Professor Michelle Norris:

I shall respond first. I thank the Deputy for his questions. Some of the media coverage of the report was a little disappointing in that there was a big emphasis on proposed increases in rents. The impression was conveyed that the affordability of social housing provided by the council was not a concern but that is absolutely not the case. The report makes the point that many other countries manage to fund social housing in an efficient way, which is also affordable for tenants. Our system manages to fund social housing in a way that is affordable for tenants but which generates much inefficiency. We could achieve both objectives with some reform.

Rents currently are related to income so that is affordable for tenants in most cases. The average income in the local authority sector is low and there are high rates of benefit dependency, so protecting affordability is important. The problem with having rents related to income is that it is difficult for a local authority to project rental income and, therefore, rental income does not reflect the cost of managing and maintaining dwellings. We know from the local authority officials we interviewed that, in practice, there is inadequate investment as a result in regular upgrading of dwellings and in the more significant upgrading that might be done after 30 years. The expenditure on that is too low because rental income is too low. That means the costs do not disappear. They are generally funded at the end by means of a regeneration scheme, money from the Department or, increasingly, from central grants for increased investment in turning around vacant dwellings and reletting them.

That is an inefficient way of funding the service. It is also a way of dealing with major management and maintenance and upgrading costs that is often destabilising for the communities living on these estates. In many cases, the estates are demolished or significantly refurbished and the communities have to move out. A more efficient way of providing revenue finance to meet management and maintenance costs is simply to link those costs and to charge what are called cost rents. That is the case in the vast bulk of other countries in western Europe. Ireland is unusual in having income-related rents. The concept with cost rents is that they are linked to cost. The rental income can then be projected forward and refurbishment and upgrading can be planned after 15 years as well as more significant refurbishment and upgrading after 30 years.

In many countries, these cost rents are also used to repay loans for the housing. It also puts in positive incentives for efficiency in the system. If a low rent is being received, there are not the same incentives to ensure the dwelling is relet quickly. It is hard to plan for spending on reletting it quickly. In a system like this, it is important to protect affordability by having some subsidy for tenants that cannot pay the cost rents. We suggested using HAP because it is in existence and administered by local authorities. That proposal was just an administrative efficiency proposal. Other ways of subsidising it could be examined. AHBs at the moment get an availability agreement payment from the Department. That payment is linked to 92% of the local market rents. I have never understood the reason that is the case. If there was a payment availability agreement, it could be linked to cost. That would also protect the State from fluctuating rents in the private market. Our concern is to ensure affordability but in an efficient way. I would not have an objection to that.

I will move on to the questions about approval times by the Department and the turnaround times for building new council housing developments. A couple of issues were raised by interviewees. Planning for council housing development has been streamlined in recent years and it is now reasonably fast. Some public procurement issues that apply to council housing, which can slow up the process, and there may be potential for streamlining them. The main concern, however, among the people we interviewed was the level of scrutiny by the Department of proposals and the value of the scrutiny. For instance, some of the issues mentioned included that local authorities employ architects or they contract in architects to design their development. Aspects of that development, however, are then scrutinised by central government architects and reworked.

It is similar for costings. Cost proposals are tightly scrutinised, even though they have been put together by a quantity surveyor. This period of over and back on queries about cost can slow up developments significantly. The local authorities' key issue then was that after all of that scrutiny, the project goes out to tender and the market decides the cost. Questions were raised, not about the value of oversight - it was acknowledged that oversight is needed - but about the benefit of all the scrutiny. I refer to the Department and the local government audit side of things.

They explained the need for accountability in the spending of public money and for proper auditing. There was no criticism of that by the local authorities, it was just the value of the actual scrutiny that is put in place.