Seanad Éireann díospóireacht -
Wednesday, 4 Jul 2012

Vol. 216 No. 8

Rent Supplements: Motion

Senator Trevor Ó Clochartaigh

I move:

"That Seanad Éireann notes that:

the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, and the European Social Charter recognises the right to housing as part of the right to an adequate standard of living;

there are 94,000 people in receipt of rent supplement in this State;

there are 100,000 people on waiting lists for local authority housing in this State, and the public housing sector has been chronically underfunded for many years;

many of those in receipt of rent supplement fall within a particularly vulnerable category of tenants, often already living in properties which are at the lower end of the price scale for rented accommodation;

the Minister for Social Welfare's stated commitment that no tenant would be made homeless on account of these changes;

according to Focus Ireland there are some 5,000 people homeless in the State at any given time;

many single parents face an anomaly as regards being assessed as single persons for the purposes of rent allowance, despite having joint custody of a child;

the problems experienced by a proportion of landlords cannot be separated from the wider mortgage arrears crisis;

many of those in receipt of rent supplement will find it difficult to renegotiate their rent downwards, and to find alternative accommodation in the vicinity.

Seanad Éireann criticises the practice of landlords seeking cash payments from tenants, in addition to accepting rent supplement, in breach of the legislation; and therefore calls on the Government to:

provide support information and assistance to tenants currently availing of rent supplement;

negotiate directly with landlords the rates at which rent supplement is paid, in order to reduce the expenditure on rent supplement;

put in place a scheme whereby rent supplement is paid directly to landlords, rather than to tenants;

make as much use as possible of suitable NAMA accommodation in order to meet the needs of those currently in receipt of rent supplement, and to acquire vacant NAMA properties for social housing purposes; and

direct HEOs, formerly known as CWOs, to take all reasonable steps necessary to ensure that tenants have appropriate accommodation.''

Cuirim céad fáilte roimh an Aire. Tá mé thar a bheith buíoch di as teacht isteach leis an rún seo a phlé. I dtosach, ba mhaith liom míle buíochas a ghlacadh le Ceannaire an Tí as an t-am a thabhairt dúinn leis an gnó príobháideach seo a chur chun cinn. Mar is eol dúinn go léir, níl aitheantas ghrúpa tugtha do Shinn Féin sa Seanad agus táimid ag brath ar deá-mhéin an Cheannaire. Táimid thar a bheith buíoch dó as an t-am sin a thabhairt dúinn.

Molaim an rún seo don Teach. Seo rún atá iontach tábhachtach agus atá ag tarraingt go leor cainte faoi láthair ar fud na tíre. Baineann sé leis na liúintais atá dháíoc ó thaobh chúrsaí cíosa de ar fud an oileáin seo. Tháinig leasú ar na rátaí sin le déanaí agus laghdaíodh iad. Aontaímid leis an Aire go bhfuil gá le leasú agus go bhfuil sé tábhachtach go mbaintear leas cheart as airgead an Stáit agus go bhfuil an t-uafás airgid dhá chaitheamh ar an scéim seo, ach tá fadhbanna an-bhunúsach leis an bealach atá sé seo dhá chur i bhfeidhm, ní amháin do na tionóntaí atá curtha in áit an deacair ó thaobh go bhfuil iarrtha orthu dul ar ais ag idirbheartaíocht leis na tiarnaí talún. Tá fadhbanna ag na tiarnaí talún féin mar tá go leor acu sa gcás nach bhfuil siad ábalta ná in acmhainn na cíosanna a laghdú. Tá fadhb bunúsach leis an leagan amach agus sin an fáth go bhfuil tar éis an rúin seo a thabhairt os comhair an Tí anocht. Tá cuid mhaith saineolais sa Teach seo maidir leis an ábhar seo agus síleann muid go bhfuil sé tábáchtach go bpléifíé seo agus go dtiocfaidh muid ar réiteach.

We are disappointed with the Government's amendment to a motion which we consider conciliatory and not inflammatory in any way. We have tried to find a constructive solution to the problem I have outlined. While aspects of the Government's amendment are well-intentioned, it also contains flaws. As I will explain later, the contention that the caps are in line with market value is false.

The amendment also makes reference to housing assistance payments. We look forward to hearing more about these payments but it appears the Minister for Social Protection has come up with this concept without providing much information about it. We are totally unfamiliar with it and councillors in Dublin and elsewhere also seem to know nothing about it. On the basis of telephone calls I made today, there is not much knowledge about the matter in either the Department of Social Protection or the Department of the Environment, Heritage and Local Government. It appears to be merely a vague idea which a steering group has yet to develop. As public representatives have not been briefed on housing assistance payments, it will be difficult for us to back the amendment. If we had included such a vague idea in our motion, it would have been shot down immediately. It is a bit rich to ask the House to give our backing to a scheme about which we know very little.

The right to housing is a fundamental right. As our motion notes, this right is recognised in the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights and the European Social Charter. This country places a particular value on the permanent or, at least, semi-permanent occupation of a dwelling. Our history has placed particular significance on the idea of the home hearth, good shelter and a stable homestead and it remains a major aspiration of Irish people to have a place in which to settle and build a life. However, we are significantly failing to vindicate the right of our citizens to adequate housing. As the motion notes, between 90,000 and 100,000 people remain on waiting lists for local authority housing in this State and the public housing sector has been chronically underfunded for many years.

Approximately 94,000 people in this State receive rent supplement. Recent census figures show that 500,000 people, or 29% of the population, are dependent on the rented sector. This is a huge number of people for such a small country. Despite the extensive amount of housing that lies empty, many people have no way of vindicating their right to adequate housing. This is a veritable housing crisis but it is taking place away from the intent gaze of the media and other players.

Senators who work in constituencies where this issue arises will be more than familiar with the difficulties that people are facing. I have come across single parents with several children who have been waiting for housing for as long as ten years. In many households three generations live under the same roof, sometimes in small two up-two down houses, because of the inability or unwillingness of local authorities to build the accommodation they need.

Our public administration has long ago given up on the idea that the State should provide houses for those who cannot afford their own. Given the cost of housing during the past 20 years, this is no small or uniform category of persons. Because of this failure, 94,000 of our citizens are dependent on the rent supplement scheme. This has long been an unsatisfactory solution, one operated imperfectly even in better times. I note, whenever a parliamentary question is asked, that the first line of response is that the rent supplement is a short-term scheme. It is not short term for those dependent on it. It has long been an unsatisfactory solution.

In the most recent budget, the Government reduced the allocation for rent supplement by €21 million. This has led to a review of rates across the State and the introduction of new and lower rates, which according to the Department of Social Protection, were gauged on the basis of CSO and daft.ie figures. Often these new lower rates are way out of kilter with reality. The maximum payable to a single person for a one-bedroom flat-apartment is €450 per month. However, the most recent daft.ie report on rents indicates that the average cost of rent for a one-bed apartment-flat in the city is €542, which is €92 more than that allowed. Again in Galway the maximum allowable amount for a couple with a child renting a two-bed house-apartment is €680. According to daft.ie this type of accommodation in the city commands rent of €730 per month, which is €50 more than the amount allowed by the Department. Rent allowance for three bed accommodation in Galway city cannot breach €700 per month. Yet, according to daft.ie, average rents on the private market are €799 per month, which is €99 more than what is allowed by the Department.

This morning, I searched the daft.ie website for a three bedroomed house for rent in Galway for between €400 and €1,200 per month. I found 21 properties, only two of which fell within the price range allowable. There are 4,300 people in Galway who are dependent on rent supplement, all of whom are currently under review. It is clear that the rents being demanded are way above what is allowed by the Department. This is what we are hearing from people on the ground. This flatly contradicts the claim in the Government amendment that the new rent caps are in line with the most up-to-date market data available. The Government is sticking its head in the sand on this issue and needs to get real.

People are facing limits which their rent supplement will not meet. In recent weeks, tenants in receipt of rent supplement in many parts of the country have received letters from the Department advising them of the new rent supplement limits and that they must seek to reduce their rent to those limits. The manner in which this is being applied in different areas varies on account of the different approaches of local social welfare offices. However, the cumulative effect is the same. People can no longer afford the rent which their landlord is seeking. This is further exacerbated, as noted in the motion, by the fact that some landlords seek additional cash payments from their tenants. This is illegal, takes advantage of the tenant's difficulties and needs to be weeded out. We are calling on the Minister to take action on this issue as a matter of priority.

Those in receipt of rent supplement are being left in the invidious position of being asked to renegotiate their rent with a landlord who may be unable or unwilling to do so. The IPOA stated in its presentation to us that many landlords are not in a position to negotiate downwards because of the extra costs imposed on them. It is utterly unfair to expect tenants to renegotiate rents. These are not a category of tenants likely to wish to rock the boat. It is often quite difficult to find landlords who will accept rent supplement. People are, therefore, generally reluctant to leave suitable accommodation. This is the case where the person or family has put down roots in an area, has made a home of the house or where children are attending a local school. The possibility of displacement in such a context could potentially lead to devastation and turmoil for many families. I have met with many such families during the past number of weeks.

I welcome the Minister's commitment that these changes will not lead to any incidents of homelessness. The Minister can be assured that we will hold her to that commitment. In our view these changes left unchallenged will have enormous and devastating implications for individuals and families in receipt of rent allowance. They will also have huge implications for the State as it comes to terms with the countless families who will as a consequence face displacement from their communities and homes. It is not an effective or fair strategy to reduce rent or, more specifically, rent supplement in the private rental sector. Responsibility for implementing the new rent threshold falls squarely on the shoulders of the rent supplement recipient who, because of his or her precarious situation, will sign forms stating that rents have been reduced while being forced to meet the difference.

According to Threshold, the Department rather than tenants should negotiate directly with landlords to secure rent reductions. The Department is asking tenants to do the impossible and to break their lease agreements, which is not alone legally unsound but will without doubt lead tenants into serious conflict with their landlords. The Department is asking people, many of whom are very vulnerable and may not be well informed of their entitlements and rights, to negotiate directly with landlords to secure a reduction in their rent, which we believe is a farcical situation.

In our pre-budget submission to the Department, we acknowledged that savings could be made in the rent supplement scheme but recommended that the best approach would be for the Department to negotiate directly with landlords to secure reduced rent. Unfortunately, our advice was overlooked. In our view, it is time for action. My colleague, Senator Reilly, will outline the actions we believe the Government needs to take. However, the key issue is that the Minister needs to step in, take action and protect all of those unable to secure a rent reduction.

I will, possibly, come back with some further points ag an deireadh.

Táimid ag iarraidh ar an Aire glacadh leis an rún, i ndáiríre. Choinnigh muid an rún réasúnta díreach. Níl muid ag iarraidh a bheith ag scóráil pointí. Fadhb í seo atá le feiceáil ar fud na tíre agus tá súil agam go dtógfaidh an t-Aire ar bord é. Glacaim leis san leasú a bhfuil Seanadóirí an Rialtais á chur chun cinn go bhfuil siad ag teacht le cuid mhaith des na pointí atáimid a dhéanamh, ach bheimís ag impí orthu an leasú atá molta acu a tharraingt siar.

Senator Kathryn Reilly

I welcome the Minister to the House. Like Senator Ó Clochartaigh, I thank the Leader for the opportunity to bring this important motion before the House.

My colleague, Senator Ó Clochartaigh, has outlined the difficulties, in terms of changes to the rent supplement, facing many of the families. Staff in my office, as I am sure staff of other Members, councillors and citizens information centres, are currently dealing with large volumes of families affected by this measure. The Government decision to lower the rent caps and force individual tenants to renegotiate rents is causing great upheaval and anxiety for families throughout the country. As stated by Senator Ó Clochartaigh these rent caps often do not reflect market value. Even if they did, it is unacceptable to expect tenants, who are already in precarious situations, to renegotiate rents with their landlords, who may be unable or unwilling to do so.

These policies will oblige tenants to move out of their homes and the areas in which they and their children are living and attending school. There are alternatives to these policies. There are actions that the Government can take in the interests of all parties, which would not cause any hardship. Tenants affected by this cut in rent supplement are being left in the dark and are receiving little information on what is happening, other than being told by their local social welfare offices to renegotiate their rents, in respect of which they are receiving no advice or information. The Department and social welfare offices should be working with tenants and providing them with advice and support to ensure they are not forced to move. There is a role for HEOs, formerly CWOs, in resolving this difficulty. We appeal to them to take all reasonable steps to ensure tenants have appropriate accommodation. We acknowledge that officials do have a degree of flexibility in individual cases but the position in this regard needs to be clarified and enhanced. The role of these officers is key to ensuring that the human ramifications of any policy deficiencies are limited.

There is a need for more concrete action in this area. The Department is at the end of the day in a far better bargaining position than are tenants, many of whom are isolated, vulnerable and in precarious situations. The Department commands the budget for rent supplement and a landlord will be slow to refuse to engage with it. For this reason, the Department needs to take action rather than leave this responsibility to individual tenants. The Department should directly negotiate with landlords in regard to the rates of rent supplement. This, rather than subsidising landlords, is the approach it should be taking if it wants to save money in this area. Private landlords are being subsidised by the taxpayer to the tune of more than €500 million.

The Government amendment states that there is no direct relationship between the Department of Social Protection and landlords. While that may be the case, this does not mean the Department could not have a role. Clearly, it should. As all tenancies are registered with the PRTB this information is readily available. It is within the Department's gift to take responsibility for this area. In the longer term the Government needs to put in place measures to take the tenant out of the equation entirely with the landlord being paid directly by the Department. Not only would this reduce the tenant's anxiety, it would cut out under the table cash payments. The Irish Property Owners Association has called for such a scheme and it would be in the best interests of all parties.

It is clear much of the difficulty in this area comes from years of chronic under-investment in public housing. This is evidenced by the almost 90,000 to 100,000 people on the housing list and the fact that less than half of the €500 million used to subsidise private landlords is spent on social housing. It would be far more cost-effective to invest in the purchase of social housing via NAMA or otherwise. This is not a minor issue. It is an issue fast approaching crisis point and I want to stress this. Where are these people supposed to go if their landlords refuse to reduce their rents, but rents across the board are at the same level? Some community welfare officers have suggested they approach the homeless services. The number sleeping rough in Dublin has risen and I presume this is also true throughout the country. The increase in Dublin stands at 20%. It is not good enough for the Government to table amendments with no substantial proposals to resolve the issue and ask those who have only a matter of weeks or days to renegotiate their rents to await the housing assistance payment scheme, which appears to be known only to the Minister. This is why I, in seconding the motion, ask the Seanad to support the unamended motion.

Senator Martin Conway

I move amendment No. 1:

To delete all words after ‘‘Seanad Éireann'' and substitute the following:

"—acknowledges that the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, and the European Social Charter recognises the right to housing as part of the right to an adequate standard of living;

recognises the vital role played by the rent supplement scheme in addressing the accommodation needs of up to 93,000 households for which the Government has provided €436 million in 2012;

affirms that the purpose of rent supplement is to provide short-term income support to those who do not have accommodation available to them from another source and it is not intended as a long term housing solution;

has concerns over the long term reliance on rent supplement with approximately 55,000 recipients having now been in payment for more than 18 months;

agrees that the recent maximum rent limits introduced from 1 January 2012 are in line with the most up to date market data available;

affirms that officials from the Department of Social Protection dealing with rent supplement tenants will continue to ensure that their accommodation needs are met and that the introduction of the revised rent limits have not and will not lead to any incidence of homelessness;

affirms that rent supplement is an income support specifically for the benefit of tenants to assist them with their accommodation needs and there is no direct relationship between the Department of Social Protection and landlords;

acknowledges that if the Department of Social Protection were to become involved in negotiations of rental agreements with landlords, the efficiency of the scheme would be adversely affected;

agrees that any practice whereby landlords would seek cash payments from tenants in excess of that agreed under the rent supplement scheme is an offence and that representatives of the Department of Social Protection have specific legislative powers to deal with such offences;

recognises that in cases where parents have joint custody of a child, the needs of both parents to have adequate accommodation are taken into account when determining entitlement to rent supplement;

acknowledges that rent supplement should revert to its previous role of providing short-term income support for those temporarily unemployed;

welcomes the transfer of 39,910 households from rent supplement under the Rental Accommodation Scheme (RAS) since 2005 to date;

notes the publication of a new housing policy framework statement by the Minister for the Environment, Community and Local Government and the Minister for Housing and Planning in June 2011;

welcomes Government agreement in principle to transfer responsibility for the provision of rental assistance to persons with a long term housing need from the Department of Social Protection currently provided through rent supplement to housing authorities using a new Housing Assistance Payment (HAP);

notes that a commencement date for HAP of 1st January 2013 has been approved subject to further consideration of the matter by Government;

notes that the Government has established a multi-agency steering group to develop proposals to give effect to this transfer. The group consists of representatives from the Departments of the Environment, Community and Local Government; Social Protection; Public Expenditure and Reform; Revenue; the County and City Managers Association, and the Housing Agency;

welcomes the announcement by NAMA of its commitment to providing up to 2,000 units for social housing through the use of a social housing leasing initiative;

notes that the Minister for Housing and Planning has established a Steering Group comprising officials of the Department of Environment, Community and Local Government, NAMA and the Housing Agency to oversee the process of obtaining as many of these units as possible for social leasing.".

I wish to share time with Senator Bradford.

Acting Chairman (Senator Diarmuid Wilson)

Is that agreed? Agreed.

Senator Martin Conway

Cuirim fáilte roimh an Aire. I acknowledge the work done by our Sinn Féin colleagues on the motion. However, in proposing this amendment I acknowledge the Minister has been in office for just a little over a year. We are faced with an unprecedented economic crisis and there is no doubt landlords have been charging extraordinary rents to people on the basis they know they are in receipt of rent supplement. Quirks exist throughout the country. Senator Ó Clochartaigh pointed out anomalies and I could also do so in County Clare where the amount is much higher in some villages or towns than others and there is also a difference between urban and rural. This is the primary reason it must be moved to local authorities. The housing assistance payment scheme proposed in the amendment is the right step forward.

A number of years ago the RAS scheme was introduced, which meant somebody on rent allowance for more than 18 months was transferred to the local authority which then paid the rent supplement. This has worked reasonably well because council officials know the score and are prepared to advise on dealing with landlords to ensure value for money is achieved. I believe the new housing assistance payment scheme is moving in this direction, whereby the entire rent supplement will be in the full control of local authorities, and I ask the Minister to clarify this. It is necessary to play ground hurling with some of these landlords on the rents they charge.

I also welcome the establishment of the steering group to examine the possibility of using NAMA properties. I also note it is hoped 2,000 NAMA units will be made available for social housing. As everybody here well knows, NAMA was established because of the disaster of the property bubble and development in this country. It would be welcome if some good can come out of this mess for people in need of housing and who have a right to a roof over their head.

This must be done properly. The Minister is quite right to give herself, her officials and other Ministers a period of time to ensure when we move to the housing assistance payment scheme through local authorities it is done correctly and that it is properly investigated, researched and executed. We are dealing with public money. Approximately €450 million has been spent on rent allowance so there is room for improvement. Savings can be made and more can be done to ensure those in need of housing will get good quality accommodation for the money. Nobody wants to be on rent supplement. People want their own homes. Those who are unemployed on a long-term basis deserve the security of knowing their landlord is the State. This is why the proposal with regard to NAMA is welcome.

The amendment tabled in no way takes from the substance of the work done by our Sinn Féin colleagues. I commend them on tabling the issue for discussion. What they propose has huge merit but the amendment strengthens their motion and I call for a unanimous support for the amendment.

Senator Paul Bradford

I support the comments made by my colleague, Senator Conway, and formally second the Government amendment. Without trying to sound patronising I believe the motion tabled by the Sinn Féin Senators is very thoughtful and very well researched. I have no personal difficulty with it. However, the fact the Minister for Social Protection is before the House this afternoon to speak about housing policy rather than the Minister of State with responsibility for housing or the Minister for the Environment, Community and Local Government shows how wrongly we have wandered as a society with regard to housing. To a degree, rent supplement is a fire brigade action and until such time as we put out the fire and put in place a proper housing policy we will continue to struggle with the very sad facts and figures as presented in the motion.

It is quite unbelievable, politically, socially and morally, that in 2012, after the Celtic tiger, the building boom and the construction of tens of thousands of houses throughout the country, that so many people do not have a decent place to live. The Minister of Social Protection has what is probably an accidental role to play in housing policy. We really need to move beyond the emergency solution that is rent supplement towards a real housing solution and policy. We have not had a substantive debate on housing in a political generation. Former colleagues of ours published, debated and ignored the Kenny report and since then there has been no real housing policy apart from building and speculating. A housing estate was not a place where people and families lived; it was a profit vehicle for those who wanted to turn an acre into a €1 million park. We need a debate on this.

In recent weeks I have put on the record of the House how surprised I have been when a number of our colleagues have expressed their delight and pleasure at reading media reports about the increase in house prices.

Senator Martin Conway

Hear, hear. Well said.

Senator Paul Bradford

We ruined our country once through house prices and I find it utterly unbelievable that colleagues of mine on the Government side of the House have welcomed the stir in the market and the increase in house prices. Surely the Government must aspire politically to more than wanting to preside over another housing boom. Our aspiration should be a robust housing policy which makes housing affordable, credit available and tries to deal once and for all with the housing crisis.

It was difficult to come up with an amendment to a well reasoned motion but the amendment is also well reasoned and mentions the NAMA properties. I welcome the fact we might find a use for 2,000 NAMA properties. However, tens of thousands of people cannot afford a house and we require a bigger solution for this issue. The Minister is moving as best she can on rent supplement. A small amendment recently caused political grief in the other House, but rent supplement is not the be all and end all. It is a tiny part of what should be a much larger solution.

Let us have this debate on rent subsidy, RAS, which has been a fine scheme, probably the only bit of fresh thinking on housing policy in the past ten or 15 years. However, we really need a substantive debate on housing. We need a new political definition for housing and a strong political statement from Government about people's entitlement to housing, whether this concerns rural planning, well-built urban estates or well-managed streets and cityscapes. We need that debate.

The commencement of the Sinn Féin motion mentions the universal Declaration of Human Rights, etc. Sometimes these declarations are full of fine words. However, it should not be beyond possibility in a civilised political society, which one hopes ours still is, to ensure there is adequate housing. Rent supplement is a tiny part of the solution. We need that substantive debate on housing. The Minister has her role to play but her Cabinet colleagues with responsibility for housing must be the senior players in this debate.

Acting Chairman (Senator Diarmuid Wilson)

Senator Mooney has six minutes.

Senator Paschal Mooney

All sides of the House welcome the Sinn Féin motion. I share the view that rent supplement is only a short-term policy. The ultimate solution is to move the 94,000 recipients into permanent accommodation, either through local authorities or by employing NAMA properties to tackle the social housing waiting lists. It is interesting that the figures from 2005 up to June 2012 show a 60% increase. This is significant, in that even at the height of the Celtic tiger period housing boom there were 60,200 people in receipt of rent supplement. That would seem to suggest that even at that point, with the housing market going out of control, it was still impossible for people to look after their own housing; they had to rely on State subsidy. Here we are at the other end of the scale, where house prices have fallen dramatically to some 60% below what they were in 2006-07, yet there is an increase to 94,000 people who are now in receipt of rent supplement.

Fianna Fáil would support the Minister in attempting to make savings by reducing rent supplement expenditure. On the one hand, the supplement addresses a particular short-term need, on the other it affects the housing market, depending on the part of the country. In establishing the rent limits, the Department announced a countrywide average of some 23% reductions in rent allowance. This reduction, however, differs county by county, with reductions ranging from 0.08% in Cork for a couple or a single parent with one child, to a staggering 44.9% in County Roscommon for a couple or single parent with two children. I do not have the figures for County Leitrim but I would say they are as high, if not higher. Perhaps the Minister might have something to say about the variations throughout the country in that regard.

The Minister also indicated that letters have been issued, advising welfare tenants of the new maximum levels when their lease is due for renewal. I am sure the Minister will take this opportunity to clarify the situation but we understand that a number of letters have already been sent out in various local authority areas stating that tenants have until a specific date, unrelated to their lease, to renegotiate their rent with the landlord or, alternatively, seek other accommodation. There is obviously a clear disconnect between the Minister's announcement that reductions come into force upon the renewal of leases, which I understand occurs once every 12 months, and the letters being sent out by social protection offices in various counties, stating that tenants must renegotiate by a certain date. Again, I am sure the Minister will clarify that.

Whether NAMA should be brought in to tackle social housing waiting lists is a moot point. There are many ghost estates throughout the country, with many unoccupied houses. Speaking from my own experience, such houses in my county and surrounding counties are there primarily as a result of the Shannon tax incentive scheme which, in its initial conception, was an excellent scheme, essentially intended to repopulate counties such as mine, Cavan, particularly west Cavan, Roscommon, Longford and part of east Sligo. That was fine but the Government then decided, under pressure from the building lobby — I cannot think of any other reason- to extend the scheme. In my part of the country at least, it was the extension of the scheme that caused the surplus housing. This happened in my home town. That was where the big mistake was made because this was not necessary. The questions kept being asked: where would the people come from to populate these houses on the fringes of towns and villages across my county; where would the jobs be provided for them to do so?

That said, there is anecdotal and even stronger evidence that some sort of social housing engineering has gone on, with people being relocated out of some of the Dublin constituencies and down the country. There are certain social implications attached to that because they are effectively being parachuted from one type of environment, an extreme urban one, into what is probably an extreme rural environment. This brings its own social difficulties — there is no question about it. Although in principle I agree with many of the people who are raising their voices about using ghost estates and unoccupied houses, in particular the NAMA-controlled ones, to address this issue, I would proceed with severe caution. I do not want to call this social engineering — one cannot account for human behaviour — but I believe there are social consequences that arise from taking people from one environment and putting them into another, taking them from one extreme to another.

I am sure the Minister has an opinion on the whole NAMA issue and on what to do with some of these estates and I would be grateful to hear her views in that regard. Perhaps the best way forward is for the Departments of Finance and Social Protection and NAMA to get together and see if there is some way of sorting this out. Overall, I take on board the points Sinn Féin made. I agree with the broad thrust of the Minister's policy in that there is a need to reduce this reliance on supplement. I confess it had not occurred to me it was a short-term or stop-gap measure. I had never thought about it other than to think it was there because it was there. However, although it is a short-term measure and only intended to address short-term housing need, it now seems to be a given. It is certainly distorting the market in some areas. Although it may be affecting markets in the wrong way, in the current state of the housing market — I refer again to my county, encompassing the counties I mentioned — rental income is very low because of the surplus of housing. There is such a wide choice both for those who can afford it and those who seek such housing because they have rent supplement, that people are negotiating downwards rather than upwards in many cases. Again, I would treat with caution lobby groups representing landlords who claim they are losing out to an extraordinary extent because of rent supplement. It is not because of the supplement but because there are too many houses and because the current competition is so vast. The options for people who want to rent are considerable. Until that issue is addressed there will be no change in the status of rental income.

Minister for Social Protection (Deputy Joan Burton)

At present there are approximately 92,000 families claiming benefit from a rent supplement payment. It is very important for us to mention the figures involved, in this time of very difficult economic crisis for most of our citizens and taxpayers who are ordinary people, on moderate levels of income. It is very important that we look at this issue from the point of view of the taxpayer in this country, ask whether we are getting value for money from landlords in this country and ask whether we are making the best arrangements for people who need support with their housing, of whom there are many.

Currently there are 92,000 people claiming and for them my Department is paying €436 million this year — a lot of money in anybody's language. I find the notion that we should not scrutinise that spending to determine if we can target it and spend it as well as possible and get the best possible value for money rather strange.

The total spend on the payment of rent allowance in the past five years, from 2007 to 2011, is approximately €2.4 billion. That is a great deal of money to have been spent under this heading on what is meant in policy terms to be a short-term housing support for people who lost their job and have rented accommodation. They need to be helped to hold on to their accommodation while they move on to another job or into education and training because we know the jobs market is tight. That is the reason the Department of Social Protection assists people with rent supplement.

The main purpose of the rent supplement scheme is to address people's short-term accommodation needs while they are temporarily unemployed. The aim is to provide short-term assistance and not to act as an alternative to the other social housing schemes operated by the Exchequer. However, more than half the current recipients of rent supplement, approximately 55,000, have now been on rent supplement for more than 18 months. Many of them have been on rent supplement for many years. I welcome the opportunity to discuss rent supplement but Sinn Féin, in all honesty, ought to examine rent supplement, what it has done and where it has worked. For instance, once somebody is in receipt of a significant amount of rent supplement it can have a hugely distorting impact on their capacity to return to work in that if they get €1,000 a month in rent supplement, that is €12,000 a year, any job they would take up would have to cover social welfare payments, perhaps for a family of four, plus €12,000 in rent supplement because if they were to take up a job they would lose the rent supplement. That is the reason I emphasise that we must examine this in a holistic way and liaise with the Department of the Environment, Community and Local Government in that in recent years 40,000 families have been transferred from rent supplement to rental assistance schemes. When people do that, they are then like other local authority tenants, although living in private accommodation. They can predict, therefore, if they get an offer of a job, to what their differential rent is likely to rise. There is a disincentive in taking up an offer of employment because of the loss of the very large amount of rent supplement. Senator Ó Clochartaigh gave an example of a single person in Galway who was getting €450 a month.

Senator Trevor Ó Clochartaigh

Yes.

Deputy Joan Burton

That amount of €450 a month is €110 a week. The Senator's constituent in Galway gets €188 a week, plus fuel allowance, plus another €5,000 a year. The difficulty in that respect is how that person will take up employment because he or she has to get a job that will pay more than the total package. There is an important opportunity in this debate to bring this point home. Those on all sides of this House must be thoughtful about the way we get best value from the expenditure of taxpayers' money.

Social housing is provided through a number of delivery mechanisms by housing authorities or through the voluntary and co-operative housing sector by approved housing bodies. More than €333.7 million has been provided in 2012 for the social housing capital budget. Again, that is a significant commitment in the context of our current economic position.

Rent supplement is administered at local level by former community welfare officers who came into the Department of Social Protection last October. They are now full departmental officials. Those officials provide a great deal of support and advice to customers in addressing their accommodation and other needs.

Budget 2012 provided for a number of changes to the rent supplement scheme including a review of the maximum rent limits which were set after a detailed analysis of the most up to date market data available. That data and the survey are available on the Department's website and incorporate all the data from all the different locations in the country and is urban, rural and country based. Senator Ó Clochartaigh is shaking his head, but it is acknowledged to be a very comprehensive survey and picture of rents. The emphasis of the rent limit review was to ensure that maximum value for money for tenants and the taxpayer was achieved while at the same time ensuring that people in receipt of rent supplement are not priced out of the market for good quality private rented accommodation. It is expected that €22 million in savings will accrue to the Exchequer during 2012 as a result of this measure.

Another important point I would emphasise is that the Department of Social Protection funds approximately 40% of the private rented sector in Ireland. That means the Department is the biggest player in establishing rent. I ask Senator Ó Clochtaraigh and Sinn Féin who else rents in this country. Who are the 60%? For the most part, they are workers, often on quite low incomes because they cannot afford to buy a house and they are often students whose parents are funding rent for them while they are at college. Is Sinn Féin telling us that the Department of Social Protection should use a 40% position in the market, as is implied in the Sinn Féin motion, to drive rents up such that people who are in low income jobs would end up paying higher rents?

Senator Trevor Ó Clochartaigh

In fairness, we said the opposite.

Deputy Joan Burton

It is very good we have a discussion of how this actually pans out. The Department pays for 40% of rented accommodation in this country. Sinn Féin needs to take into account who are the other people who pay rent. They are mostly low income workers and students. Does Sinn Féin want to drive up rents, as is implied in the motion, for those people? It needs to think about the policy it is advocating.

Senator Trevor Ó Clochartaigh

The Minister should have listened to what we said. We said the opposite.

Deputy Joan Burton

I listened carefully to what the Senator said. The previous rent review of June 2010 resulted in reducing national rents by a weighted average of 4%, accruing annualised savings of €20 million. That was generally regarded by almost everybody as being quite a successful undertaking because, from the point of view of people on a social welfare income and those who are renting in the private market, it helped to reduce rents. Since that time we have had a catastrophic collapse in the construction industry, to which Senator Mooney referred. I ask Sinn Féin is it unreasonable to expect some better value from rents in the context of the well documented fall in property values in the country? I know that the two are not necessarily absolutely related because there are landlords who bought their homes to rent many years ago at very attractive prices and they may have no mortgages on them.

Sinn Féin references in its motion its discussions with the Irish Property Owners' Association — that is my understanding. The Senator was speaking about that association and that Sinn Féin is concerned about buy to let landlords. Everybody is concerned about buy to let landlords because quite a number of them were some of the people whom Senator Mooney referenced, people who were beguiled into investing in property and perhaps did not think it out such was the property bubble in this country. Sinn Féin is a party that does not want property taxes and yet it wants increased rents to get landlords a higher income. That is basically what it is saying.

Senator Trevor Ó Clochartaigh

It is not what we saying at all.

Deputy Joan Burton

Whereas the job of the Government is to get more value for all of our taxpayers but what has the Government done——

Senator David Cullinane

It would have helped if the Minister read the motion. She would have saved herself some trouble.

Deputy Joan Burton

——in regard to people, the buy to rent landlords, who may be in difficulty with their mortgages? It should be noted that the banks have been capitalised at very great cost to the taxpayer. It is not the job of the Department of Social Protection to fund the mortgages of buy-to-let landlords. We are sympathetic to their problems but the implication in the Sinn Féin motion is that we should in some way arrange to subsidise buy-to-let landlords when in fact the taxpayer is already putting very significant committed funds into the banks to restore the funding basis of the banks and to deal with the mortgage crisis.

The points raised by Sinn Féin are very interesting but as for their economic impact and the fairness of the proposals vis-à-vis the ordinary taxpayer who may not be a landlord at all, those proposals need to be thought out quite carefully. A total of 25,000 rent supplement claims, which represent more than 27% of total claims, have now been awarded in 2012. This is a strong indication that accommodation can be secured within the new limits. While I acknowledge there are certainly difficulties in particular areas, the staff in the community welfare services of the Department are working with tenants where special circumstances exist to offer assistance in individual cases. These new limits will not cause homelessness for anyone in receipt of rent supplement. The maximum rents may be exceeded in certain circumstances, for example, in respect of people with a disability in specially adapted accommodation or homeless people whose needs cannot be met within the standard term of the rent supplement scheme. In addition, local rent caps can be set lower than the prescribed maximum limits where the local market conditions dictate, thus ensuring that recipients are provided with suitable adequate accommodation.

The next national review of maximum rent limits is due to be completed before June 2013. I say to the Sinn Féin Senators that what has happened so far indicates that we have a capacity to get better value for money in respect of this scheme for hard-working taxpayers. This is a legitimate concern as well as concern for landlords. I ask Senator Cullinane to bear this in mind.

The Department of Social Protection, through its homeless persons unit and the asylum seekers and new communities unit, provides assistance to people in sourcing the most appropriate accommodation available. I refer to the statistics for last year and the previous year. In 2010, some 97,000 individuals and families were in receipt of rent allowance with 96,000 individuals and families in receipt last year. Just over 60% of these were people of Irish nationality and the remainder comprised people who have come to Ireland. Senator Mooney will be well aware that people coming into a country are, generally speaking, among the hardest working because they are moving to a new country in expectation of working hard and making a new life for themselves and their families. We have to give serious consideration to whether we are creating a very serious employment trap not just for Irish people, but also for people who have come to Ireland, in that the rent supplement inhibits transfer to employment because in some cases it is such a significant portion of a person's income that to lose it means he or she is deterred from taking up employment. This needs to be considered very carefully.

Senators will know that the officials in my Department and the community welfare officers go out of their way to help people who have problems with homelessness. On the point of the Department negotiating directly with landlords, the people on social welfare are our clients. If the Department were to take on the landlords as well, this would be an extra 92,000 people or businesses to deal with and the Department does not have the resources to do this. I have emphasised that reform of the rent allowance scheme is required. It needs to be changed from what it has become and what it was never meant to be, a long-term housing assistance. It was meant to be short-term assistance for people who had lost their employment. Senator Ó Clochartaigh referred to such reform. What is envisaged is that the scheme would transfer to the local authorities who have housing departments and who are well equipped to deal with landlords and the overall provision of accommodation, as part of the general provision of services within a county or a city area.

Reference was made to top-up payments to landlords. Rent supplement is calculated to ensure that the person, after payment of rent, has an income equal to the basic supplementary welfare allowance rate, less a specified minimum contribution which recipients are required to pay from their own resources. Where a person has an additional income above the rate of supplementary welfare allowance, he or she is allowed in certain circumstances to top up the rent as the additional income will mean there is sufficient income to meet basic needs after paying the rent. A second type of top-up payment can occur where the application to the Department declares a rent lower than that actually being charged by the landlord. Any instance of false declarations should be reported to the relevant Departmental official administering the scheme who has specific legislative powers to deal with such offences. The recent Social Welfare Bill introduced powers of inquiry for appropriate staff such as social welfare inspectors to formally request and oblige landlords to provide information in respect of their rent supplement tenants, principally to verify the agreed rent, the identity of the tenant and the existence of the tenancy and to ensure the person in receipt of the allowance is using the accommodation. This measure will improve both the governance and oversight arrangements in place and it will complement existing compliance arrangements between the Department and the Revenue Commissioners. This is to ensure that landlords report such income for taxation purposes.

My intention is to return rent supplement to its original purpose, which is to provide short-term income support for those temporarily unemployed. The rental accommodation scheme has been in operation since 2004. The Department of the Environment, Community and Local Government is working on the housing assistance payments scheme. Collaborative interchanges between Departments and organisations, such as housing authorities, depend for success on a synchronisation of information technology. The transfer to a housing assistance payment scheme would allow for direct rent payments to landlords by the local authority. Differential rents will be set and collected by the local authority and this system applies currently to local authority tenancies. It is anticipated that it will be a condition of tenure that the tenant enters into a household budgeting facility arrangement with rent deducted at source by An Post from the tenant's welfare payment. This is an important initiative which will ensure that the rent is paid up to date.

Whether a rent supplement tenant or a local authority tenant, a sign of serious economic difficulty in a family is that people fall behind with their rent. I want a system like that in order that tenants will not be able to opt out of paying the rent unless they have, for some reason, the specific permission of the local authority. I have listened to Members from both Houses say they are concerned at the level of local authority arrears because of the way the system is structured. I am working with the Minister for the Environment, Community and Local Government and the Minister of State with responsibility for housing on a scheme that transfers rent supplement back to, as was intended, a short-term support and puts in place longer-term structures, through the medium of the local authority, to assist those who need accommodation and help with housing. Members will be aware that in many counties people are on rent supplement for very long periods. If this had been arranged via the local authorities, we would probably have found, for most of those people, a long-term local authority provision either through local authority renting or, as was traditional, through the local authority building and developing or working in conjunction with housing agencies.

Senator Aideen Hayden

I thank the Minister for a comprehensive statement. I also thank the Sinn Féin Senators for raising this important issue. We must bear in mind that 20% of the people live in rented accommodation. That is a significant change for a country that until recently had an 80% home ownership rate.

Rent supplement was introduced in 1989 as a short-term measure but that position had changed within two years of its introduction. There have been numerous attempts to transfer rent supplement costs from the Department of Social Protection to the Department of the Environment, Heritage and Local Government, one in 1993 and another in 1996, but every attempt to date has been unsuccessful. The commitment given by the Minister for Social Protection and successive Ministers of State with responsibility for housing, Deputy Willie Penrose and Deputy Jan O'Sullivan, to transfer the payment to the Department of the Environment, Community and Local Government represents, in all honesty, the only real hope for rectifying the difficulties in the area of rent supplement.

There are a couple of aspects of the amendment with which I am not entirely comfortable, including where it acknowledges that the Department of Social Protection would not receive better value if it negotiated rental agreements with landlords directly and that tenants negotiating individually brings about greater efficiency. For example, it is clear from the Department of Social Protection's statistics that in 2010, some 20 landlords received more than €100,000 and up to €300,000 annually from the Department. It would be far more efficient for the Department of Social Protection to have negotiated with those landlords directly. To get best value for money for the State, I strongly suggest it is not a good idea to put vulnerable tenants in the front line to achieve savings. These are tenants who have health issues, mental health issues and language and literacy problems. Better savings could be achieved by negotiating and dealing directly with landlords. In that context, the transfer of the payment to the Department of the Environment, Community and Local Government and into the hands of the local authorities, ultimately, represents the only solution to the problem.

In regard to the Government amendment, the reality is that anybody dealing with rent supplement on the ground knows there are difficulties in its administration. I fear that whatever information the Department of Social Protection received when setting rent supplement limits did not take into account the specific difficulties of people who occupy the bedsit end of the market. The rent indices that would have been available to the Department under the Private Residential Tenancies Board and Daft systems do not cover, to any great extent, bedsit accommodation and yet 60% of rent supplement recipients are single people. Therefore, the system is flawed in giving an accurate account of the costs in the market.

I do not question the Department's bona fides but I draw the Minister's attention to a top up survey recently conducted by Threshold. It was a random sample of 100 rent supplement clients between February and May 2012. Some 55%, or 55 people, were paying more than the rent limit. Of those 55 who were topping up out of their social welfare payments, 67% said the amount of rent they paid affected their spending on their shopping bill and a further 64% said it impacted on their capacity to pay their heating bills. In Dublin and Cork it is not uncommon to encounter clients who pay a top up in the region of €100 per month. That has a real affect on the ability of individuals to meet their daily living expenses.

I have discussed with the Minister situations where it has not been possible within the rent caps to provide properly for people. I know she is open to this. It is important that the Department understands that for those who are living on rent supplement it is their home and it should not arbitrarily say to somebody that he or she needs to move because his or her landlord will not take a successive rent reduction. Landlords have taken rent reductions and many have taken successive rent reductions. On this occasion, more and more landlords are reluctant to take a rent reduction, for which there are a number of reasons. The market is increasing in terms of the numbers who are renting. We have a moribund housing market; we are not building. The reality is that rent supplement tenants are competing with ordinary people who, in previous times, would have seen their future in the home ownership market. As a country we do not want to see the most vulnerable pushed into the worst quality accommodation.

I respect the Minister's commitment that nobody will be made homeless by the changes made to the rent supplement scheme. However, I wish to bring one case study to the attention of the House. It relates to a homeless person who has been liaising with the access housing unit in Dublin and is seeking housing. He has been coming to the access housing unit for a number of years. He is a heroin addict and has been receiving treatment. Fortunately, he is drug free and trying to get back to live independently. The access housing unit began seeking accommodation for him in March 2012. It accompanied him on several viewings but has been unable to source good quality accommodation within the €475 rent cap. In one studio, the individual was unable to stand up straight in the kitchen area. Another studio in the city centre was so small that the single bed took up 50% of the floor space. He also viewed studios that were damp, had sofa beds rather than actual beds as well as studios that did not meet the minimum standards and in one case did not contain cooking facilities. To date we have not been able to find him accommodation within the rent cap. I accept the Minister has given a commitment that homeless people will be given appropriate access, under the rent supplement scheme, and it is Government policy, under the housing first scheme, that housing is put first and that we do not end up, by default, with more people in homeless accommodation at a greater cost to the State.

I bring to the attention of both Ministers that there are difficulties with the rent supplement system, and there is little point in us burying our heads in the sand about it. In advance of any review of that system I ask both Ministers to do two things. First, we must expedite the transfer of rent supplement to the local authorities because the sooner we do that, the better chance we have of getting out of this position. Second, I ask the Ministers to give priority to the real difficulties single people in particular are experiencing in the system as well as the difficulties the caps are imposing in terms of getting people out of homeless services into houses.

Senator Sean D. Barrett

I welcome the Minister, Deputy Burton, and the Minister of State, Deputy O'Sullivan. As we try to put the pieces together in the country from the position we inherited 14 months ago, this measure will take a great deal of thought. We can go through all the mistakes that we made including the massive infusion of private capital into a stock of housing that, according to The Economist list, gave us the highest rise in house prices anywhere and far in excess of those in Spain and so on. That was fuelled by the view that a house was a fantastic source of tax free capital gains rather than just a place in which to live, which is what we are concerned with here, and I support the motion and the views of the various speakers. That has to be considered. There should have been a cut-off point when somebody could buy a house in Killiney for €15 million and sell it for €16 million. That was the easiest €1 million euro they would ever make tax free. That created the property bubble.

We must address also the irresponsible practices in the banking sector, the maximum loan to value ratio and the maximum loan to income ratio. The banks, by putting approximately 4% of the extra inflow of money into either agriculture or industry, created the property bubble from which we are all suffering.

Anthony Downs of the Brookings Institution in Washington once wrote a paper entitled, "Too Much Capital for Housing", in which he stated that supply is elastic and if we continue to put capital in, as the Irish banks did, we end up with the situation we had in Dublin where the average house price, in the ten years up to the financial collapse, rose by 500%. That results in negative equity for the people who bought in the expectation that that would continue, another problem with which the Government is trying to wrestle.

There must be much stricter rules for banking in the future, in terms of lending and saving, and we must not allow those capital gains to become a substitute for work, which we needed to address.

Our colleagues in Sinn Féin mentioned the local authority stock. It has been run down and is below demand but I recall that after he became Taoiseach, the late Garret FitzGerald chaired a committee on local authority housing in Dublin — I believe it was when Gay Mitchell was Lord Mayor — and he found it was more expensive at that time than housing in the open market. The rents were extremely difficult to collect and the maintenance costs were extremely high, much higher than those experienced by the Housing Executive in Northern Ireland. My Northern Ireland students asked me if I thought the Housing Executive is a model of efficiency and I replied that it is not, but it compares with Dublin Corporation, which is what Garrett FitzGerald was examining at that time. Concerns were also expressed about building conglomerations of local authority houses in such large numbers, which created fears of ghettoisation, and we tried to build them in smaller quantities.

In terms of getting out of this crisis, I referred to reforms in the private sector but if we had reform in terms of local authority housing so that it would again become value for money, I am sure the Ministers present would be delighted to engage in that but it was not done in the past. Garrett FitzGerald, by inclination, would not discriminate against local authority housing but he felt that the economics at the time had moved against it. That might have been because of the power of the construction industry and the way it influenced local government in terms of rezoning in that it saw itself as a servant of the construction industry and not as a servant of the people whom these Ministers seek to serve.

I agree with Senator Bradford that we must get house prices down, and they should continue to come down because if house prices are low it benefits those on low incomes. There should not be any Government interest in seeking to restore the rampant growth of house prices we had in the past.

It is time to put pressure on the National Asset Management Agency to sell the ghost estates. We had a discussion about that with the former Minister of State, Deputy Penrose, before he left office. Many of the ghost estates look fine from the outside and it would take very little work to restore them. If the local authorities do not have the money, why not sell them? They should not be left to go to rack and ruin. I ask the Minister if their owners should face prosecution for allowing properties to become derelict. A huge investment was made but it is worth far less now and therefore we should try to get those into the market.

Overall, we must get unemployment back down below the 14.9% announced today but housing, along with banking, are the two areas in which massive mistakes were made and it will require a new policy to address them. I assure the Minister, and as she can see from this constructive debate, that the Seanad will assist her because it is vital that we do not go back to the position where we were pricing local authorities out of the ability to build housing and pricing the market sector way beyond anybody's ability to afford it unless they got the massive capital gains to which I referred, which pushed up the price even further. A house is just a place in which to live. It is not a boost for the construction industry or the banking industry and getting those out of the picture would be a start in terms of avoiding the terrible mistakes made over a decade or more ago.

Senator Deirdre Clune

To pick up on Senator Barrett's last point, a house is just somewhere to live but, unfortunately, for some people it became a commodity and we have seen the set of problems that created for this economy on many fronts in the past decade.

Today we are focusing on the rental sector. We had a briefing this morning on the Central Statistics Office figures and it was pointed out to us that 475,000 people are renting including private renting, assisted renting and renting directly from the local authority. That is an increase of 300,000, or 60%, on the last census figure.

As we are aware, renting is a real option for people and in the circumstances in which many individuals and families find themselves, renting will probably be what they must do for the foreseeable future, and perhaps for the remainder of their lives. This country is not equipped for that scenario. We only have to look at the number of landlords versus the properties available to rent. It is estimated that there are approximately 1.6 properties per landlord, which compared with Europe or other countries is very low, and as a result there are landlords who are not professional landlords. They did not set out to make a career out of it. They have another job or they may have acquired a property and thought it would be a good idea to rent it.

I represent a city which has two third level institutions and a mobile population. Landlords have bought the houses. They want to maximise the rent but they are not prepared to invest in them in terms of providing services for the tenant. They just want the return from the investment.

In general, we do not have professional landlords who are serious about their business. There are some exceptions to that rule, one of which is the local authorities in terms of the support they give to their tenants. When I first became a member of a housing committee in Cork City Council over ten years ago we had a debate on single parents during which the housing officer said that the best thing a young person with a family can do is engage with the local authority which provides the services many of them need. Many of those people have difficulties in accessing services and getting around what they perceive to be officialdom. Local authorities are good landlords and provide good service and support to their tenants. The Minister for Social Protection, Deputy Joan Burton, referred earlier to the rental accommodation scheme which is a very important scheme that has been extremely successful. Rent supplement was only meant to be a temporary measure but has evolved into a semi-permanent measure and it is not appropriate. It traps individuals in that they cannot access employment for fear of losing their rent supplement.

The rental accommodation scheme, whereby the local authority deals directly with the landlord, has been extremely successful on a number of fronts. It gives the tenant security of tenure in that he or she is guaranteed that the landlord will not come along at the end of a six or twelve month contract and ask the tenant to leave, claiming that the property is required for personal reasons or for another tenant. The scheme also gives the landlord the certainty that he or she will have a tenant and a relationship with the local authority for a certain period, be it three, four or five years. Therefore, from the landlord's point of view, income is guaranteed for 12 months of the year whereas if tenants are constantly changing, the landlord often loses out on rent for a month or two in the changeover period. Furthermore, in a period when we are not building any more local authority housing, the scheme provides local authorities with an avenue through which they can house tenants. The scheme also ensures that there is a minimum standard of accommodation, which is extremely important and from what I have seen in my own area, housing standards are improving. The rental accommodation scheme is very popular and successful and I urge the Minister to ensure it continues.

Regarding the rent supplement, the cap in Cork is €715 per month. If one looks on www.daft.ie, the average rent for a two-bedroom house is €770 per month. Therefore, tenants are surrendering, on the sideline, additional money to landlords. Both tenants and landlords are in on this scheme. This is happening in urban areas, particularly in Dublin and Cork. Pressure is being put on tenants to pay additional money and for such tenants, the rental accommodation scheme is the way forward.

Senator Mark Daly

I welcome the Minister to the House. An enormous sum of money has been spent on this scheme over the past five years. In her speech to the House earlier the Minister spoke of her amazement at the proposal to pay landlords directly. Previously, rent was paid directly to landlords under this and other schemes but now it is paid to tenants. This has left some curious anomalies in the system which have been pointed out to me by people in Kerry and I am sure Senators from other parts of the country are also aware of them. A tenant can, for example, tell a landlord or agent that his or her rent allowance has been cut and ask for a rent reduction. The landlord then reduces the rent on the basis of information provided by the tenant and in some instances the new rent is actually less than what the tenant is receiving as a rent supplement. A lot of information is circulating among those in receipt of the payment about what is essentially a scam, whereby the rent supplement is actually higher than the rent being paid. This is due to the fact that the rent is going directly to the tenant. There is no safety measure in place such as the agent or landlord informing the Department of Social Protection of the terms of the lease and providing a signed copy of the agreement. In the absence of such a measure, what is happening in some instances is that the form provided to the Department has a rental amount on it that is different from what is being paid to the landlord.

I have raised this issue with staff in the Minister's office and urged them to put mechanisms in place to ensure that information on the actual rent being paid by the tenant is provided by the landlord or agent to the Department. This would prevent the taxpayer from being defrauded under this scheme which will cost €436 million in 2012 and has cost €2.4 billion over the last five years. This is not merely a loophole but a gaping hole in the system. Time and again I have been told by agents that tenants present them with a blank form to sign. The tenants then fill in the form to obtain the maximum amount of rent supplement which, in the case of Cork, is €770 per month and return it to their local social welfare office. At the same time, they are telling landlords they can only afford to pay €500 per month. Landlords are accepting rent of €500 because in this climate, as my colleagues know, they are delighted to get tenants. Rents are falling and landlords know that the best payer at the moment is the Government. This situation is costing the taxpayer tens of millions of euro and over the lifetime of the scheme could cost hundreds of millions. There is no mechanism whereby the amount of rent being paid to the landlord by the tenant is verified by the Department of Social Protection.

I have made the proposal to staff in the Minister's office but have been met with deafening silence. Does anyone want to check what landlords are receiving from tenants? The relationship between the Department of Social Protection and the landlord has been broken. Now the money goes to the tenant and the tenant passes it on to the landlord. There is a huge gap in the system which I have also tried to raise on the Adjournment. I do not see why we cannot fix this loophole because it is costing millions of euro annually. There are many elements to my colleagues' proposals to the Minister but this is a scam. I know it because I used to work in the industry. It is an absolute scam. All it needs is a requirement from the Department of Social Protection that the landlord or the tenant verify the amount of rent being paid. If that was done, we would know that the entire amount of money being paid to the tenant by the Department is actually being passed on to the landlord and that the rental amount as stated by the tenant is the actual amount of rent being paid. That is not the case at the moment. It is not always the case that the tenant is claiming dishonestly but it is happening a lot. If it is happening in say 10,000 cases, which is 10% of the total, that adds up to €43 million.

I ask the Minister to raise the matter in the Department and determine how to verify that the tenant is actually being charged the amount of money he or she stipulates is the rent for which a supplement is being claimed.

Senator Marie Moloney

I congratulate the Sinn Féin Senators on tabling this motion today. Whether or not we agree with them, they have raised an issue that needs to be aired and debated on the floor of the House. I am very disappointed with the attendance in the House because I had expected that Senators would be clamouring to speak on this issue. The Minister stole half of my speech. She must have been looking at my notes because she spoke about many of the matters I intended to raise. I will not repeat her comments.

She described rent supplement as a short-term payment but everyone knows that is not the reality of the situation. The housing policy framework states that 94,990 households were receiving rent supplement payments at the end of March 2012, of which 53,821 were receiving payments for 18 months or longer. There is no indication of the length of time for which they were receiving payments but I am sure it is a long period. We cannot blame the people concerned because they are trapped in this scenario due to loss of employment or the reduction in the rate of construction of social housing. There is nothing they can do to get out of their predicament. I have met several directors of housing in local authorities to ascertain their opinions on the issue. Many of them expressed the view that the rent supplement deters people from accepting local authority housing. In one case a family of two parents and two children who were in receipt of a jobseeker's allowance of €372 per week and rent supplement for a four bedroom property found that the €35 they contributed to their rent was less than they would pay in differential rent for local authority housing. Why should this family take up a local authority house which probably has three bedrooms if they can live comfortably in a four bedroom house?

The leasing scheme does not appear to have taken off to the extent predicted. The last time I checked nobody was on the leasing scheme in Kerry County Council. I had a client who had a daughter with a disability. She negotiated with her landlord to enter the leasing scheme and all was going well until a council official advised her that she would have to move out of the house before she could enter the leasing system. She might not even have gotten the house again if somebody with a disability was ahead of her on the list. These anomalies need to be addressed.

It appears from my experience in housing matters that the rent supplement process is devoid of basic background checks such as whether the property meets PRTB standards and whether the landlord can document building energy regulation certification, proper planning permission and tax compliance. I am glad that responsibility for this area is transferring to the Department of the Environment, Community and Local Government because housing should be the responsibility of a single authority. If the rent supplement transfers to the local authority these issues will have to be addressed because local authorities cannot be permitted to make payments to individuals who are not registered for tax or own properties which do not meet the standards. Perhaps these are issues for another debate but they must be addressed.

Senator John Kelly

I welcome the Minister of State, Deputy Jan O'Sullivan, back to the House and commend Sinn Féin on tabling this motion. Contributors have spoken a lot of common sense thus far and despite the Minister for Social Protection's description of rent allowance as a short-term scheme, it is far from short term. From my own experience as a community welfare officer, I am aware of people who were in the scheme for 20 years. Nothing will change until housing is made available through local authorities or voluntary bodies, unless these individuals find work in the meantime.

I take issue with the new rent caps being imposed in certain parts of the country. The levels set in my own part of the country are ridiculous because they do not reflect the rents charged in the west of Ireland. If rent allowance is to continue in its current form we need to reconsider the rent caps. However, the debate on rent caps is essentially about whether they have reached the appropriate level or if it is simply the case that too many houses have been built. It is a tenant's market and if a renter does not like one house he or she can move to another. Prior to the Fianna Fáil building boom and bust, one might find rental accommodation with mushrooms growing out of the ceilings and floors due to dampness. Accommodation is now relatively good, however, although it is not appropriate to the needs in certain parts of the country. A single person cannot find an apartment in rural Ireland because the majority of accommodation is in three bedroom houses.

The Minister, Deputy Burton, has spoken about value for money. She noted that the €1,000 per month paid to individuals in Dublin in rent supplement works out as €12,000 per year. It is difficult to take people off social welfare on that basis. I agree with her in this regard but if one goes down to the country one will be lucky to receive €3,500 per year, which would not make the difference between going to work and staying on social welfare. Perhaps rents in Dublin need to be investigated.

I have sympathy with certain landlords. I do not refer to those who own 40 or 60 houses or the landlord who paid the non-principal private property charge on 70 houses. However, ordinary landlords can include public servants who decided they will never be able to save enough to support their families in the future unless they bought a house as an investment in their children's education. They have been hit with pension levies and the universal social charge at the same time as they face reduced rents and difficulties in collecting money from tenants. I do not see why we should not deal directly with landlords on rent supplement in the same way as the county councils deal with landlords on rental assistance. The reluctance to deal directly with landlords is the result of a 20 year old case in which a landlord in Galway sued the health board for property damage because it was paying the rent directly to him. The problem of liability can be easily addressed through legislation, however.

NAMA's portfolio offers us an opportunity to house people who are currently in rented accommodation. We should be housing people in units that will never otherwise be considered for anything but demolition. When will the transfer of the rent allowance system to local authorities be completed?

Senator David Cullinane

The motion tabled by Sinn Féin is fair and measured. It calls on the Government to take a number of actions which we believe would improve the current situation. The Minister's contribution was far from fair and measured, however. She made what was in effect a political statement, which is not helpful. She made a number of arguments which I find incredible and staggering from a Labour Party Minister. Some of her comments were reminiscent of the Progressive Democrats and could easily have been made by Margaret Thatcher.

She indicated that by paying a basic social welfare rate of €188 on top of rent supplement we are giving too much because people do not have an incentive to go to work. That argument ignores a number of points. People need rent supplement support because they cannot afford rent in the private sector out of their basic social welfare rate of €188 per week. They also need rent supplement because they are not being provided with social housing. The entire policy has changed and we are in a limbo because the previous social housing logic which involved local authorities building housing has been replaced by rent supplement, the rental accommodation scheme and long-term leasing. I agree with previous speakers that this is not a short-term measure but part of a policy shift which we must accept. The Minister of State's comments were incredible. Is she saying that she believes we are paying people too much and should cut their rent supplement or social welfare benefits? The solution to the problem identified by the Minister of State is that we ensure that people in low-income employment are given some level of support in terms of paying their rent and do not have all of their benefits withdrawn. Many of the people with whom I deal are in low-paid jobs and do not receive any rent supplement. One anomaly in the system is the inclusion of lone parent's maintenance payments as income, which results in many of them falling outside the threshold for rent supplement and having to meet the full cost of rent. These are important and serious issues.

The Minister of State has also misrepresented what we are calling for. This is very unhelpful. The motion asks that the Government request the Department to provide support, information and assistance to tenants currently availing of rent supplement who will be required to renegotiate rents with landlords. It also calls on the Government to ensure the State negotiates directly with landlords on the rates at which rent supplement is paid in order to reduce expenditure on rent supplement. We are asking first that the Department engage with landlord representative groups to obtain agreement on rent caps across the country and, second, that local authorities be the nominated bodies to engage with landlords. We should not be putting vulnerable people in the position of having to negotiate with landlords. We are all aware that many people, because they want to live in a particular area where, perhaps, their children attend school or because landlords will not reduce their rents, are paying cash under the table to landlords on top of what is being provided by the State in terms of rent supplement. It is essentially a social welfare cut if people are using their benefits to top up rent payments to landlords.

The motion also calls on the Government to put in place a scheme whereby rent supplement is paid directly to landlords rather than tenants, that as much use as possible be made of accommodation held by NAMA and that HEOs be directed to take all reasonable steps necessary to ensure that tenants have appropriate accommodation. Nowhere in the motion is it stated that we are not in favour of obtaining value for money. Nowhere in that motion or in Senator Ó Clochartaigh's contribution is it stated that we cannot achieve savings in this area. Of course, we can. Nowhere in the motion is it stated that we want to increase the incomes of pay to rent landlords or that we want to increase rents. That is not stated in the motion. We are calling for supports for people who are being forced to renegotiate rents with landlords.

It is hoped, despite what the Minister, Deputy Bruton, had to say that the Minister of State, Deputy O'Sullivan, will take on board the very constructive proposals contained in our motion. We believe the situation will be improved if our proposals are taken on board and if new rates can, by way of negotiation with landlord representative groups, be agreed and responsibility for negotiations, in terms of rent reductions, transferred to the local authorities. We cannot support the new scheme which is being rolled out because we do not know enough about it. The scheme being piloted may be a good scheme but there is a need for Government to brief Oireachtas Members on it. We have trawled through the Internet and contacted the Department about it but have been unable to get information which would enable us to make a proper judgment.

Deputy Jan O’Sullivan

It is being worked on.

Senator David Cullinane

It would be helpful if when work on it is complete the Department or Minister could hold a briefing session on it in the AV room, which would benefit all of us.

Acting Chairman (Senator Martin Conway)

As there are no other Senators offering, I call Senator Ó Clochartaigh to conclude.

Senator Trevor Ó Clochartaigh

Go raibh maith agat. Gabhaim buíochas le gach duine de na Seanadóirí a labhair agus leis an Aire as teacht.

The contribution made by the Minister of State, Deputy O'Sullivan, is probably one of the most disappointing, in terms of it missing the main issue, I have heard from a Minister in a debate in this Chamber. There is a short-term and long-term issue involved. The short-term issue is that there are people on rent supplement who have been told they must renegotiate their rents or leave the houses they are currently living in. This is not pie in the sky, it is reality. We have been, as I am sure have other Senators, meeting with these people on the ground. We have also received a presentation from them in the AV room. A number of the people affected will be outside the gates of Leinster House tomorrow at noon to draw attention to their situation.

Many of those affected by this cut are families. They are being asked to move out of the houses which they have made their homes and to uproot their children from the schools they are attending and the communities in which they are living. This is the immediate issue that must be addressed. We are asking the Minister of State to direct HEOs to be a little more lenient in this regard. The Minister of State has stated that no one will be made homeless as a result of this measure. However, I believe she is detached from reality on a number of issues. There is a difference between what she says is happening and what is actually happening on the ground in terms of engagement between tenants and CWOs. Tenants believe they are being forced to renegotiate with landlords or move out of their homes, which is the crux of the issue. As stated by Senator Hayden, many of these people are not in a strong position personally to negotiate with landlords. They should not be being put in that position by Government. There is a need for a little more leniency to ensure nobody is uprooted from their home or community.

The longer-term issue is that these rent caps are not fair and are not working. I challenge the Minister of State to find a house for rent within the caps set. She would not be able to find one in any area, be it urban or rural, either on daft.ie or any other way. This is what we are being told by people who are at the end of their tether when they come to our offices. The Government needs to provide social housing. We welcome the positive statements today around the new scheme. However, as stated we cannot pass judgment on a scheme which is unknown to us. The motion calls on the Minister of State to reverse the rent caps until this issue has been addressed in a fairer manner.

A number of other practical issues have come to our attention following our discussions with people in this situation, including that a person who has paid a deposit on a house or apartment will not have that money refunded until they have moved out of the house, which means they will not have the deposit necessary to put down on the new house. Another issue is the cost of hiring a van and so on to move furniture, which can be enormous. In addition, a tenant who owns the furniture in the house from which he or she is moving will, if he or she cannot find an unfurnished house, have to bear the cost of storing that furniture. These are the practical issues facing people on the ground, which are the issues we are trying to address in the motion before the House.

I believe the Minister of State misrepresented our intentions and that a number of her comments in that regard were unfair. The Minister of State mentioned that in certain circumstances people are being allowed to top up. However, that is not what we are hearing on the ground. I was told by a superintendent, who shall remain unnamed, that they are taking legal action against anybody found to be topping up, be it a landlord or tenant.

Deputy Jan O’Sullivan

They must disclose that they are doing so.

Senator Trevor Ó Clochartaigh

Yes. The Minister of State said that this is allowed in certain circumstances.

Deputy Jan O’Sullivan

They must declare it.

Senator Trevor Ó Clochartaigh

Senator Daly stated that some tenants are in receipt of rent supplement, the amount of which is greater than the rent due on the home, and that these people are keeping the extra money. That is difficult to do because landlords are required to declare on a specific form the amount of rent being paid and a CWO will not pay more than the amount stated. If the Senator has evidence of that happening he should bring it to the attention of the Department.

As regards the social housing capital budget, the reality on the ground is very different in terms of the figure of €300 million being provided in this regard. At a recent meeting with Galway County Council I was told by the director of housing that only two one-off houses in County Galway would be built this year and next year. The possibility of a budget to make available houses for all those people on housing lists does not seem to matter. We are not having a go politically. We acknowledge an issue exists and there is a problem that needs to be addressed. The immediate situation is very hard on tenants put in the position of having to re-negotiate and this needs to be addressed.

Another anomaly which has been discussed at a number of public meetings in Galway is that of single parents who have split from their partners and have been granted custody in the courts, being measured as single people in this scenario. A single father is given rent supplement accommodation for a single person. If he has joint custody of his children he has no space in his house for them. This is having a very detrimental effect on these families and is another issue which needs to be addressed.

Young people are stuck in emergency homeless accommodation because their income is too low due to the rate of social welfare they are paid. They cannot leave the emergency homeless accommodation to move to mainstream accommodation and this issue also needs to be addressed.

To be honest, I feel we are getting more of a hearing from the Minister, who is listening to us. I welcome the comments made by other Senators who have shown they are very much in touch with what is happening. I call on both Ministers to rethink some of the issues. Even at this stage I call on the Minister to withdraw the Government amendment because I do not feel it adds anything to what we have proposed. Our motion is fair and balanced. The Government amendment has some points with which we cannot agree and we feel we do not have enough information to support it. Glacaim buíochas le gach duine a ghlac páirt sa díospóireacht. Bhí sé iontach tábhachtach agus tá súil agam go mbeidh díospóireacht eile againn faoin ábhar seo arís go luath.

Acting Chairman (Senator Martin Conway)

I used my discretion to give Senator ÓClochartaigh an extra two and a half minutes.

Senator Trevor Ó Clochartaigh

I thank the Acting Chairman. He should be in the Chair more often.

Amendment put.

The Seanad divided: Tá, 25; Níl, 11.

Tá

• Bradford, Paul.
• Brennan, Terry.
• Burke, Colm.
• Clune, Deirdre.
• Coghlan, Eamonn.
• Coghlan, Paul.
• Comiskey, Michael.
• Conway, Martin.
• Cummins, Maurice.
• D’Arcy, Jim.
• D’Arcy, Michael.
• Gilroy, John.
• Harte, Jimmy.
• Hayden, Aideen.
• Keane, Cáit.
• Kelly, John.
• Landy, Denis.
• Moloney, Marie.
• Mulcahy, Tony.
• Mullins, Michael.
• Noone, Catherine.
• O’Keeffe, Susan.
• O’Neill, Pat.
• Sheahan, Tom.
• Whelan, John.

Níl

• Barrett, Sean D.
• Cullinane, David.
• Daly, Mark.
• Leyden, Terry.
• Mooney, Paschal.
• Mullen, Rónán.
• Ó Clochartaigh, Trevor.
• O’Sullivan, Ned.
• Power, Averil.
• Reilly, Kathryn.
• Wilson, Diarmuid.

Tellers: Tá, Senators Paul Coghlan and Susan O’Keeffe; Níl, Senators David Cullinane and Trevor Ó Clochartaigh.

Amendment declared carried.

Question put: "That the motion, as amended, be agreed to."

The Seanad divided: Tá, 25; Níl, 11.

Tá

• Bradford, Paul.
• Brennan, Terry.
• Burke, Colm.
• Clune, Deirdre.
• Coghlan, Eamonn.
• Coghlan, Paul.
• Comiskey, Michael.
• Conway, Martin.
• Cummins, Maurice.
• D’Arcy, Jim.
• D’Arcy, Michael.
• Gilroy, John.
• Harte, Jimmy.
• Hayden, Aideen.
• Keane, Cáit.
• Kelly, John.
• Landy, Denis.
• Moloney, Marie.
• Mulcahy, Tony.
• Mullins, Michael.
• Noone, Catherine.
• O’Keeffe, Susan.
• O’Neill, Pat.
• Sheahan, Tom.
• Whelan, John.

Níl

• Barrett, Sean D.
• Cullinane, David.
• Daly, Mark.
• Leyden, Terry.
• Mooney, Paschal.
• Mullen, Rónán.
• Ó Clochartaigh, Trevor.
• O’Sullivan, Ned.
• Power, Averil.
• Reilly, Kathryn.
• Wilson, Diarmuid.

Tellers: Tá, Senators Paul Coghlan and Susan O’Keeffe; Níl, Senators David Cullinane and Trevor Ó Clochartaigh.

Question declared carried.

An Leas-Chathaoirleach

When is it proposed to sit again?

Senator Maurice Cummins

Ag 10.30 a.m., maidin amárach.