Dr. Michelle Norris:

Let me respond to the Chairman's point on differential rents and the relationship with the voluntary housing sector. I once conducted a large study for the Department of the Environment, Community and Local Government on differential rents. There are 102 schemes in operation in the local authority sector for about 120,000 households. From memory, one of the major benefits of differential rent schemes is that in general they are very progressive, as people pay a larger proportion of their income as it rises. Sometimes the contribution is capped, which can make a scheme less progressive, but in many cases it is not. If the Department decided that it wanted to have a wider mix of incomes within the social housing sector - that is a policy issue - to my mind, it would not require a change in rentspayable per se, rather it would require a change in the rules regarding to whom local authorities and housing associations could let. From the perspective of the agency and how it is funded, the loans to voluntary housing associations are paid back using two mechanisms, first, the rents tenants pay and, second, the social housing leasing scheme which the Department funds. If the rent payable was higher, the contribution from the Government would be lower.

Deputy Dessie Ellis commented on the structure of the social housing sector and the challenges facing the Government in funding social housing without adding to the national debt. We face European Union state aid rules in the funding governments can provide for housing. Obviously, the agency does not play a role in deciding policy, but I can give the committee my personal opinion. Every country in western Europe that has a social housing system has faced similar issues. Many countries have amended the structures of their social housing sectors to try to address these issues. That is one potential route that could be taken to address them. Here the Government is trying to fund the voluntary housing sector and trying to introduce a system of regulation of the sector to help it to grow. Other countries such as the United Kingdom have tried to deal with the matter by setting up arm's length bodies controlled by local authorities but not part of them. The structural issues will have to be explored in the end. As I said, the role of the agency is to try to provide the finance that will enable the Government to implement these policies. However, there is a limit to our ability to grow the national debt in the current context as we are dependent on the EU-IMF emergency loan. For that reason, the borrowings we can issue to the local authority sector are limited.