Before we commence, I know that housing is a very emotional issue on every side of the House. I ask everybody to stick to their time slots, make their points and try to avoid arguments that will not do anything to solve housing issues.
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
I will be fair to everybody on every side of the House. I usually get good co-operation from all those present. I do not anticipate any problems and certainly the Christmas spirit will be in the air as well.
Social and Affordable Housing
36. Deputy Darragh O'Brien asked the Minister for Housing, Planning and Local Government his plans to review the €2 million eligibility spending threshold for single-stage approval for local authority social housing; and if he will make a statement on the matter. [51986/19]
I will try to abide by the Acting Chairman's request.
I ask the Minister to give an update on the €2 million eligibility spending threshold for single-stage approval for local authority social housing. We have discussed that threshold and it was agreed in the previous budget and again in this budget. Has the Minister issued a direction to local authorities? What is the position with that review? Has he had any interaction with the Department of Public Expenditure and Reform?
I thank the Deputy for the question. The review of the public spending code, carried out by the Department of Public Expenditure and Reform, was considered by the Government yesterday. The code is the central framework for the control and governance of all public expenditure activities, including social housing construction projects, where our responsibility is to ensure value for money in the essential work we undertake to provide housing for our citizens.
The €2 million eligibility threshold for the single-stage process for social housing projects was reviewed as part of the recent review of the code. This has had regard to the level of public funding involved and that raising the €2 million threshold would remove significant oversight from the Department over a substantial element of the social housing build programme, leading potentially to an increased risk of cost overruns or time delays or both. Taking account of these issues, as well as the importance of delivering quality and sustainable housing, no change to the €2 million threshold level is proposed in the revised code.
To date, the uptake of the single-stage process has been modest, at best. Of around 660 capital-funded social housing projects since 2016, approximately 280 are within the €2 million threshold. Of these, only approximately 45 are using the single-stage arrangement.
The reality is that the time involved in approving projects is only a small element in the process of bringing social housing projects from initial conception all the way through to construction. This is borne out by the fact that the single-stage process has the potential to save, at most, six to eight weeks off the pre-construction target programme of 59 weeks. Most of the time within that 59-week period is required to allow local authorities to complete their work on design, planning, procurement and engagement with contractors.
The social housing approval arrangements have already been streamlined by concentrating the nine review stages of the code into just four. The Deputy can be assured that my Department will continue to work with local authorities to ensure that the streamlined processes are operated efficiently, with a view to moving projects through both the single-stage and four-stage approval processes as expeditiously as possible. This is evident in the fact that it has been possible, in some cases, to complete the 59-week four-stage process in as little as 44 weeks.
I am not sure if it is coincidental that this was just reviewed yesterday and the decision was made. I take it the recommendation was for no change. What information does the Minister have on the delays within the process? We are trying to facilitate local authorities being able to tender and procure directly for relatively small schemes. A €2 million threshold basically means eight to ten houses.
It does not make any sense to me that the Department wants to have absolute control over anything above that. One of the concerns raised in some information we got from the Department is based on the belief that it would lose control of approximately 44% of the housing budget. I do not think that is the case. It is not a question of letting local authorities just go off and do it and that there would be no oversight. We need to find a mechanism to deliver building of social houses quicker. This was agreed in the discussions on the recent budget and the one prior to that, yet the Minister has told me this morning that the recommendation is that there would be no change. Is that a Government decision or is it a recommendation?
I thank the Deputy for his follow-up question. To be clear, in the meetings the Minister for Finance, Deputy Donohoe, and I attended, our understanding was that there was an agreement to look at reviewing the public spending code to see if we could. The review has been completed and it was discussed by the Government yesterday.
I was just checking.
That is a coincidence, but it is helpful that it was concluded yesterday so I can answer him today in this way. The Minister, Deputy Donohoe, will make an address on this matter later this morning. It is pertinent to the next question tabled by Deputy O'Brien as well in terms of the cost-evaluation programmes.
Local authorities do not want this and the proof is in the fact that 280 projects could have gone through the first stage of the approvals process but only 45 did. They prefer the four-stage process. We have streamlined the four-stage process down to 59 weeks but now local authorities such as Wicklow County Council are getting it down to 44 weeks. We will continue to streamline the process and to improve and reform it. Among the things that we have done is an internal specification for local authority housing that can be taken off the shelf by local authorities, but also an internal specification not for the facade or front of the home but for the actual layout. If one is going to build 30 homes or 20 homes plus step-down facilities or elderly housing, there are now external layout specifications that can be taken off the shelf by local authorities to help them drive things more quickly. We are moving the housing delivery office into the County and City Management Association, CCMA, which is another important reform that will put the delivery of social housing at the centre of local government again.
I thank the Minister for his response. The reason we have been pushing for this is to try to deliver projects quicker. I welcome the streamlining in the process which is something we have called for as well in relation to design. When all of that is pulled together it would be worth bringing it to the Joint Committee on Housing, Planning and Local Government, potentially tomorrow. I do not know whether the Minister is ready to provide an update on Rebuilding Ireland.
It is not true to say that local authorities do not want this; there is a particular reason for that. It is because of the liabilities that may be foisted upon them. The only reason is the financial stick that is hanging over them. I believe many local authorities would be in a position to deliver projects quicker if they were allowed to do it themselves with oversight from the Department. The sum of €6 million was a mid-point. We would go further, namely, to €10 million, in particular in local authorities' that have large housing waiting lists. We are looking at more than 130,000 people currently. If we keep building at the current rate, we are not going to keep up with the demand and we will not start eating into those lists. I am talking about building social houses, not buying existing built stock. We must get back into building and building quicker and delivering quicker.
We are getting back to building social housing. Next year we will build more homes for social housing than were built in any of the past 20 years, including any of the boom years. That is very important. We can do that because of the work that we did in the initial stages of Rebuilding Ireland and it is because of the reforms that we continue to make to the approval process that we can do that more quickly.
If Deputy O'Brien were to put himself in my shoes and look at a recent project such as the children's hospital, which his party and others criticised in terms of cost overruns, he would not then, on reflection, want to lose even more oversight of cost controls in his Department by doing something that would seem to be both risky in terms of capital delivery but also might even lead to further delays if projects came forward that he could not stand over in terms of value for money. For example, one local authority could come forward with plans to build apartments at a unit cost of at least €500,000 if not €600,000. We would only see more of that if we increased the thresholds. Again, the four-stage process has been streamlined down to 59 weeks and it is down to 44 weeks in some local authorities. The person who has driven that in Wicklow is the chair of the housing committee in the CCMA. We are now putting the housing delivery office into the CCMA so we are going to see those improvements in other local authorities. I will see if I can provide the documents to the Oireachtas joint committee this afternoon.
Or if not, then the following one.
Yes, perhaps the following one. That would be helpful. I thank Deputy O'Brien.
Local Authority Rates
Eoin Ó BroinCeist:
37. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government the engagement he has had with the eight local authorities that have seen a combined loss of revenue of €20.9 million arising from the revaluation of commercial rates to Irish Water; and if additional funding will be provided from within his Department to mitigate the loss of the revenue to the councils. [52148/19]
As the Minister is aware, the recalculation of the Irish Water rates compensation for local authorities has resulted in eight local authorities losing a significant amount of revenue for this year. Among others, Dublin City Council has lost almost €9 million, my own local authority area of South Dublin County Council has lost more than €4 million and Waterford City and County Council has lost €3.5 million. Could the Minister outline the rationale behind the revaluation and reassessment of the compensation but also tell us what contact he has had with the local authorities in question to try to address this issue so that the cuts do not result in a loss of services?
I thank Deputy Ó Broin for his very pertinent question. In the past four years, since 2015, the revenue of local authorities has increased by 25%, from €4 billion to €5 billion. I suspect it is a much bigger figure than is widely known. This mainly comprises income from goods and services, commercial rates, Government grants and local property tax.
Between 2015 and 2019, Irish Water was not liable for commercial rates and approximately €47 million per annum was paid to local authorities to compensate them for the water services-related rates income they would have previously received. The local government sector itself, through the CCMA, then sought to have Irish Water globally valued and that process finished recently. Having regard to a recommendation from that sector that the exemption be removed, commercial rates will be imposed instead of the compensation that existed since 2015. Irish Water will pay commercial rates directly to individual local authorities, following the global valuation process undertaken by the Commissioner of Valuation, in a similar arrangement as applies to other utilities. The majority of local authorities will see an increase in their rates income arising from this process.
Of course, this is just one of a number of variables that feed into local authority budgets. For example, there have also been revaluations of other utilities and all of the local authorities likely to lose rates income from the Irish Water valuation would be likely to see their rates income increase from the ESB revaluation. In addition, funding is made available from the Local Government Fund, LGF, and Exchequer funding of €156 million, which is being made available through the LGF on a like-for-like basis, will see local authorities receive €23 million more in Exchequer funding in 2020 when compared to 2019.
The Department has kept the anticipated financial impact of the changed approach to the rating of Irish Water under review. Senior officials have liaised directly with sectoral representatives, including in the most impacted authorities, some of which the Deputy has referred to. Taking account of other expected changes in incomes and the financial positions, Waterford City and County Council and Wicklow County Council were identified as facing significant challenges and did not have other sources of income to offset the loss. For that reason the Minister, Deputy Eoghan Murphy and I agreed to a once-off compensatory payment in both of those cases.
I thank the Minister of State for his response and the clarification. I accept that the valuation process is fully independent and the consequences for the local authorities arise from that. What contacts have there been between the Minister of State and all of the eight local authorities that are going to experience a significant loss of revenue arising from the revaluation?
Could the Minister of State provide more information in terms of the once-off compensatory payment for the two local authorities? To put this in context, if one looks at Dublin City Council, for example, it has lost almost half of what would have been the compensation fund of €14 million previously only to get €5 million now. South Dublin County Council is losing two thirds of what it had received. It is losing €4 million and it will only get €2 million of what was previously €6 million. The neighbouring local authority of the Minister of State, Waterford City and County Council, is losing €3.5 million, which is a significant loss of revenue for a relatively small local authority with a low rates base and income source. Could the Minister of State provide more detail in terms of his contacts with all eight local authorities and more information about the once-off compensatory payments to the two local authorities he mentioned?
Most of the contact was with Waterford City and County Council. In fact, there was even a delegation from the councils last week on which Deputy Ó Broin's party and mine were represented. The other councils did have contact with the Department. In light of recent decisions by Dublin City Council to back a white-water rafting initiative on the quays, it was felt that the authority and some of the other Dublin local authorities had the financial wherewithal to be able to cope with the changes. The reality of the global revaluation of Irish Water is that there is a strong argument to be made that the compensatory system was over compensating the four Dublin local authorities, Waterford City and County Council, Wicklow County Council and Kildare County Council prior to the new valuations base.
I re-emphasise, however, that this was sought by the sector, and the payments for Waterford City and County Council and Wicklow County Council reflect the available funds, which are more than one third of what is discretionary in the local government section, going to both councils next year. That will be reviewed again by whoever is in my position in 12 months' time, who I hope will be me.
As I am sure the Minister of State will be aware, the vast majority of the funding for the white-water rafting facility in Dublin City Council will come from central government-----
-----and his party colleagues, as well as my party colleagues, supported the scheme. I do not know much about the background to the matter, however, and will leave it where it is.
One of the difficulties with the revaluation process, although it is unique because of the nature of Irish Water, is that if there is too long a gap between revaluations, there can be significant anomalies. What assurance can the Minister of State give that future revaluations will take place in a shortened timeframe in order that there will be less disruptive effects?
I am not clear on what the Minister of State stated in respect of compensatory payments for Waterford City and County Council and Wicklow County Council. Will they get an additional compensatory payment above what is detailed in the information I have or have I misunderstood that point?
The compensation for Waterford City and County Council will be €2 million, while for Wicklow County Council it will be €300,000. It reflects the shortfalls in both cases and their lack of alternative sources of revenue. It is open to whosoever in the future to consider compensation. Waterford City and County Council is in quite straitened financial circumstances. It has a budget of approximately €130 million and is the only local authority that has not yet approved this year's budget. Its debts are €117 million and, therefore, it has a 90:10 debt-to-revenue ratio. I gave a commitment last week that officials from the local government sector, representatives of the National Treasury Management Agency and the European Investment Bank, as well as other relevant stakeholders and I will visit the local authority in Waterford in early January to determine how to manage the debt in the future.
One of the problems identified for local authorities is the delay in appeals against commercial rates. We will invest additional staff and physical space in the appeals process, although that, too, is separate from the Department. There is a lag that needs to be addressed in order that local authorities will not have a shortfall resulting from it, and that is being addressed as we speak.
Public Spending Code
38. Deputy Darragh O'Brien asked the Minister for Housing, Planning and Local Government when final guidance on cost-effectiveness analysis cases will be issued to local authorities; and if he will make a statement on the matter. [51987/19]
The public spending code requires that housing projects with a cost of more than €20 million be subject to a cost-effectiveness analysis before getting approval from the Department to proceed. When will final guidance on the analysis be issued to all local authorities? It has not yet been issued and, according to information I received through a freedom of information request, it has caused great confusion and continued delays in progressing projects.
My Department provides advice to local authorities on an ongoing basis to support them in delivering social housing projects, including undertaking cost-effectiveness analyses in respect of high-value projects. Local authorities have primary responsibility for evaluating, planning and managing their public investment projects under the public spending code. Against this background, my Department recently provided final draft guidance documents to local authorities to support them in undertaking cost-effectiveness analyses. The final draft documents provided include draft sectoral guidance for social housing appraisals, as well as worked examples of preliminary appraisal and detailed appraisals.
Final observations on the draft documents have been sought from the local authorities and adjustments may be made based on that feedback, as well as to take account of the review of the public spending code, which was considered by the Government yesterday. In the meantime, however, local authorities can continue to use the draft guidance for any of their projects that require a cost-effectiveness analysis. It is intended that the documentation will be finalised soon and the final sectoral guidance will be issued in early 2020.
The Minister will be aware of the confusion and delays this issue has caused. From information I received from his Department and copies of emails accessed through a freedom of information request, we learned that approximately 1,800 homes have been delayed in Dublin, in Dorset Street and on Constitution Hill, because of the confusion with Dublin City Council - this will not apply to all local authorities - as to how it could meet the requirements of the cost-effectiveness analysis.
I understand from what the Minister stated that a final draft has been sent out for feedback to be received from the local authorities as to what they believe is required. Has he a final date on which the process will conclude? Is he aware of schemes, such as those I mentioned in Dorset Street and on Constitution Hill, that have been caught up in red tape because of the confusion over the cost-effectiveness analysis? Will he agree that in Dublin, the 1,789 units that could be moved forward to house people have been held up because the matter has not been finalised? We cannot continue with drafts going back and forth, and need to get certainty in the process.
Any confusion around the matter was cleared up earlier in the year. The draft documentation can be used to carry out the cost-effectiveness analyses. The reason we do such analyses rather than cost-benefit analyses is that we consider social housing projects. We determine them in different ways and it is a question as to whether it is a better way of delivering the project, not whether the project is good. Exceeding the €20 million cap has affected only six local authorities thus far and has happened only in the past 18 months. We have had a series of engagements with the Department of Public Expenditure and Reform and have helped the local authorities concerned navigate that Department. An example is what we did in the case of the first bundle of public private partnerships. Change is coming as a result of the Government decision yesterday and the Minister for Public Expenditure and Reform, Deputy Donohoe, will announce that soon. Given that the decision has been made by Cabinet and we are discussing it today, projects below €100 million will still require a cost-effectiveness analysis, but they will not have to go through the Department of Public Expenditure and Reform. The new code will be available in January.
That is welcome. The Minister expects there to be finalisation of the code in January next year, and the new process will be in place. I ask that in the case of any schemes in the pipeline, such as those I mentioned in Dorset Street and on Constitution Hill, which we learned about through freedom of information and which have been delayed because of the process, the Department liaise with the six local authorities the Minister stated it has engaged with to find out what else is in the pipeline and what the local authorities say has been delayed because of the confusion over the process. I take it from the decision made yesterday that within a short time, the Minister will advise the affected local authorities of the new procedure, and that anything in the pipeline could be moved through without further undue delay, following the new guidance. The number of units that could be delivered is significant, as I am sure the Minister will agree. We do not want any confusion to delay further the delivery of such homes for families.
I have examined the projects the Deputy outlined but the delay is not with us. It is up to the local authorities to do the work-----
It is the fault of the local authorities.
Local authorities are great at pointing the finger-----
The Minister is not bad either.
-----at the Custom House, but whenever I investigate individual cases, I find that the truth lies somewhere else. They have the draft guidance to work to and know how to do the work. We have helped them in every way we can and will continue to help them through the process. The change that is coming, which will be announced later, is welcome. They will still have to do the analysis - that will not change - but will not have to go through another layer of Government. Rather, they will come through my Department, which will help to expedite future projects.
I have examined the projects the Deputy mentioned. We are waiting for the work to come from the local authority and will help it when it comes.
Social and Affordable Housing Provision
Eoin Ó BroinCeist:
39. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government the status of the delivery of affordable homes to rent and buy in the Poolbeg strategic development zone, SDZ, the Clonburris SDZ and St. Michael's Estate, Inchicore, Dublin 8; the details of the financing of the schemes; and if the financing by his Department of the schemes will deliver affordable homes to purchase at less than €250,000 and affordable homes to rent at less than €900 per month. [52149/19]
Affordable housing projects will begin at important sites such as Poolbeg, St. Michael's Estate and other locations in the State. One of the concerns many of us have is what the price of the rental or purchase units will be. The Minister is on record as stating he believes that €310,000 for purchase and €1,200 for rental is affordable but there are many ways to reduce the prices. Will he give some reassurance that, not least in the case of St. Michael's Estate, Poolbeg, Ballymun and Cork, purchase prices can be below €250,000 and rents below €900?
Delivery of more affordable homes to rent or buy is a priority for the Government and my Department has developed a range of measures to assist local authorities to provide homes of this nature, which are being utilised at the three sites referred to by the Deputy.
In relation to Clonburris, which will provide 8,000 homes, the local infrastructure housing activation fund, LIHAF, and the serviced sites fund, SSF, will make more than 1,000 of these homes available in the shorter term, including 100 social homes and 133 homes for purchase, at significantly below open market values. South Dublin County Council estimates a price range of €253,000 to €263,000 for these homes. At these rates, using the Rebuilding Ireland home loan, a couple with a joint income of €44,000 would be in a position to buy any of the 133 homes for purchase. As an example, this would be affordable for a couple comprising a new entrant school teacher and nurse. A development partnership between the site owners and the council to will see a detailed design for the full site finalised next year.
Poolbeg West SDZ will deliver up to 3,500 homes in close proximity to the city centre. To improve access to this strategically important site, more than €15 million of LIHAF funding has already been allocated by my Department. The SDZ planning scheme requires the delivery of 15% of the homes for social and affordable housing purposes, which is in addition to the statutory 10% under Part V arrangements. NAMA is currently procuring a development partner for the site.
With the St. Michael's Estate cost rental development, land is being provided by Dublin City Council to minimise the eventual rents of the planned 375 homes, and I understand that an application will be made for serviced sites funding and that it is also planned to utilise low-cost, long-term finance through the European Investment Bank. Dublin City Council is currently procuring an architect-led integrated design team to bring the development to the planning stage, with tenders for this due before the end of the year.
With regard to rents in cost rental projects, in the case of the Enniskerry Road project, which is already on site, the 50 two-bedroom cost rental units will be made available for €1,200 per month, which is a reduction of approximately 50% on the rents being charged for equivalent homes in the area. In the case of the Dublin City Council area, I understand that initial projections by advisers engaged by the council have estimated that rents of more than 40% below open market rates are achievable in certain cases.
The Minister is right on time.
I welcome that we are beginning to move in the direction of genuine affordability, in rental and purchase. I will, however, make some observations. I believe it is a mistake to think about the pricing of these units as a reduction or a discount from market rent because they are not being delivered by market operators. They are being led by the local authorities. Clonburris, for example, will be a local authority-led project on public land. Given that only yesterday I received replies to parliamentary questions back from the Minister, Deputy Eoghan Murphy, to say that the average cost of construction of new units, including apartments and houses, by local authorities last year was €200,000, one would have hoped that the purchase price for the homes in Clonburris could be below that. I say this because the average loan offering from South Dublin County Council under the Rebuilding Ireland home loan this year was €200,000. To purchase either of the price range houses the Minister has just outlined, the households would need a deposit of some €50,000 to €60,000, which is not reasonable.
Likewise with rents, many of us are concerned that with the St. Michael's estate the European Investment Bank, EIB, finance is only for 25 or 30 years. To get those rents down below €900 - which is where they should be - some form of soft loan refinancing is probably required by the Department to stretch the maturity of the loans, perhaps for another ten years. Will the Minister explore those two options so that even with the Rebuilding Ireland home loan - or for the lower-income working families - we can get the price points down to genuine affordability, especially for those people who are just above the income thresholds for social housing and who currently cannot afford to rent or buy?
I welcome that the Deputy has recognised that the delivery of affordable housing is coming and is welcome under Rebuilding Ireland. It is happening now and we are on sites. Obviously we want it to happen more quickly but with cost rental in particular we must make sure the finances add up. We would not want a person securing a rent for ten or 15 years or for longer, only to then find that five or ten years down the line, the rents must increase because somebody had made a mistake in the early stages of the process.
Many of the fundamentals of private house building are the same for public house building, which are the construction costs and so on. When we talk about what a discount might be or a discount on market rates it is just a way of putting it into a perspective that most people understand. The reason we can talk about that is because these homes will not be at a market rate and will not have other aspects built in, such as profit or risk. They will, however, have built in the maintenance and upkeep of the building over time with regard to the asset degrading over time. This is why we refer to a below-market rate in that sense.
I was not quite clear about the Deputy's point on deposits. If a house is to be sold at approximately €225,000 for example, a deposit of 10% would be around €25,000. The help-to-buy incentive could help with a large chunk of that. On the EIB issue, we are looking for long-term finance from the European Investment Bank. We already have them as a hired consultant to help us ensure we get the work right now. This will help us to achieve lower rents that might otherwise not have been available if we had not gone through the EIB mechanism.
It is important to acknowledge, however, that affordable cost rental across Europe looks at 40-year plus loans and not the 25 to 30-year loans the EIB is providing for St. Michael's. For the Enniskerry Road project, I understand there is an innovative type of financing that allows it to be financed via the Housing Agency up to 40 years. If a similar arrangement was provided for St. Michael's, we could bring the rents down. The Minister is absolutely right that we must get the finances right. The key, however, is the scale of capital intervention by central government at the start and the length of the loan. If we find the right formula the rents could be brought down.
The difficulty with the Clonburris prices is that we must find affordable homes priced between €170,000 and €250,000 to meet the needs of people who are currently applying and being accepted for Rebuilding Ireland home loans but for whom the offer is below €200,000. While the Minister is right that we could combine the 10% deposit with support from the help to buy incentive, if a person's loan offering from the local authority is only €170,000 or €180,000, it does not do it. Even though there has been a shift, as with the O'Devaney Gardens site and other projects, the talk was still of €310,000. We are moving in the right direction but we need units priced between €170,000 and €250,000 for first-time buyers and rents below €900 per month. These can be delivered. We have seen it with Ó Cualann in Ballymun and from the reply to a parliamentary question from the Minister yesterday. I am confident that with the right financing these types of units and prices can be delivered. I would ask that the Minister considers this.
I thank the Deputy for his follow-up and clarification. The Enniskerry Road project is a very interesting example of how complicated the delivery of cost rental can be. It does not have to be. This is why we are working on a national policy framework, and we have a working group set up to do that. This is also why the EIB is involved and it means we can something that is a bit more off-the-shelf. The Deputy will be aware that the Enniskerry Road project involves the Housing Finance Agency and two approved housing bodies. While the finance arrangements around this are in place now, it took some time for them to be constructed. We have a number of people working on the different types of finance available and how it might be structured into longer-term loans. These are the National Development Finance Agency, the European Investment Bank and some private consultants for some of the individual sites. I have no doubt that as we continue to develop this, we can continue to find longer-term sources of finance that can drive down some of the costs of delivery and therefore, drive down cost rental.
In what we are seeing the delivery of affordable housing for purchase, obviously I cannot overrule the Housing Agency when it comes to decisions made by it or by local credit committees under the Rebuilding Ireland home loans-----
Nor would I ask the Minister to do that.
-----but I take the Deputy's point that people can get less than what they applied for and there is a bigger gap to fill when making up the difference. Even the 10% requirement can be structured so that only 3% of it has to come from the person's savings. There are further mechanisms to assist there. Ultimately, when we consider the approval of a Rebuilding Ireland home loan it is linked to the person's ability to pay; it is not linked to their income. It must remain linked to that.
Building Energy Rating Administration
40. Deputy Jan O'Sullivan asked the Minister for Housing, Planning and Local Government the extra funding allocated to improve the energy ratings of local authority homes in addition to that already provided under schemes that have been ongoing in recent years; the monitoring that takes place to ensure local authority tenants are protected from fuel poverty due to the condition of their homes; and if he will make a statement on the matter. [52086/19]
My question relates to the energy rating of local authority homes, many of which have very low energy ratings. This is in the context of climate change and fuel poverty, from which many tenants of local authority homes are at risk. I want to find out what moneys are made available to improve the quality of the homes and what monitoring is there to ensure that when works are carried out, they improve the rating.
As part of the just transition proposals for the midlands region, budget 2020 has made provision for an additional €20 million to fund energy efficiency upgrades to local authority houses in the affected midland counties. There is €5 million in the initial tranche. This funding is in addition to the €25 million, which my Department is making available in 2020 for energy efficiency upgrades to the existing local authority housing stock nationwide.
With the additional €20 million, my Department is currently working with the Department of Communications, Climate Action and Environment on the development of a targeted programme for the midlands region. My Department has also recently met the relevant local authorities in relation to this initiative, which it is envisaged will be rolled out in early 2020.
The Department's energy efficiency programme has been running since 2013. By the end of 2019, approximately 71,000 homes - or just over half of the local authority social housing stock - will have benefited from retrofit works under this programme, supported by a total spend of some €144 million. To date, the programme has largely been focused on phase 1 works, primarily attic and wall insulation. While the energy efficiency improvements arising from these works will have had an obvious positive impact in terms of fuel poverty, we expect these benefits to increase as we move on into phase 2 of the programme. Phase 2 commenced in all local authorities this year and is focusing on upgrades to the fabric of dwellings, including external wall insulation and upgrades to windows, doors and heating. That should also make a significant difference.
While I appreciate the work being done in the midlands, it largely relates to a just transition for the workers. This is welcome for people living in the area but I am trying to find out how much additional money, on top of the ongoing schemes that have been in place since 2013, is being provided for people living in low energy efficiency homes in other parts of the country. Will the Minister of State specifically tell me how much is being provided for phase 2, to which he referred and which is to start this year? Where insulation is being installed in local authority homes, is an independent building energy rating, BER, survey carried out in each home after the works are completed to ensure that they have improved the energy rating?
A BER certificate is issued both before and after the works to capture what has been achieved. That is an EU requirement. Some €25 million has been allocated for phase 2 of the scheme next year. A call for submissions is issued to all local authorities every year seeking applications for funding under the energy efficiency retrofit programme. It is natural and positive that there are always more requests than can be funded each year. This means that there is an ongoing demand. In 2019, the local authority funding request was approximately €40 million. Approximately €25 million of this has been spent so far this year. The same will be spent next year. We recognise that this is an area into which we will need to put more money in the coming years. The initial projection of the cost to retrofit all existing social housing stock is anywhere between €1 billion and €2 billion. We are committed to doing that over the coming years through a roll-out organised by our Department in conjunction with the Department of the Minister, Deputy Bruton. There is a bit of work to be done there.
The aim is to get homes to a BER of B2, which is the cost-optimal rating. This involves initial work to clarify the state of a home and then seeing what is achieved after works are completed. On top of that, the best way to achieve our overall aims is to survey the condition of our stock right across the counties. Such work is being done in Clare and other counties to develop a picture of where we are. We will then be able to budget correctly for the years ahead.
Some of these homes are in a bad state and funding must be stepped up to protect people from fuel poverty. This additional money is a relatively small amount. For clarity, does the Minister of State's Department gather the information arising from the BER surveys carried out before and after works from the local authorities? Is such information centrally gathered by the Department?
It is a condition of receiving resources. The Deputy raised issues with regard to certain local authorities not having spent money allocated for voids programmes and so on previously. They are often combined. The BER certificates are required and we do gather the data. It is gathered locally and then made available to us. I do not know whether we take it in every week but it is available to us because we have to have the data showing the difference in BER rating achieved to pay out under these schemes. The Deputy argues that we need more money. We know that but, to be fair, it is a big step in the right direction to have upgraded more than half the housing stock. This programme has been ongoing since 2013. We are committed to it. We will put funding in place in the years ahead to ensure it is completed. It has to happen but it will not all happen in one year. It certainly will happen over the coming years because it is very important. We depend on local authorities to prioritise the houses that need earlier work and intervention. Some counties have done great work in this regard. In the Deputy's own county of Limerick, more than 1,000 houses have been retrofitted. Tipperary is probably leading the charge in that close to 4,000 properties have been retrofitted in the county. There is a lot of movement in some local authorities. That is what we are trying to do. Naturally, we want to be able to respond to their requests as quickly as we possibly can. It will mean additional resources. That is work to which we are also committed under the climate action plan.