Mr. Seamus McCarthy:

The 2022 Appropriation Account for Vote 34 - Housing, Local Government and Heritage records gross expenditure of €5.632 billion.

Appropriations-in-aid of the Vote amounted to €71.4 million. The surplus of the amount provided over the net amount applied in the year was €586.7 million. Of this, the Department received permission to carry over to 2023 €340 million related to unspent 2022 capital allocations. The remaining €246.7 million was liable for surrender back to the Exchequer.

The appropriation account is presented under six programme headings. The largest by value are the housing programme, water services programme and the programme to support local government, which together account for 95% of the gross expenditure under the Vote. The remaining three programmes relate to planning, including the funding of planning-related bodies, Met Éireann and heritage, including the National Parks and Wildlife Service, NPWS.

I issued a clear audit opinion in respect of the account. However, I drew attention to the Accounting Officer’s disclosure of certain instances of material non-compliance with procurement rules in respect of contracts that operated during 2022. I also drew attention to a note in the account about fines paid to the European Commission arising from a judgement of the European Court of Justice, ECJ, in November 2019. The case concerned the failure to ensure a retrospective environmental impact assessment was carried out in respect of a wind farm constructed in County Galway. Payments related to the fines totalled €17.2 million over the years 2020 to 2023 and ended when Ireland was considered to have complied with the terms of the judgment.

Local authorities receive a sizeable portion of their annual funding from various central government Departments and agencies. Each year, my office prepares a report to present an overview of the amount and purposes of the funding provided from central government sources to local authorities. In 2022, such funding totalled €6.04 billion, a net increase of approximately 5% on the €5.77 billion provided in 2021. The primary sources of central government funding for local authorities are the Department of Housing, Local Government and Heritage through Vote 34 and the Local Government Fund, LGF, and the Vote for transport. Approximately 92% of the €6.04 billion was provided from these sources in 2022. In 2022, €3.2 billion of central government funding was provided to local authorities for housing and regeneration. This included housing assistance payment, HAP, and rental accommodation scheme, RAS, payments. A further €1.4 billion was provided for transport investment. Three quarters of this was earmarked for road improvements, with the balance for public transport and active travel investments. Other local authority activities that receive regular funding are water and sanitary services investments, waste management and flood relief works.

Central government providers of funding to local authorities are required to ensure an effective funding supervision regime is in place that accords with the provisions of the directions of the Department of Public Expenditure, National Development Plan Delivery and Reform. Given the scale of the funding transfers and the experience of the Department of Rural and Community Development with grant funding provided to one local authority, I decided to examine how some other Departments oversee local authorities’ utilisation of programme funding they provide. One of the programmes reviewed, namely, the energy efficiency retrofitting programme to upgrade the energy efficiency of local authority housing stock, is funded by the Department of Housing, Local Government and Heritage. The grant-funding Departments examined were found generally to have complied with the conditions set down by the Department of Public Expenditure, National Development Plan Delivery and Reform.

One significant departure from the standard model of public accountability for grant recipients is that local authorities, with the permission of the Department of Housing, Local Government and Heritage, are not required to disclose details of the grants they receive in their annual financial statements. Unlike most State bodies, local authorities are also not required to present a statement on their system of internal control, or a governance statement, with their annual financial statements, or to make standard remuneration disclosures. The Department has indicated that a planned new code of governance for local authorities will introduce new compliance requirements similar to those already in place for the rest of the public sector. The Accounting Officer will be able to update the committee on the current status of the new code.