Select Committee on Housing, Local Government and Heritage debate -
Tuesday, 20 Apr 2021

Vote 34 - Housing, Local Government and Heritage (Revised)

Chairman

I welcome the Minister, Deputy Darragh O'Brien, and his officials to the meeting and thank them for the briefing material provided, which has been circulated to members of the committee. The first two sets of imeachtaí have been circulated relating to the select committee meetings on 6 October and 12 November 2020. Are they agreed? Agreed.

This meeting has been convened to consider the Revised Estimates for Votes 16, 23 and 34, which were referred to the committee by the Dáil. While the committee has no role in approving the Estimates, there is an opportunity for the committee to make the process more transparent and to engage on relevant performance issues in a meaningful way.

I propose to proceed by asking the Minister to give an overview of the pressures impacting on the Department's performance and related expenditure in each programme area in 2021. I would appreciate it if he could restrict his briefing to five minutes. Next, we will proceed to members for questions and I will take them in the order in which they indicate.

I invite the Minister to make his opening statement.

Minister for Housing, Local Government and Heritage (Deputy Darragh O'Brien)

We have provided a briefing on this to the committee and I will go through the high-level points of the Department's Estimate for 2021, as well as the Votes for the Valuation Office and the Property Registration Authority of Ireland, which are under the aegis of my Department. We have given some performance information and we have also given a briefing to members. Our time is limited and we will have a further discussion later after the Estimates meeting on the commitments in the programme for Government

It is important to note that the overall Estimate for Vote 34 provided for in budget 2021 is very significant, with just over €5.118 billion in gross expenditure for the year. This is made up of €2.356 billion in current spending and €2.76 billion on the capital side. There was a carry-over of just over €200 million from 2020. Any fair view of that would see that it is a very significant budget for this Department and that it is heavy on the capital side, which is what we need. There is no question but that there will be some impact on delivery, which I will cover later, due to the Covid-19 pandemic and the significant shutdown of construction, bar some small exemptions for certain social housing and strategic sites. In general, my Department's funding represents a very substantial element of overall Government expenditure for 2021.

We know that 2020 was a very challenging year for Ireland and 2021 has been no different. We have seen substantial additional funds flow through the Department in the areas of stimulus funding to bring voids back into play. Last year, there were 3,607 voids. They are located all over the country and in all of the local authorities. There were significant waivers provided to support local business and a 100% rates waiver. We also made sure to fund the local authorities with that gap in funding and provided additional funding to support local authorities in the area of homelessness where we have made and continue to make significant progress in tackling homelessness. That has been in no short measure due to the hard work done by those in the NGO sector who work with us, as well as our own staff. It is also because of the substantial priority the Government has given to driving down homelessness. The rate of child and family homelessness year on year has fallen by just over 40% and the level of overall homelessness has reduced by 18%. Homelessness still remains a challenge for us as a Department and it is for us, as a Dáil, to tackle the issue of singles homelessness. There are supports available in that area but it is a significant priority for me to continue the progress the Government has made in a short space of time to ensure that we give people permanent housing, and permanent housing solutions, but are supporting those who need it most through schemes like Housing First, which we will expand further into this year.

Despite the very challenging situation of a very limited construction sector for the first quarter of 2021, the reopening of activity on a broader scale now means that we can work to get back on track. It is too early yet to fully determine the impact. Each week of shutdown will result, between public and private house building, in 800 homes not being delivered this year. We are going to work very closely with our colleagues in local authorities for measures that will support making up some of that lost ground and having a phased delivery of developments. I will continue to work very closely with the local authority sector and our partners in the approved housing bodies to see how we can expedite delivery through 2021, and to make up for some of that lost ground to ensure that we deliver good public and affordable homes for our people.

We have set an ambitious target for this year. We intend to deliver 12,750 new social homes, the majority of which, 9,500, will be through new build, together with some leasing and a small amount of acquisition. We may be looking to allow some further latitude for local authorities on the acquisition side to make up for some of the lost stock. I intend, with agreement in the Government, to bring forward a further voids programme for this year to ensure that vacant stock that lies idle is brought back quickly. I reiterate that last year, we brought 3,607 units back into use. All of them have been allocated already and most have been occupied, which is what we want to ensure is done.

Importantly, in terms of capital funding, a priority for the Government is the delivery of affordable homes for working people and we have real plans in place to do that. I will be bringing forward the affordable housing Bill, and I thank the committee for their work on the pre-legislative scrutiny side. In respect of capital funding, we have provided €468 million specifically to cover affordability measures, of which €110 million is on the affordable shared equity side plus the cost rental equity loan. We will deliver the first cost rental units this year. We have set a target of 440 units but some people have said that it is not enough. Of course we want to build on that but let us remember that we are starting from zero with that new form of housing tenure.

We have an additional €50 million in the serviced sites fund to support local delivery and affordable purchase. I also intend to bring forward changes to the serviced sites fund to allow faster and more efficient delivery of affordable houses on local authority lands. We have additional moneys for the local infrastructure housing activation fund, LIHAF. I am also reworking some changes to the Rebuilding Ireland home loan. I have some proposals with me to improve that product and loan.

In addition to the €205 million being spent on the Land Development Agency in its progression of-----

Chairman

I must interrupt the Minister as we are tight on time.

Deputy Darragh O'Brien

I will leave housing at that and I will be happy to take any questions members have on the issue.

I will speak on water services for less than a minute. We are providing more than €1.3 billion to Irish Water in 2021. We provided an additional €88 million in capital after I was appointed last year and this year, an additional €100 million has been provided. It is badly needed, particularly in the regions and rural areas. We will have a review of the NDP this year and I will bring forward some initiatives with regard to areas that do not have the required wastewater treatment or freshwater capacity. My Department will ensure that Irish Water is funded. I recently published a White Paper and the stakeholders in the water sector have been invited by the Workplace Relations Commission, WRC, to meet so that we can move towards a single publicly-owned utility model.

We are tight on time, which is not of my making. I have not covered heritage, planning or local government. I mean no disrespect to those areas but they have been covered in the briefing and are addressed in the statement supplied. If there are questions in that regard, I am happy to take them.

Chairman

I appreciate that the Minister has a large Department with a substantial budget and that it was difficult for him to cover everything in the opening statement. I ask members to stick to asking direct questions. I call Deputy McAuliffe.

Deputy Paul McAuliffe

Do I have five minutes?

Chairman

Yes. I ask the Deputy to try to keep it to four minutes.

Deputy Paul McAuliffe

We will have an opportunity when the joint committee meets to discuss housing with the Minister so I will leave some issues until then. Looking at these figures one cannot miss the €558 million figure for the housing assistance payment, HAP. It leaps off the page. The Minister obviously inherited this system. I and other members have consistently stated that HAP accounts for the largest spend in housing. However, the people negotiating that Government procurement are some of the most vulnerable in society. Has the Minister considered how we might get better value and tenure and reduce over time the spending on housing assistance payments?

There has been consistent underspending on Traveller accommodation, often connected with local authorities. What measures has the Minister taken to change that?

Some local authorities, notably Dublin City Council, are saying they are short on funding for retrofitting. Does that match with the funding in the Estimates?

My colleagues have suggested that €110 million for the shared equity scheme is not enough, even though we have not even passed the legislation. The allocation will increase next year. Does the Minister have any idea where that budget will go?

Deputy Darragh O'Brien

I thank Deputy McAuliffe for his questions. There is no question that the housing assistance payment is a significant cost to the State. We have to make sure we tip the balance back from providing the short-term measures that we need to provide for people. We are looking to support an additional 15,800 new households to have their housing needs met under HAP or the rental accommodation scheme, RAS. It is a necessary measure in the short term to help people, with a particular focus on helping people out of homelessness. The thrust of the Government's plan in the new programme for Government is to increase the provision of new-build public homes. That is why we set a significant target of 12,750 homes for this year and bringing vacant stock back into use.

There is no doubt there are value issues with regard to HAP but we come under understandable pressure from parts of the country where people want to see the HAP limits raised. To put this in context, 77,503 households are covered under HAP, RAS and other schemes. We cannot switch off that support. We need a phased approach to deliver more than 50,000 public homes and help people out of that situation. We will always need some form of short-term rental support for families and we have significant work to do.

On the energy retrofit programme, as the Deputy will be aware, we have the midlands retrofit programme, for which €10 million was provided initially. We have provided €30 million and €65 million in total for retrofitting. Most of the target for delivery of retrofit is in our own housing stock. The target is to complete a deep retrofit of approximately 2,500 homes to improve their energy efficiency and, most importantly, to reduce energy use and bills and make public homes more comfortable and healthier places for people to live in.

On Traveller accommodation, the Minister of State, Deputy Peter Burke, will be before the joint committee meeting later. It is a concern to me and all parties that the expenditure allocated to this area has not been fully utilised. We want to see that change. We have allocated €15.5 million for the delivery of Traveller accommodation. The Minister of State is heavily involved with local authorities and Traveller organisations to ensure that funding is spent and utilised. It was for this reason that we exempted Traveller accommodation and most social housing from the construction restrictions earlier in the year.

We have allocated €65 million for retrofitting social housing.

Deputy Cian O'Callaghan

On the theme of value for money, the Minister referred to long-term leasing under Part V. Does he have any value-for-money concerns about the increased use of leasing instead of Part V acquisitions? Documents released to me under freedom of information show that Dún Laoghaire-Rathdown County Council, with State approval, signed multimillion euro contracts for 25-year long-term leases and did not carry out any independent valuation. It relied entirely on valuations provided by the developer. Is the Minister concerned about that? Is he confident that this has not happened anywhere else? Has he investigated the matter and can he assure us that it will not happen again?

Deputy Darragh O'Brien

We have set out our housing target for this year. It is for 12,750 units, of which 2,450 will be through long-term leasing. I do not see leasing as taking over from Part V. Last year, 19 or 20 homes were secured under Part V leasing. We must be aware of value for money. My big focus is on building new homes, which is why we have allocated funding for that.

There is a role for leasing. Most people want to have a formal lease and buy-back arrangement but the capital issue is that with leasing we can secure more homes initially and up-front for a lesser capital cost at the outset. It makes sense to have certain delivery models in that regard and that we have a blend of delivery.

I saw the report in relation to Dún Laoghaire-Rathdown and the homes to which the Deputy referred and I will certainly look into the matter.

Incidentally, the number of leasing units under Part V was actually 16, not 19, in 2020. It is a very small number.

We delivered over 7,000 public homes last year. We would have liked to do more than that but we were affected by the construction shutdown. Leasing has a role but the focus of the Government is on new builds utilising our own stock properly. The approved housing bodies, AHBs, have a role in this as well, particularly on the turnkey side and delivering public homes on private land. We are in the midst of a housing crisis. We need to build 33,000 public and private homes per annum.

Right now, we are well off that. Last year, even without the pandemic, we would probably have reached about 25,000 homes in total between public and private. We need more than that. We have to look at increasing our own housing stock and using all avenues open to us to deliver homes for people. The Part V leasing unit number is 16. I will look into the issue that the Deputy raised about Dún Laoghaire-Rathdown. I have not made any conclusion on that and will investigate it with regard to other local authorities too. I thank Deputy Cian O'Callaghan for his question.

Deputy Emer Higgins

I believe that the affordable housing Bill has the potential to become a real game-changer in ramping up the delivery of much-needed affordable homes. The €468 million being provided for in Estimates is extremely significant. The Minister mentioned some changes that he is considering to allow for the faster and more efficient delivery of affordable homes on sites covered by the serviced sites fund. That would be welcome from the value-for-money perspective and I would be interested in hearing more information about the Minister's plans or proposals on that. It is great to see that the pyrite remediation scheme is included in the Estimates. What is not included is the provision for funding for homeowners impacted by construction deficits. We had a good session on that in our housing committee and I would be interested to hear of any progress that the working group is making.

Some of my colleagues have addressed HAP. From a different perspective, I would like to hear about HAP in the context of Covid, given that we have so many people who are temporarily reliant on social welfare, including the pandemic unemployment payment and other supports that the Government is providing during such an uncertain time. There are now more people eligible for, reliant on and accessing HAP, and I would be interested to know what plans are in place to help people to transition out of HAP as they get back in to employment.

Deputy Darragh O'Brien

I am glad that Deputy Higgins has raised a number of issues, especially about affordable housing. It will be clear to the committee and people will be aware that provision of affordable housing, especially for affordable purchase and affordable rent, is a priority. The measures that we brought forward in budget 2021 are not insignificant at all. I am proposing some changes to the serviced sites fund that are subject to Government approval. The fund itself is €310 million and could provide more than 6,000 affordable homes. There are affordability issues in some areas, especially Dublin and Cork, and Galway to a lesser degree, where we may look at flexibility in the subvention that the State makes. Dublin City Council, for example, has come up against one of a number of obstacles and while I will not go into that in too much detail, we need flexibility to allow faster delivery.

Under the fund this year, homes will be built in Boherboy and a couple of good schemes have been announced in Dun Emer in Lusk, where we are looking at prices of between €165,000 and €265,000, remembering that the local authority will take an equity stake in that home for that development. The serviced sites fund can be used well. The concept is good but it needs to be repurposed. I will bring forward some of those changes in the affordable housing Bill. I am also looking at Part V provision and working that through with Government. I have made some comment on that, as the Deputy will see, about increasing the provision from 10% to 20%. That would protect the 10% social housing and bring in 10% affordable housing. We need a national affordable housing scheme, which we are bringing forward in the Bill, including affordable purchase, affordable rental for the first time, and an affordable cost-rental scheme.

I am committed to the pyrite remediation scheme. I was involved with its establishment in 2011. There is still work to be done by the Pyrite Resolution Board and we intend to continue that. I have asked the board to look at category 1 plus progression to see if we can expand the scheme further. We also have the defective blocks scheme that is currently in operation in Donegal and in Mayo. I am glad to say that applications to that scheme are increasing.

We gave a commitment about construction defects in the programme for Government. When I was a member of this committee, I met with the Construction Defects Alliance. Many of us did from across parties. Good work was done in the Safe as Houses report.

We said that we would establish an expert group along the lines of what was done with the original pyrite remediation panel. That group is up and running and is chaired independently by Seamus Neely, former CEO of Donegal County Council. It has had its first meeting. I expect it to bring recommendations to me and want it to operate independently of me. I am glad that the Construction Defects Alliance, the Apartment Owners' Network and others have been able to move on this quickly. There are some who would say just to bring in a remediation scheme immediately. We have to quantify the problem, its scale and its cost. The best people to do that are the people in that group chaired by Seamus Neely. I will not set a timeframe on their work because it is their work to do. They will report to me and make recommendations which I, in turn, intend to bring to Government.

Chairman

I am sorry to interrupt the Minister. We are finished with that slot.

Deputy Eoin Ó Broin

I have a couple of quick questions so that we have time for Deputy O'Donoghue too. Will the Minister tell us from which programme the €214 million has been carried over? I assume the bulk of it is in social housing for local authorities but maybe the Minister will confirm that.

Covid obviously played a significant role in the drop in construction output last year. Social housing had a much larger drop in output than overall construction. Dublin City Council, South Dublin County Council and Dún Laoghaire-Rathdown County Council delivered no units directly last year. Cork City Council delivered very few and Fingal County Council delivered even less. Is the Minister concerned that there are more issues than just Covid? Are there other issues, especially with the public spending code, which is slowing down some larger projects? The Minister is a strong critic of turnkey housing and said he wanted to prioritise direct delivery of new builds by local authorities. Last year saw 50% of new builds as turnkey. What does the Minister propose to do this year to shift the balance back in favour of direct delivery by local authorities?

On HAP and RAS, at the end of this year, according to the Minister's estimates, 93,000 households will be on HAP and RAS, so we are exponentially increasing the use of HAP and RAS. I am not saying that the Minister can unwind it straight away. At what point will we start to see a reduction of the use of HAP and RAS? Obviously the aim is ultimately to get people into long-term, secure social housing.

Deputy Darragh O'Brien

I thank Deputy Ó Broin. The €214 million carryover is made up of six different subheads. There is €58 million from local authority housing and €40 million from energy efficiency, with about €90 million from pyrite and mica remediation, which is basically because the mica scheme is up and running and accepting applications. There is about €10 million from Irish Water. The total carryover of €214 million is outlined in the paper submitted. We intend for that to be used this year.

To answer the question about the impact of the shutdown of construction and the difference between public and private, we made up quite significant ground, where we did just short of 72% of the target that was set for public housing delivery. One must remember, on the private side, which caught up quicker, that a sizeable proportion of private homes were one-off dwellings. That has a disproportionate impact. When one is building estates, the Deputy will be aware that whole sites were effectively closed, whereas people were able to get moving on the one-off houses. That difference predominantly relates to one-off homes. We have a total of about 21,000 homes and just short of 4,500 are single dwellings, so it has a disproportionate effect. The private sector caught up. We want public home-building to catch up this year. There is a role for turnkeys. I have been critical of them in the past, especially if I felt that they were not adding to stock. Where they are adding to stock, they should be welcome. They allow fast delivery, especially through approved housing bodies, and efficient delivery too.

On where we see the tipping point, even with the restrictions, we hope that we will see quarter 1 figures about delivery in the next four to five weeks. That will give us a much clearer picture on what the projections for the remainder of this year are.

There has been a greater dependence on HAP and, particularly, RAS, and on emergency rent supplement but I think most people understand one of the reasons for that has been the pandemic. We have had to be able to provide short-term rental supports for people who have not been able to pay their rent through no fault of their own. They have lost their jobs and entered into the emergency rent supplement payment, which is an important one that continues at the moment.

The turnkey piece, on which we can go into in more detail in the meeting we have after this, is not to substitute local authority or approved housing body, AHB, build direct programmes but to complement them. Where it complements them and makes sense, we should do it and we should allow that flexibility. I am trying to build up capacity in the local authorities to deliver their own homes. We need to make sure we are building up experience and expertise within the sector on the project management side. I have set specific targets for every local authority in the country on what it needs to deliver in 2021, split between build, lease and acquisition. I have met all the chief executives, either in person or virtually. I intend to continue to do that from the end of this month, particularly in Connacht, where I have to meet a number of chief executives. In a matter of weeks, we will have an idea of what has been able to be delivered in quarter 1.

We will publish the housing for all plan in the summer of this year, which will give us a multi-annual view of what delivery we need to do over the next three, five and ten years in relation to public and affordable homes. I hope that answers most of the Deputy's questions.

Deputy Richard O'Donoghue

There is a shortage of houses because, due to the pandemic, houses were not being built. An issue in Limerick at the moment concerns people relocating to Limerick from other counties, which is causing a massive problem with price increases for three- and four-bed houses. It is up to €50,000 to €75,000 in some areas, including Castleconnell. How do we combat that in a time of crisis? We have not built enough houses, now we have a price increase and a shortage of houses. People relocating from the likes of Dublin have been paid big money for their houses so, when they are relocating, it is easy to get on the market and put the local people out of same.

Some 73% of housing in Limerick is at full capacity. There have been promises from previous Governments for up to 30 years that they will upgrade sewerage systems. They fell on deaf ears. Now we have only 27% left. Some 7% in east Limerick and 20% in west Limerick have inadequate sewerage facilities. We have asked the local authorities what they will do and they said they will only upgrade existing sewerage plants, which does not increase capacity. They say they will only build on the areas where there is capacity. That means they will build in west Limerick, mostly, and there is 7% left in east Limerick. When will we get the sewerage treatment plants we have been asking for for up to 30 years in Drumcolliher, Oola and all these places to which people are crying out to come home, for houses to be built and to house the people we have in our areas?

Deputy Darragh O'Brien

I thank the Deputy. On the issue of sewerage treatment capacity, wastewater capacity and freshwater capacity, it is a great frustration for many people. We have discussed this ourselves and we are doing a couple of things right now. I have asked Irish Water to work with local authorities in resetting priorities of delivery under the capital plan. We need money to do that, which is why I mentioned at the start about €1.3 billion being provided for Irish Water in 2021. About €105 million of that is provided to support water programmes delivered by the Department, including the rural water programme. As part of the national development plan, NDP, review, to which the Department and I have made a submission, we need to be inventive about how we assist in moving projects along that have been there for quite some time. We need to do this if we believe in balanced regional development, which I do absolutely. There are few positives of Covid, but one is that many people have been able to go back to their original homes, working online and remotely. If we follow an approach of town and village centre first, which we are, we need to make sure those towns and villages have the basic capacity to provide for additional population coming into the area.

We did the developer-led, older infrastructure scheme recently. We brought about 2,000 homes back into the mains network. We have a lot more to do there. The capital plan for Irish Water is being worked through with them. I am in regular contact with them. More needs to be done, particularly in a regional sense.

I am confident we will be able to make strides in this, particularly under the NDP. I have a particular proposal in there, on which I cannot go into detail yet. Once I have it, I am looking at what we can do in towns and villages that do not have any Irish Water infrastructure. I refer to places with older historical council schemes and what we can do to build capacity in those areas. Fundamentally, my earnest belief is we need a publicly owned single water utility that people will be proud of to deliver an efficient and effective service for all our citizens. That is where the White Paper I published a number of weeks ago on the future of Irish Water and water and waste water provision is important. I have had very good engagement with unions, with Irish Water and with the County and City Management Association, CCMA. The next step is for them, hopefully, to go back into discussions with the WRC. We want to make sure we have a sustainable water system into the future. I have made sure water is not the poor relation in this Department. It is crucial if we are to deliver the additional homes we need for our people and if we are to balance our regional development.

The Government recently announced €1.3 billion in urban regeneration and development fund, URDF, funding. Limerick was a significant beneficiary of that. It is to make sure that our regions are invested in and that people live, work and bring additional foreign direct and domestic private investment into those areas. It is an exciting time for our regions but we need to make sure it is backed up with the required infrastructure. I will continue to engage with the Deputy on this issue. The NDP is a chance to do more and I want to see the capital plan expedited, like the older schemes the Deputy mentioned that have been on the books for 20 or 30 years. We need to start moving and getting them done.

Chairman

I thank the Minister and I thank members for the questions.