Tuesday, 9 April 2019

Questions (62)

Darragh O'Brien


62. Deputy Darragh O'Brien asked the Minister for Housing, Planning and Local Government the status of the development of a special purpose vehicle by the Irish Council for Social Housing for the investment of funds in social housing; and if he will make a statement on the matter. [16450/19]

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Oral answers (30 contributions) (Question to Housing)

The Minister is probably used to answering this question at this stage. In light of the fact that for almost five years, the credit union has been advocating using approximately €10 billion in assets to invest in the social good, and not a cent has been used to date, I ask the Minister to give an update on the development of a special purpose vehicle by the Irish Council for Social Housing, ICSH, for the investment of funds in social housing.

I will give the Deputy an update to the best of my ability because we have been through this on a number of occasions.

We do it every month. It should get better every month.

Absolutely. The Department, the Minister, Deputy Eoghan Murphy, and I would be delighted to see the credit union money invested in social housing projects.

I will embarrass the Minister of State into actually doing something.

We would be very happy to do it and, wherever we can, we have worked to that end, but we cannot and should not control or be involved in certain parts. Considerable work has been ongoing between the Irish Council for Social Housing, a number of larger tier 3 approved housing bodies, AHBs, and their financial advisers on the development of a vehicle for delivering private financing for AHBs providing social housing in line with ambitions set out in the Government's Rebuilding Ireland action plan on housing and homelessness.  The ICSH work is being undertaken in three phases, the first two of which have been completed, which are the phases designed to test the market interest in investing in social housing and the appetite among AHBs for private finance.  While the ICSH had hoped to have completed the final phase of the work by now, and we certainly hoped it would be completed too, it is focused on the structuring of special purpose vehicles and this important work is ongoing.

I understand that one of the issues which has given rise to the delay in concluding the work is the need to take account of other private finance arrangements and vehicles that certain AHBs have put in place in parallel. Three different bodies have put arrangements in place and I believe they are working quite well. The decision by EUROSTAT to reclassify AHBs has also influenced the progression of this final phase of work. Alongside this project, three individual approved housing bodies have been successful in accessing private finance from financial institutions to deliver new social housing, with each financial institution having its own specific requirements for lending and investing. While the completion of the outstanding phase of work is primarily a matter for the Irish Council for Social Housing, I hope that it will be in a position to finish it as soon as possible. We are committed to it. The Central Bank changed the rules to allow investment. Deputy Darragh O'Brien keeps referring to a figure of €10 billion. Under the rules, up to €800 million or €900 million-----

It is still significant.

-----could be invested in housing and we would be delighted to see it.

One could take this away from being a credit union issue and say it is a social housing issue. Government policy since 2014 has been to provide alternative sustainable sources of funding and here is one that has not been utilised in five years. The Minister of State has regularly replied to questions that I have tabled that one credit union body had a special purpose vehicle ready. What is happening there? Why has not a single red cent gone into the special purpose vehicle? Is there no appetite for it? Does the Minister of State not think it is needed? What is the final phase that we are still waiting for and what is the Minister of State's timeframe for that completion? He has mentioned rightly that AHBs are on-balance sheet now. He has another source of funding here that could be off-balance sheet to provide social and affordable homes. I really do not get it and that is why I ask the Minister of State questions repeatedly. Is this a priority or is it something that the Government does not want to do?

We cannot be any clearer that it is something that we want to do and have facilitated as a Department, working with the Department of Finance and the Central Bank. All the rules and changes have been made to facilitate this to happen. We committed to it in our programme for Government and it makes common sense. If there is money to be invested and we want to fund social housing projects, we should put the two together. There is only so far that a Government can go. These are private finance arrangements and they have to design a special purpose vehicle themselves, separate to Government and to our Department. I cannot be clearer than that. The Deputy might not like that. If he wants to help with the design of one, work away.

I could probably do a better job than whoever the Minister of State has doing it at present.

With respect, I have not heard Deputy Darragh O'Brien come forward with solutions over the last six months in which he has asked the same question but good luck to him if he wants to bring forward a solution. To be clear, because the Deputy keeps wanting to mix up what I said, I confirm that one of the credit union bodies, the Credit Union Development Association, has indicated that it has completed all the work necessary to underpin a special purpose vehicle for investors but it has not yet formally established it as a corporate entity because the cost involved-----

That is different.

-----would not justify it until such a time as a clear investment opportunity is available.

To be very clear-----

This is an important point.

We will be back to the Minister of State.

That is a different answer from the one the Minister of State gave me before.

It is exactly the same.

The Deputy should check the record. I have checked it but the Deputy obviously has not checked it.

I will check the record. I actually asked the Minister of State to correct it before and he got very annoyed the last time I said that.

I have nothing to correct.

The Minister of State is saying that the work is completed now, not that it is up and running or effective. This is obviously not a policy priority for Government. The Minister of State is contradicting himself. The Minister could answer the question too but he seems to have delegated his responsibility for that to his Minister of State because, effectively, Government has said that creating a special purpose vehicle is for the credit unions. Flatly contradicting that, however, is the fact that it has over the years engaged public money to assist the Irish Council for Social Housing to do what it says is up to the credit unions. Does the Minister of State see at any stage this year when money will be invested through an SPV to provide social housing? When he talks about providing any assistance in that regard, I have kept this on the agenda because it had fallen off the Government agenda and nothing was being done about it.

It has absolutely not fallen off our agenda. Deputy O'Brien does not like the answers to the questions and keeps trying to phrase them differently every time and tries to insinuate that I misled the House. I have absolutely nothing to change on the record. I have been very clear in saying one of the credit union bodies is ready to do this. Everything is in place. It can switch it on literally overnight once a body wants to draw down the money. I said to the Deputy last September that a credit union body had a special purpose vehicle ready to go, and it does. The Deputy might not like that but it is ready to go when a housing body wants to draw it down.

That is a different answer.

I cannot be any clearer. That is a fact, it is true and I have no record to change. It is ready for business if a body wants to use it.

It would be great if that was the truth.

The other section is where we grant-aided money through an innovation fund to the sector along with the credit union movement to bring forward a special purpose vehicle. It is to encourage innovation. We are not dictating to it how it develops that special purpose vehicle because we would not be allowed to do that, nor would it be appropriate. The Deputy seems to fail to understand that. I cannot work it out in the Deputy's head but that is the reality of it.

I understand. The Minister of State does not seem to understand the urgency to provide a different stream of money to provide social housing rather than buying it from under the noses of young couples.