Mr. Paul Lemass:

I will pick up on a few points. We have looked carefully at the off-balance sheet question and how it impacts behaviour. We have tried to learn how behaviour has changed since the introduction of the capital advance leasing facility, CALF, in 2011. It provides for a 30% unsecured fund, effectively from the Government via the local authority, with the remaining 70% to be raised by the AHB. Under CALF, the AHB is free to source private financing if it wishes to do so. Before CALF came into existence in 2011, we had the capital assistance scheme, CAS, and the capital loan and subsidy scheme, CLSS, which were at 100% funding. Since 2011, the avenue has been open to AHBs to raise private finance.

In 2011, we did not have the reclassification issue with which we are challenged currently. There was a period from 2011 to the end of 2017 during which the door was open to AHBs to access private finance. In reality, the actual amounts drawn down through private finance rather than via the HFA were very small. We must learn from that. Part of our engagement with the AHB sector will be to try to do so and to understand more about that significant period of time. As someone mentioned, nearly 99% of funding in that period and beyond has come from public rather than private sources. Something we need to understand more is what the barriers to drawing down private finance are. Between 2011 and 2017, reclassification clearly was not a barrier, yet private finance was not drawn down. The danger is that removing the barrier now will not have the desired effect. We just need to understand the situation a bit better and to engage more with AHBs. We are committed to doing so.

Regarding the source of funding, colleagues have identified that there is provision through the HFA to provide funding. However, an AHB is not obliged to go through the HFA. If an AHB were to identify another source of funding, it would be possible to reduce the drawdown from the HFA and divert that to the other source. That is a feasible outcome if there is a desire to explore available sources of private funding. That option is on the table.

We have done what we can to support credit unions and AHBs in developing a special purpose vehicle, SPV, to enable investment by the credit union sector in AHB developments. That has included changes in the regulations from the Central Bank to allow credit unions to invest. I believe that the figures are in the order of €700 million. The investment is based on the size of the credit union and its reserve, with larger credit unions able to invest more than smaller ones. That facility is in place. Ultimately, however, it is a matter for the two independent bodies - a credit union, the Credit Union Development Association, CUDA, or the Irish League of Credit Unions, ILCU, and the respective AHB - to decide to take the final step and set up an SPV. The framework has been put in place and the Department has provided funding to the Irish Council for Social Housing, ICSH, to develop that framework. My understanding is that it has gone pretty much as far as it can go without actually reaching the point of making an SPV happen.

I will give some scale to this issue. The goal under the national development plan is to build 12,000 housing units through building, acquisition and leasing - building and leasing are the main components and are growing faster and faster - between now and 2027. At that point, we will have added to the housing stock to the tune of 112,000 units. The current housing list as per the scheme for social housing assessments, the headline figures of which have been released but the details of which are yet to be released, is in the order of 68,000. The projection in the national development plan of 12,000 units per year from 2021 will enable us to build, acquire or lease 112,000 units. Given that there are 68,000 households currently on the list, and accepting that people join and leave lists, we will broadly be in the right area in terms of the scale of the response.

A question was asked about contracts, finance and risk. I will not go into detail on all of those, but a key aspect of the CALF contract is a continuation agreement. This has been cited in correspondence from the Housing Alliance as something that it would consider. Our duty of care in a continuation agreement is to the tenant. We need to know that, in the event of a difficulty with the contract, the tenant is protected. That is why we must insist on there being a continuation agreement. There have been proposals for alternative assurances to financiers and so on, but there must also be assurances to the tenant that if anything happens with the source of finance, there is security for him or her. The current arrangements with the HFA are working well in that regard.

EUROSTAT has taken a wider view on financing. That seems to be the direction of travel. However, there is also a practical constraint. In the event of a downturn, someone might suggest that it would be great to go to private financing to raise the capital. If that capital were raised by an AHB, it would have to be paid down somehow. That is the other side of the equation. The capital is the input, but that finance would need to be paid from some source on an annual basis. To consider access to private capital in isolation is only to deal with the input side of the equation. The output side is that, once an AHB has its €100 million or whatever, it must find funding or charge rents to enable it to repay the amount. This, as well as the broader range of elements at play, show why the situation presents a more challenging picture for us.