Mr. Seamus McCarthy:

The activities of the Department of Housing, Planning, Community and Local Government are provided for financially through a Vote account and the local government fund, which are accounted for separately. In 2015, the Vote recorded gross expenditure totalling €1.2 billion, while the fund recorded expenditure totalling €1.8 billion.

There are some transfers between the Vote and the fund but a consolidated statement of the Department's receipts and payments is not prepared. While the Vote is mainly Exchequer-funded, the local government fund is mainly financed by motor tax receipts, approximately €1.1 billion in 2015, and local property tax receipts, which amounted to €469 million in 2015.

The breakdown of the Vote 34 expenditure in 2015 is indicated in the figure on screen. This uses the programme structure as defined in the Vote. The housing programme accounted for over half of the Vote expenditure in 2015. Expenditure on this programme was €646 million, which represented an increase of €52 million year on year. Almost all of this increase related to additional provision for local authority housing programmes. The most significant increase in the Vote year on year was in respect of the local government programme. Total expenditure in 2015 was €275 million, compared with €36 million in 2014. The 2015 expenditure included a payment of €241 million to the local government fund to provide a contribution towards the transfers from the fund to local authorities and a subvention of €92 million paid to Irish Water. Vote expenditure on the water services programme 2015 totalled €131 million, an increase of €94 million year on year. The increase was due to the payment of household water conservation grants in 2015. The grant scheme was administered on an agency basis by the Department of Social Protection but the related grants and agency administration costs were borne on Vote 34. After appropriations-in-aid totalling €46 million, the net surplus on the Vote at the end of 2015 amounted to €84 million. With the approval of the Minister for Public Expenditure and Reform, capital funding of €41 million not spent in 2015 was carried over to 2016. The remaining €43 million was surrendered to the Exchequer.

Chapter 4 of my report aims to present an overview of the level of funding provided by central Government to local authorities and the purposes for which that funding is provided. Relevant information is drawn together from a number of accounts to get a full picture of the complex financial transfers and of trends over time. Central Government transfers to local authorities of almost €2 billion in 2015 represented just over 34% of the 2008 level of those transfers when they peaked at around €5.8 billion. The decline reflects the general reductions in public expenditure since 2008 and the transfer of certain responsibilities away from local authorities. As evident from the figure which can now be shown on screen, the reduction in transfers has impacted most on local authority capital spending. This impacted especially in the areas of social housing and roads. In 2014 the Department provided general purpose grant funding to local authorities mainly for their day-to-day activities. General purpose grants were discontinued in 2015 and were replaced by annual local property tax allocations. This resulted in adjustments of funding for some local authorities. Under the 80% retention rule provided for in the local property tax regime, 19 local authorities would have been allocated less funding in 2015 than in 2014. However, equalisation funding of €102 million from the residual 20% of the tax was utilised to bring those local authorities to the same level of funding that they received in 2014. The retention based allocations for 12 authorities and these were mainly large urban authorities in commuter belt counties were some €177 million higher than the amounts they received in 2014. Total funding of €239 million was provided to those local authorities in 2015 but they were directed to allocate €131 million for housing services and €22 million for road services, with the balance of €86 million available for general or discretionary purposes within those local authorities. In addition to the €2 billion funding provided by Departments and agencies in 2015, an amount of €427 million was transferred directly from the Exchequer in the form of once-off payments to local authorities. This was to allow the local authorities to repay borrowing from the Housing Finance Agency that had been used in the past to fund local authority water supply and treatment infrastructure that had since transferred to Irish Water.

Chapter 4 also provides a brief overview of the key structures in place for the oversight of local authority finances. These are the local government audit service and the National Oversight and Audit Commission. I previously reported on the Department's implementation of the land aggregation scheme and this was examined by the committee on 5 February 2015. Under the land aggregation scheme, local authorities could transfer to the Housing and Sustainable Communities Agency, referred to as the Housing Agency, surplus residential development land on which there were outstanding loans. The loans were due for repayment to the Housing Finance Agency. Between 2010 and 2013, the Department approved 73 sites for transfer with a total land area of 247 ha. My previous report, which was completed in mid-2014, found that there were very significant delays in effecting the transfers of many sites to the Housing Agency. By July 2016, however, we found that all but six of the approved sites had transferred.

The focus has consequently now shifted to a strategy for the management, utilisation and ultimate development of these and other sites. Progress in developing and utilising the sites as at mid-2016 can be summarised as follows: no housing units had yet been completed but development had been approved in respect of 185 homes on seven sites and proposals were being worked up in the context of another 180 homes across five sites; and 1.6 ha of land on two sites had been transferred to the Department of Education and Skills for a school and to a community organisation for a children's recreational facility to promote sustainable communities. However, 93% of the sites had either no proposed development in place or had not yet been transferred to the Housing Agency. The Accounting Officer will be able to update the committee on developments in regard to the acquired land since the reporting date.

The key agencies in respect of 2015 would have been the Environmental Protection Agency, Pobal, An Bord Pleanála, the Housing and Sustainable Communities Agency, the Western Development Commission and the Residential Tenancies Board. There are a couple of other non-commercial State bodies which do not fall within my remit, namely, the Housing Finance Agency and the Local Government Management Agency. I thought that might be useful to the committee in its deliberations.