Written Answers Nos. 71-91
71. Deputy Bernard J. Durkan asked the Minister for Finance the extent of action pending or likely to bring mortgage interest in Ireland into line with the rates applicable throughout the Eurozone and the European Union in general; and if he will make a statement on the matter. [2161/21]
View answer72. Deputy Bernard J. Durkan asked the Minister for Finance the persons or bodies to which the most benefit accrues from the higher interest rates charged by lending institutions to home buyers; the way in which lenders in other European jurisdictions seem to be in a position to manage with lower interest rates; and if he will make a statement on the matter. [2162/21]
View answer77. Deputy Bernard J. Durkan asked the Minister for Finance the position regarding the possibility of the application of interest rates currently available to home borrowers throughout Europe to apply here; and if he will make a statement on the matter. [2167/21]
View answerI propose to take Questions Nos. 71, 72 and 77 together.
I am aware that the general level of lending interest rates in Ireland are higher than is the case in many other European countries, though it should also be noted that recent trends indicate that certain mortgage rates have been falling in Ireland. For example, the interest rates on new fixed rate mortgages (excluding renegotiations) have fallen from 4.11% in December 2014 to 2.67% in October 2020.
However, Irish mortgage and other loans can have different characteristics from those offered in other countries. For example, many Irish banks include incentives such as cash back offers, which reduce the effective Irish mortgage interest rate. Also Irish mortgages are also generally not subject to upfront fees which are typically charged by banks in some other EU jurisdictions.
Nevertheless, there are a number of important factors which will likely influence the interest rates charged on Irish mortgages. These include operational costs, certain structural factors as referenced above (such as incentives offered), as well as the fact that pricing will reflect:
- credit risk and capital requirements which in Ireland are elevated due to historical loss experience;
- the level of non-performing loans which is higher in Ireland relative to other European banks (as provisioning and capital requirements are higher for these loans to reflect their higher risk and this in turn results in higher credit and capital costs for the Irish banks);
- higher cost-to-income: growing cost inefficiencies have been a characteristic of the Irish banking sector in recent years;
- there are lower levels of competition in the Irish banking market compared to other jurisdictions (however, it is noted that a new entrant has recently entered the residential mortgage market and that it is offering fixed rate mortgages at competitive interest rates).
The Central Bank has a range of measures to protect consumers who are taking out a mortgage. The consumer protection framework requires lenders to be transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle; through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties. In particular, the Central Bank introduced of a number of increased protections for variable rate mortgage holders which came into effect in February 2017. The enhanced measures, which are provided for in an Addendum to the Consumer Protection Code 2012, require lenders to explain to borrowers how their variable interest rates have been set, including in the event of an increase. The measures also improve the level of information required to be provided to borrowers on variable rates about other mortgage products their lender provides which could provide savings for the borrower and signpost the borrower to the CCPC’s mortgage switching tool.
The Central Bank also introduced additional changes to the Consumer Protection Code in January 2019 to help consumers make savings on their mortgage repayments, provide additional protections to consumers who are eligible to switch, and facilitate mortgage switching through enhancing the transparency of the mortgage framework. Consumers can reduce average pricing in the mortgage market by availing of switching options to ensure that recent and potential future price reductions through increased competition pass through to the greatest number of customers possible. Indeed the Central Bank advises that a recent study by it estimated that three in every five ‘eligible’ mortgages for principal dwelling homes stand to save over €1,000 within the first year if they switch and €10,000 over the remain term.
Ultimately, however, the price lenders charge for their loans is a commercial matter for individual lenders. As Minister for Finance I cannot determine the lending policies of individual banks including the interest rates they charge for loans including mortgages. Nevertheless, I will continue to work with the Central Bank and also engage with lenders to encourage, within a framework which seeks to maintain overall financial stability, greater price and other competition in the mortgage market, both for new and existing borrowers. It is, therefore, a welcome development that a new residential mortgage lender has recently entered the market and it will be of benefit to new mortgage borrowers and also to borrowers, in particular to borrowers who may still on a standard variable rate with their lender, who may wish to consider switching to a new lender.
73. Deputy Bernard J. Durkan asked the Minister for Finance the steps that will be taken to ensure that lending policy does not contribute to house price inflation; and if he will make a statement on the matter. [2163/21]
View answer74. Deputy Bernard J. Durkan asked the Minister for Finance his plans for regulations that the Central Bank might apply to the lending institutions to encourage them to assist first-time house buyers and to deter profiteering in the housing market; and if he will make a statement on the matter. [2164/21]
View answerI propose to take Questions Nos. 73 and 74 together.
The Central Bank of Ireland, as part of its independent mandate to preserve and protect financial stability in Ireland, has statutory responsibility for the regulation of mortgage lending by banks and other regulated entities. In line with this mandate, the Central Bank introduced macroprudential measures for residential mortgage lending in February 2015. The objective of these mortgage measures is to increase the resilience of the banking sector and households to reduce the risk of credit-house price spirals from developing.
The mortgage measures are now in place as a permanent feature of the market and are operating in line with their stated objectives of enhancing the resilience of banks and borrowers to future shocks and reducing the risk of credit-house price spirals from developing. Subject to certain allowances and exemptions, the mortgage measures set particular loan to value and loan to income limits on residential mortgage lending by regulated entities and, as the Deputy will be aware, the loan to value limit for first time buyers is 90 per cent compared to 80 per cent for second and subsequent buyers (and 70 per cent for buy to let mortgages).
The mortgage measures are not intended to regulate or directly control the level of house prices per se. However, the 2019 review of the mortgage measures by the Central Bank found that if the measures had not been introduced in 2015, both the level of house prices and the proportion of highly indebted mortgage borrowers would likely have been significantly higher in 2019 than their observed levels, all else being equal. Therefore, as indicated while the objective of the mortgage measures is not to target house prices, this suggests that – in the absence of the mortgage measures – affordability pressures for mortgage borrowers would have been even more acute. Furthermore, the Central Bank indicated that the latest review of the mortgage measures conducted late last year found that they have continued to meet their objectives over the course of 2020.
75. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he expects Covid-19-related payments to continue into the future; and if he will make a statement on the matter. [2165/21]
View answer76. Deputy Bernard J. Durkan asked the Minister for Finance his plans for the continuation of Covid-19-related payments into the future; and if he will make a statement on the matter. [2166/21]
View answerI propose to take Questions Nos. 75 and 76 together.
I would draw attention to the comprehensive package of business and employer supports that have been made available since the July Stimulus Plan and Budget 2021, including the Covid Restriction Support Scheme (CRSS), the Credit Guarantee Scheme, the SBCI Working Capital Scheme, Sustaining Enterprise Fund, and the Covid-19 Business Loans Scheme.
Such measures as have been put in place to help otherwise viable businesses who continue to be adversely impacted by COVID-19 are kept under close review especially in light of the introduction of the Level 5 public health restrictions.
One very important measure that continues to be closely monitored is the Employment Wage Subsidy Scheme (EWSS). This has been a key component of the Government’s response to the continued Covid-19 crisis with over €4.5 billion worth of payments having been made to date via wage subsidies to sustain businesses and help people to manage financially in the midst of these very challenging times.
I have always been clear that there will be no cliff-edge to the EWSS. It is noted that the legislation implementing the measure provides that it will be in place until 31 March 2021, but also provides that the scheme may be extended until the end of June 2021, should it be required.
It is likely that continued support will be necessary out to the end of 2021 to help maintain viable businesses and employment and to provide businesses with certainty to the maximum extent possible. Decisions on the form of such support will take account of emerging circumstances and economic conditions as they become clearer.
78. Deputy Richard Boyd Barrett asked the Minister for Finance the details relating to his Department for outsourcing to consultancies of specific Covid-19-related work, services or advice; and if he will make a statement on the matter. [2185/21]
View answerI wish to advise the Deputy of the following details in response to his question.
The Department of Finance/ESRI Joint Research Programme is funded by my Department and the Revenue Commissioners and involves ongoing project collaboration across all three parties in the policy areas of banking, taxation and the economy. Now into its seventh year, the project scope of the programme to date has incorporated the following Covid-19-related analyses:
- An examination of the sectorial overlap between Covid-19 and Brexit shocks (published)
- Examining SME revenue shortfalls associated with the Covid-19 pandemic (published)
- Estimating the macroeconomic impacts of various potential Covid-19 recovery paths (forthcoming)
Furthermore, in Q4 2020, my Department sought research to be prepared on the future of Economic and Monetary Union (EMU), particularly in the context of Covid-19. The winning tenderer in this procurement was Professor Federico Fabbrini and the cost was €15k VAT included.
79. Deputy Róisín Shortall asked the Minister for Public Expenditure and Reform the process by which a new salary point was agreed for a five-year period for the next Secretary General of the Department of Health; his role in this matter and the approvals given; and if he will make a statement on the matter. [2149/21]
View answer87. Deputy Matt Shanahan asked the Minister for Public Expenditure and Reform the stage at which his attention was drawn to the fact that the existing Secretary General of the Department of Public Expenditure and Reform would be interested in the position of Secretary General of the Department of Health ; if, in advance of appointing them to the interim position, he requested that if they were appointed to the role on a permanent basis that they might waive the salary increase and increase to their pension arising therefrom in the public interest given their role as head of the Civil Service; and if he will make a statement on the matter. [2103/21]
View answer88. Deputy Matt Shanahan asked the Minister for Public Expenditure and Reform if the increase in salary of 50% proposed in respect of the Secretary General of the Department of Health will not apply to any other Department including his own when a successor to the Secretary General is appointed and that assistant secretary and lower grades of the Department of Health will also not be the subject of grade elevation now; and if he will make a statement on the matter. [2104/21]
View answer90. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform if he will confirm that the new secretary general of the Department of Health will be paid an annual salary of €292,000, significantly in excess of the top scale of Secretary General I (PPC) of €211,742; the reason this derogation from the rules was sought;and if there are comparable roles within the public service paying an annual salary in excess of the top pay scale. [2126/21]
View answer91. Deputy Róisín Shortall asked the Minister for Public Expenditure and Reform the circumstances by which a decision was taken to introduce a new salary point for a new Secretary General in the Department of Health; the person or body which initiated this issue; the Ministers or Departments involved in this decision; the specific rationale for same; and if he will make a statement on the matter. [2150/21]
View answerI propose to take Questions Nos. 79, 87, 88, 90 and 91 together.
Following the reassignment of the Department's former Secretary General to a newly established Government Department in July 2020, action was immediately taken to appoint an experienced senior official from the Department of Health as Acting Secretary General. This has ensured that the Department has been in a position to properly fulfil its role in relation to the management of the response to the pandemic over recent months. The decision to appointing a person on an acting basis was made at that time pending further consideration on how the post should be filled on a substantive basis.
Government has now decided that an Interim Secretary General should be appointed until the completion of an open competition run by the Top Level Appointments Committee to fill the post for a five year term. That competition is underway and is expected to be completed in the early months of this year.
80. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform if he will reopen the voluntary homeowners relocation scheme for those with primary residential properties which have been flooded due to turloughs and rising ground water in addition to those flooded in 2015 and 2016; and if he will make a statement on the matter. [2048/21]
View answer81. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform his plans to review the cost-benefit analysis for flood relief works to incorporate turlough flooding; and if he will make a statement on the matter. [2049/21]
View answer82. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform his plans to address the serious flooding currently threatening homes and farm buildings due to the overflow of the former turlough at Lough Funshinagh, County Roscommon which is now effectively a continually rising lake with no outlet; and if he will make a statement on the matter. [2050/21]
View answer83. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform the number of voluntary home relocations that have been completed to date; the total cost of the completed relocations; if the amount has been incorporated into the CBA for flood mitigation works; and if he will make a statement on the matter. [2066/21]
View answerI propose to take Questions Nos. 80, 81, 82 and 83 together.
In relation to Lough Funshinagh, a range of flood mitigation options were considered. It was determined that the options were not economically or environmentally sustainable. These extreme high water levels, while rare, are within the naturally occurring range. There is no evidence to suggest that the flooding was due to an abnormal decrease in the outflow rate from the Lough other than that due to possible seasonal variation in the subsurface water level. It remains open to Roscommon County Council to make an application under the Minor Works Flood Mitigation Scheme should further measures be identified in the future that meet the Scheme criteria to mitigate flooding. It is understood that a meeting will be convened with all of the relevant stakeholders shortly.
The Voluntary Homeowners Relocation Scheme was introduced by the Government to address the very serious flooding of those properties that flooded in the Winter of 2015/16, including those properties flooded by turloughs. To date, 7 homeowners in the State have received Humanitarian Assistance in the sum of €1,674,861 which has enabled them to relocate and purchase a replacement dwelling house under the Scheme. A further 28 other applicants are at various stages in progressing through the Scheme, including considering possible engineering solutions. I have no proposals to amend the Scheme at this time.
I understand that the introduction of a voluntary farm building relocation scheme is being progressed by the Minister for Agriculture, Food and the Marine.
I am advised by my Office that it has commissioned a report on options and recommendations, within the parameters of the Public Spending Code, for the future economic appraisal of investment in capital flood relief schemes. This report will help to inform consideration by the OPW of the circumstances in which the existing economic appraisal may not reflect the full value of the scheme.
84. Deputy Christopher O'Sullivan asked the Minister for Public Expenditure and Reform the main policy initiatives undertaken by his Department since 27 June 2020; and his main priorities for 2021. [2090/21]
View answerIn line with the requirements of the Public Service Management Act, 1997, I have recently agreed a new Statement of Strategy for my Department for the period 2021-2023, which reflects my priorities and the commitments in the Programme for Government relevant to my Department. I will submit this to Government shortly, following which it will be published on the gov.ie website.
My priorities for 2021 include the following:
- To continue to manage public expenditure effectively while addressing challenges such as the Covid-19 pandemic, Brexit and Climate Change;
- To produce multi-annual Estimates and Expenditure Statements that meet Government objectives, EU commitments and support economic, social and climate-related progress on a fiscally sustainable basis, and to monitor voted expenditure outturns and trends during the year;
- To mainstream budgetary reforms to promote certainty and discipline regarding the level and broad composition of public expenditure over the medium term, to enhance the quality of performance information and to continually develop the evidence-based approach to expenditure policy formulation, including through the key role of the Irish Government Economic and Evaluation Service and through the promotion of the linkage between the allocation of resources and the proposed well-being framework;
- To manage public service pay and pension costs on a fiscally sustainable basis using agreed industrial relations frameworks and advance solutions to support the effective administration of the Single Pension Scheme;
- To oversee the review of the National Development Plan and alignment with the National Planning Framework as part of Project Ireland 2040;
- To address the challenges posed by Brexit, while maximising the opportunities presented by EU membership in a range of EU policy areas. We will make the best use of EU funding, including the existing European Structural and Investment Funds and the new Recovery and Resilience Facility and Brexit Adjustment Reserve, and promote North-South cooperation, including through PEACE PLUS;
- To lead the implementation of Our Public Service 2020 to deliver better outcomes for the public, build effective public service organisations, and develop a culture of innovation as part of the reform programme, and to develop and lead Our Public Service 2030;
- To lead the development and implementation of a ten year Civil Service Renewal Vision and Strategy and the first of three operational plans;
- To promote and support open, accountable and transparent government and public administration and good governance in the Public Service;
- To lead and support the development and implementation of a new Civil Service People Strategy, which reflects the workplace transformation that has taken place as a result of Covid-19 and challenges traditional ways of working to support business continuity and effectiveness into the future;
- To drive the implementation of the GovTech priority actions and the Public Service ICT, Data and eGovernment strategies, with particular focus on those initiatives that will improve delivery of public services, encourage take-up of digital services, encourage sharing and promote the use of data as a key enabler of better services; and
- To lead the Procurement Reform Programme, to enable effective, sustainable and compliant procurement across the Public Service.
I would add that my Department has an important role in respect of service delivery to other public bodies and priorities in that regard include:
- To deliver effective and efficient ICT services to relevant public bodies as part of the Build to Share programme and use the OGCIO Vote to support the sustainable development and delivery of these services;
- To ensure oversight, value for money and evidence based prioritisation of learning solutions by OneLearning, which has responsibility for all L&D that is common across the Civil Service;
- To implement projects to strengthen HR service delivery across the Civil Service, including the Human Capital Management Project, HR Operating Model and the CSHRD Centre of Expertise; and
- To continue to drive an integrated approach to public procurement through the Office of Government Procurement and to provide a range of procurement solutions for the Public Service, delivering value for money, compliance and risk reduction.
Throughout 2020, the staff of my Department worked collaboratively on a very wide range of policies, projects and initiatives to deliver on its strategic goals. Work has commenced on preparing the Department's Annual Report, which will set out the key initiatives and achievements of the Department for 2020 as a whole. This is expected to be published and uploaded to the gov.ie website later in Quarter 1.
85. Deputy Matt Shanahan asked the Minister for Public Expenditure and Reform the number of civil servants on the Secretary General grade; the number on the grade that are in receipt of additional emoluments from the public purse; and if he will make a statement on the matter. [2101/21]
View answer86. Deputy Matt Shanahan asked the Minister for Public Expenditure and Reform the number of civil servants recruited through the Top Level Appointments Committee that are in receipt of additional pension rights; the extent of the public liability in respect of such rights; and if he will make a statement on the matter. [2102/21]
View answer89. Deputy Matt Shanahan asked the Minister for Public Expenditure and Reform the precise costs including pension accrual benefits to the State of the three categories of persons being appointed to the role after the existing competition, that is, a person with no prior public service, a person who joined the Civil Service for the first time after 2013 and a person with the same salary and pension entitlements as the new acting secretary general of the Department of Health; and if he will make a statement on the matter. [2105/21]
View answerI propose to take Questions Nos. 85, 86 and 89 together.
I refer the Deputy to the document attached (TAB A) which details the current Secretary General posts, listed by Government Department. The salaries that apply to Secretary General posts are as outlined in Circular 12 of 2020 which is available here:
https://www.gov.ie/en/circular/39b2c-circular-12-2020-application-of-1st-of-october-2020-pay-adjustments/
I understand the Deputy is also referring to the Top Level Appointments Committee (TLAC) Retirement Terms which apply to appointments to Secretary General posts and certain equivalent posts in the civil service (e.g. Chairman of the Revenue Commissioners, Director General of the Office of the Attorney General).
The terms that apply to appointments to these posts since October 2011 are as follows:
(i) Newly appointed Secretaries General may at the end of their term of office be offered an alternative appointment in the Civil or Public Service on the same salary, if they were recruited from the Civil or Public Service, on condition that they do not have 40 years’ service and that they have not reached the applicable minimum pension age. Those recruited from outside the Civil or Public Service will not be made such an offer, but will be covered by paragraph (ii) below.
(ii) If the person is not offered a post as in paragraph (i) above, and has not reached preserved pension age, he/she may be offered severance of 1 year’s salary (or salary to preserved pension age if less), with pension payable on reaching preserved pension age. For those who have reached the applicable minimum pension age, superannuation benefits are payable immediately, with no additional benefits and no severance payment.
(iii) Where an alternative appointment is offered, as in paragraph (i) above, but is not accepted, no severance is payable, and pension is payable at the applicable minimum pension age, with no additional pension benefits. Similar arrangements apply where a Secretary General is given an alternative appointment and later retires.
(iv) Pension benefits of Secretaries General who are members of the new Single Pension Scheme will be based on career-average rather than final salary, and no enhancements.
The terms that applied to appointments prior to the introduction of revised terms in 2011 are as follows:
(i) Secretaries General may at the end of their term of office be offered an alternative public service post, or a position in an international institution, if the individual is under age 60 on the expiry of their term of office
(ii) If no alternative post is offered or if the individual is over 60 on the expiry of their term the following may be provided:
- Immediate payment of pension and lump sum, without any actuarial reduction
- Added notional service up to a maximum of 10 years or balance of service to age 65 (subject to a cap)
- Severance payment of 6 months’ salary.
The pension entitlements for those recruited to these positions depend on a range of factors including career history, pay point, date of entry and age of retirement. The value attaching to these terms also will vary from case to case depending on the specific circumstances applying at each retirement. For example, the pension entitlements of an individual who joined the civil service for the first time after 2013 would be based on membership of the Single Public Service Pension Scheme i.e. career average earnings for the calculation of pension benefits depending on years of service, payable from State Pension Age. An individual with no prior service now joining the civil service on foot of a TLAC competition for the position of Secretary General would similarly become members of the Single Public Service Pension Scheme.
