Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I very much welcome this opportunity to discuss with the committee the progress to date in 2017 on expenditure and outputs in respect of my Department’s programme and also the prospects for next year in light of budget 2018. I am accompanied by the Minister of State, Deputy Damien English, who will take questions on the programmes related to planning and Met Éireann, and Minister of State, Deputy John Paul Phelan, who will take questions on the programme on local government. I am also accompanied by Department officials, John McCarthy, Mary Hurley, Maria Graham, Lorraine O’Donoghue, David Walsh, Maurice Coughlan, Theresa Donohue and Janet Jacobs.

Following the transfer earlier this year of community functions from my Department to the new Department of Rural and Community Development and the making of necessary financial provision for Irish Water, the budget for my Department in 2017 now stands at €1.995 billion. This represents an increase of €215 million on the Estimate published last December. In terms of our engagement this morning, it will be most useful for the committee if I summarise briefly the 2017 expenditure position as it stood at mid-year before going on to share with the committee the latest data on spending as we approach year end. In this, I do not propose to deal with community-related issues as they are now the responsibility of my colleague, the Minister for Rural and Community Development, Deputy Michael Ring.

To the end of June 2017, the Department had spent €662 million from its allocation of €1.779 billion as set out in the original 2017 Estimates, some €20 million ahead of the published profile of expenditure for the Department of €642 million. When community spending programmes are excluded, the total at the end of June was €625 million from the revised allocation of €1.995 billion, capital and current. This was some €30 million ahead of the revised profile of expenditure. I have circulated with my statement today tables that summarise the capital and current expenditure position at the end of June and as it now stands in November 2017. The tables show that capital expenditure now amounts to some €514 million, or 74% of the allocation, and current expenditure is now €575 million or some 44% of the full-year allocation. The position on spending on the Vote is being kept under close review in my Department as we move towards year end. On the basis of the information now available, I expect we will be at full expenditure at year end. In this process, we will reallocate funds as necessary to help ensure maximum benefits are achieved from the resources made available to us. We will also continue to engage with the Department of Public Expenditure and Reform as required in finalising the position on the Vote for 2017.

Turning briefly to some of the larger programmes, in 2017 the combined capital and current housing allocation is €1.2 billion. In addition, certain local authorities are funding a range of housing services from surplus local property tax, LPT, receipts to the value of over €98 million, bringing the total housing provision to some €1.3 billion. To date in 2017, some €498 million of Exchequer funding has been spent on housing capital programmes with a further €77 million being spent by local authorities from surplus LPT receipts, the bulk of which has been used to support the construction and acquisition of social housing homes. Reflecting the increased activity by local authorities and AHBs, 76% of the housing capital budget has already been spent. Some €402 million has been spent under the housing current expenditure programmes and this has been supplemented by spending totalling €22 million by local authorities from surplus LPT receipts. The high level of expenditure to date reflects the accelerated delivery of social housing across all programmes and we are well-positioned to achieve our 2017 target of 21,000 housing solutions for individuals and families. In respect of HAP, I am pleased to say we have already exceeded our target under Rebuilding Ireland, with more than 15,130 tenancies established to date, which is an average of 344 HAP tenancies established every week in 2017. In addition, almost 1,400 new homes have been delivered through the social housing current expenditure programme and we expect to reach the target of 2,250 homes before year end. In the six months to the end of June, we delivered 800 new homes under the local authority build and acquisitions programme and a further 245 homes for older people, homeless people or people with a disability through the capital assistance scheme.

The level of social housing construction activity continues to grow as can be seen in the status reports published by my Department. The most recent report to the end of the second quarter of 2017 shows there are projects which will deliver 11,000 new social homes, of which more than 1,000 homes have already been delivered in 2016 and the first half of 2017. Over 2,700 new homes are on site being constructed. The remainder are progressing through planning, design and tendering and we have not stopped. Approvals for new social housing construction schemes are being issued to local authorities on an almost daily basis and I have no doubt this will be reflected when the third quarter status report is published in the coming weeks.

A key priority for my Department is addressing the issue of vacant homes. Under the national voids programme, over 700 local authority homes have now been returned to productive use in 2017. I expect we will be in a position to deliver almost 1,400 such homes this year, a near doubling of our target of 766. In conjunction with the delivery of new social homes, my Department is focused on ensuring people are supported to stay within their own homes in line with their changing needs. To date, we have provided almost 6,200 housing adaptation grants for older people and people with a disability and expect to meet or exceed the 2017 target of 9,000 grants.

Turning to LIHAF, while there will be an underspend this year due to projects being at design stage, with the larger construction costs expected to fall due from 2018 onwards, savings are being used to support increased activity under the local authority capital programme, including through the direct delivery of new social homes via construction and acquisition.

The funding for LIHAF projects is ring-fenced within the overall housing budget and will be available for local authorities to draw down over the lifetime of the projects out to 2019 and 2020.

Turning to my Department’s water programme, as I mentioned at the select committee meeting this morning, following the Government decision on the future funding model for Irish Water and the planned refunds to domestic customers, an additional provision of some €293 million for payment to Irish Water has been made in the Revised Estimate. This includes €173 million needed to pay refunds to the 990,000 domestic customers. There are also administrative costs associated with the refund process, estimated to amount to almost €5.9 million. In addition, €114 million is being provided to cover the funding required by Irish Water arising from the extension of the suspension of domestic water charges to the end of 2017. Funding will be made available to Irish Water to allow it to commence refund payments to customers following on from the passage of the Water Services Bill 2017.

The local government fund allocation in 2017 is €365 million. Total expenditure to date is €100 million. Significant payments from the fund take place in December and it is intended that there will be full expenditure of the allocation by the end of the year.

Turning now to the year ahead, the committee will be aware that my Department’s Vote for 2018 will be €2.457 billion in total. Within that, housing is by far the biggest programme. All told, €1.9 billion will be available for housing next year, an increase of €600 million, or 46%, on 2017. This investment is directly aimed at addressing our housing shortage and homelessness crisis. It represents an increase of 62% on the capital side, to build new homes and 35% on the current side, to over €760 million, to allow further action on homelessness, as well as supporting people into new social housing tenancies through the HAP scheme. In budget 2018, the total funding provision of €1.9 billion for housing will allow us to deliver housing solutions for 25,500 households. A large element of this, €1.14 billion, is for the targeted delivery of new social homes through a range of construction, refurbishment and acquisition programmes. Next year, 3,800 new social homes will be built directly by local authorities and approved housing bodies, which is 1,800 more homes than we will build in 2017. A further 1,200 will be Part V builds or refurbished vacant homes, 900 homes will be delivered through acquisitions and a further 2,000 homes will be secured through long-term leasing arrangements, resulting in a total of 7,900 new social homes.

Looking beyond 2018, the budget provides an extra €500 million for capital investment in social housing in the years 2019 to 2021, inclusive, which has allowed us to increase the Rebuilding Ireland social housing target from 47,000 to 50,000 homes. As regards the funding of Irish Water in 2018, the Water Services Bill 2017 provides for a new funding model for domestic water services under which funding will be made through the Vote for the Department. This will involve technical adjustments to the Vote and the consequential reform of the local government fund. These changes will be made in the context of the Revised Estimates for 2018. The channelling of all funding for domestic water services to Irish Water through the Vote will improve the transparency and accountability arrangements for this expenditure. In overall terms, some €1.1 billion will be required to meet the cost of domestic water services in 2018, of which €500 million relates to capital investment. This is the major financing component of the overall planned investment of over €600 million in cash terms by Irish Water in 2018.

I hope that members have found this contribution helpful and I will be happy to deal with matters that members wish to raise, either on 2017 or 2018. My officials will be in a position to come before the committee to give a more detailed update on the Rebuilding Ireland targets at a later date. I would like to point out that next week or the week after I will be publishing targets for each local authority's social housing output programme for 2018.