Mr. Ed Farrell:

I am grateful to the Chairman and committee members for inviting the Irish League of Credit Unions to make a presentation on its social housing funding proposal. I am joined by Mr. John Knox from our research and development department.

As members will be aware, the Irish League of Credit Unions represents 423 credit unions across the island of Ireland which have 3.4 million members, member savings of almost €13 billion and approximately €15 billion in assets. They are a voluntary, visionary movement. The members own and run credit unions. Being grassroots, not-for-profit organisations founded and run for a social purpose, credit unions are unique financial institutions. They are democratically run, volunteer led and based on helping members rather than on profiting from customers. This ethos sets us apart. The economic crash has put enormous pressure on families, but credit unions have been there for them and now we want to do more.

Focusing on the future, in a national and global financial environment which, technologically and structurally, will be radically different from what went before, our purpose is to demonstrate how credit unions can better serve communities. To that end, the Irish League of Credit Unions has in its policy platform set out six strategic steps for how, in partnership with the Government and the Central Bank, we can deliver on a range of critical issues, including social housing. One such step - micro-lending for the most vulnerable, in partnership with the Department of Social Protection - is being operated very successfully as a pilot scheme. I mention this to underline the readiness and willingness of the credit union movement to respond and take action.

On 15 October last, on International Credit Union Day, the the Irish League of Credit Unions published the detailed document before the committee on its social housing strategy. The proposal was published specifically in response to the publication in November 2014 by the Government of its social housing strategy 2020 which included the following key theme - that the State adopt a central role in the direct provision of social housing through the resumption of building on "a significant scale" and that the funding of this programme will require the development of innovative funding mechanisms that do not increase general Government debt. It is to be financial sustainable.

Our proposition is broadly as follows: that the credit union movement form a special purpose vehicle to invest in a State-owned financial vehicle which would on-lend to approved housing bodies to fund the development of social housing or to invest and on-lend directly to approved housing bodies to fund the development of social housing. The key benefit for the credit union movement from this proposition would be that it would enable the movement to put a significant portion of members’ funds of €8.5 billion, currently held in short-term investments, to a more productive and economically rewarding purpose, while at the same time addressing a key social issue that deeply affects the communities credit unions serve. This would represent an initiative that would be very closely aligned with the core values of the credit union movement - economic democracy, inclusiveness, human and social development and community focus. etc.

For the State, the key benefit of this proposition is that it would enable the Government strategy of off-balance sheet sustainability to be fulfilled over short, medium and long-term horizons. The credit union sector could become a significant funder of the social housing strategy via the approved housing bodies, AHBs, and could reduce the financial commitments of the State to the social housing agenda while enabling the Government to retain complete control over social housing policy.

The mechanism developed in the league’s proposal sets out a structure by which the Irish credit union movement could fund AHBs to provide social housing. The approved housing bodies provide and manage social rented housing. They are private, not-for-profit organisations formed for the purpose of relieving housing need. There are approximately 520 of them in Ireland with a stock size of over 27,000 units. Approximately 10% of AHBs provide 80% of the housing supply. There is therefore a small number of well-established and financially sound AHBs which provide the vast majority of the social housing needs.

This would also have a wider economic impact. The initiation of social housing projects would create employment, generate taxes, provide stimulus to the construction sector and so on. The key benefit for the population as a whole is obvious, namely, the creation of a sustainable supply of social housing opportunities for those in need.

I want to emphasise in the context of our discussion today that credit unions responded to a call from the Government. The league’s proposal has been the subject of detailed discussion between us and the Departments of Finance and the Environment, Community and Local Government as well as the Central Bank. Indeed, there have been a number of meetings at official level in the past weeks. I acknowledge the consideration given by officials and the interest and support given by all sides politically. Regrettably, however, today we are no further on; innovative funding models have not been delivered. Credit unions are willing and ready. There is a lot of genuine interest both within Government Departments and politically. There has been a lot of in-depth consideration. The next step is to bring this proposal forward, together with the Government. We remain willing partners.