Oireachtas Joint and Select Committees
Thursday, 3 June 2021
Public Accounts Committee
Vote 34 - Housing, Planning and Local Government (resumed)
I welcome everyone to this morning's meeting. Due to the current situation regarding Covid-19, only the clerk, support staff and I are in the committee room. Members of the committee are attending remotely from within the precincts of Leinster House. This is due to the constitutional requirement that in order to participate in public meetings members must be physically present within the confines of the place where the Parliament has chosen to sit, namely, Leinster House or the convention centre. I will ask members to confirm their location before contributing to ensure they are meeting that requirement.
The Comptroller and Auditor General, Mr. Seamus McCarthy, is a permanent witness to the committee and is attending remotely. Today we will engage with officials from the Department of Housing, Local Government and Heritage. We engaged with the Department last November and today we will resume our examination of the 2019 Appropriation Accounts, Vote 34 - Housing, Planning and Local Government, with a specific focus on expenditure and value for money in relation to the following areas: the rental assistance scheme, otherwise known as RAS; the housing assistance payment, or HAP; the repair and lease scheme; the enhanced long term social housing leasing scheme; and emergency accommodation.
We are joined remotely from outside the precincts of Leinster House by the following officials from the Department of Housing, Local Government and Heritage: Mr. Graham Doyle, Secretary General; Ms Áine Stapleton and Mr. Barry Quinlan, assistant secretaries general; Ms Deirdre Mason, Mr. David Kelly and Mr. Eamonn Waters, principal officers. We are also joined remotely from within the precincts of Leinster House by Ms. Clare Costello, principal officer in the housing Vote section at the Department of Public Expenditure and Reform. The witnesses are all very welcome.
When we begin to engage, I must ask members and witnesses to mute themselves if they are not contributing so that we do not pick up any background noise or feedback. As usual, I remind all those in attendance to ensure their mobile phones are switched off or on silent mode. Before we begin, I wish to explain some limitations to parliamentary privilege and the practices of the Houses as regards references to other persons made in evidence. The evidence of a witness who is physically present or who gives evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. However, a number of today's witnesses are giving their evidence remotely from a place outside of the precincts and as such may not benefit from the same level of immunity from legal proceedings as a witness present. Such witnesses have already been advised of this and may think it appropriate to take legal advice on the matter.
Members are reminded of the provision within Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
To assist the broadcasting and debates services, I ask that members direct their questions to a specific witness. If the question is not directed to a specific witness, I ask each witness to state his or her name when first contributing. The Comptroller and Auditor General, Mr. Seamus McCarthy, delivered his opening statement on the Vote last November, which has been re-circulated to the committee prior to the meeting. Unless Mr. McCarthy wishes to address the committee, we will move straight into Mr. Doyle's opening statement. Is Mr. McCarthy happy to proceed thus?
Mr. Graham Doyle:
I am pleased to be participating remotely this morning as Accounting Officer to further assist the committee in its examination of the 2019 appropriation account for Vote 34. I am joined remotely by a number of colleagues from the Department. Ms Áine Stapleton is assistant secretary with responsibility for the social housing delivery division. I am also joined by Mr. Paul Lemass, rather than Mr. Barry Quinlan, as indicated by the Chairman. Mr. Lemass is assistant secretary with responsibility for the housing policy, legislation and governance division. I understand that Mr. Lemass is having some technical problems this morning but hopefully he will be with us shortly. I am also joined by subject matter experts in the areas of social housing delivery and emergency accommodation, Ms Deirdre Mason, Mr. David Kelly and Mr. Eamonn Waters. As requested by the committee, I have provided some advance briefing material for the meeting and a copy of my opening statement. As this meeting is a resumption of the committee's examination of Vote 34 which took place across 25 and 26 November and as time is limited, I will focus on the areas set out in the committee’s invitation for today.
Total housing expenditure in 2019 was €2.34 billion, representing an increase of 19% on the outturn for 2018. This was comprised of current expenditure of €901 million and capital expenditure of €1.445 billion. An additional €93 million from local property tax, LPT, receipts was also used by certain local authorities to fund housing programmes. The focus of the Department’s 2019 activity in the area of housing was led by the actions set out in the six-year Rebuilding Ireland: Action Plan for Housing and Homelessness.
Social housing delivery represents the largest proportion of expenditure under the housing programme and the schemes that the committee has asked us to focus on today are primarily current expenditure-funded delivery structures.
In order to situate these programmes properly in the overall context of expenditure on housing, it is crucial to understand why the State relies on capital and current structures for social housing. Simply put, it is about maximising the number of homes we can deliver and meeting the housing needs of all those who are reliant on the State for support. We cannot just look at the local authority housing waiting lists when considering meeting housing need. We must also look at all of those households already being supported. This means enabling local authorities and approved housing bodies, AHBs, to manage and maintain existing tenancies and properties, upgrade and relet stock, and manage day-to-day interactions with households, including applications, differential rent and transfers. When we look at the totality of households in a housing support or in need of a housing support, the number exceeds 300,000.
The Department is responsible for providing the resources, be they financial, legal or policy frameworks, to enable local authorities, AHBs and other stakeholders to operate a social housing system that provides for all eligible households. Crucially, the State must meet these costs in a way that is aligned with domestic and EU fiscal rules.
A whole housing system such as this has component parts that exist to meet the need for immediate, mid-term and long-term supports. While we focus intensively on creating new supply, particularly new build supply, we must continue to have immediate options available to households that require them.
Turning briefly to the schemes that the committee is interested in for this meeting, we will start with the rental accommodation scheme, RAS. RAS has been an important contributor to social housing supply since its introduction on a pilot basis in 2005 and has placed responsibility on local authorities to meet the accommodation needs of people in receipt of rent supplement for 18 months or longer and who are assessed as having a long-term housing need. RAS has enabled rent supplement to return to its original objective as a short-term income support. By the end of 2019, the housing needs of more than 18,000 households were being met through RAS.
The housing assistance payment, HAP, scheme is also a form of social housing support for people who have a long-term housing need. HAP is an important part of the social housing options available across the country. At the end of 2019, more than 52,000 households were having their housing needs met under the scheme.
Mr. Graham Doyle:
HAP gives local authorities greater flexibility to accommodate households in their areas of choice, provides a secure payment for tenant and landlord alike, removes barriers for people to return to employment and leads to improved property standards.
In terms of reliance on the private rented sector for housing supports, it is important to note that fewer households were reliant on State support in 2019 than were in 2014. The principal areas where such supports are provided are under HAP and RAS and also under rent supplement, which is operated by the Department of Social Protection. In 2014, there were 92,000 tenancies under these schemes. By the end of 2019, this number had reduced to 87,000.
Leasing is one of the range of options available to local authorities to supplement delivery of social housing. It represents less than 20% of targets but allows local authorities to secure long-term homes in areas where demand is high but they have neither land available for housing nor existing stock. It frees up fiscal space so that more capital can be invested in build activity. Leasing mechanisms allow the State to address a greater proportion of social housing need in the short run within a tight budgetary environment. There are many types of leasing, including the enhanced lease and the repair and leasing scheme, which are on the list of topics for this meeting.
The enhanced leasing scheme is aimed at property developers and investors who can deliver newly built or yet-to-be built houses and apartments for leasing at a scale of 20 or more units for a term of 25 years. It secures homes at the earliest stage, provides certainty to the market and allows developers to secure construction finance in order to commence builds. It also allows for units to be secured in areas or developments that may not otherwise be available for social housing. One of the advantages of the scheme is that the lessor is obliged to provide management and maintenance services for the properties.
The repair and leasing scheme is aimed at owners of vacant properties who cannot afford or access the necessary funding to bring them up to the standard required for rental properties. Under the scheme, the cost of the necessary repairs to properties will be met up front by the local authority or an AHB, with the cost of the repairs being recovered from the property owner by offsetting it against future lease payments. This allows the local authority to access units quickly that may not otherwise have been made available for social housing. Dwellings brought back into use under the scheme span a range of dwelling types, including over-the-shop properties, former bedsits, city centre terraced houses and one-off rural dwellings.
While what I have set out reflects some of the positive indicators and increasing provision of social housing, we are keenly aware of the substantial work that remains to be done. The number of homeless households supported to move from emergency accommodation to homes increased by 16% between 2018 and 2019, but the challenge remains in making substantial and sustainable inroads into reducing the net numbers reliant on emergency accommodation and services and we continue to prioritise working with housing authorities and NGOs. Prevention is just as critical as developing pathways for exits. In 2020 alone, almost 5,900 exits from homelessness were achieved. All of these exits were to homes with tenancies. Since the peak in October 2019 when 10,514 individuals were homeless, there has been a fall of 2,432, or 23%, based on the most recent data published on Friday last, 27 May. While this trend is welcome, there is a continuing need to work with local authorities to develop and deliver high-quality emergency accommodation for homeless households. Expenditure on homelessness involves much more than the provision of a bed and a temporary roof. Complex other needs must be met.
Across all areas, we will be unrelenting in our commitment to achieve the best outcome for citizens using the resources provided to us by the Exchequer. The new programme for Government seeks to place an even more demanding ambition on delivery to be achieved in the years ahead. Rising to meet this ambition will be the cornerstone of social housing activity for this Department.
Housing expenditure in 2020 amounted to over €2.6 billion and supported the social housing needs of more than 24,000 additional households across our social housing delivery streams and those already in a support. Like many sectors, the impact of Covid-19 has been challenging for the Department and its stakeholders this year. However, we continue to push for maximum feasible delivery across all streams. In 2021, a provision of over €3.3 billion is available for the housing programme. This represents the largest ever investment in housing and will support implementation of the ambitions in the programme for Government, with a particular focus on increasing supply through new build activity.
I hope that my opening statement, together with the advance briefing provided to the committee, has provided a rounded context for the specific housing programmes listed for today's discussion. Housing is clearly one of the Department's key priorities. I assure the committee that my team, our delivery partners and I will continue to work day in and day out to support the delivery of much-needed homes for citizens. My colleagues and I will be happy to respond to questions or issues that emerge in the course of the committee's work today.
I thank Mr. Doyle for his opening statement. Today's lead committee speaker is Deputy McAuliffe, who has joined us in the committee room because he must also vote at a committee that is sitting next door. The only way he could be accommodated was to have him be present. However, we are socially distanced well beyond the requirement. I think the distance is 6 m, not 2 m.
Both politically and physically distanced, but I appreciate the Chairman's courtesy this morning. I am present because we are voting on the Land Development Agency Bill next door.
Implicit in the debate during the previous general election and in subsequent reports, including as late as this morning in the ESRI's report on the need for a capital building programme, is a criticism that we have been too reliant on short-term interventions like HAP and RAS. I might focus some of my questioning on this matter. Of the Department's €4 billion gross expenditure, how much was spent on HAP and RAS?
Mr. Graham Doyle:
My apologies. I was on mute for a moment.
We saw that ESRI report as reported this morning. Certain targets were set under the various delivery streams of Rebuilding Ireland. The current programmes to which the Deputy referred are using current funding but in a way where the capital funding required to deliver under those programmes is far higher. HAP or RAS involve a cost of, maybe, €8,000 to €11,000 per annum to house a family. The upfront capital cost of that is very significant.
As to the figures the Deputy requested, the 2019 figures were €134 million in the RAS space and €382 million in HAP. The number of homes that supports is significant. The issue of upping the capital spend the Deputy referred to involves the balancing of that upfront capital investment and borrowing by the State within the fiscal rules against the need to deliver homes for people in the short term.
I accept that. It is a trap the State has been involved in for the best part of 30 years of having a temporary support measure while also having a need for capital spending. I take the figures of €134 million for RAS and €382 million for HAP. I take the point that, on average, it provides a home for in the region of €10,000 per year. Mr. Doyle is correct that the capital costs would be far greater but the borrowing costs for building those homes might be closer to the figure of €10,000 per year.
I come to the second part of the question in regard to the ESRI report. I do not expect Mr. Doyle to stray into Government policy but does he accept the premise that increased capital spending and reducing supports such as HAP and RAS is the future policy direction of the Department?
Mr. Graham Doyle:
It is, within the bounds of what will be available to us in terms of the national development plan, NDP, which is being reviewed at the moment. Our hope as a Department is to increase the capital spend to deliver more homes into the system and to rebalance that spend over time versus current spending levels. As we work over the coming weeks on developing the Housing for All strategy and work with the NDP review, there will be a greater focus on the capital elements. The programme for Government commits to reducing our reliance on the use of HAP for new social housing as the supply of social and public housing increases over that time. It will be a central element of Housing for All but there is a large quantity of homes to be provided and the level of capital we are talking about is very substantial, as the Deputy will be aware.
To continue that line of questioning on the transition from short-term to longer-term supports, I will focus on the move from RAS to HAP. In many ways, it is an unfair comparison because, in many cases, it was a move from rent supplement, which was with the Department with responsibility for social welfare, towards HAP. Can Mr. Doyle compare the transition from RAS to HAP and talk about why we have not seen the reduction in RAS we might have expected with the introduction of HAP? Can he compare it with the reduction that social welfare saw over that period?
Mr. Graham Doyle:
The Deputy has correctly identified that it is not a case of necessarily one replacing the other in terms of HAP and RAS. It is about refocusing the rent supplement payment in the Department of Social Protection as a short-term support, as it was previously. Over the period, we have seen significant numbers of people become eligible for social housing supports and HAP has been used to meet that increasing need where in the past RAS would have grown in that context.
RAS is still a useful housing support and one that gives some flexibility to local authorities in providing for the need presented to them. The costs of providing an individual property under RAS have offset a bit. I will bring in my colleague, Ms. Mason, on this. She is our expert on the subject.
Ms Deirdre Mason:
It is a move from rent supplement to HAP. We do not see tenancies moving from RAS to HAP. RAS and HAP are meeting a long-term housing need and the increase in HAP tenancies includes some transfers from rent supplement and people on the waiting list on rent supplement but there are additional people in the private rental sector coming into HAP after being in social housing.
Ms Deirdre Mason:
Yes. The local authority has responsibility to rehouse people in RAS but HAP is grounded in the private rental market. The basis of HAP is that tenants have to find their own property. With RAS, the local authority has responsibility for finding a dwelling for the individual. People on rent supplement can come into RAS in the same property as long as the local authority is happy the property meets the required standards and the needs of the individual or family involved.
The best part of €500 million is spent each year on these two supports. If it was any other portion of public procurement, senior public procurement experts would manage that €500 million. Instead, the policy allows for thousands of people without any public procurement knowledge spending public money in a market where it inevitably has an inflationary impact. Does Ms Mason accept that having, in some cases, very vulnerable people procuring the service on an individual basis is an inevitable way to get poor value for money, compared to if the State procured it in a more co-ordinated way?
I saw a figure in, I think, 2014 or 2015 that €8 million was being spent on the rent supplement scheme in my area, Finglas. That could not have been getting good value for money because thousands of people were procuring that service. It is not a good way of spending public money.
Ms Deirdre Mason:
We are trying to harness the private rental market to provide for the need of people waiting for a local authority or AHB house. We have seen in HAP since its inception a large number of transfers into other forms of social housing.
The vast majority of those transfers would be into units owned by local authorities and approved housing bodies. There are over 9,000 tenancies in that category at this point. The value for money aspect is that there are over 60,000 active tenancies in HAP at the moment. While this is a large amount of Exchequer expenditure, it is providing for a huge number of households to be accommodated. There are two points I would make about the average cost. The average cost in terms of the landlord payments is about €10,000. The Exchequer element of that is only about €8,000. A report done by the Central Statistics Office, CSO, in 2019 looked at the impact of HAP tenancies in an area. The effects on rental levels have been mentioned. It found that there is no clear correlation between the number of HAP tenancies in an area and increases in rent. That was a very interesting finding. It is one of the reasons that the Minister would say that we keep HAP limits under review. We are conscious of any inflationary effects of increasing the limits. The other point is that the limits are a separate discretion that local authorities have: 20% across the country and 50% for homeless households in Dublin. Limits are set, which mitigates some of the risk in terms of inflated prices-----
Any member of the public who is not eligible for HAP and who has attended rent viewings would argue greatly with Ms Mason that HAP does not have a distorting impact on the market. It is a temporary, short-term, necessary support. Nobody disagrees with that. The question is: how long do we accept it as a short-term, necessary support? Has the Department set a target for when an eighth of its budget will no longer be spent by thousands of people without any public procurement oversight on the individual contracts?
Mr. Graham Doyle:
As we deliver new-build houses and deliver houses into the system over the next number of years, it is difficult to set the target for HAP to no longer exist. It is providing housing for 60,000 households at the moment. We will make inroads into that over time. As we develop targets for the year ahead, we will see how the build targets interact with that.
I appreciate the points that Mr. Doyle makes. He makes them bona fides. I know he is new to the Department. He spoke about making "inroads into that over time", but what we actually need to see over the next number of years is a radical revolution in the delivery of public housing. We passed the Affordable Housing Bill in this House over the last number of weeks. Is the Department ready to start rolling out that delivery to local authorities, using the Affordable Housing Bill and all the powers it gives to local authorities, to deliver in the short term? Along with the societal impacts, there is a public spending issue, where nearly €500 million is being spent on a policy that should be phased out in the short term. The short question is whether the Department and the local authorities are ready to start this radical roll-out of housing.
Mr. Graham Doyle:
That is what we are working on with the local authorities through our interaction with them and with our various delivery partners. We will increase the level of capital funding, I have no doubt, under the NDP review. It was increasing in any event. I suspect it will increase further. We will work with our delivery partners to deliver houses under that, thus offsetting, exactly as the Deputy says. It is a matter for the Government to agree the funding and the overall targets. We will implement it to the best of our ability with the delivery partners we have.
On the inspection regime in respect of HAP and RAS, I have a parliamentary question from Deputy Ó Ríordáin. I will speak specifically about the local authorities of Cork County Council and Cork City Council. It shows that the number of inspections carried out to September 2020 in County Cork was 611 and in the city of Cork was 434. Notwithstanding the public health restrictions, we can take out all of the last 12 months in terms of the inspection regime. Is the Secretary General satisfied that the inspection regime is properly funded - we all speak from our own experiences as public representatives – such that it can be ensured that the policy and legislation are working effectively and we do not have families living in absolute slums? That is how I would describe some of the properties I have seen that are beneficiaries of RAS or HAP payments. I contend that the inspection regime is not fit for purpose. I do not want to put the blame on the local authorities. What is the link between the Department and the local authorities in respect of ensuring the inspectorate passes muster and is fit for purpose? I put the question to the Secretary General.
Mr. Graham Doyle:
I thank the Deputy. The quality of accommodation provided under these schemes is of significant importance to us. I had a conversation on the topic with my colleague, Ms Deirdre Mason, last week. On the inspection of rental properties in general, could I bring in my colleague Mr. Paul Lemass for a moment? I am afraid he has an issue with sound. Specifically on HAP and RAS, my colleague, Ms Mason, and I had a conversation on the inspection side last week. I will bring her in for a moment.
Ms Deirdre Mason:
The approach to the inspections of HAP and RAS are specific in their own right. They are, however, part of the overall private rental inspections regime that local authorities carry out. They are funded separately for that purpose. HAP, specifically, is provided for in legislation. An inspection is required when a property has not been inspected in the previous 12 months. The inspection has to be arranged within eight months. As the Deputy rightly pointed out, the Covid-19 emergency period has affected both the arrangement of and the carrying out of inspections, because local authorities could not enter people's houses under levels 4 and 5. The overall number of HAP inspections carried out is about 50% of the total number of inspections carried out by local authorities over the last number of years. The fact that it is required under legislation has an impact. Under the umbrella of the restrictions that were required under Covid-19, a virtual inspection regime has also been brought in. Dublin City Council piloted that. A number of other local authorities – about ten – have taken it up, or have expressed an interest in doing so. There was a number of virtual inspections carried out last year and this year. This could be used well into the future. More inspections could be done.
I am conscious of my time. The point I make here is that the witnesses acknowledge that there is an issue with inspections. The Covid-19 pandemic has had a bearing in terms of the number of inspections. I ask that this is prioritised, so that the Department would liaise with the local authorities in order to ensure that the inspection regime is fit for purpose, robust, and properly resourced, and so that there is a significant increase in the number of whole-time equivalents, WTEs, that would be tasked with this.
That is the only ask I have. I do not think it is fair to ask a tenant to walk around with a mobile phone to look at his or her house. We have to get people back into houses as quickly as possible. This is about taxpayers’ money at the end of the day. If we are talking about taxpayers’ money, we cannot have a situation where we have quite literally slum landlords. This is the outworking and the resourcing of the policy. Families with children with respiratory illnesses are coming to me because they are not in proper, fit-for-purpose accommodation. That is a poor day for Ireland in terms of how we deal with families under those schemes.
When the housing assistance payment, HAP, was introduced in 2014, both I and others made the argument that unless it was accompanied by a large-scale build, we would see more and more money used on current, as opposed to capital, spend and we would be paying in perpetuity. In 2014, when it was introduced, there were 285 either builds or acquisitions. In 2015, it was 4,000; in 2016 it was 4,025; and in 2017 it was 4,209. If we look at HAP, and not at the rental accommodation scheme, RAS, there were 485 in 2014; 5,680 in 2015; 12,000 in 2016; 17,000 in 2017; and so on. It is exactly as predicted. It is really bad value for money. It is not only bad value for money but it is a poor social policy. We know that the most efficient spend is by direct builds in terms of cost. The Department of Public Expenditure and Reform has said we are now moving from HAP and RAS to long leasing, enhanced leasing for 25 and sometimes 30 years. In fact, the Department of Public Expenditure and Reform concluded that long leasing at the height of a rental market in high-demand areas represented bad value for money. What analysis has the Department of Housing, Local Government and Heritage done on getting value for money and on shaping policy so that we will get value for money? The Economic and Social Research Institute, ESRI, report produced today recommends that we spend considerably more on housing, because it is driving costs in the economy. What bearing will that have in terms of housing policy and on value for money?
Mr. Graham Doyle:
There are a couple of components to value for money. It includes issues around the maintenance of properties, etc., over time. Fundamentally, part of that is to provide housing where it is needed as quickly as possible, under the pressures that the State has been under to do so over the last number of years. These current programmes have allowed that to happen. Of course, we would prefer to be delivering new build properties, which is what we do-----
Can I just stop Mr. Doyle there? The State, through the local authorities, has had a considerable land bank. The output, in terms of direct builds, is woefully inadequate and below what has been announced. There seems to be impediments to direct builds, which are the most cost-efficient way of delivering housing stock because there will be an asset at the end. However, we seem to be taking this lazy option of going for long leases and, essentially, tying up money in perpetuity. One is effectively paying the mortgage on those properties for 25 years, refurbishing those at the end and handing them back to the owner or developer. I cannot for the life of me see how that is value for money. Indeed, when we had the Think-tank for Action on Social Change, TASC, in, it told us it was the least cost-efficient way of delivering housing. Does value for money play a part in the thinking of the Department of Housing, Local Government and Heritage? Is it trying to unravel the impediments to getting local authorities directly building? What is it doing in relation to that? We will not get to value for money unless we do that.
Mr. Graham Doyle:
Value for money is absolutely a key part in our thinking around this, balanced with the need to deliver homes to people in the short term. I refer to putting in place a new build programme, the upfront capital costs and the challenges to deliver of which the Deputy speaks, which we are very keen to overcome. I am a relatively recent arrival to the Department. I am sure colleagues are sick to death of me at this stage talking about the need to do everything we can to remove any barriers that we can to the delivery of new build properties. However, with that best will in the world - and people are working very hard to do that with the local authorities and other delivery partners - that takes time and is taking time-----
I have been listening to "it does not happen overnight" since 2014. To be perfectly honest, the Department of Housing, Local Government and Heritage needs to give us a paper or a document on exactly what it is doing to break that impediment.
I welcome the Secretary General and the team from the Custom House. I have a couple of questions. These are rapid-fire buzzer questions, which will require a yes or no answer. Has the Department agreed one rule on whether local authorities consider somebody housed or not housed, once he or she is on either RAS or HAP? In other words, if I am on HAP or RAS, am I off the housing list, or am I out of consideration for the allocation of a house by the Government?
Ms Deirdre Mason:
Yes, both HAP and RAS tenants can go on the transfer list. They come off the main social housing waiting list, because their housing need is considered met. However, they are on a transfer list. The local authority will follow an allocation scheme to take people off both the main waiting list and the transfer list. We have seen more than 9,000 tenancies move from HAP to other forms of social housing, since HAP started back in 2014. The moves are definitely happening. The RAS tenancies are moving as well. Approximately 53% of household exits last year were to other forms of social housing. The vast majority of the other forms of social housing are to local authority-owned and approved housing body-owned units, that are either built or bought. There might be a tiny percentage of movement between RAS and HAP, but that is not a normal move. Generally, they are moving into a unit that is owned by the local authority or the approved housing body. It is down to the local authority and its allocation scheme in terms of taking people from different waiting lists.
That was a yes or no answer. Can a note on this be sent to us? My concern - and it can be addressed in the note – is that there is no consistency to this.
People are seen as housed and there is no way they are getting consideration if they are on HAP or RAS and this is a problem. We need consistency. I would prefer if people remained under consideration for houses.
I thank the witnesses and ask them to send us a note on what the strategy is for the year ahead. Given last year's success, perhaps all of the 8,000 people will get into homes.
I have a little bit of trivia. I gather that the Department was going to open a time capsule from the Queen Maeve statue at the Customs House and I am very anxious to know what was in it, if it was opened on its anniversary in recent weeks.
As I have a small amount of time, I ask the witnesses to keep the answers as short as possible. I want to focus on the manner in which emergency housing services are being contracted and how these contracts are overseen by the Department. Annual reports do not seem to be provided by the Dublin Regional Homeless Executive. Is it the Department satisfied with this approach to reporting on spending?
People in emergency accommodation are often extremely vulnerable. I would like to dig down into the level of training the Department thinks is appropriate for people working in these settings. Does the service level agreement the Department has with local authorities or the service providers support a minimum standard of social care qualification and management to be qualified in trauma informed care? No Garda vetting is required for staff working in the settings. Does the Department believe this is appropriate?
Mr. Eamonn Waters:
There is a protocol and a financial governance system in place between the Department and all of the regional authorities responsible for homelessness. They are required to submit quarterly performance reports and quarterly financial reports, and these reports are certified by the head of finance and the head of housing in each region. They are published. We are satisfied the financial governance and oversight arrangements are appropriate and effective. Responsibility for procurement of services resides with each local authority responsible and they are required to comply with the public spending code and the various Departments of Public Expenditure and Reform circulars which are applicable.
Mr. Eamonn Waters:
The individual arrangements put in place by a local authority reflect those needs. For example, the national quality standards framework in place in all NGO facilities requires quite a robust minimum standard. In the case of facilities that are not covered under the quality standards framework there is a separate parallel standards framework which requires minimum performance. All of these are monitored through inspections and reports. There is a training system is in place.
With regard to child protection, a training system is in place between Tusla and the providers of the accommodation, particularly where we have vulnerable individuals-----
I am sorry to cut across Mr. Waters but time is short. The Department provides funds, and through the service level agreement it could set minimum standards. I want to be very clear that the Department does not require as a minimum standard that people be Garda vetted or have any type of social care qualification before they work in emergency housing services.
Mr. Eamonn Waters:
The Department takes ownership through requiring the local authorities to have these service level agreements in place. It is a requirement of our protocol for funding that local authorities must comply with putting in place service level agreements with the service providers and these service level agreements cover areas such as standards to ensure appropriate provisions are in place.
We know that, at present, staff working in these services in Dublin do not have Garda vetting and are not required to be Garda vetted. I am asking whether the Department feels this is appropriate in the service.
The person providing the funding calls the tune, and if the Department does not require minimum standards such as these I cannot imagine anybody else would require them. I want to move on. There is an increasing correlation between the providers-----
The Deputy has gone over time. I will let her back in. The Deputy was trying to get a straight answer and used up more than six minutes trying to get an answer to the question. It is unsatisfactory that at the end of the six minutes, I am no clearer and neither is the Deputy or the committee on the answer to the question. It is not satisfactory. The Deputy wants to know whether the Department requires those providing homeless services to be Garda vetted. It is a "Yes" or "No" answer. If they do not, will the Department change this? I will ask the witnesses to come back in later and answer this for the Deputy.
I want to go back to the issue of long-term leasing because there appears to be a nonsensical approach, particularly as it relates to Part 5 developments.
We know units appear to regularly cost in the region of €15,000 to €18,000 per year. Over 25 years, this works out on a real-term basis as somewhere between €375,000 and €450,000 per year. This is money the State has paid, but at the end of it has no asset in return. There was a furore over the fact that an affordable home was classified as €450,000 when most reasonable people would accept that was not affordable. How does the Department justify this level of funding for housing provision over a period of 25 years when at the end of the day, we still end up with somebody with a housing need and an outlay on the State, but has nothing to show for it in terms of a real asset?
Mr. Graham Doyle:
As I said earlier, the Government's objective is to focus strongly on new build, particularly local authority new-build activity. Leasing is one of the range of options available to local authorities to supplement that delivery. It is a part of the overall programme. It has not been possible for the State to provide capital funding to build the significant number of homes involved in each year. Leasing is one of the tools that allowed delivery to happen.
While Mr. Doyle is looking for that figure, I will make the public aware that the figures I outlined are not even at the upper end of what is often paid. I am aware of one case in Dún Laoghaire-Rathdown where €28,000 per annum is being paid on a long-term lease. That is €700,000 going directly to developers, paying for the house, paying for any works required over the period and handing developers a clean asset at the end of day, with nothing to show for it over the long term from this State provision.
It is €250 million. That is in addition to HAP which, I understand, is €558 million and RAS, which is €133 million. With the benefit of hindsight, and recognising we are likely to reach spending of more than €1 billion per year on essentially private subsidies in order to meet short-term housing need as opposed to long-term demand, does Mr. Doyle accept that approach was in essence flawed?
Mr. Graham Doyle:
First of all, SHCEP is an overall fund that includes AHB delivery, mortgage rent and a number of things. In any event, on the Deputy's general point, I said this morning we would certainly like to be in a position to provide as many new-build homes as possible, funded by capital means. That has not been possible over recent years. In order to meet the need to provide roofs over people's heads, the leasing schemes and the current schemes the Deputy referred to helped to augment delivery over that space of time.
Have the schemes done that? This is the point I am trying to get at. Does Mr. Doyle accept that over the period of all these schemes, if we had spent an additional €1 billion on capital works we would be better off in the long term compared to what we are currently doing? At the moment, we are spending ever-increasing amounts. This €1 billion I am talking about is only going to increase under the current trajectory. We will be spending additional hundreds of millions of euro per annum, essentially in dead money, and at the end of the day will end up, in many cases, probably exacerbating both the house price crisis we are in and the house supply crisis.
Mr. Graham Doyle:
If the Department over the years had managed to spend that money on new build, the question would have arisen as to where to put the people we had not managed to house. New build would not have delivered for all of those people. There had to be a scheme to house people over that period. The public would not have been better off because there were many people we would not have been able to house over that period of time.
I will repeat that therein lies the problem. If there is not at least the recognition that this was a flawed approach in the first place, then we are doomed to repeat the mistakes of the past. I have to say that is a very disconcerting response.
Mr. Graham Doyle:
I will respond briefly to that. I am not sure the response can be characterised as that. We know we need to deliver more capital new-build homes. We absolutely accept that. That is an absolute focus. I am just saying that over that period, we would not have been able to house people with the amount of money available, had we not used those particular schemes. That is all I am saying.
Many of the questions I hoped to raise have been asked at this point. In terms of the accounts we are discussing today, there was non-compliance with procurement rules. Can Mr. Doyle outline how nine contracts totalling over €500,000 came about and how they were not in compliance?
My other question is about local authorities being held accountable for the implementation of the National Oversight and Audit Commission's report. What is being done to make sure local authorities are in compliance with the commission's recommendations?
Mr. Graham Doyle:
The Local Government Audit Service works across the local government system. I am a chartered accountant by profession and was an auditor in the early days of my career. From what I have seen to date, it takes a very professional approach to engaging with local authorities and holding them to account across the audit system that is employed. I am afraid that is just a very general response.
There have been many questions in respect of HAP and RAS. What has the Department done to try to ensure that landlords who are signed up to HAP with local authorities are registered with the Residential Tenancies Board, RTB? As public representatives, all us know about and have come across issues of low standards of accommodation for tenants. What has the Department done in that regard to try to encourage landlords to register with the RTB?
If issues arise with tenants and the landlord is not registered with the RTB, what protections can be provided by the Department?
What can the local authority offer those tenants who are in that particular predicament?
Ms Deirdre Mason:
HAP tenancies are in the private rental market and are governed by the Residential Tenancies Acts. Protections are under those Acts as opposed to specifically for HAP tenants. However, because the shared services centre provides a listing of the landlords to Revenue, there is enforcement based on the data in the list the shared services centre provides to the RTB quarterly. The enforcement is on its side rather than on the local authority side because the local authority has an agreement with the tenant as opposed to the landlord. The tenancy agreement is between the tenant and the landlord as it would normally be in any private tenancy arrangement.
Mr. Paul Lemass:
There is, in fact, a registration process in the RTB. That sets out to identify situations where people have not registered their tenancies with the RTB, whether it is a HAP tenancy or a private rental tenancy. That service includes the potential to issue a fine of up to €4,000 or six months in prison. The RTB obtains information from members of the public. It has its own research as well. It also has an investigations and sanctions unit, which has a staff in excess of 15 people. It proactively tries to identify situations like this as well as situations where there might be a breach of the rent pressure zones and other such breaches. Those facilities, most definitely, do exist within the RTB, not just for HAP tenancies but for all tenancies.
I will start with the response of Mr. Lemass on the RTB. I received a report from the RTB in the past two weeks which sets out the number of cases in which it has taken prosecutions. In 2017, it prosecuted a total of 29 landlords in the entire country. Last year, that number has fallen to ten landlords for the entire country. As such, I am not clear about the RTB in terms of implementation.
I submitted to the RTB an audit of an area in my constituency in which 242 houses in a very small area were audited. Of those 242 houses, 142 were not registered with the RTB. Where is the RTB's answerability to the Department? It gets funding but it appears it is falling down with regard to registrations. I have submitted to the RTB a full list of 142 unregistered addresses. What reports does the Department receive from the RTB? Is the Department satisfied that there is full implementation of the requirement for landlords to register with the RTB? Is there a difficulty with the process for registration given the number of tenancies not registered in one small area?
Mr. Paul Lemass:
I thank the Deputy. To put it in context, the number of private tenancies registered in quarter 3 of 2020 was 25,607 and in quarter 4 of 2020, it was 19,287. The overall number of tenancies has been in the order of 300,000 for quite some time, so the overall numbers have not moved that much. I accept there will always be landlords who do not register but we are satisfied that 15 staff on investigations and sanctions is a significant number of people who can actually follow up on these things. Not everything results in a conviction. It may lead to a situation where people just register and that is the end of it.
I would add though that the investigations and sanctions unit has assessed information in relation to 1,531 tenancies. Out of that, it has commenced investigations on 337 tenancies and 241 of those are still in investigation. Getting to the court process at the end of that takes time; there is no doubt about it. Covid has not helped with that. I am satisfied that the unit, with 15 full-time staff and legislative powers, is in the right position to do what needs to be done.
The Department and the RTB also rely on members of the public to make them aware of things. If, as in the Deputy's case, there are 142 tenancies not registered, that is the kind of information the RTB needs to hear from members of the public. In reality, we rely on that information, as well as other sources, for example, scanning lettings pages to make sure that if a property is being put up for let, it subsequently features on an RTB registration. That is the effort that is being put in.
If a member of the public reports that a property is not registered - one can check whether a property is registered on the RTB register - and files a complaint, there is no reference number and he or she cannot check whether the matter is being following up or whether the property is registered. People have to go through the whole process all over again. Likewise, when I wrote to the RTB it replied that it would not come back to me about any of the cases but would follow up. I have no evidence to show how many of those houses or residential units will be registered in three months' time unless I physically audit each one of them again.
Mr. Paul Lemass:
In terms of the actual response to the Deputy directly, I would have to check with the RTB but I imagine that its ability to share that information is limited. I go back to my previous point. We have, on record from the RTB, 1,531 pieces of information assessed for investigation and that would suggest quite a significant number in the overall context. We have about 6,000 disputes in a year, so that is in a similar order of magnitude.
In 2018, there were, I understand, more than 7,000 first or second notifications to landlords. The following year, there were only 1,100 notifications issued to landlords. There was a substantial drop in the level of notification to landlords for non-registration. In an area of my constituency, 60% of the properties that are let are not registered. That raises serious questions. I ask that the Department take up this matter, in particular in areas where there are third level institutions, which appear to be a major problem as regards registration.
Mr. Paul Lemass:
Student tenancies are required to be registered the same as any other tenancy. The registration enforcement activity I have to hand is specifically to do with registrations. In addition to the 1,500 or so investigations, 4,651 first notices were given regarding registration in 2018. That number rose to 6,013 in 2019. It went down to 1,282 in 2020 and that is clearly Covid-related. These are significant numbers and the RTB follows up with a second notice letter, a first solicitor letter and, indeed, a second solicitor letter. That goes on to additional enforcement. There was in the order of 550 additional enforcements beyond the two letters and two notices. I think that points to a significant engagement by the RTB in the issue of registration of tenancies.
I will move on to the issue of the non-collection of rents by local authorities. Recently, I saw that in one local authority more than €33 million is owed in rent arrears. Is the Department aware of the total figure for rent arrears in each local authority? What is the total amount? Can we have details for each of the local authorities?
Mr. Paul Lemass:
My recollection is that the overall level of arrears is in the order of €80 million. I will confirm that in my notes. If there was one at €33 million, I suspect it would be Dublin City Council because it is by far the biggest. I will review the enforcement and what is going on to collect rent. During the Covid restrictions there has been an easing of enforcement activity simply to keep tenants in their homes. I will investigate that further and revert to the committee on the €33 million and the overall number.
I fully accept that people are in difficult circumstances but surely we need to have details of the breakdown of the arrears. Are the moneys owing for two months, three months, six months or two years? Perhaps it would be appropriate to let the committee have a breakdown of how far back some of these arrears go.
Okay. I refer to the timeframe from when a local authority identifies a site and makes a submission to the Department for housing. For instance, I am aware of a situation where a local authority secured approval for approximately five housing projects to proceed. When it received tenders for the building of the houses, the tenders were far higher than anticipated, but then there was a further gap of up to six months before the Department finally gave clearance. Have the rules changed on this? There was a six-month delay from getting in the tender submissions, which were at a higher rate, for the Department to make a decision on it. What is the average time from when a local authority identifies a site and gets it to starting the housing project to getting it completed?
Mr. David Kelly:
Six months is a long time so we will be happy to examine that case. There is a 59-week process with timeframes set out for the interactions between the Department and local authorities. We certainly do not envisage those types of timeframes. We are improving the system. A housing delivery co-ordination office has been set up in the Local Government Management Agency, which works closely with local authorities to streamline the process. The Minister recently changed the threshold for single-stage approvals from €2 million to €6 million and that is something of which we are starting to see more. Six months is a long time. If the Deputy wishes to provide the details of that case, we can certainly look into it.
It is a big policy change, so it would be good to have that figure. I am interested in mixed tenure delivery. In my area, the Enniskerry Road development is delivering 155 homes, including 105 social homes and 50 cost rental. I am particularly interested in two aspects of the cost rental element. How much money is being provided from the serviced sites fund? How will that contribute to lower rents? Who will own the cost rental units in the development?
Mr. Graham Doyle:
I will get the Deputy a note on that specific development. I do not have the information to hand. We are providing funding through our various schemes in those mixed tenure developments to enable properties to be delivered at more realistic pricing, whether for rent or purchase. Affordability is critically important. There are several ways we can do that. We are trying to make changes to the serviced sites fund to improve that situation.
It is critically important. This is one of the first, if not the first, projects for delivery on cost rental, so I am surprised the witnesses do not have details on it. This is really important and I would be obliged if they came back to me on each of those points. Who will own the cost rental units in that development or who will manage them?
The Deputy is asking a question regarding the new cost rental model project in her constituency. It is a pilot project. Surely one of the representatives of the Department can answer her question as to who will own those units. Is that the question she is asking?
Cost rental is one of the major planks of the Affordable Housing Bill. It is one of the most important interventions that can be made in terms of different types of housing delivery, different service facilities and different options for people on fixed incomes, incomes that are likely to change considerably, including those of key workers. It is a significant plank of-----
It is not a relatively new scheme. It has been in development for some time. These projects are at a point of near delivery. It has been included in the Bill, which is published and is going to be debated in the Dáil. This means substantial pre-legislative work has been done within the Department. It is part of the vision for the Land Development Agency and part of what is being delivered in Shanganagh with the cost rental element there. A major part of it relates to who will manage and deliver it, what the rents will be and whether it will be managed and owned through an approved housing body or otherwise. It is not a new scheme.
I have several other questions but I will leave it there. I ask Mr. Doyle to come back to me specifically on the questions I have asked relating to cost rental generally and my specific questions relating to the Enniskerry site, the specifics of the serviced sites fund that will contribute to that, what the rent will be and how it will be set and by whom it will be managed. I refer specifically to the major policy change that was made while Mr. Doyle was Secretary General in the one-step process. How many applications have been made for how many houses and in what period? When is delivery expected? What has been the outcome of that major policy change? I will leave it there.
The bulk of it is spent on private subsidies. Regarding how much HAP is spent each year, we invested an additional €42 million in 2016 to deliver 12,000 new places, amounting to €3,482 per person. An additional €78 million has been invested this year to provide 15,000 new places, amounting to an average of €5,200 per person. Does Mr. Doyle agree that HAP is getting more expensive?
Mr. Graham Doyle:
The availability of large-scale capital funding. Significant amounts of capital funding have been provided under the national development plan. Those amounts have been growing in recent years and will continue growing. This has allowed for more new build homes to be delivered. I suppose-----
I am sorry, but if there was that extent of capital, 60,000 people would not be in private rented accommodation and the Department would not be paying in excess of €1 billion of the €3.3 billion in private subsidies.
Mr. Graham Doyle:
-----cost would be substantial and increasing building capacity in the country would have to grow to meet that requirement. Some 60,000 homes are provided at the cost the Deputy mentioned. The difficulty for the State in funding and realising that level of delivery up front has prevented such provision.
I thank the witnesses for participating in this meeting. Mr. Doyle and I know each other from our previous lives, mine with the Irish Road Haulage Association and his in the then Department of Transport, Tourism and Sport. I fundamentally disagree with his statement that HAP is providing homes. It does not provide homes. Only building houses does that. HAP gives the applicant the means to afford rent.
This brings me to my point, of which we notified the witnesses yesterday. It relates to a circular issued by the Minister. Is Mr. Doyle familiar with it?
Yes. Recently, representatives from An Bord Pleanála appeared before this committee. Its chairman, Mr. Dave Walsh, informed us that its 2020 legal fees reached €8.5 million. I would have assumed on the basis that fewer houses were built and fewer applications were received that this figure would have been less than that for 2019, but it was actually 60% more. The board is losing 70% of the cases that are judicially reviewed. The courts are having to interpret ministerial guidelines because it seems that our planning policy lacks clarity. Most court decisions are being made on the basis of a misinterpretation of the ministerial guidelines by one or other department. What has Mr. Doyle, as the relevant Secretary General, done to try to bring these issues together? They are culminating in choking the supply of housing. We will never get rid of or lessen our HAP dependency or lower rents if we do not increase supply. What measures has the Department taken?
Okay. The Planning Regulator appeared before my group, the Regional Group, recently.
He is insisting there are minimum densities contained in the guidelines. He could not tell me where they were but he is insisting they are there. Quite evidently, they are not there, and that is a big factor. Representatives of An Bord Pleanála have appeared before this committee, with its chairman stating there are absolutely no minimum densities. If two arms of the State are involved with the planning and building of houses and this is a time we are instituting county development plans all over the country, if we cannot bring a consensus to all the regulatory performers in the planning process, how will we ever expect to increase building supply?
Has Mr. Doyle written to the Office of the Planning Regulator to inform it that it is misinterpreting the ministerial guidelines? Doing so might prevent the possibility of many cases being judicially reviewed.
Is Mr. Doyle stating, as Secretary General of the Department dealing with housing, he is now only being made aware of this matter of the difficulty with the regulator and the chairman of An Bord Pleanála, as they have opposing views? The chairman of An Bord Pleanála, Mr. Dave Walsh, agrees with the Minister. If the witness is aware of the circular, the Minister identifies the fact that the guidelines do not stipulate minimum densities. The Office of the Planning Regulator, whose remit it is to oversee the forming of county development plans and make recommendations, is misinterpreting the guidelines.
I am in Leinster House. As my time is limited, I will focus initially on the pyrite remediation scheme. I come from a constituency, Mayo, that has seen mounting pressure arising from increased numbers of homes with pyrite-related damage. In the past number of weeks, the impact on housing estates in north Mayo has become evident and the issue is starting to snowball as more residents become aware of issues. Those numbers may reach the hundreds in the months ahead. There are similar issues affecting households in Donegal and many residents feel the remediation scheme for defective building materials that came into effect last June falls short significantly in its intended purpose.
The overwhelming majority of properties require demolition and rebuilding. Many owners are angered by a 90% grant limit for costs, which is capped at €275,000. This approach does not take into account other expenses, such as storing furniture, materials and the cost of living elsewhere in the interim, including paying rent. These people are looking for parity with the current pyrite remediation scheme in place for the east of the country. Rental property availability is also a factor in areas with homes affected by pyrite. Does the Secretary General accept the validity of these concerns?
Mr. Graham Doyle:
At one of our previous sessions with the Committee of Public Accounts, there was a specific report on pyrite and mica that we dealt with and at the time, we brought subject experts. We can see the level of damage and some images were shown at the time indicating how it is very significant. I can absolutely understand the concerns of people who have been affected by this.
The scheme amounts to the State stepping up to attempt to put those owners, in a substantial way, back into the position they would have been in if these defects had not occurred in the materials. It is a significant scheme, with significant resources being applied to it. I know there is dissatisfaction in some cases, as the Deputy has described, in that it is a 90% scheme. There are some reasons for applying that 10% requirement.
The scheme for homes affected by mica is new and there already significant numbers of applications for that. We are endeavouring to deal with those. There has not been-----
Does Mr. Doyle accept the Pyrite Resolution Board, which covers parties with a liability, has the capacity to pay all the costs for remediation of damaged dwellings? There is certainly a major anomaly with the defective concrete blocks scheme in this instance. Chapter 13 in the Comptroller and Auditor General report on the accounts indicates projections for the Department that the scheme will amount to approximately €210 million, remediating 3,140 dwellings. I need to bring these concerns to the witness.
How many homes in County Mayo have been approved under the first stage of the scheme? How many have second stage approval for the implementation plan?
I have some questions and I ask Mr. Doyle to keep his replies brief. I apologise if we sometimes cut across each other but we are trying to use technology and we are also caught with time limits arising from Covid-19 precautions.
I will speak to the timeline. I have made it my business to speak with officials, and particularly practitioners such as engineers etc. on the ground, over recent years in particular on the timeline for new builds. To be honest, I get a feeling of fierce frustration from them arising from delays and the level of micromanagement of projects by the Department. Stuff is sent back and forth to the Custom House. There is all the appearance of a system of micromanagement. If we want local authorities to act maturely and do the business for us, we must relax the restrictions and red tape. This is not an argument for any kind of wild west behaviour but will the Department look at this?
I raised the issue with the previous Minister, and former Deputy, Eoghan Murphy, and the Minister before him in the context of giving local authorities some breathing space. I ask Mr. Doyle, as the Secretary General of the Department, to look at the matter again with a view to giving local authorities some breathing space and putting more trust in them.
Mr. Graham Doyle:
We will remove any barriers, within reason. As the Chair stated, there is a need to answer to this committee in terms of how public funding is being used. We will absolutely remove barriers, within reason, while balancing the need to deliver with the need for financial probity. I can see a colleague smiling because it is a mantra that I have had since joining the Department.
Houses will not get built through passing back and forth between the Customs House and local authorities drawings depicting what kind of a hood goes over a front door. We are not going to get houses built that way. Local authorities need to be trusted. There are competent people in local authorities, including engineers and councillors to oversee projects. There are competent management systems in general. In terms of the reform of local government, which is a whole other area that I will not go into today, we need to give them breathing space.
Ms Áine Stapleton:
I just want to mention that the Department's architectural side has issued a design manual to the local authority sector that is currently out for consultation. That will be most helpful in achieving a shared understanding of the approach. We are also working with the local authorities to build up their housing delivery teams, particularly in the context of ensuring that they have sufficient competence on the technical side. A combination of measures, together with us continuing to look at the approval processes, will help address some of those issues.
In answer to a question that was asked earlier, we are beginning to see some increasing use of the single-stage process as it has gone to the €2 million ceiling and recently increased to the €6 million ceiling. Therefore, there are a combination of factors that will help address some of those very practical issues.
I thank Ms Stapleton for her response. I cannot emphasise the point strongly enough.
In respect of tax compliance and landlords, briefly, how does the Department ensure that landlords are tax compliant? We know that the problem of unregistered landlords is fairly widespread. I agree with the witnesses that the information does need to be fed to the RTB by all concerned. How does the Department ensure that the landlords are tax compliant? Is any work done on that?
That is helpful. I wish to revert briefly to the issue of the long-term cost. I was there in the days when rent supplements were first introduced, going back a good few years now. It was a temporary measure to tide people over until they got more permanent accommodation. Then we moved on to RAS and HAP. The spend is now in the region of €1 billion per year. That €1 billion provides between 5,000 and 6,000 one-, two- and three-bedroom homes, depending on what part of the country one is in. That is roughly what we are talking about.
I understand that the Department cannot magic up houses immediately at the click of a finger. However, in respect of the long-term cost, a witness from TASC appeared before the committee a few weeks ago. He quoted research by Mr. Mel Reynolds which stated that it costs €450 per month more for HAP than direct bills in many parts of the country. The point that we need to move on it cannot be emphasised enough. It has been raised by a number of Deputies today. The Department has to find the money and capital for it. In that context, has much work been done in respect of looking at sources of finance? There are 0% interest rates at the moment. In fact, there are negative interest rates on deposits currently. There are many investment funds out there. The credit unions have in the region of €10 billion in deposits. Representatives of the credit unions have stated at various times that they would like to invest it better. Irish pension funds are always sourcing ways of investing money to get a good return for pensioners. The European Investment Bank is also lending at low interest rates. Pension funds and credit unions in particular have substantial reserves. Has the Department looked at tapping into that money and investing it with a view to getting a return in the areas of cost rental homes, but also in the context of social homes and affordable purchase homes, which to provide a good return if it is done properly? Have those pots of money been looked at?
Mr. Graham Doyle:
In terms of the sources of finance, the discussions are had, particularly within the Departments of Finance and Public Expenditure and Reform, each year when it comes to agreeing multi-annual capital envelopes or under something like the NDP, which is being reviewed currently. As was the case with my previous Department, we go in as a Department and argue our capital envelopes. The question of where the capital comes from is more for the other Departments that I mentioned. While we do feed into those debates and ask questions, it is a matter for those Departments. However, we will continue to argue as strongly as we can - and we are doing so at the moment in the context of the NDP review - for as much capital funding as we can get, that the system can actually support and on which it can deliver houses.
I am saying I have heard that before. I am not being dismissive, but real work needs to be done in that area. There are options that need to be tapped into.
In the area of the income thresholds for social housing, in counties Laois and Offaly, the threshold is €480 for a single applicant. For a couple, the threshold is €503. I can rattle off the numbers up the scale. If an applicant has one child, the threshold increases by €15 and so on. I am aware that the Department is reviewing it. One could paper the walls with the replies to parliamentary questions on this issue from various Deputies. The point I wish to make is that there is a whole cohort of people who are just above the income threshold for social housing. There is no option of cost rental or affordable purchase homes for them. It does not exist outside the Pale. There is certainly no option of a mortgage. These people have reams of refusals from banks and building societies. They are going to wind up as pensioners in private rented housing. There will have to be a turbocharged HAP for them. We are looking at HAP for pensioners.
There is also a financial cost in the context of HAP. The rents that we are seeing are not the real rents. Every Deputy, county councillor and Minister in the country will state that their constituents are paying much more than what the rent is supposed to be. Of the tenants that I deal in counties Laois and Offaly, certainly 95% of them are paying top-ups. The point I wish to make is that there is a huge cohort of people who are trapped until kingdom come, in poor private rental accommodation, without security of tenure and rent control. They are left at the mercy of the landlords, some of whom are okay, and some of whom are a long way from being okay. Approximately 140 years ago, the Land League campaigned on the issues of fair rent, fixity of tenure and the right to buy. Now we are in the 21st century trying to get back to that again. I ask the Department to move on the issue of upping the income thresholds for social housing. When can we expect to see that being delivered? I ask for a short answer to that question.
On long leases, I assume the Department must give approval for long-leasing schemes to approved housing bodies and local authorities. How does it determine value for money on long leases, including where Part 5 is long-leased as opposed to purchased?
Ms Deirdre Mason:
In terms of the assessment that is done for the applications that come to us, we receive applications for developments that are over four units. The local authorities have delegated sanction for anything less than that. The local authorities obviously have to do an assessment of the social housing need in their area before they send in the proposal to us, as well as the pipeline they have in terms of build and they also have to look at the availability of land. Basically, they look at the need and sustainable communities in terms of the percentage of social housing in the area, they agree the market rents - there is a whole process around that - and a proposal comes into the Department. If it is the enhanced lease, it goes through the Housing Agency as it is the national co-ordinator for that scheme. We then look at it in terms of the overall balance. Obviously, the cost of the scheme is very important. The speed with which the project can be delivered is also important. The sustainability of communities is considered as well. An assessment is done internally in which we take account of all those criteria. The first assessment is done by the local authority, however. I suppose it depends on the area in which the project is being developed. A lot of the development we are seeing now is in the Dublin area and involves apartments. It comes back to the local authority's need in the area and the types of units it requires.
Yes. It relates to the Department's spending on Traveller accommodation. Department officials were before us in February 2019 when I think we were reviewing the 2017 accounts. At that meeting, queries and concerns were raised about the underspend on Traveller accommodation. The same recommendation was made, almost word for word, when Department officials appeared before the committee again last year and the response seems to be the same again this year. In any event, it appeared as though they were hiding behind an expert review dating back to September 2018. Is that still the case? What has happened since?
Mr. Graham Doyle:
It is something we have to continue to focus on. It has been a feature; I absolutely accept the Deputy's point. I know in the case of Covid there were significant efforts to spend in relation to trying to safeguard people from that community in terms of capital spend. I think over the last year there has certainly been more spent. However, this has been a feature over the last number of years and we need to focus more on making sure that capital money is taken up and spent in the local authorities.
Mr. Graham Doyle:
Yes. Just in terms of the status of the report, I think in 2020 we managed to actually spend the full amount, so certainly in terms of progress on the spend, the focus has delivered significantly greater spend in the area. In terms of an outcome on the back of that report, the situation has improved substantially.
I thank Mr. Doyle and his team from the Department for joining us today. I also thank Ms Costello from the Department of Public Expenditure and Reform for her patience. I thank the staff of the Departments for their work in preparing for today's meeting and the information they provided. I thank the Comptroller and Auditor General and his staff for attending and the support they gave us to prepare for the meeting.
Is it agreed to request that the clerk to the committee seek any follow-up information and carry out any agreed actions arising from today's meeting? Agreed. Is it also agreed that we note and publish the opening statements and briefings provided for today's meeting? Agreed.