Professor Michelle Norris:

I want to clarify the view of council housing put forward in the report. Ironically, the opening statement in the report concerns the value of council housing. Some 22% of the housing stock in Ireland was originally built by local authorities. Only 8% is now in local authority ownership because of sales to tenants. The opening statement in the report mentions the enormous value of their contribution in terms of providing affordable housing to lower income households, and in terms of increasing the housing stock in the country, and the quality of that stock. The intention of the report is not to denigrate the sector but rather the opposite. It asks how we can provide more council housing in a more efficient way.

In terms of the point raised about the HAP, provision of social housing by councils or approved housing bodies, AHBs, is a much more efficient way of providing for low income households because it provides additional supply, counterbalances the market and helps to bring prices - and rents in particular - down, whereas schemes such as HAP do the opposite in that they subsidise rents and help to increase rents in the private market. Also, the costs of council housing, if funded properly, are very predictable for the State in the long-term, whereas the costs of HAP are completely unpredictable. HAP costs will go up as rents go up. A major concern of mine is that the risks associated with the subsidisation of private rents are never called out, whereas there is a lot of scrutiny of the efficiency of councils.

Councils could ring-fence rents, but in practice they do not do so. One of the things raised in the report is the fact that there is enormous variation between local authorities in different parts of the country. In a rural local authority that has a relatively new housing stock because many dwellings have been tenant purchases, the maintenance costs can be low, and it may be the case that rents reflect the maintenance costs more closely. In those cases, income from rents can be spent on other services. That raises an ethical issue in that the rents of relatively low-income households are spent on subsidising other services rather than on their housing. In urban areas it is different because the housing stock is generally older. Flats, for example, which dominate Dublin City Council stock, are much more expensive to maintain, and the rental income achieved is not enough to maintain the stock, particularly in urban areas. As a result, the stock runs down and people end up living in poor conditions in some cases. We also have to go in via a regeneration scheme or upgrading after a long period in a way that is very destabilising and undermining to the communities living there. The report advocates replacing income-related rents with rents that reflect the cost of provision as a way of ensuring that there is an adequate rent scheme to manage and maintain the dwellings and that maintenance can be done on an ongoing basis rather than having to go in with a big regeneration scheme at the other end. In order to address affordability there would have to be a subsidy in place for tenants who could not pay the rent. Linking rents to costs has many efficiency benefits, one of which relates to the off balance sheet model that Deputy Pat Casey raised.

Funding social housing off-balance sheet is very challenging. One of the criteria used by EUROSTAT in making assessments about what is on-balance sheet and off-balance sheet is the level of subsidy from the State being less than 50%. Under the current model whereby the sector is funded by income related rents, it would be almost impossible to achieve an off-balance sheet model. The subsidy from the State would have to be well over 50%. Also, any system funded using loans, which is generally the way the off-balance sheet model is funded, needs a predictable source of income to enable repayment of the loan. Income related rents are not a predictable source of income. It is not that Dr. Hayden and I are not concerned about showing affordability; we are. The point I am making is that we need to achieve affordability in a different and more efficient way than by income related rent.

Reference was made to sales of dwellings to council tenants. Our concern is around the discounted nature of sales rather than the sales per se. The fact that the dwelling is sold at a significant discount and well below replacement cost creates inefficiencies. When there is a loans-funded scheme, it is difficult to sell dwellings at a major discount because there is a loan outstanding on the dwelling and that creates further inefficiencies.

Use of successive tenancies varies throughout the country. In rural areas, they are seldom used. The problem with successive tenancies is that they are more common in urban areas. They are more commonly used and people use their right to inherited tenancy. It is more commonly used in urban areas where demand for housing is very high. It raises equity issues for people on the waiting list who are trying to get into council housing.