Approved Housing Bodies: Discussion

At the request of the broadcasting and recording service, members and visitors in the Public Gallery are requested to ensure that for the duration of the meeting their mobile phones are turned off completely or switched to airplane, safe or flight mode, depending on their device. It is not sufficient to put phones on silent mode, as this will maintain the level of interference with the broadcasting system.

No. 3 on the agenda today is the reclassification and future output of approved housing bodies, AHBs. I welcome to today's meeting Mr. Declan Dunne, Mr. John Hannigan and Mr. Brian O’Gorman from the Housing Alliance and Dr. Donal McManus, Ms Karen Murphy and Ms Tina Donaghy from the Irish Council for Social Housing, ICSH.

Before we begin I draw the attention of the witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the joint committee. If, however, they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

Members are 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 make him or her identifiable.

I invite Mr. Declan Dunne to make the opening statement.

Mr. Declan Dunne

With the permission of the Chairman, I propose to highlight the points made in the opening statement rather than read the entire statement.

That is fine.

Mr. Declan Dunne

The Housing Alliance is made up of six organisations, which are also members of the Irish Council for Social Housing. What brings us together and unifies us is a common commitment to support people in need of housing. The six organisations are actively involved in developing significant numbers of houses at scale. We are here to talk about the fact that up to 18 months ago, we were classified as non-profit institutions serving households. As a result of a recommendation by the Central Statistics Office, CSO, and EUROSTAT, we are now classified as part of the local government sector. That has had an impact on us in terms of our potential to borrow funds and build housing for people who need it urgently but not on the Government's balance sheet. We now find that the debt we incur becomes part of the Government debt.

When this issue first arose 18 months ago, it was not a cause of major concern because the view was that there was adequate funding for at least two years to allow us get on with building houses at scale. The general consensus was that we would look at this to see what we could do to get ourselves back into the position where our debt was off the Government balance sheet. The reality is that matters have changed significantly in that time. As 18 months have passed, we have used up 18 months of that two-year window we had identified. In that time, a good deal of work has been done both by the Irish Council for Social Housing and the Housing Alliance to study the arguments, understand the issues and develop proposals to address this issue. A positive development is that, in the meantime, the Minister, Deputy Eoghan Murphy, has supported our efforts to address this issue. The Minister of State, Deputy English, has specifically said he would like to see us overturn this classification as being on Government debt.

The most important aspect at this point is where we find ourselves in the country now, both in terms of housing need and homelessness, which are bigger issues than ever, but, importantly, in terms of macroeconomics. We now find ourselves facing into a summer economic statement and pre-budget preparations that envisage two possibilities, one of which is that if Brexit turns out in the worst possible way, we could end up with a deficit of 5%.

At the same time, other issues have arisen that no one could have foreseen in respect of the cost of the provision of hospitals, broadband and many other demands on the Government's capital expenditure programme. There is a particular concern that at this time, that fiscal space will be significantly reduced. The State must examine how it can meet all those competing demands in terms of providing hospitals, healthcare, roads and all the other infrastructure that is required, including housing.

We are now at the point where a certain amount of urgency is required. It falls to us to flag that it is important we are in a position to continue to provide the houses people seek, need and deserve and, by going back to the position we were in previously, can access finance that does not form part of Government debt.

That provides an avenue for significant delivery of housing in Ireland.

The good news is that the work the Irish Council for Social Housing and the Housing Alliance have done allows us to take the positive view that we now have good arguments to address this issue significantly. We are asking all arms of the State to come together to address it. We will bring to the forum the information we have to address the issue clearly and effectively. The time is right, but there is urgency too to assist the people the organisations were set up to help. They were established as social justice organisations and charities. Our wages are paid by our tenants, for whom we work. Our purpose is to provide housing not only for existing tenants but also for others. We are here to flag what is an urgent need and state there is no difference of opinion between us and the Government on the need to do this, but if action is not taken as a matter of urgency, it will not happen. There is a need for engagement by all arms of the State to make sure it will.

Dr. Donal McManus

As I do not have Mr. Dunne's fluency, I will read my written submission, a lot of which is similar to what our colleagues in the Housing Alliance have submitted.

I thank the joint committee for inviting the Irish Council for Social Housing, ICSH, to engage with it on one of the most significant issues affecting the sector. I am joined by two colleagues, Ms Karen Murphy, director of policy, and Ms Tina Donaghy, elected vice president at the ICSH and head of development at Fold Ireland, a tier 3 body.

The ICSH is the national federation of 260 housing associations that collectively own and manage over 35,000 homes provided at affordable rents for families, older people, people with disabilities, the homeless and single people. The housing association sector in Ireland is part of the wider social housing sector in Europe which has over 22 million homes throughout the European Union. A common factor within these jurisdictions is state support, directly or indirectly, to house people in the social housing sector, including through housing associations or approved housing bodies, as they are referred to in Ireland. Without state support, it is unlikely that many of the households in the social housing sector would be housed in accommodation with affordable rents. Members of the ICSH include larger tier 3 bodies which are managing over 300 to 6,000 homes such as the Housing Alliance and local and regional tier 1 and tier 2 approved housing bodies which provide housing and related support services for vulnerable groups in local communities and respond to specific local housing needs. Overall, the sector is committed to developing and managing social housing in the long-term and addressing the changing needs of the population.

I turn to classification. It is now almost a year and a half since EUROSTAT reclassified 14 approved housing bodies, placing them within the local government sub-sector. At the time and repeatedly since, including at this Oireachtas committee, the sector has stated its major concerns at this development for housing associations and welcomed the commitment of the Minister, Deputy Eoghan Murphy, and the Minister of State, Deputy English, to work towards the return of all approved housing bodies to off-balance sheet status. Since 2018, the CSO has begun the process of examining tier 2 approved housing bodies which include a mixture of approved housing bodies which are providing general needs housing, as well as those which provide more specialist housing for the homeless, older people and people with disabilities. However, in the 18 months since the CSO's decision and its subsequent confirmation by EUROSTAT, there has been little concrete progress in the undertaking of a thorough review of the decision or a change management programme to reverse it. The ICSH and the Housing Alliance have made proposals to assist a policy review and requested the establishment of a working group comprising departmental representatives and with an input from sector representatives. However, that has not happened.

As a sector we have been working on proposals and have also commissioned research to assist in our work in this and related areas, including examining the scope of social and affordable housing as a service of general economic interest, SGEI, under EU rules. In addition, the ICSH undertook, with Housing Europe, in 2017, a survey of the classification status of the housing association sectors in other EU member states and found the vast majority were off balance sheet.

In our view classification remains a significant issue, which will have long-term effects on the sector. For now, the sector's ability to deliver homes under Rebuilding Ireland has not diminished in delivery terms, but this is under the current capital plan and in the context of a housing crisis. Our concern is that in the medium and long term, the current on-balance sheet status will restrict ability to deliver social housing in the event of either a sharp restriction in the availability of public finances and a lot of other competing Exchequer demands, or in the event of a shallowing out of the political support for social housing provision. It is our experience that the provision of homes for vulnerable and low-income households is a continuous requirement and the severe reduction of capital funding for social housing during the financial downturn has contributed to the lack of suitable, affordable housing now evident. As a spillover effect from classification, a number of other public bodies are making public policy decisions based on the sector being controlled by the State.

We are grateful to the committee for this discussion today and propose that a working group be established to report within a six-month timeframe on a change management platform, which will work proactively towards reversing the classification decision, in co-operation with the sector, within a reasonable timeframe of 18 months to two years. This would help to set a target to take approved housing bodies, AHBs, off balance sheet by budget 2021.

This change management programme could address contractual agreements, degree of financing and risk exposure, and will involve consideration of changes to legislation, regulation, financing, and housing management reform. In doing so we will be helping to build further the capacity of an independent, well-regulated AHB sector that provides quality housing for the long term. We are committed to working with all the key stakeholders to ensure the best outcome for social housing delivery.

Last year the sector provided 3,219 social homes, 38% of the national total, and took more than 4,000 households off the social housing waiting list. A total of 54% were new build social homes provided by ICSH members to households on the social housing waiting list, 33% were acquisitions and 13% were leased. As a sector, we have delivered 6,700 homes since Rebuilding Ireland was launched and we hope to reach our 2021 target of 15,000 social homes. Our current pipeline is almost 5,000 homes or projects actually on site and funding approved to go on site. This does not include many more homes currently planned and further back in the development pipeline.

The target for 2019 is approximately 2,500 homes, excluding leasing, which we expect to achieve. As a sector there are challenges to the continued delivery at a high level, including the classification issue, high concentration of one lending source, access to land for continuous delivery, and the need for additional affordable rental options beyond current pilots. The classification issue is the central part of these other key issues. The publication of the regulation Bill is expected shortly and we look forward to that.

As a sector we are committed to the provision of permanent, affordable homes for people whose needs are not met by the private housing market and for people with special needs requiring housing and support. We look forward to hearing any comments the committee has following this address, or indeed on the paper we forwarded previously to the committee.

I thank the witnesses for their presentations. They know my position. I strongly support anything that takes the AHB sector off balance sheet as long as it does not in any way affect the not-for-profit and voluntary sector ethos of the sector. I know the witnesses' organisations share that view. I share and hear their frustration that, 18 months in, there does not seem to be much progress.

I am a little disappointed that we were not able to have representatives from the Department of Finance and the Department of Housing, Planning and Local Government with us today, but we will pursue the matter and have them here at the earliest opportunity, either before or after the recess. We can only have half the conversation if they are not in the room to answer some of the questions raised by members and the panel; it is not a properly rounded conversation. The committee has made a commitment to pursue that matter.

We did ask the Department of Finance for a written submission, which it gave us, and we are happy to share it with the panel. I am disappointed with two parts of it. The Department of Finance states it has no direct involvement with approved housing bodies, that their outputs are outside the scope of its responsibilities and that its main involvement is in the direct collection of the necessary financial data to ensure the public finances are compiled and reported on accurately. That point is repeated at the conclusion of the short submission which goes on to state an outstanding action point remains to review the remaining AHBs which were not encompassed in the 2017 exercise. The only thing on its radar is whether the approved housing bodies that remain off the balance sheet should be brought onto it. That is worrying. While strictly the Department is correct - it does not have a direct departmental role with the approved housing bodies - it is central to working out the best way to solve the problem alongside the Department of Housing, Planning and Local Government and the sector. If the statement is a reflection of the Department's thinking, it gives me great cause for concern. I wanted to share that view with the panel.

My questions are as follows. In as much detail as possible, will the panel outline how often the ICSH, the Housing Alliance or individual AHBs have met the Department of Finance and the Department of Housing, Planning and Local Government on this issue in the past 18 months? The committee should know what level of engagement there has been and whether representatives have been brought in for meetings. Is there a sense that the two Departments are co-operating? I am not trying to get anyone into trouble with either Department, but the last time we discussed this issue it was clear that there was a level of frustration on the part of the Department of Housing, Planning and Local Government at the lack of information flowing from the Department of Finance. It was quite open about it. Has the position improved? Are the Departments engaging with each other in any way?

I hear clearly what is being said about the supportive position of the Minister for Housing, Planning and Local Government, but does the panel have a sense that this issue is not a priority for the Department of Finance? Without wanting to cause a row with one of the two Departments that are necessary to assist in dealing with this issue, is that where the blockage is?

I would like to know a little more about what both organisations mean by a "change-management programme". Mr. McManus touched on some of the headline items, but what needs to happen to ensure the 2021 deadline will be met? What does that change look like? Both organisations are engaged with the Department on the regulation Bill, but is that change reflected in the legislation or will it need to be added on Committee or Report Stage? That stretches a little beyond what this meeting is about, but it would be helpful for the committee to know where the regulation Bill is and what needs to change to meet some of the concerns expressed.

With the indulgence of the Vice Chairman, I have one last question. The other big issue we are all keen to resolve is getting the special purpose vehicle up and running to access alternative sources of finance, including credit union finance. There have been some exchanges between Deputy Darragh O'Brien and the Minister of State, Deputy English, on this and I am very sympathetic to Deputy Darragh O'Brien's position. The Minister has said help and funding have been provided but that the rest is up to the approved housing bodies sector as a vehicle that can borrow and the credit union sector as a vehicle that can lend. There is a lack of urgency in that regard, in the same way as there is in reclassification. Perhaps the panel might update the committee on that issue andm in particular, tell us what the approved housing bodies sector needs from the Department of Housing, Planning and Local Government or the Department of Finance to assist in gaining access to funding. It is crazy that since the Central Bank changed the lending rules for credit unions, not one single cent has been made available from them to the sector. I am a member of a credit union, as I am sure are other members. We want credit unions to lend to the approved housing bodies sector for social housing provision. Will the panel give us its view on that matter?

We will start with Mr. Dunne.

Mr. Declan Dunne

I propose to address the point about urgency and then hand over to my colleague, John Hannigan, who is also the CEO of Circle Voluntary Housing Association and chairs the sub-committee within the alliance that deals with this issue. My colleagues can then join in as necessary.

The urgency is very real and immediate. It is fair to say that when this judgment came down initially, many people, including ourselves, were of the view that we had time and that money was available for that year and for the following year to do what we are doing. Significant work is under way and the funding is coming in for us to do that work. However, we now find ourselves in a situation where that window is closing and many other factors, which I mentioned before, are now kicking in. We are in a changed world and it merits a changed response from both Departments to recognise the need to do something immediately. I am referring to the impact of Brexit, the potential for a deficit in the budget going forward in the worst-case scenario and the demands for other capital projects such as hospitals, overruns and so on.

Those are significant developments since that occurred and the other part of that is that the need for housing is so pressing. People urgently need to access housing and that need increases every day of the week. We put it to both Departments that we understand how we all started from a view where we believed we had time. That time has now gone, circumstances have changed and we are at risk. Delivery of the programme is at risk in the future if we do not address that. That 18 months has not been wasted because from our side, the ICSH and ourselves have done a lot of work. We have commissioned work, we have done investigation and we have got material. The time is right and we are ready. We need formal engagement and we need all the arms of the State to engage actively and to show how the commitment that has been made by both the Minister for Housing, Planning and Local Government and the Minister of State at the Department of Housing, Planning and Local Government, Deputy English, to achieve this. The time is right. It is in the interests of people who depend on housing and it is urgent. There is no getting away from it and it must be addressed at this point.

I will hand the technical points over to Mr. Hannigan. He will speak about the number of engagements and regulation.

Mr. John Hannigan

I will let Dr. McManus comment first.

Dr. Donal McManus

We have had two or three meeting with the Department of Housing, Planning and Local Government and we provided a submission to it. We have had less engagement with the Department of Finance, probably only one meeting, which was part of a wider engagement.

The ICSH has had three meetings with the Department of Housing, Planning and Local Government and one meeting with the Department of Finance in 18 months.

Dr. Donal McManus

The meeting with the Department of Finance was not direct. It was through the community and voluntary pillar. It was raised at that platform.

So the ICSH has not even had a meeting with the Department of Finance.

Dr. Donal McManus

Not as directly as that but we have had meetings with the Department of Housing, Planning and Local Government. We have received information since that. As Mr. Dunne said, we have done much work but we do not have a platform to share it on. It is like déjà vu. We are speaking about this issue again 18 months after we had this initial discussion in March 2018. We would like to share the point to where we think matters could progress.

On regulation, we had initially mentioned that one of the issues with regulation was control. If a regulator was controlling the sector that would have an impact on the classification. The regulation Bill will be produced soon so we will see what happens with that. The problem about contracts was one the points we made. Any regulator should not be able to control housing bodies because in Britain they are seeing as controlling the sector from a public point of view.

That is the number of meetings we have had. We have done quite a bit of work but the difficulty is in trying to follow up on that and to have an engagement. It is difficult to have an engagement on that at a distance. As Mr. Dunne said, matters have moved on in the last 18 months. It is on the agenda for a lot of the housing bodies. We still need to classify what will happen. It is taking up headspace for many housing bodies both in the process and for new bodies as well, such as the tier 2 and the tier 1 approved housing bodies. They will also have to think about it. We are just trying to have dialogue with them on that since we have come up with the information.

Ms Karen Murphy

I can speak to the Deputy's question about the change management programme and give some further detail on that. As Dr. McManus and Mr. Dunne have alluded to, the first question would be whether it was a cross-stakeholder working group that was leading on it.

The first job would be to scope what is required and what that change management programme might look like. We have drafted proposals containing our own ideas and submitted them, but it is somewhat of a vacuum at the moment in terms of the ones that would need to be progressed or what might need to be added.

In terms of our proposals, we would be looking at legislation. The regulation Bill is a significant part of that but other legislative change may be required, for example, in respect of approved housing body status, which will be dealt with by the regulation Bill, but also other aspects of funding that may need to be dealt with through legislation.

Another one is looking at the financing, for example, a move towards a greater stream of affordable rental coming into the sector. We can look at whether that would help in terms of the overall position and the criteria on which the CSO came to its decision. If we had a greater degree of rental income from affordable rents, for example, would that change the position?

These are our proposals or areas for discussion. We do not know, because we do not have any feedback, the extent to which one criterion is more important than another. Much of the ruling was quite subjective. It is about engaging with the other parties so that we know which elements of a change management programme should be prioritised.

There are other areas such as reform of the rental scheme. The CSO pointed to the differential rents and the fact that they were guided by local authorities, which would be similar to housing assistance payment, HAP, and rental accommodation scheme, RAS, rents, for example. To what extent is that a significant factor? If change is required in that respect, we need to deal with that. We would not see that as an insurmountable problem.

Another is in respect of the nominations process, which was pointed to in the decision. We have suggestions in our proposals around choice-based lettings, which are used in HAP.

Looking at dealing with the individual criteria the CSO ruled on and the extent to which we may or may not need to make changes, we need to have that conversation and scope out the elements that need to be addressed and those that are less important. There were some changes to the funding systems that we thought may need to be addressed also. For example, the CSO criteria looked at the degree of risk the State held through contractual agreements. Our view is that there is quite a lot of risk on the approved housing body, AHB, through some of the more recent agreements. However, we would need to consider whether any further changes are required to balance out that perceived risk in the CSO criteria in respect of the financing. There are some areas we believe could be on the table such as the historic debt and whether that could be dealt with in a way that would change the perception of the CSO and EUROSTAT of the way our sector is perceived to be controlled by local government.

Those are detailed, technical aspects of the programme that we believe could be brought in to address the CSO's concerns. One or two of those elements may be enough to deal with the reclassification decision. What we need to do is get into the detail of that.

Mr. John Hannigan

The Housing Alliance has met the Department of Finance once, specifically on classification, in the very early stages of the considerations, and there has been nothing since. Along with our colleagues, we had two meetings with the Department, specifically on classification. Obviously, other meetings take place regularly on other issues.

In terms of whether there is a sense of co-operation, there is a sense of wanting to co-operate but we have not seen any actual evidence of action. There has been no action, as has been highlighted.

The change management programme was spoken about in some detail. It is fair to say that a significant proportion of that will not require legislation but will require some rethinking, none of which would affect the status or ethical approach we would take as not-for-profit organisations. From that perspective, we believe we can see reclassification happening without changing fundamentally what we are here to do and how we provide support and housing for our tenants.

The regulation Bill is an interesting question. We have not seen the regulation Bill. There has been no consultation with us in respect of it so we cannot tell the Deputy specifically what is in it.

What I can say is that in discussions with the regulator, it says it has seen it and does not believe there will be any additional impact in respect of classification. The regulator will have learned from the changes in the UK to regulatory requirements which impacted specifically on classification. In respect of what else is in the regulation Bill, I have no idea and most of my colleagues will be in the same position. We have not seen it. It raises questions that the sector it is likely to impact most is not being consulted directly in respect of its content. That is a concern.

On the questions on credit union finance and the special purpose vehicle, SPV, a significant level of work has been done in our sector on the creation of vehicles to enable borrowing to occur with credit unions and other third party funders, including pillar banks. We have been out to the market, as the Department and, perhaps, the committee have been advised, and terms of lending have been received from one of the credit union bodies. We have not pursued that at this point in time for commercial reasons because currently we have nobody and nothing to borrow from. My understanding is that the credit unions have not created a vehicle which is regulated by the Central Bank and which can enable borrowing to occur. Discussions with credit unions are active from our sector's perspective, in particular with individual members of the sector, but nothing is being done in terms of a deal that would see borrowing come through to the sector.

There are different players on the pitch here. If credit unions created a lending vehicle which was ready to go tomorrow, would housing bodies be in a position to borrow from it, depending on the interest rates and commercial viability of the loan offering?

Mr. John Hannigan

Absolutely.

They are ready to go.

Mr. John Hannigan

Yes. The ICSH vehicle supported through the Department requested credit union bodies to quote and send terms of borrowing.

Can the witnesses share information as to which credit union body made the offer that has been received?

Mr. John Hannigan

I would prefer not to for commercial reasons. Suffice it to say, it is a recognised element of the credit union movement.

I thank the witnesses for attending. Approved housing bodies are playing a massive part in Rebuilding Ireland and in the local authority sector. Last year, they provided 3,219 social homes. Local authorities are no longer building, which is a massive issue as we need to build local authority housing. Reference was made to the number of meetings which had taken place with the Department. My understanding is that approved housing bodies themselves meet with developers and revert to the local authorities. Most of the work is done through local authorities and it then goes back to the Department. Sometimes the local authorities do not even go back to the Department. That needs to be clarified. It is definitely the case that a lot of the work is done through the 31 local authorities with which approved housing bodies engage. The bodies then work with builders before going back to the local authorities. It is an issue I encountered recently. It is important to build the houses. The more we build the better.

I note that the ICSH and the Housing Alliance proposed that a working group be established to report within six months. We need to do that as soon as possible. The houses approved housing bodies provide are of excellent quality, which is important also. It was stated that a local authority can nominate 75% or more of the tenants of an approved housing body. My understanding is that local authorities nominate 100% of the tenants. There is a bit of confusion there and it is important to get that clarified. The approved housing bodies work through local authorities which give the names and then the meetings take place. All AHBs go through the local authorities. It is important to look at all areas, including bungalows for elderly people or people with disabilities. It is important to build more of them.

When the Bill addresses building, it should envision a lot more bungalows as people are living longer. I find it very hard to find a house for people with disabilities who are on the housing list, particularly a bungalow that is wheelchair accessible.

The delegates spoke about guidelines, rents and settings. Only last week, a lady appeared with me on our local radio station, KCLR 96FM. There is a beautiful housing estate which was built by one of the approved housing bodies and I have to say it is excellent. Two local authorities, those in counties Carlow and Laois, worked together. I note, however, that the rent for someone on the Carlow local authority housing list has been capped at €180 per week, whereas in County Laois it has been capped at €92 per week. Some people are paying double the amount their neighbour is paying. It is becoming a huge issue. We have to be very careful where neighbouring counties are involved, although I know that the matter has to go back to the Department. I have approached the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, about the matter, about which I am very concerned as it is causing hassle in estates. We need to be wary of it.

Recently an approved housing body scheme fell through because the developer pulled out. I do not know why, but he had his reasons. Seemingly, 36 houses were left in Wexford. What happened in that instance? I think the houses were put up for private sale. Perhaps the delegates might give me more information.

Lately a lot of local authorities have started to buy houses. What is the reason for this? Is it because they are cheaper? Sometimes buying houses is fine. However, we have to make sure people who do not qualify for inclusion in the local authority housing list or find it hard to get a mortgage will be in a position to buy a house. Will the delegates update me on that matter?

There is a question I wish to ask again. What have been the main impacts of AHB reclassification? It is something about which I am very concerned. Overall, great work has been done and there has been great management. That has not been mentioned this morning, but the Housing Alliance has a great management team, which is so important and on which I compliment the delegates. It is doing a really good job, whether the issue is anti-social behaviour or help with payments. Perhaps they might come back to me with the answers to some of those questions.

A lot of what Senator Murnane O'Connor said was not directly related to the reclassification.

No, but it is part of it.

Yes, I am just giving the delegates the option. They might not have the answers for the Senator today because some of the questions were about specific issues. If they do not have them today, perhaps they might get back to her directly.

Dr. Donal McManus

The Senator mentioned that 75% of tenants were nominated by local authorities. The capital assistance scheme pertains to people with special needs. Approved housing bodies drew up to 75% of tenants from the waiting list and had flexibility in selecting other tenants, but that has probably changed now. The current figure for the capital assistance scheme is 100%. Under the capital loan subsidy scheme and the leasing schemes, all of the tenants are drawn from the local authority waiting list. For a scheme to be approved, an impact for the local authority must be demonstrated, but generally all tenants must be taken from the local authority waiting list.

Mr. Declan Dunne

We are happy to answer the question which I would like to direct to Mr. O'Gorman, chief executive of Clúid Housing. I thank the Senator very much for her positive comments which we appreciate. We have a really close relationship with local authorities which we hold in high regard. We could do nothing without them. The councillors or members set the development plan for each county and we work with the executive. Councillors decide the priorities. The local authority is the planning authority for the area and makes allocations. We play a small part in supporting it to achieve its objectives in the county and are very happy to do so. In practical terms, it establishes the level of need and demand in its area is looking at the population. It then decides whether there is a role for it or us to play.

Rebuilding Ireland calls for us to account for one third, not two thirds, of overall housing provision. We are happy to do as requested. The local authorities play a very large and important role, which we recognise.

I will hand over to Mr. O'Gorman who will talk about some of the details.

Mr. Brian O'Gorman

I recently met the Senator in Carlow when we opened a scheme. We share her concerns about the rent caps. A different differential rent rate applies in each local authority area. There is a real issue of equity. There should be one differential rent scheme for the entire country. Whether a tenant is in County Donegal or County Wexford, he or she should be charged the same rent, based on his or her income. That is the system we all want to have in place. Having a system with a rent payment that is fair and affordable would be preferable for everybody, but we see a significant disparity because ours are national organisations. However, it becomes much more immediate and pressing in the Senator's constituency where the counties of Laois and Carlow are literally across the river from each other. People know that their neighbours are making different rent payments, which is a real problem.

We acquire units on the open market. Most of us have programmes which include both acquisitions and developments. We acquire some properties and build and develop some. We do not see ourselves as competing with the private sector. In fact, we enable it to do more as we can make deals with private developers. Because developers have a guaranteed sale on a portion of a development they can fund the rest of it through the private sector. We see ourselves as facilitating the private as well as the social sector. The last thing we want to do is to encourage the idea that social housing is competing with private housing. We need more of all forms of housing.

It is fair to say classification has not had a huge effect, as Mr. Dunne and Dr. McManus pointed out in their submissions. That is because as a country we are doing a lot better than we were during the recession years. As such, the impact has not been felt. We are trying to prevent an impact in the future. We are trying to plan for a situation where there will be many more demands on Government finance and the same level of funding will not be available for housing. That is of what we need to take care at this stage. If money can be sourced outside the public sector, the Government will be enabled to do more with the funding it has available. I am just repeating what others said. We have done a lot of work in the 18 months since classification, but we cannot do it without the help of the Department of Finance and the Department of Housing, Planning and Local Government. To come back to Deputy Ó Broin's point, the Department of Finance has stated it is the lead Department in dealing with this issue. It is a whole-of-government issue. While the Department of Housing, Planning and Local Government can do a certain amount, the Department of Finance is the lead Department. Without its active involvement, we will not be able to do this. As Dr. McManus said, if we can collaborate, liaise and work with the Department, we can reverse the classification decision. In the North of Ireland and throughout Britain the regulator, the housing associations, or registered social landlords as they are called, and the Government have worked together to reverse the classification undertaken in 2015. They were taken off the balance sheet in 2017. We can do similar things but only in collaboration with the Departments.

Mr. John Hannigan

On the impact, I would like to provide clarity on the figures in order that members know what they mean. Until the classification deadline was set and while we were on the balance sheet, we were able to generate €3 from the private sector for every €1 we received from the State. At that point the borrowings of the Housing Finance Agency, HFA, were considered to be off-balance sheet. They are now considered to be on the balance sheet. Everything we have borrowed since, regardless of from where it came, has been on the balance sheet. We have lost the ability to provide an extra €3 worth for every €1 spent by the State on housing. That is where we are.

Classification, if it was to be returned to us, offers us the opportunity to go back to doing that. For every €1 we get from the State in subsidy, we can provide another €3 in private finance that is not on the State's balance sheet. That is important because we are all aware of the national children's hospital, the national broadband plan and MetroLink. We now compete in the same fiscal space - I hate that phrase but it is commonly understood by everybody - as all those projects. We have read in the press and Ministers have said in the Dáil that other projects will be impacted as a result of that. Nothing has been announced on housing yet, but the reality is that if Brexit is to be as hard as we think it could be, the State will go from a potential small surplus to a very large deficit. That would mean we would have no fiscal space and all housing - local authority and AHB provision - could be wiped out. We have a pending difficulty and if we do not resolve this sooner rather than later, we could see the housing we provide wiped out completely.

That answer is of concern. We need to get clarification on that because housing is crucial. It is important for the witnesses to have their meeting with the Minister for Finance. It is also important that this committee has more meetings with them. Sometimes we would not be aware of what is going on and how serious this is now. We will have a budget in October with the competing demands of the children's hospital and national broadband plan. Where will the money go? We have 31 local authorities and we need to build more houses more quickly. It is suggested that €1 billion could be spent on housing assistance payment, HAP, this year, which is a phenomenal amount when houses could be built on which we would not be paying rent.

I was listening to the committee's proceedings earlier on the monitor. I was not being rude in not being present. I am trying to double job.

I appreciate the enormous contribution AHBs make to providing social and affordable housing. I do not doubt their motives and the good work they have done. However, I am worried about their campaign. I understand they are in a dilemma that is not of their making. They are responding pragmatically to a dilemma created for them, essentially by the fiscal rules. The reclassification we need is in how social and affordable housing is treated by the fiscal rules. We would be far better advised campaigning on that than campaigning for it to come off balance sheet. I am deeply concerned about that. I know why they are doing it and I do not doubt their good motives, but fundamentally I think they are making a mistake.

As the witnesses have put very starkly, the chickens are coming home to roost on the folly of the fiscal rules, which now essentially prevent states building public and affordable housing using their own money and their own resources. It is shocking that if Brexit hits us hard or some economic downturn hits us, the State could be prohibited from building public and affordable housing. We need to say loud and clear that it is outrageous and unacceptable. Because we are in that space, the housing bodies are being put under pressure to find other forms of financing and essentially fragment the social and affordable housing system, which fundamentally has to be about subsidised housing and has nothing to do with the market. Surely that is what public and affordable housing is about.

I would like to hear our guests' views on that. We discussed with the NDFA the dilemma that Clúid, I think, has in Enniskerry.

Mr. Brian O'Gorman

It is Respond.

Respond is in a dilemma because the best it could come up with is a price of €1,200 a month for cost-rental when what is affordable for average incomes is between €700 and €900. That is the pressure they are put under. Said pressure is going to be exacerbated. The more housing bodies have to do to get this off their balance sheets, the more they potentially come under pressure from private financial lenders on which they must rely in order to improve their balance sheets.

While I do not doubt the bona fides of the AHBs, there are questions regarding their becoming corporatised in other jurisdictions. I was in a bar in Dún Laoghaire when I was approached by a man who told me that he is involved with a hedge fund in New York that is considering moving into social housing in Ireland. The alarm bells started ringing as to what its agenda is in wanting to move into social housing. By moving into this space, housing bodies are opening up the danger of affordable and social housing becoming corporatised where profit motives come into play. I know that the bodies represented here today do not have them, but I fear that is the door they are opening.

I am a member of the Committee on Budgetary Oversight. A serious debate is starting on how capital expenditure generally is treated under the fiscal rules. It is not working. It is not necessary to be a left-winger; very mainstream people are saying there is something wrong with how they are designed and particularly with how they treat capital expenditure. Nowhere is this truer than in the area of public and affordable housing. We need to say that. I am sure many people in Europe will back us up in stating that these rules need to change because they are pushing us towards the privatisation or worse the potential extinction of public housing as we know it.

Dr. Donal McManus

The Deputy mentioned the fiscal rules. We had done some work at European level. What is called social and affordable housing comes under the service of general economic interest rules. Those are the rules that determine what member states can spend on social housing. How is social housing defined? In Ireland it is quite narrowly defined for people incomes below a particular level and certain vulnerable groups. In other countries social housing is defined much more widely. For example, in the Netherlands and Sweden it includes much higher income groups.

A number of years ago a few private companies in those countries took cases against the governments' social housing sector suggesting they were being blocked out from providing social housing. There are many affordability problems throughout Europe not just on the social side but on the affordable rental side with people who do not qualify for social housing side but do not want to get a mortgage. There has been discussion between all our federations in Europe on this issue. The SGEI rules are very narrowly defined. They are becoming more narrowly defined into targeting groups under certain income and vulnerable groups. With the whole push on cost rental and affordable rental, there is a chance to widen those rules for not just social but for cost rental and affordable rental.

We have done some work on that with some of our colleagues in Europe. We are a small country and other countries believe we are unusual in providing a very targeted social housing sector; other countries provide a much wider sector. With the problems with affordable rental for middle-income groups, there is momentum at European level. We made submissions at European level that the SGEI rules on social housing should be re-examined. They will be reviewed. There is a consultation up to mid-July on the service of general economic interest rules.

They determine the rules by which member states can allocate or notify the Government on social housing. That is the area that can be examined. We are interested because we are now charged with cost rental and affordable rental. On service of general interest, SGI, rules, Ireland and other parts of Europe are moving into that space where we are talking about not only lower-income groups but other groups whom the market has failed. The market has failed more people just outside social housing, which is why we are talking about cost and affordable rental. There is momentum for that. We have been pushing at European level for the SGI rules to be widened on that. It is on our radar, where it would not have been so much in the past. It would also be in local authorities' interest if the SGI rules were more flexible. However, it has to be determined at more of a European and Commission level to allow Government to determine what they can do at national level.

Mr. Declan Dunne

We find ourselves in agreement. Taking an overview, Ireland as a country is facing a significant challenge. The housing market can be broken into different sectors, and I often consider three of them, namely, people who want to get mortgages, many of whom cannot get one, people who want to access social housing and are waiting many years to access it, and people in the middle who would like to have a rental option and have certainty about rents and so on, which I would describe as intermediate housing. There are affordable and cost rental models, and we, Túath and Respond, which I also work with, are involved in trying to make that happen. It has taken a lot to get to that, with 40-year money or cheap money and so on.

Ireland as a country must think about housing generally being provided. All forms of houses are needed. As long as housing is a commodity rather than a social good, we will remain in difficulty. We have problems in all three classifications. I have two sons and I have aspirations for what I would like for them. I live in Clondalkin, which is an ordinary place, and I was able to buy a house. As I get to the age I am now, I have started to wonder whether I will need a nursing home later and how that will be funded. What happens to someone in a long-term rental with a private landlord when they no longer have an income? The State already has difficulty paying old age pensions without creating another social transfer for housing on top of everything else. There are fundamental policy issues which must be addressed.

The Deputy is correct about our orientation. We have two challenges. We would like to support housing policy development because it has evolved over the years and can evolve further, but we also have a requirement to build now and to deliver for people now. We tend to be pragmatists and solutions focused, trying to do something in the short term, but we would also like to see the bigger picture addressed.

I call Deputy Boyd Barrett to respond briefly, as Deputy Ó Broin wishes to come in.

That is very positive. It does not surprise me that Mr. Dunne would say that and it echoes the points I put to him. It is important that that statement comes out. What the witnesses have said here is very stark and very worrying. We must say in the loudest possible way that the Government must go to Europe and make it a priority that public and affordable housing would be treated differently under the fiscal rules, because otherwise we could find ourselves in a position where we are not allowed to spend money on public and affordable housing. That is just unacceptable. Arguably, about 70% of people are being left out of the market and there is no chance that the private market will deliver for them. That number is rising, whether it relates to affordable, public or intermediate in terms of controlled rents. That is the space we are in.

The proportions in Rebuilding Ireland are the opposite way around in what it hopes to deliver, as was noted in the opening statement. Would Mr. Dunne agree that is a message? Perhaps the witnesses are careful about what it tells the Government to say and do, but we really need to send out that message.

I am concerned about the pressure the associations are under. I qualify everything by acknowledging they are trying to do the right thing and have a record of doing so. In my area, Dún Laoghaire, it seems that, whether it is the local authority, the Government or whoever else is making the decisions about whether things should go to approved housing bodies or the local authority, a big and growing proportion seems to be loaded on the AHBs. Certainly in my area, there is a reluctance on the local authority's part to do it. I am worried that the pressure is building. Does it put the associations under new pressures? It seems that it does.

A big issue in public housing provision is welfare related matters. Local authority welfare teams are under-resourced and barely able to cope. I suspect that the AHBs have even fewer resources to deal with welfare issues. One ends up with tiers of support because of the pressure being exerted and the lack of resources. It all becomes more fragmented. There is even a problem in arranging transfers. One association might have particular housing stock that has one or two bedrooms and there is the question of whether someone who has children can secure a transfer. It proves difficult because the system is fragmented. It is a big problem and I am interested in learning how the delegates see it. There is a need for much more integration and consistency in the provision of support and resources. There are those who are above the thresholds which are ridiculously low and who are caught in no man's land. Last week I put the following point to representatives of the National Development Finance Agency. They did not disagree, although it was obviously difficult for them to say things, that affordability should be based on a proportion of income and that the affordable scheme should be back fitted to ensure that would be the case, rather than being dependent on site-specific costs, specific servicing costs or whatever else. It is crazy. Something is either affordable for ordinary people on average incomes or it is not. Surely it cannot be dependent on peculiarities, geographical position or specific site characteristics or from where the finance is coming.

I thank the Deputy. As happens, we end up straying into other areas. Deputy Ó Broin wanted to come back in.

I have two quick supplementary questions, but, first, it would be worthwhile comparing the number of meetings the delegates have had with relevant Departments with the number the inter-departmental Clearing House Group have had. That is a group that was established by the Department of Housing, Planning and Local Government to examine ways by which private sector real estate trust investment in social housing provision could be facilitated. In an equivalent period it had over 25 meetings. I know this because I submitted a request under freedom of information legislation. I received over 32 records or documents in response to that request. It was a stack that was inches thick. The delegates have had three meetings with the Department of Housing, Planning and Local Government, while the Housing Alliance has had one meeting with the Department of Finance. It has submitted documentation but received no response. That says a lot. The Department of Finance had no difficulty in being part of the inter-departmental group, contrary to what it has stated in its submission today that the AHB issue is not one for it. When it was an issue of private finance coming through a different mechanism, the Department had no difficulty. That highlights the problem.

Deputy Boyd Barrett made an important point. The CSO set out concerns in its initial determination with which EUROSTAT agreed, namely, issues related to financing, contracts, regulations and risk exposure. However, EUROSTAT went one step further. It was concerned not only with governance issues but also the relationship between rents - social rents and the level and movement of market rents and how they affected the AHB sector's investment decisions. That is a much bigger issue than that raised by the CSO.

There are ways of tackling that first group of issues that the CSO highlighted without undermining the body's ethos. I worry about the mistake that British AHBs made, which was to tackle the issue of rents, market fluctuations and investment decisions, they went further and they have gone down a trajectory of undermining their ethos. The jury is out and, depending on what the Minister comes back with, we can make some judgments.

Has the Housing Alliance of Ireland has made proposals to the Department or does it have a view on the second to last paragraph in the conclusions of the EUROSTAT document, regarding the additional criteria? That is a worry. Even if the AHBs do not want to, they may become sub-market operators as they are in Britain rather than not-for-profit and voluntary social housing providers. I have not heard anybody coming up with a way of responding to that.

I acknowledge the witnesses said there has been no impact on delivery. One of the main worries many of us had when the AHBs were put on balance sheet was that they would have to jump through the same hoops and four stages in the development pipeline as local authorities. I take from the comments that, so far, the Departments dealing with housing and finance have been pretty hands-off in how they do their business once they get approval. Has there been any change with respect to departmental scrutiny?

Mr. Declan Dunne

Ironically, there is much agreement and we are not in a battle with the right, the left, the private and public sectors or the Departments. It is interesting that the Department of Housing, Planning and Local Government has done more in the past 12 or 18 months to facilitate our delivery than ever before. That is my experience in Respond! at least. We all have to think about the market and economics but we need a functioning housing market. How will we retain young people in our country otherwise? Why should they stay here? How will we get key workers in cities when their rent or housing costs are so high? How will we attract the large intellectual property companies on which we depend? How will we do all that and have an Ireland of which we can be proud if it is not possible to have housing in every part of the market? There is great agreement on such matters, which might surprise people.

Our call is for a cross-party and multi-agency approach and we believe some of the work we have done positions us positively. Our hand is stronger than it was 12 months ago in trying to reverse this problem. We have a common cause. It is important that homes are seen as lifetime homes and such issues are not commodified. The market should not suck out large lumps of profit while providing people with homes. We have found ourselves - possibly unintentionally - in this position because of the HAP, etc. We need a pathway out of that. We should not create another problem for the Department of Finance of yet another social transfer to pay for people post-retirement to have a place to live.

Ms Tina Donaghy

On the quality of life and well-being issues, we have strong evidence that providing quality accommodation would keep people, especially those who are ageing, independent for much longer. I have strong evidence of people moving into our accommodation and experiencing improvement to their health, well-being, safety and security, as well as sustainability in their finances. They know where they will age and they are free to do that in place. They are not panicking about what will happen as they get older, where they will go and who will take care of them. That is important. Having purpose-built, sustainable and accessible accommodation frees up other social housing for families. There is a cycle in what we provide in strong partnerships and working with local authorities. We know the demographics of an area and the priority needs of that area. There are strongly managed and maintained properties and we know the condition of our stock. We know what money is required to ensure the housing stock can be repaired, renewed and replenished as required.

That is as much a part of the cycle as getting start-up funding.

My organisation has borrowed from commercial banks and the Housing Finance Agency. We have a strong model of funding but this is nonetheless a fledgling process. I have worked in the social housing area all my life, some of it in Northern Ireland and a big part of it in the United Kingdom, specifically London and south-east England. I am now in Ireland. We are new to using this private finance model to deliver public housing; we want to deliver public housing that is sustainable with good design, construction and management. We need assurances that we can continue doing that. We cannot do this in a piecemeal fashion but the tap seems to be getting turned on and off. We must ensure we can get a free flow of funding to allow us to continue to do what we do.

We have resourced our organisations and provided the appropriate training. All the ingredients are in place for us to continue to deliver and meet our growth plans and the elements of Rebuilding Ireland. Until we get the reclassification issue sorted, there is the potential that everything might stop.

Ms Karen Murphy

Deputy Ó Broin asked how we would deal with the rents issue without undermining our ethos. The objective is to return to the non-profit institutions serving households, NPISH, classification. That is essentially non-market in nature. In order to achieve that status or classification we do not envisage any significant change to the rent structure per se. We see a broadening of the category of clients that we need to serve, as traditionally we have always focused on social housing, but the market is now excluding so many different households that there is a necessary broadening. As Dr. McManus notes, the European rules must reflect that. We cannot have such a narrow definition because so many categories are excluded. That ethos is not in danger with regard to the NPISH status as it is essentially third sector or non-market.

Mr. John Hannigan

I can amplify the point a bit. The Deputy is absolutely correct. Like some of my colleagues, I have worked in the UK for a long period and its housing bodies have lost their way in terms of ethos and what they should be doing. Last year they produced 7% social housing from the total delivery, which is a very small portion. We will not get to that point in this country because there is a different view as to what we should be doing.

The EUROSTAT ruling relating to the rent link to the market is defined in two ways, with those elements being "price setter" and "price taker". The reality is that across Europe there is plenty of evidence that "price takers", which is what we are at this point, still qualify as off-balance sheet under NPISH. That is what we want reconsidered. It relevant that the addition was made but the reality is the evidence across the rest of Europe is that the majority of social housing provision, including affordable and social housing, is about price taking from the State's approval perspective. There is evidence to overturn that element but a very narrow view was taken in respect of how that was dealt with for Ireland, based on the other elements.

We have done a very significant amount of work and we are in a very strong position to be able to go back and start discussions again. The critical point is that we need the Department of Finance, which is the gateway to the Central Statistics Office, CSO. If it is not involved, our initial opportunity to speak with the CSO and have a serious conversation would be significantly diminished.

My question on affordable housing was answered. Affordable housing is crucial and we all know about it. There is definitely a lack of communication between the Department of Housing, Community and Local Government, local authorities, builders and approved housing bodies, whether that body is Clúid, Respond! or Tuath. There should be more awareness of one another and more meetings. One of those parties may think another party is doing something but that may not be the case; all the parties involved should know what the other is doing.

I have a few brief questions. I thank the witnesses for their submissions. Sometimes when we sit here we get caught up in all the red tape and bureaucracy of everything. It is very hard to understand that throughout Europe the equivalent of approved housing bodies are delivering social housing off-balance-sheet. We sit here and ask what is the difference between them and us. Mr. Hannigan gave me a bit of a shock when he said that the €3 his organisation leverages for every €1 it gets from the State is now on the State's books. If €1 billion was available from the credit unions and the Housing Alliance accessed that €1 billion, it would be State debt.

Mr. John Hannigan

Correct.

This is a fundamental issue that radically needs to be solved as quickly as possible. Based on this ruling, all private funding received is the State's responsibility.

Mr. John Hannigan

Yes.

The impact on the delivery of housing, as everybody has said, whether we agree in principle or not, is that we now rely more and more on the likes of the Housing Alliance to deliver social housing for the State. We all have different views as to whether it should be this way. I cannot understand how private funding is now part of the fiscal space. Getting into the technical end of why it was put on the balance sheet, is it down to the fact that the funding ratios are wrong? Other issues were raised with regard to management, setting the differential rate and the allocation of houses. These are all issues we can deal with locally. I am seriously worried, having heard Mr. Hannigan state that all private money and equity is now the State's responsibility because of this ruling.

Mr. John Hannigan

Yes, that is correct since the date of the ruling with regard to anything we raise and any expenditure we have. The organisations have income and expenditure. The net figure, whatever it might be with regard to our revenue costs, comprises either revenue costs or revenue incomes for the State.

Is that retrospective?

Mr. John Hannigan

It goes right back to the beginning of our existence. The reality is that anything new, regardless of where it comes from, is now considered to be Government debt and on the Government's balance sheet. As the Vice Chairman rightly said, if we were successful in borrowing from the credit unions effectively it would immediately become State debt. It is counted as State debt within the fiscal rules.

Why are we so different from the rest of Europe? This is what is frustrating. We read reports on how social housing is delivered throughout Europe via various models that are all off-balance-sheet. They all have vehicles that deliver social and affordable housing off-balance-sheet but in this country we do not seem to be able to strike that balance. Why is this?

Mr. John Hannigan

Some of it has to do with the narrowness of the definitions that we have here, as has already been highlighted by my colleagues from the Irish Council for Social Housing. The levels of earnings to qualify for social housing are quite low. There is a broader definition in other jurisdictions that allows for an intermediate market to exist and for it to be dealt with through approved housing bodies or similar bodies. The fiscal rules are one of the reasons this has occurred.

In addition to this, a different point of view has been taken for Ireland in isolation to the rest of Europe. This is one of the issues we have been examining to see how those interpretations stand up if we were to compare them to the rest of Europe. There are some differences in the interpretation for Ireland compared to what has been there for the UK and other jurisdictions. We are going to look at this.

Dr. Donal McManus

This is not a classification issue for countries in Europe. When we go to meetings they do not speak about this. In fact, they do not want to get involved because they do not want to get dragged into this Irish problem. They are keeping their heads down and stating the Irish are up to something but they do not want to get involved in it. There are various traditions in the history of social housing throughout the European Union. Many of them have focused on rent type structures, such as cost rent or economic rent, that allows the provision of State support but also means income is received from tenants and there is a HAP-type support for tenants who cannot meet the rent level.

By and large, this is not an issue. I am not aware of a campaign by EUROSTAT throughout the European Union to target social housing to put it on-balance-sheet. We were annoyed when it happened. We thought we were unfairly picked out as a sector for this classification. This has not been a widespread issue throughout the European Union. Social housing provision in Ireland has become narrow. It used to be wider with council housing back in the 1950s and 1960s when income groups were housed.

The rules at European level are a big issue. There is exemption from the notification of state aid if there is a targeted social housing definition. This should be re-examined and widened for Ireland and for other countries as there are real affordability problems in other major urban centres. There is momentum throughout Europe to look at the service of general interest, which are the rules by which a country can allocate state funding to social housing.

Aligned to the classification issue, which is what we are focusing on today, is seeing whether there could be a re-examination of the definition of the services of general economic interest rules in the current European climate, where housing affordability is a major problem, to allow more targeted social housing and to allow for a new income group. We must appreciate that affordable housing is a slippery term. Sometimes it is 35% of income and there is a question of who qualifies. Where the European Union rules come into play is where the market has failed and it is incumbent on a member state to be able to provide state aid, whether through subsidies or land. This issue could be grappled at the same time as the classification issue. It is a wider issue, as Deputy Boyd Barrett mentioned, but it is one that could be looked at here and at European level where there is common interest.

We provide a lot of capital funding for social housing, unlike the UK which moved into the private financing of social housing 30 or 40 years ago. We will shift from 100% capital to 30% capital in between five and seven years. This is a record change for any sector in Europe. In one sense we are working our way through it. We are not experts but we have made a fair stab at it to get to this stage, working with local authorities. There are a few things we could look at, including the European rules on services of general economic interest. They could certainly be explored so we can have a discussion and speak to people about them at European and national level. Conversations on classification and the services of general economic interest rules could certainly be had in the current housing environment.

Ms Tina Donaghy

The 30% capital is practically non-existent when purchasing within Dublin because of the high cost of rent. It is very unlikely a capital subsidy would be received for a turnkey project in Dublin or the surrounding counties because of the high level of market rents. The roles have reversed. At its commencement, the new financial model restricted construction or purchase outside Dublin because of the low market rents. Now the opposite is happening and it is more viable to be able to construct and purchase outside Dublin. The only projects for which a capital subsidy would be received now are new build projects, which brings about our requirement for land, working closely with local authorities and having land transfers to enable us to be able to deliver projects in existing urban centres where need is highest.

From my ignorant point of view, I just do not understand why we cannot resolve this. Everybody here is agreed, as is the Department, that this needs to be fixed. It is in the Department's interest because if it fixes this it will take this debt out of its fiscal space and will give it the money to spend on the overrun on the children's hospital. I am disappointed to see that the level of engagement is not there and that energy is not being put into revolving this.

Given there is consensus, the committee should do something about it.

A previous meeting of the committee was attended by the witnesses as well as officials from the Department of Housing, Planning and Local Government. The expertise relevant to the issues to which Dr. McManus referred rests within the Department of Finance. If something is new to the AHB sector, it is also new to officials in the Department of Housing, Planning and Local Government. The latter indicated clearly at the previous meeting that they needed input from the Department of Finance on the technicalities of resolving this issue. Until we asked officials from the Department of Finance about it at this committee and they had to answer our questions, there had been no sharing of that vital information with their colleagues in the other Department. My sense from talking to the Minister and officials in the Department of Housing, Planning and Local Government is that they would like to resolve this matter but they do not know how to do so. The Department of Finance is key to a resolution, which makes its original proposal all the more worrying.

On foot of this meeting, I propose that we write to both Departments to express our concern at the lack of progress and to insist that representatives from each attend a meeting of the committee at the earliest opportunity to explain their view on this issue. If we are saying there is an urgency to resolve it, whatever about the detail of how that is done, we need to express that urgency to the two Departments by way of a letter from the committee on foot of today's proceedings. Different members have different views, but we do not need to get into the details.

We can discuss Deputy Ó Broin's proposal in private session, if he is agreeable.

I thank the Vice Chairman.

I thank the witnesses for their interesting engagement with the committee. It is frustrating for everybody that we cannot resolve this issue, which is fundamental to resolving the housing crisis.

The joint committee went into private session at 1 p.m. and adjourned at 1.05 p.m. until 9.30 a.m. on Thursday, 4 July 2019.