Dáil Éireann Debate, Tuesday - 5 April 2022
381. Deputy Richard Boyd Barrett asked the Minister for Housing, Local Government and Heritage his plans for affordable housing to remain affordable considering recent comments by an organisation (details supplied) that increasing costs of raw materials will impact on its involvement in Housing for All; and if he will make a statement on the matter. [18194/22]
View answerThe Housing for All strategy is the Government’s plan to increase the supply of housing to an average of 33,000 per year over the next decade.
Our targets include the delivery of 90,000 new social homes and 54,000 new affordable homes in the period 2022-2030. Housing for All is supported by an investment package of over €4bn per annum, through an overall combination of €12bn in direct Exchequer funding, €3.5bn in funding through the Land Development Agency and €5bn funding through the Housing Finance Agency and through a strategic partnership between the State and retail banks.
Specifically in relation to affordable homes, using various funding streams available to help reduce the ultimate purchase or rental cost, Housing for All targets the delivery of 36,000 Affordable Purchase homes and 18,000 Cost Rental homes up to 2030. These homes will be delivered by Local Authorities, Approved Housing Bodies, the Land Development Agency as well as through a strategic partnership between the State and participating retail banks (the First Home shared equity scheme).
The CSO Wholesale Price Index shows the annual increase for building and construction materials to be 17.7% to the end of February 2022. The latest data shows that productivity in the construction sector remains below 2010 levels and is less productive than EU average. Construction costs have risen considerably over recent years through a combination of the increased cost of regulatory compliance and general increases in labour and materials costs.
Housing for All commits that the Government and relevant State agencies will advance methods to reduce residential construction costs, particularly the cost of apartment construction, by increasing the focus of existing and planned construction related initiatives on the residential construction sector, and by ensuring a coordinated, whole-of-government, approach to residential construction.
In this regard, the Government will enhance the intended role of the new Construction Technology Centre, which is under development by Enterprise Ireland, beyond the standard remit of Technology Centres in general for its first three years of operation in order to prioritise residential construction, in particular by incorporating:
- structures and funding to enable innovation in residential construction prior to the National Standards Authority of Ireland compliance processes, including demonstration, certification, standardisation and commercialisation as well as research and development;
- a proactive role in strengthening the residential construction value chain;
- promotion, development and support for innovation / modern methods of construction (MMCs) using digital and manufacturing technology;
- support for SMEs to develop scale and to adopt MMCs and Building Information Modelling techniques for residential construction; and
- support for digitisation in the manufacturing sector for residential construction e.g. digitally controlled manufacturing equipment.
This will be complemented by an increased focus for the Department of Public Expenditure and Reform-led Construction Sector Group (CSG) on the residential construction sector. This will include the introduction and full implementation of a pipeline of cost reducing innovations and productivity measures, in line with its established remit to improve productivity and efficiency, and to temper price inflation.
In addition the CSG supported by my Department are also in the process of preparing a study to carry out an analysis for each component of cost of construction (including cost of compliance) of house and apartment development, with a view to reducing cost (including cost of compliance) and increasing standardisation. It will also identify opportunities for cost reduction for consideration by relevant Government departments and industry.
In accordance with Government policy, social and affordable housing construction projects (as with all publicly funded construction projects), must be procured in accordance with the Capital Works Management Framework. The Office of Government (OGP) is responsible for implementing national policy on public procurement, particularly in relation to construction procurement.
The OGP recently introduced the following interim measures to address the impact that the recent price increases in construction materials is having on public works tenders:
- Reduced fixed price period duration to 24 months (previously 30 months minimum).
- Permit mutual cost recovery within the fixed price period for material price changes in excess of 15% (previously 50%)
- Introduction of a new mechanism to address the period between tender submission and award through limited indexation of the tender price
The above measures relate to new public works contracts going forward.
