Topical Issue Debate

Jobseeker's Benefit Eligibility

Deputy Thomas Pringle

I thank the Cheann Comhairle for the opportunity to raise this issue, which is very important to seasonal workers in south west Donegal, particularly those working in the fishing industry. I want to address three matters in the time available. They concern the changes to entitlement for jobseeker's benefit that have taken place, some due to budget 2012.

The first matter is the qualifying conditions for jobseeker's benefit. As the Minister knows, jobseeker's benefit is paid for nine months in the year. The impact of the changes in the qualifying criteria and the implementation of the nine-month period has come home to roost in the past six or eight months in the south west Donegal area in that qualifying people have to move to jobseeker's allowance, which is a means-tested payment, after jobseeker's benefit has ended. A number of people, particularly couples, do seasonal work in the fishing industry, and one couple I know of lost over €150 a week when they changed over to the means-tested assessment. They lost the entitlement initially on jobseeker's allowance and child dependant allowance for children in full-time education. This is having a severe impact, and it will have an even more severe impact in the coming years as these changes bed in, so to speak.

The second matter is that of subsidiary employment and entitlement to jobseeker's benefit. It is linked to the same period, but in south west Donegal and many other rural areas, many farmers are part-time farmers who work in fish processing factories to supplement their income from farming. When they become unemployed and subject to an assessment for jobseeker's benefit, this comes in under subsidiary employment from their farming income. The requirements are that they cannot have an income of more than €12.70 per day from the subsidiary employment. They have no problem with that because they are all small farmers and they get a very low income from that. However, there is also the requirement that they must have paid 117 PRSI contributions in the preceding three years, and because of the seasonal nature of the work and the impact of quotas, whereby the working season has been shortened, it is virtually impossible for them to have the 117 paid contributions. That means they will have to depend on a means-tested payment, which will have a severe impact in terms of allowing them to avail of seasonal work in the area. It is some of the only work available across Donegal.

The third item is more of an administrative matter. The Department recently introduced scannable dockets for seasonal workers in the Killybegs local social welfare office, which means they have to go to their employers every week to have their dockets signed and stamped. That creates a severe burden on them, because many workers might have to take a 30 mile round trip to get their dockets signed and stamped by their employer. While it may reduce the administrative burden on the Department, it increases the burden on employers and increases the difficulty for the workers in having the docket signed.

Those are the changes that have been implemented in the past while but, with some tweaking, the Minister could make it easier for people to manage on jobseeker's benefit.

Minister of State at the Department of Social Protection (Deputy Kevin Humphreys)

I thank Deputy Pringle for raising the matter. I wish to advise the Deputy that the Department has not made any changes recently to the arrangements that apply for seasonal workers who are in receipt of jobseeker's benefit and jobseeker's allowance.

I have been given a briefing note but, unfortunately, it does not cover the three items the Deputy has raised. In terms of having a meaningful engagement, I suggest that we sit down next week and go through the three items, namely, the scanning of the document, and the onerous amount of travel required for some people, subsidiary employment in the fishing industry, and the change in the jobseeker's benefit entitlement for part-time farmers.

Rather than giving the Deputy a stock answer, I would be happier to engage with him to examine the impact of what he is suggesting and see if we can alleviate it in some manner. I think that is the most constructive way, rather than delivering a set speech, and I would be happy to do that.

The recent changes, which were not related to this matter, were to facilitate people to return to work part-time without losing benefits. If they went back to work, it was, therefore, easy to transfer back onto jobseeker's benefit or jobseeker's allowance without a prolonged delay for the money to come through.

The matters raised by the Deputy are particularly related to the fishing industry, small farmers and scanning documents. I will be happy to work through those three items with him next week, if that is suitable.

Deputy Thomas Pringle

I thank the Minister of State for his response which I appreciate. That would probably be a better way of trying to deal with these issues if we could get together. I will contact the Minister of State about organising that meeting. I appreciate his response on the matter.

An Ceann Comhairle

We will have to wait for the second item, because the Deputy and the Minister of State were too quick.

Deputy Thomas Pringle

I did not expect that.

An Ceann Comhairle

We will wait for Deputy O'Donovan to arrive for the second item which concerns the need to amend building regulations in relation to one-off houses.

Building Regulations

Deputy Patrick O'Donovan

I apologise for the delay, a Cheann Comhairle.

An Ceann Comhairle

It is not your fault. The first item did not take as long as one would expect. There is no problem.

Deputy Patrick O'Donovan

I thank the Ceann Comhairle for selecting this Topical Issue for debate. I have already spoken to the Minister about it and I know he is working on the matter. I am raising this item in the context of recent changes that were made to the Central Bank's lending requirements for mortgages. There is a specific issue concerning one-off rural houses. When houses are being built currently, the burden of regulation on signing off on the construction element is fairly onerous. That is because the person who draws down a mortgage for a one-off rural house is not the same as a standard developer. In other words, they are taking 100% of the risk, so it is in their interest that the house is properly built, engineered and overseen.

In common with other Deputies, I have been contacted by draftsmen, engineering technicians, architectural technicians and technologists who for years have built up a level of experience in maintaining a good stock of one-off rural houses. The Minister of State will know from his own constituency that one-off houses did not cause the difficulties arising from the construction sector's collapse, and neither did one-off houses cause difficulties such as those at Priory Hall or with pyrite.

People building one-off houses are insistent that proper standards are required. Sign-off costs for one-off houses currently range from €4,000 to €7,000 plus VAT. Another problem is that some people who have built up quite an amount of experience in recent years, including technologists and engineers, are excluded from being able to sign off for an individual's mortgage drawdown. Shrinking the number of people who can do this, particularly in rural locations, is adding to the cost burden involved.

The Minister for the Environment, Community and Local Government had very good reasons for introducing such changes. As we all know, the low standards that applied under the previous Administration left us with pyrite and Priory Hall. They also left us with houses falling down all over the country and unfinished housing estates. Given that the mortgagor for one-off houses is taking 100% of the risk involved, that risk is not borne by the State. The Minister of State will not find anyone knocking on his office door at the Custom House having had difficulties with a one-off rural house due to planning permission and the way in which such construction is supervised. He will find, however, that speculative sales in housing estates are causing problems.

I would like to see some sort of re-examination of the building regulations regarding one-off houses. This re-examination should include architects, engineers and technicians with years of experience in the design, construction and supervision of such projects, including the drawdown of mortgage stage payments for one-off rural houses. The Department should ascertain whether we have gone too far in this respect. Anecdotally, from my own constituency in County Limerick, technologists and technicians say that on the one hand they are being pushed out, while, on the other, costs are rising.

Minister of State at the Department of the Environment, Community and Local Government (Deputy Paudie Coffey)

I wish to thank the Deputy for raising this important matter. It is an issue of concern to many Deputies around the country who have raised it consistently.

Following public concern with regard to the widespread failure to comply with regulatory requirements in all sectors of the construction industry, the Building Control (Amendment) Regulations 2014, otherwise known as Statutory Instrument No. 9 of 2014, were introduced to strengthen the arrangements in place by requiring greater accountability in relation to compliance with building regulations. In relation to single dwellings, common problems which have come to the attention of my Department include inadequate drainage and septic tanks, necessitating the introduction of an inspection regime; sub-standard energy performance arrangements, as evidenced from the national building energy rating database; and occasional structural problems arising from poor workmanship or poor choice of materials.

Over 5,000 construction projects have commenced, to date, since the new regulations took effect on 1 March 2014. Over 1,100 of these are new build single dwellings. This is a significant number of projects and already a significant number of home owners, builders and other professionals are gaining direct experience of advancing one-off housing projects under the new arrangements. These dwellings will now enjoy the benefit of statutory certification of their design and construction, having been inspected and certified by the builder and a registered construction professional who have lodged compliance documentation with the local authority, where it is validated and included on a public register.

We now have a credible regulatory framework for building activity in place on a nationwide basis for the first time in the history of the State. While this is of immense benefit to home owners, obviously the issue of cost and value for money is of paramount concern for any new home owner. While costs are determined by market forces and are therefore outside the scope of my regulatory powers, I recognise the importance of ensuring that the regulations do not impact unduly on one-off housing, particularly in relation to cost.

As I have indicated previously, my Department, in conjunction with the Housing Agency and the construction professional bodies, is currently finalising additional guidance on an appropriate inspection plan for a typical one-off dwelling. This guidance will be helpful in better informing the market in relation to offering realistic and appropriately priced professional services for such work. I intend to publish this guidance shortly.

In my opinion, based on the advice I am receiving, the inspection regime for one-off houses should cost no more than €3,500. However, I am aware of many cases where the cost of inspections has far exceeded this amount, something I am determined to address in as far as possible.

I intend to announce details of the imminent review of SI 9 of 2014 early next month. It is appropriate that it be reviewed now that it is almost a year in place. I expect that the issue of cost in the self-build and one-off housing sector will be a key component in this review. I look forward to engaging openly with all stakeholders on the matter, including the technicians and technologists the Deputy has mentioned. A full report on the matter will be produced by the second quarter of 2015 and will inform further regulation in this critical area. I will arrange for a copy of the report to be made available in the Oireachtas Library in due course.

My Department will continue to engage proactively and constructively with all key stakeholders and interested parties in reviewing and strengthening the arrangements in place for the control of building activity. This is in the interest of the consumer and the person who builds, and also in the interest of keeping a high standard and keeping accountability at the forefront of construction here.

Deputy Patrick O'Donovan

I welcome the Minister of State's decision to review SI 9 this year. It is an important signal to send out to people with one-off rural houses. I know the Minister of State is a great proponent of one-off rural houses. From my time on the local authority and from the Minister of State's membership of Waterford County Council, we both recognise that there is a very strong anti-rural house lobby, some of whom might have found a welcome home in the Department of the Environment, Community and Local Government. I am glad the Minister of State will take on that lobby with the review of the statutory instrument.

The current obligations regarding inspections and regulations for one-off houses also extend to house extensions of up to 40 sq. m, which is onerous. In many cases, this might not even involve a mortgage and might involve the person paying for it himself or herself. If it involves a mortgage, it could be much smaller than the actual cost because of savings, etc., which is also onerous.

The requirements under the existing regulation to meet energy ratings almost lead to a kind of passive house environment, which adds costs of €10,000 to €15,000. This is all having an impact on something those in my area and, I know, the Minister of State in Waterford want to sustain, which is the viability of people being allowed to construct a house on their own land in most cases. These are ordinarily the sons and daughters of farmers or landowners. If we want to maintain a vibrant community in rural areas particularly, this is something that needs to be addressed. I support the Minister of State's approach in reviewing it. I hope that review follows up with changes specifically aimed at the one-off rural house.

Deputy Paudie Coffey

The Deputy is correct in pointing out that these regulations also apply to extensions. Many years ago, I built my own house in Waterford by direct build. I know the challenges that people face, but people generally set out to build the best quality home for themselves.

Anecdotal evidence suggests that inspections cost between €5,000 and €16,000 which is unacceptable and I am determined to do something about it in the short term and the medium term. In the short term, I will publish guidance stating that inspection regimes should appropriately cost no more than €3,000 to €3,500. However, it is important to maintain standards and accountability in terms of construction. I am sure Deputies will agree we cannot go back to the days of putting up houses that are substandard; I know that many professionals signed off on these in the past. Under the new regulatory regime, they are now accountable. It is important that we maintain that element.

I acknowledge that the technicians and practitioners the Deputy mentioned have vast experience in this area and I believe they can contribute in a more enhanced way. I am sympathetic to the Deputy's views in this regard. I am preparing a review of SI 9 generally and this review can consider one-off houses and extensions. I envisage an increased role for the practitioners to play a more proactive role in the inspection regime. I will do this because I believe there is a role for them in this. However, we need to have appropriate standards and appropriate recognition of experience in this area. I hope that as part of the review we can come up with a model that recognises this experience and recognises technicians' contribution. I believe they can play an important role as they have done for many years regarding one-off houses and extensions. I expect progress on the matter in the coming weeks and months.

Credit Unions

Deputy Martin Heydon

I thank the Ceann Comhairle for selecting this Topical Issue today. This is a very serious topic with a local element affecting the town of Newbridge in my constituency and the very national element of the credit union movement in general and lessons learnt from the past.

I thank the Minister of State for attending today. I remind people what happened in Newbridge Credit Union. In January 2012, the Central Bank appointed a special manager to run Newbridge Credit Union. Effectively, for the following 22 months, that special manager stayed in place in a position where that person could say very little owing to a High Court gagging order. Very little information came out to the members of the credit union. They were kept in the dark and it led to a very significant amount of frustration. People did not know there were problems with their credit union because they were not able to be told. It led to considerable speculation as to what had happened.

When the Central Bank report was published in November 2013, just after the transfer to PTSB, we got examples of some significant lending, which would not be traditional to credit unions, that had caused major problems. However, the Central Bank decision to appoint a special manager could have been handled better. Leaving people in the dark for as long as they were without that key information was very difficult.

Since taking over the assets and liabilities in November 2013, PTSB has acted in the credit union building in Newbridge in the name of Newbridge Credit Union, albeit not in a position to give out new loans, but to continue to run existing loans. That has left Newbridge, the 15th largest town in the country, effectively without credit union services. The issue came to a head in recent weeks with PTSB sending cheques to thousands of members of the former credit union with the final closure of those savings accounts. That was the one cheque in the post most people did not want to get because they did not want to see their credit union close with the loss of those services.

This very large town does not have access to credit union services and businesses do not have the ability to take out those small loans. The big benefit for small businesses in the area was that when the dividend was paid at the end of the year, people had more money in their pockets heading into the Christmas period. There are many people in the town who do not traditionally want to be with banking institutions but like to be members of a credit union. That option is no longer available to them. It is crucial that we ensure the return of those credit union services to the town of Newbridge.

Ultimately, I want to see a credit union operating in Newbridge again. However, as a starting point we need people in Newbridge to have access to credit union services that we do not have at present. There is no common bond area covering Newbridge. The nearby Naas Credit Union has made an application to the Central Bank. I met Central Bank representatives in support of the Naas application. That proposal is still under consideration to the best of my knowledge.

It is absolutely crucial that Newbridge residents get access to a credit union. Down the line I hope that such a facility can open in the town itself. However, as a start, people who want to access those credit union services have to be able to do so. It is just too big an issue. The ordinary members of the former Newbridge Credit Union, who made no mistakes and are not at all at fault for what happened with the credit union, are the real losers at present.

Minister of State at the Department of Finance (Deputy Simon Harris)

I thank the Deputy for raising what I know is a very important issue for the people of Newbridge and for him personally. It is an issue he has raised in the House with the Minister for Finance on a number of occasions.

While the Government is absolutely determined to support a strengthened and growing credit union movement and has highlighted its support for the return of credit union services to Newbridge, the role of the Minister for Finance is to ensure the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions. In line with the Credit Union Act 1997, as amended, the registration of a new credit union and the extension of a common bond of an existing credit union is the responsibility of the Registry of Credit Unions at the Central Bank.

The Minister for Finance was informed by the Central Bank that it sought to address both financial and governance issues at Newbridge Credit Union from 2008 which ultimately led to the appointment of the special manager in January 2012. Following a thorough assessment and in the context of the existing legislation, it was determined that the only viable resolution of the financial difficulties was a transfer to another entity. It is important to understand the practices in Newbridge that operated over many years. Some of these can be illustrated in the following key lending statistics: an individual loan of €3.2 million, which was in excess of the Credit Union Act restriction of a maximum of 1.5% of the total assets; 52% of the loans exceeded five years duration as opposed to the maximum of 20% as set out in the Credit Union Act; the average loan in Newbridge Credit Union was €17,281 as compared with the average credit union loan which was €7,764; and 26 loans of an average value of €550,000 which were seriously distressed. These figures illustrate that Newbridge Credit Union was operating in a very different way from a normal credit union. The structure of some loans was more akin to development loans with so-called bullet repayments as opposed to regular repayments.

All available options were considered by the Central Bank before the decision was taken to transfer all assets and liabilities, excluding the premises of the credit union, to Permanent TSB. In line with the resolution options available, the Central Bank undertook a process which involved the examination of possible credit union combinations. These efforts resulted in an approach being made to a number of credit unions. Ultimately, however, no credit union considered that it was in its best interests or those of its members to complete such a combination even in the context of considerable taxpayer support. The Central Bank also considered proposed solutions put forward by various interested parties but formed the view that none was viable.

The transfer to Permanent TSB was ultimately the only viable solution available with the alternative option being a full-scale immediate liquidation of the credit union with interruptions to members' access to their funds and risks to depositors not covered by the deposit guarantee scheme. This action was taken to protect members' savings within Newbridge Credit Union and to protect confidence and stability across the credit union sector and the wider Irish financial sector. The alternative option to a transfer to Permanent TSB was that full-scale immediate liquidation, which was not in anybody's interests. The transfer to Permanent TSB ensured that members could continue to access deposit and lending services within the local community and also ensured the protection of their savings.

It is acknowledged that there is a demand for the services of a credit union in Newbridge and the Minister for Finance has been informed by the Central Bank that it is open to meeting any party interested in restoring credit union services to the Newbridge area, including the possible extension of the common bond of credit unions in the local area. Any proposal to establish a new credit union or to extend the common bond of an existing credit union is subject to regulatory approval by the Central Bank. As of 31 January 2015, the Central Bank has received a proposal from a local credit union to extend an existing common bond that would allow for the restoration of credit union services to the Newbridge area. This proposal is under consideration by the Central Bank and a final decision will be relayed in due course to the credit union involved.

The funding required for the protection of Newbridge Credit Union members' savings is being provided by the credit institutions resolution fund and it is fully recoupable via a levy over time. The Government has made available €500 million to support the stability of the credit union movement. This amount is divided between two distinct funds, with €250 million in the credit institutions resolution fund for resolution purposes such as in the case of Newbridge and €250 million in the credit union fund which provides funding for voluntary, incentivised and time-bound restructuring under ReBo, the Credit Union Restructuring Board.

The Minister for Finance would like to emphasise the Government's recognition of the important role of credit unions as a volunteer co-operative movement and the distinction between credit unions and other types of financial institutions. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall. The Government is determined to support a strengthened and growing credit union movement and would encourage the movement to work with stronger credit unions in order that they can provide a viable option for assisting weaker credit unions. In particular, the Government and the Minister for Finance would like me to highlight their support for the future return of credit union services to Newbridge. As I have already outlined, there is a proposal with the Central Bank that is subject to its ongoing consideration.

Deputy Martin Heydon

I thank the Minister of State for his response. I have a few questions arising from it. Provision was made for €53.9 million. How much of that money will be needed to solve the problem in Newbridge? I am very mindful that this money is ultimately being paid by other credit unions which are all paying levies into the credit institutions resolution fund so there is no such thing as a victimless crime.

In respect of investigations, what lessons have been learned from a national point of view? How can we be sure that what happened in Newbridge never happens again? What investigations have taken place to discover the cause of what happened and to make sure lessons have been learned from that? Has there been any criminal investigation into what happened? Has there been a review of the role of the Central Bank and the levels of governance that were applied? While I know it was a period of light-touch regulation and it was not the only financial institution to run into difficulties due to that, what review has taken place?

The building is probably one of the finest and most iconic buildings in the town of Newbridge and might in some respects have been part of the problem due to its cost. It is a fine building of which the people of Newbridge feel a very strong sense of ownership. I would like information about the OPW's role in acquiring this building, the future uses of the building and the Intreo services that have been mooted and discussed around the town. We do not have Intreo services in Newbridge and they would be very beneficial for us given that Intreo is a single point of contact for people who need access to supports to get back into employment. This is something we very much need in the Newbridge area. I have also raised with the Minister of State the need for a community use for that building that would support existing and start-up businesses in order that the building could be used for the community to the maximum extent possible.

Deputy Simon Harris

The Minister for Finance agreed to the request of the Governor of the Central Bank for the payment of a financial incentive of up to €53.9 million to transfer the assets and liabilities, excluding the premises, of Newbridge Credit Union to Permanent TSB. All the assets and liabilities of the credit union, excluding the premises, were transferred to Permanent TSB pursuant to a High Court order dated 10 November 2013. The financial incentive agreement between the Central Bank and Permanent TSB comprises the following elements: €23 million in cash upfront to fill the hole in the balance sheet; restructuring and integration costs of €4.25 million; €2 million for other transferring liabilities; and a risk share on the transferring loans whereby the State will absorb 50% of the losses where loans perform below their transfer value and 50% of the gains where they perform above the transfer value. If the loans were written off entirely with no recovery, this would have resulted in an additional €24.7 million total cost.

I have been informed by the Central Bank that the position regarding the drawdowns to date and expected further expenditure from the agreement is as follows. Restructuring costs, which are payments to cover the establishment and maintenance of a recovery and underwriting platform for the Newbridge Credit Union loans, are capped at a possible €3 million. To date, €1.3 million has been drawn down. The Central Bank expects to incur a further €200,000 in such costs. Integration costs, which are payments to cover the costs of any redundancies of former Newbridge Credit Union staff, are capped at a possible €1.25 million. To date, nothing has been drawn down but the Central Bank expects to incur the full €1.25 million allocated to integration costs. Transferring liabilities are capped at a possible €2 million. To date, €300,000 has been drawn down. The Central Bank does not expect further drawdowns under this heading. Loss compensation payments are payments to Permanent TSB to cover deterioration in the performance of the Newbridge Credit Union loan book. The Central Bank has a 50-50 profit and loss sharing arrangement over a ten-year period with Permanent TSB in respect of these loans in order that the maximum cost the Central Bank can incur is €24.7 million if all of the loans defaulted. If the loans perform well, the Central Bank may have no liability under this heading or could actually be paid by Permanent TSB. Given the performance on the loan book to date, the Central Bank expects to incur some costs under this heading, although nowhere close to the capped amount.

In respect of offences committed or lessons learned, Section 33AK(3)(a) of the Central Bank Act 1942 requires the Central Bank to report information to other bodies, including An Garda Síochána, if it is suspected that a criminal offence has been committed by a supervised entity or that a supervised entity has contravened a provision of the relevant Act. The Central Bank commissioned a report from the liquidator examining the governance and management practices leading to the appointment of the special manager.

The Central Bank considered the liquidator's report in the context of whether any further action might be required and has concluded that no further regulatory action is required. The report will inform regulatory decisions of the Registrar of Credit Unions concerning those involved in the future.

On the current position regarding ownership of Newbridge Credit Union, as Minister of State with responsibility for the Office of Public Works I can tell the Deputy that the liquidator has signed contracts with the OPW to purchase the former premises of Newbridge Credit Union. This sale is expected to be completed formally within the first quarter of this year. As the Deputy rightly said, the building will provide important Intreo facilities in Newbridge which are about much more than the traditional dole office. Intreo is about getting people back to work. It is an important community facility.

In regard to the Deputy's approaches to the Tánaiste and me about community use of spare capacity within the building, my officials in the OPW and officials in the Department of Social Protection are meeting on that matter. Both Departments are positively disposed to examining ways the community can use any additional capacity once the Intreo services have been established.

Dáil Éireann debate - Wednesday, 25 Feb 2015