that were completed?

Deputy Verona Murphy took the Chair.

Mr. Graham Doyle

We do not have those details. This morning, we have concentrated more on the three chapters. Our head of water was here with us yesterday. If the Deputy wants to address some questions to us, unfortunately, I will probably have to come back to him on them but we have no problem coming back in writing.

With regard to the different measures and allocation of funding based on the local authorities' needs within specific regional areas, Mayo really concerns connection for domestic water use. I know the supports that are in place under improvements, refurbishment of private wells, etc., but it is critical that we start identifying the group water schemes that need to be connected to the public water supplies. There was a major issue regarding connection in Murrisk outside Westport. I would like some feedback on where this is in terms of funding and where works can commence. A number of communities in north Mayo - Carrowteigue, Sraith an tSeagail, Portacloy, Porturlin, Keenagh and Letterbrick - are all crying out for funding. The biggest challenge they face is that when they submit their application for funding to the local authorities, the cost of domestic connection per household is too high. We need to remove the roadblocks here.

I know a working group was established in 2018 around the multiannual rural water programme and there were a number of recommendations that built into the 2019-21 programme but where do we move in 2021 and the next three-year cycle? People on the ground are receiving letters from the local authorities. One stated that the 2019-21 multiannual rural water programme allocation from the Department of Housing, Local Government and Heritage had been received in October 2019 but the proposed community water connection did not receive any funding allocation and that the expert panel that assessed all of the multiannual rural water programme submissions considered that the unit cost was too expensive. These people are dealing with condemned water that they cannot drink. Their heating system cannot reach the required temperature. It is clogged with bog. If the Department has not visited some of these households, it would be a very good lesson for it to see the challenges they must face.

Mr. Graham Doyle

I would be very happy to come back to the Deputy on the specifics of that. Regarding the overall number about which the Deputy asked, I think the allocation was €47 million under the rural water programme last year. It was an underspend on the capital side and an overspend on the current side due to the projects out there. There is €49 million in on the 2020 number. We will give the Deputy those numbers but more specifically, we will come back to him because I know how important the work around these schemes is to rural communities. As I said, our water expert was here with us yesterday when we were dealing with the wider Vote but we will come back to the Deputy on each of those questions.

It is really disappointing to see an underspend when there is significant demand out there. Local authorities do a tremendous job trying to get as many projects as possible across the line. People see TV ads where people are looking to donate €2 per week to supply a family with fresh water abroad but we have that challenge in Ireland. These people do not have domestic water that is fit for use, which is a crying shame. We are seen as a progressive country but many communities have been left behind in this regard and an action plan to address this as swiftly as possible needs to be put together by the Department.

Mr. Graham Doyle

As I said, there was an overspend on the current side while there was an underspend on the capital side due to the projects coming through. That money will roll forward.

Deputy Brian Stanley resumed the Chair.

Mr. Graham Doyle

Like the Deputy, in situations like this, I do not like to see underspends but, sometimes on the capital side, sometimes due to the timing of delivery or whatever, it is not that money is lost as the money is there. We will come back to the Deputy specifically with an answer on that.

To follow on from yesterday's meeting, I wish to mention a couple of public private partnership contracts that we are tied into at a cost of €631 million. Yesterday, I said that I would revisit some questions on this matter because, in fairness to Ms Ryan, we asked a lot of questions about figures. How many units will be delivered for €631 million? What is the annual payment? What period does €631 million cover?

Ms Marguerite Ryan

In terms of the number of units, there are 534 units in the first bundle and 80 homes are delivered. Does the Chairman wish to know how many were delivered in that bundle?

Just keep it simple as I am watching the time. How many units will be delivered for €631 million? I understand that there are two bundles.

Ms Marguerite Ryan

Two bundles.

How many homes?

Ms Marguerite Ryan

Sorry, I confused the Chairman's questions yesterday. I think it is just under 1,000 homes.

What is the annual payment? There is a figure of €631 million but I am unclear about how that is broken down in terms of how much is spent per annum. I ask because I want us to get value for money. I can come back to this matter, if the witnesses so wish.

Mr. Graham Doyle

Sorry, Chairman. We did not understand that it was intended to come back to it today. We said that we would come back in writing, which we certainly will. My apologies for that. We will certainly come back to the Chairman with all of that detail.

There has been a substantial spend so the Secretary General can understand where I am coming from.

Mr. Graham Doyle

Yes.

What period does €631 million cover? Ms Ryan has clarified that €631 million covers just under 1,000 homes.

In terms of today's business, the pyrite remediation scheme on Old Knockmay Road was very good but painfully slow. The Part VIII process has received a lot of criticism but I know that, in general, a Part VIII can be dealt with in a matter of weeks, in other words, the planning permission was passed by councillors. However, there was a lot of toing and froing with the Department on minute details. The Department needs to give local authorities a bit of elbow room, particularly the good ones. Laois County Council has an ambitious housing programme and local authorities need to give a bit of space. I know that the Department must have oversight as a huge tranche of public money is being spent. This excellent scheme is a great example of one that came from the land aggregation scheme as it is built on that land. There is a lot of bureaucracy with the four stage process because a number of hurdles must be crossed at each stage. The scheme must be simplified down to two stages.

I wish to raise the issue of architect costs. We start with a blank canvas on each site but while we do not want Soviet-type blocks where everything looks exactly the same, surely we could have a more generic design model for a one, two and three-bed unit for a terraced or semi-detached house, or a stand-alone rural cottage, and for apartments? In 2003, the current system was brought in. Why start with a blank canvas each time? The only change is to the ground underneath. We need to reduce costs and bureaucracy because there is a huge amount of toing and froing between the design team and the local authority, between the local authority and the technical people in the Department and back again. Can we simplify the cost and timeline? Can we use a blueprint as a design for similar sized homes? There is a blueprint for most of what is designed. I am sure whoever designs the blueprint will be happy enough to get a royalty for each use. Can we do that?

Mr. Graham Doyle

On the standardisation that the Chairman talks about, there has been quite a bit of work around that. Ms Neary and her team do quite a bit of on that. I know that Mr. O'Connor and his organisation get involved in advising local authorities around this. Ms Neary might talk for a moment about standardisation.

Ms Sarah Neary

There are probably three things that I should mention. In 2019 we published the employers' requirements document. That, for all intents and purposes, is like a standard specification for the quality of finishings on local authority housing. It gives a very clear understanding, for both the local authorities and us, of what is covered by the funding. It informs the design and gives a framework around the cost perspective in terms of briefing architects who are designing the scheme. That has created effective standardisation and consistency across the country in terms of social housing. It also provides guidance on costs.

I want the Department to go a step further. Why not use the same design on each site? There are different types of housing such as terraced, semi-detached and stand-alone rural cottages. Surely we could have a standardised design for the different types and sizes of homes.

Ms Sarah Neary

The second initiative is the standard internal layouts. We discuss this a lot. The actual look and feel of an estate does need to fit within the context of the environment and community that it sits in. That is where the architects are very important in terms of appropriate designs. We have done a lot of work on the internal layouts. We are just about to share that with local authorities, in terms of a consultation period at the end of this year, so that there would be standard, economical layouts for one, two, three and four-bedroom houses and apartments. That is in motion.

To save time and money the process needs to be streamlined in terms of greater standardisation.

On the lag, while some of the sites were in areas where demand collapsed that demand how now increased. I could name a few sites but I will not waste the time of the committee. Borris-in-Ossory is one example where the situation has changed in the oast four or five years. It changed from high demand to no demand and now there is demand again, which is being met by the county council. Some of the sites are zoned for the cost-rental model. Yesterday, at our meeting I cited some examples of people in the midland counties. If a family of four has an income of over €430 they cannot get on a waiting list for local authority housing. They need an income of between €900 or €1,000 net to get any kind of a loan, including the Rebuilding Ireland home loan. These people and their children are trapped for eternity in private rented accommodation without rent control and security of tenure. A labourer with a county council cannot get on the local authority housing waiting list, which is ridiculous. One of the effects is that there are whole estates with nobody or very few people working. Even some people on social welfare cannot get a local authority house. I have encountered a situation where two people on disability benefit could not get a local authority house. There is a huge number of families with one or two people working earning relatively low wages so they cannot get on the local authority housing waiting list, cannot get the Rebuilding Ireland home loan and are trapped in the middle. I have raised this issue with the former Minister, Deputy Murphy. I am overwhelmed with the number of people who have contacted me about this matter and I have no answer for them. The witnesses, as officials in the Department, and we, as politicians, must re-engineer the system to assist people. While a lot of them would like to be able to buy an affordable home, which would be great - and we need to get that scheme back up and running - the cost-rental model would give them security of tenure and a fair rent. Can this be pushed on some of these land aggregation scheme locations in terms of some of the vacant sites?

Mr. John O'Connor

I agree with the Chairman that the focus has been on delivery of social housing on those lands. Now with the reintroduction of affordable purchase housing and cost rental housing, we have those options on the site and we are pushing them. One example I showed there was in Stepaside and there are 50 cost rental units there. On the Devoy Barracks site in Naas, the requirements the Housing Agency, in conjunction with the Department, has set for that land is for a significant amount of cost rental and we are talking with-----

It has to go further down the country.

Mr. John O'Connor

Yes.

We have to go beyond the Pale with this because this is a real issue. The real problem arising in more rural counties, such as counties Laois or Offaly, is that the threshold for social housing is very low. It starts at €480. It is €506 for a couple. Once a person's income is more than €506 he or she cannot get on a local authority housing waiting list and we do not have answers for such people. They are trapped for years. There are lands available. There are seven land aggregation scheme sites in County Laois, where they are transferred over into the NAMA for local authorities. They are there. Some of those sites are suitable. I also bring Mr. O'Connor's attention to a site being purchased by the local authority in Portlaoise, a substantial site on the Stradbally Road. There is potential there. I have raised it with the management of the council and am using the opportunity today to raise it with the various officials. We need cost rental on that. I spoke to the director of services and the county manager about this recently. Maybe Mr. Doyle and the Department can look at it. Here is an opportunity to do this model in a more rural county. It is a good site and a great chance to do it. Might he take that up?

Mr. Graham Doyle

Yes, certainly. There is a wider context as well to that question. I know the Chairman is posing it in terms of LAGs and how we progress our affordability and cost rental schemes over the coming months. My colleague, Mr. Barry Quinlan, is leading our work on the affordability and cost rental piece, working on legislation and on the schemes, but there is a wider context to the Chairman's question and we are very cognisant of that.

There is that cohort, the working poor, and it is a big middle. We often talk about the squeezed middle but this is actually quite a wide middle who are completely excluded from either social housing or being able to buy a house.

Mr. Graham Doyle

Yes, absolutely.

We need to start addressing that.

On the figures, I had asked if we could have the yearly figure for lease-to-lease and lease-to-buy and then the overall figure spent to date.

Ms Marguerite Ryan

I have some of the numbers for the Deputy now, and we will do a fuller report after the meeting, if that is okay. We do not have a lease-to-buy scheme; the scheme is called leasing. A total of 4,580 units were supported in 2019, which is about 32% of the budget at €39.5 million.

That was for lease-to-lease and-----

Ms Marguerite Ryan

That is just leasing.

That would be lease-to-lease, obviously.

Ms Marguerite Ryan

I do not understand the lease-to-lease element, I am sorry.

The lease-to-lease where the purchaser-----

Ms Marguerite Ryan

It reverts to the owner at the end.

At the end, yes. A total of €39.5 million was spent.

Ms Marguerite Ryan

In 2019, yes. In 2020, we expect to spend about €40 to €50 million. I cannot give a figure on that until the year is over and we have the breakdown of the various leases.

Okay. Does Ms Ryan have what was spent overall to date?

Ms Marguerite Ryan

I can get that for the Deputy, yes.

Okay. What was spent on housing assistance payment, HAP?

Ms Marguerite Ryan

Is the Deputy asking about last year?

For last year. Has Ms Ryan the spend to date figures as well?

Ms Marguerite Ryan

We can get it after the meeting for up to the end of quarter 2.

Why does Ms Ryan not have the spend to date figures with her when she has had notice of the meeting?

Ms Marguerite Ryan

I did have the figures on all of this. It is just-----

Mr. Graham Doyle

In terms of spend to date, we came yesterday to discuss the appropriation account for 2019, so we will provide absolutely up to date figures. In many cases we have those with us, but if there is something we are missing, we will absolutely follow up with it. There is no difficulty with that.

The officials do not have the figures to date I am asking for.

Ms Marguerite Ryan

The spend on HAP last year was €479.729 million.

Okay. What is it to date for HAP?

Ms Marguerite Ryan

I will not have it for the Deputy without checking what the spend on it is. I will have to check back with the team for 2020.

What about the rental accommodation scheme, RAS?

Ms Marguerite Ryan

On RAS, the spend for 2019 was €134.29 million from the Exchequer.

That is for 2019.

Ms Marguerite Ryan

For 2020, the estimate is €133 million.

Okay, and HAP for-----

Mr. Seamus McCarthy

I think Ms Ryan may have given the Estimate figure for 2019.

Ms Marguerite Ryan

I apologise.

Mr. Seamus McCarthy

I think €422.729 million is the Estimate figure. The spend last year was €382.408 million.

Mr. Seamus McCarthy

Yes.

Ms Marguerite Ryan

I apologise to the Deputy. I gave her this year's Estimate instead of last year's output.

Was that the same for the lease-to-lease or is the figure Ms Ryan gave me correct?

Ms Marguerite Ryan

No. I went back to the Department today to find those.

Will Ms Ryan forward to me after the meeting the amounts spent in each category to date?

Ms Marguerite Ryan

The expenditure for this year, 2020?

Ms Marguerite Ryan

Okay, the cumulative spend.

-----overall, what has been spent in public money to date on lease-to-lease?

Mr. Graham Doyle

We will get back to the Deputy.

I would like the same for HAP and RAS. I want to ask Mr. O'Connor about the pyrite remediation scheme. There was a list of areas that were covered under it and there were an awful lot more excluded. For cases that might come up, let us say in County Louth, what happens there?

Mr. John O'Connor

I am going to pass over to Ms Sarah Neary from the Department in a moment. The pyrite remediation scheme that is being used at the moment is where cases were identified or large areas where pyrite remediation was necessary. I will pass the Deputy over to Ms Neary who will explain how other areas could be added in if necessary.

Ms Sarah Neary

In September the scheme was extended to Limerick and there is a process outlined in the Act as to how to go about that. In the first instance it is a matter for the Pyrite Resolution Board under section 13 to make proposals to the Minister either to amend, revoke or replace any part of the scheme. With Limerick, what would have happened was it took several years to establish the extent and severity of the damage to the dwellings and to confirm that the damage was actually attributable to pyritic heave in the hardcore. All sorts of investigations into the background and any other means of resourcing the remediation had to be exhausted before a proposal was made to the Minister. In the Deputy's example, that sort of a process would have to be followed in order for the board to be satisfied and then to make a submission to the Minister.

On the pyrite remediation scheme, I refer to recommendation 13 on page 232 of the Report on the Accounts of the Public Services 2019: "The Board and Agency should put in place a robust process to quantify the cost of remediating non-pyrite related damage." Has that been initiated yet and what stage is that particular recommendation at?

Mr. John O'Connor

We have taken on that recommendation from the Comptroller and Auditor General. We have details and keep recording details of non-pyrite remediation work and we are just refining that on foot of that recommendation. We have engaged with HomeBond specifically on recovering as much money as we can from it.

I thank Mr. O'Connor for that. On those non-pyrite related problems and with reference to what Ms Neary said in reply to my previous question, where another problem is identified with a property or properties, is an application made to the Minister or the Department under section 13 to have it included in the remediation scheme?

How is that done?

Mr. John O'Connor

When carrying out the pyrite remediation works, if a problem is identified in an area we are working on, for example, foundations or rising walls, we fix it. We do not leave a problem behind us but the scheme is limited to the pyrite remediation works. We have no remit to remediate any other issues. Ms Neary might want to comment on broader defects issues.

Ms Sarah Neary

I reiterate Mr. O'Connor's point that it is only defects covered up during pyrite remediation and considered to be other defects caused by the pyrite that HomeBond would be pursued for. General defects that are not the result of the pyrite in the hardcore are not covered by the scheme. There is no provision in the Act for that.

The scheme covers the period 1997 to 2013. There were 31 applications made for Dún Laoghaire-Rathdown up to the end of 2019. The witnesses might come back to me on those applications. That information would be of interest to me.

On the land aggregation scheme, how many sites are we talking about in total? The report refers to 47 sites that were transferred. I am sure there are more sites than that. Further on, the report states that 36 sites have gone to approval stage, that these sites comprise 159 ha, and that approximately 3,370 homes are earmarked for those sites. It also states that there are 37 sites, comprising 89 ha, that are not suitable for development. How many sites have come under that scheme, how many of them are in Dublin, and how many of them have plans approved under, say, Part 8? I am speaking in this regard not about plans in the pipeline but plans approved. Also, how many of the sites have been built on since 2010?

Mr. John O'Connor

I will give an overview of the scheme. There are 73 sites in the land aggregation scheme. In regard to the 47 sites referred to by the Deputy, the loans that local authorities had taken out on those lands were paid off. In regard to the other 26, the local authority has an annuity loan with the Housing Finance Agency that is being funded through the Department of Housing, Local Government and Heritage. Those loans are being-----

There were refinanced. Is that done for the purpose of the balance sheet of the local authority?

Mr. John O'Connor

Yes. From the local authority's perspective, the repayment of that loan is being funded from central government funds. On the 36 sites, in terms of immediate development, 32 of them have been built out or there are plans in progress for them. On the remainder of the sites, for a number of them there are feasibility or other plans in place to develop them. The others are more long-term in terms of appropriate use of them.

How many are in Dublin? Mr. O'Connor might come back to me on the 37 sites that are not suitable.

I will ask the witness to come back to the Deputy on those issues because we are under time constraint in terms of the health regulations.

Mr. Seamus McCarthy

I have had a quick scan of the sites. There are three in Fingal and one site is on the Enniskerry Road, which has been transferred already to Dún Laoghaire-Rathdown County Council for affordable housing. There are four sites in total.

I thank the witnesses.

There is vacant land in the Deputy's area to be developed. That is some good news.

I want to deal with the land aggregation scheme as it relates to the accounting of site values. It would appear that the last valuation was in 2018. At that point, the sites were valued at €55 million and the local authorities had a spend of €115 million. The Comptroller and Auditor General has recommended that there would be a revaluation but there is no timeframe on that. Have the witnesses taken that on board and when do they propose to do that valuation? I presume these sites are for sale in terms of land disposal of sites under LAGS?

Mr. John O'Connor

On the last point, we do not sell the land. If a local authority is going to utilise it, we transfer it to that local authority for use.

At current value?

Mr. John O'Connor

Normally at no cost. If it is to be used for social housing-----

I understand that there is no cost. I am interested in knowing how it is valued.

Mr. John O'Connor

In terms of valuing it, we have taken on board the recommendation from the Comptroller and Auditor General. We propose to do a detailed valuation every six years because there is a significant cost to doing individual valuations of sites, and every second year-----

This is the first time any witness has ever raised concern in regard to costs. I thank him for that statement. It is normally from this side such a statement is made. The last valuation was carried out in 2018. Is Mr. O'Connor saying the next valuation will be done in 2024?

Mr. John O'Connor

We have agreed that we will do it every two years. In 2020, we will do a desktop valuation based on-----

We are in 2020. Has it being done?

Mr. John O'Connor

We are doing it in the context of the completion of the accounts for the end of this year. We will do a partial valuation every two years and a full revaluation every six years.

Mr. John O'Connor

No. Every two years, we revalue the lands but every third time we will do so in much more detail.

To clarify, there will be a valuation every two years and a more detailed valuation every six years.

Mr. John O'Connor

Yes.

I take it that is what was recommended.

Mr. John O'Connor

It is.

Mr. Seamus McCarthy

If assets are being carried at a market valuation, there should be a cycle within which that is done. I think the cycle suggested is sufficient.

That is good to hear. Returning to our earlier discussion, I have to get to the bottom of this issue. Again, I do not wish to circumvent anyone but Mr. O'Connor said that the Department is following up with HomeBond. When it comes to public authorities recouping moneys, I am concerned when someone says they are following up on it. How long has the Department been following up on it? It has already received €52,000, which is only 6% of what is outstanding. What is the end game in recouping public money?

Mr. John O'Connor

We will keep pursuing HomeBond. I have set out clearly the work that we carried out to houses that was non-pyrite remediation work.

Am I correct in saying that in 2015 an agreement was signed that set out the amount that would be owed by HomeBond? Is it now trying to renegotiate that figure? What is the issue?

Mr. John O'Connor

The works arise as we do the remediation. In 2019, we remediated 512 houses.

This is not the pyrite end of it.

Mr. John O'Connor

We claim as work progresses. We can only claim from HomeBond as we remediate a house and we find that there is some work that we need to carry out that is non-pyrite work.

Mr. Seamus McCarthy

There was an agreement to pay in 2015, but the quantum had to be figured out as they did the work.

We have a quantum now.

Mr. Seamus McCarthy

Yes.

I would appreciate it if Mr. O'Connor could forward a little more detail to the committee on why that process is taking its time.

Mr. John O'Connor

We will make a detailed submission on it.

In regard to HomeBond, the overall cost is estimated at €210 million for the pyrite remediation scheme.

HomeBond will finish up paying only a small percentage of that. The only amount received to date is €52,000. The overall cost or hit to the State is €210 million - that was the insurance cost. A "yes" or "no" answer will do to this. My recollection is that the type of insurance offered through the HomeBond scheme relating to pyrite was absolutely useless. It was of no benefit.

Mr. John O'Connor

The insurance did not cover damage caused by pyrite. The insurance now being offered by HomeBond is far better. It is proper insurance.

I have a follow-on question. Are homeowners and purchasers still relying on HomeBond? Is it the same outfit?

Mr. John O'Connor

They are, but proper insurance is now being offered.

Does it cover pyrite and all other eventualities? Is the Housing Agency confident that the insurance provides adequate cover for homeowners and the taxpayer? The taxpayers had to go in and remediate a significant number of dodgy apartments and so on. Pyrite has been a major problem. Does Mr. O'Connor believe the taxpayer and home-purchasers are now adequately protected under the new terms?

Mr. John O'Connor

Yes, I think the insurance being offered now does adequately protect; it covers structural defects on properties adequately.

That is the key issue here. We have been left with an appalling mess with pyrite. There were 29 applications from County Offaly. I presume they were all valid applications. How many of these are still outstanding? They are mainly from the Edenderry area.

Mr. John O'Connor

I would have to check. We are doing a good deal of work in Edenderry. We are remediating the houses. Once they are approved they are being remediated within-----

Will Mr. O'Connor come back to me with the amount? It is good that the scheme is rolling. That is the good news. Some of the slides shown earlier demonstrate the level of damage and what had to be done. We saw the situation these people finished up in with a mechanical digger in the sitting room five, ten or 15 years after buying a house and paying a mortgage. It is good that the scheme is rolling and that the pyrite board is getting on top of it. I am keen to acknowledge that. However, we need to ensure this kind of thing does not happen again.

Mr. Graham Doyle

Ms Ryan was concerned about a figure she gave earlier for the record.

Ms Marguerite Ryan

I have the figures on public private partnerships. The figure is 1,500 units in total across the three bundles. Bundles 1 and 2 cover 999 units. The total capital value is in the order of €300 million and €4.6 million in unitary payments was paid this year.

Is the figure €4.6 million per year?

Ms Marguerite Ryan

No, €4.6 million was the cost of unitary payments paid this year. The unitary payment only arises when units are delivered.

What is the annual cost, approximately?

Mr. Seamus McCarthy

It will be significantly more per year when the full scheme is up and running.

That is the question. What is the estimate on how much per year would be expected?

Ms Marguerite Ryan

It could be in the order of 300 but I would have to go back and check that.

Mr. Graham Doyle

We will be coming back to the committee on that anyway.

We have discussed the figure of the public private partnerships. Public sector benchmarking is relevant. I understand the Department is not at liberty to make this available publicly. Will the Department look at providing the detail to the Committee of Public Accounts at a private meeting? We have to try to judge whether value for money is being secured. I am unsure whether the Comptroller and Auditor General has sight of this. If we are delivering houses through PPP schemes, the Committee of Public Accounts has to make a decision on whether there is value for money in terms of oversight and monitoring. We cannot do that if we do not have the figure for how the schemes are benchmarked with the public sector. That can be done in private session.

I thank our witnesses, including Mr. Doyle, Ms Ryan, Mr. O'Connor and the witnesses who joined us remotely. We know Mr. Doyle is three months into the job and there is great complexity in it. I thank the Comptroller and Auditor General for assisting the committee in its work.

Is it agreed that the clerk will seek any follow-up information and carry out any agreed actions arising from today's meeting? Agreed. Is it also agreed that we note and publish the opening statements and briefings on today's meeting? Agreed.

The witnesses withdrew.
The committee adjourned at 1.35 p.m. until 4.30 p.m. on Wednesday, 2 December 2020.