Mr. Seamus McCarthy:

The 2023 appropriation account for Vote 34 records gross expenditure of €6.663 billion. This was up from €5.63 billion in 2022, representing an increase of 18% year-on-year.

Expenditure from the Vote is presented under six programme headings. The largest by value are the housing programme, the water services programme and the programme to support the operations of local government. Together these account for 94% of the gross expenditure under the Vote. The remaining three programmes relate to the building and infrastructure planning system, including the funding of planning-related bodies, Met Éireann and built and natural heritage, including the National Parks and Wildlife Service, NPWS. The funding provided for the Vote included €340 million of unspent capital funding carried over from 2022. A Supplementary Estimate late in 2023 provided an additional net €153 million for the Vote. The surplus of the amount provided over the net amount applied in the year was €155.3 million. Of this, €141 million in unspent 2023 capital allocations was carried over to 2024. The balance of €14.3 million was liable for surrender back to the Exchequer.

The Local Government Fund is managed by the Department separately from the Vote. The fund is mainly comprised of the proceeds of the local property tax, LPT, and a transfer from the Vote. In 2023, LPT receipts into the fund amounted to €558 million. The transfer to the fund from the Vote amounted to €520 million. This was up by €133 million, or 34%, year-on-year. This increase was to cover certain additional supports to local authorities due to rising energy costs. The fund expenditure in 2023 amounted to €989 million, the bulk of which was accounted for by transfers to local authorities. At the end of December 2023, the fund’s reserves stood at just over €293 million. I issued clear audit opinions on both the Vote and the fund accounts.

Turning to the report matters before the committee today, local authorities receive a sizeable portion of their annual funding from a wide range of central government Departments and agencies. Each year, my office prepares a report that presents an overview of the amounts and purposes of the funding provided from central government sources to local authorities, as set out in chapter 2. In 2023, aggregate funding from central government to local authorities amounted to almost €6.73 billion. This was a net increase of approximately €750 million on the 2022 level of funding. The primary sources of funding in 2023 were the Departments of Housing, Local Government and Heritage, and Transport. Together, these accounted for approximately 92% of the transfers.

Chapter 11 reviews the events which gave rise to the need in late 2023 for the allocation from Vote 34 of exceptional funding of €15 million for the Peter McVerry Trust. This is an approved housing body, AHB, and charity that provides housing and other supports to a substantial number of people in a network of accommodation settings. In the normal way, the Department provides funding for homelessness services in the Dublin region to the Dublin Region Homeless Executive, DRHE, in line with an agreed profile over the budgeted year. In turn, under agreements between the executive and service providers, the executive provides both recurrent funding and capital funding for new developments to a range of service providers.

The examination found the executive provided several advances of planned funding to the trust between March and September 2023 without the Department’s approval. Because of cash flow issues in the trust, Government approval was granted in November 2023 for the payment of up to an additional €15 million to the trust. Around the same time, the Department approved the advancing of €2 million of normal funding to the trust but the executive paid advances totalling €5.3 million. That is €3.3 million more than was provided. Although generally a condition of the provision of advances of funding, approval from the Department of Public Expenditure was not obtained for any of the advance funding provided to the trust in 2023.

The examination also considered the Department’s monitoring of the conditions attached to the exceptional funding. One of those conditions was the provision by the trust of a restructuring and rationalisation plan. While the trust submitted a plan as requested, the Department stated it did not consider it within its remit to assess the likely efficacy of the proposed changes. The arrangements did not provide for such an assessment to be undertaken. The examination concluded that the Department should have greater oversight of the controls used by DRHE. The Department should also ensure it obtains relevant evidence of the trust’s compliance with all the conditions attached to the exceptional funding.

The Local Infrastructure Housing Activation Fund, LIHAF, was initiated as a scheme in 2016. It was intended to address the issue of housing supply by removing infrastructure blockages through investment in projects such as new access roads or provision of water or drainage systems. Chapter 12 of my report examines the progress made in completing LIHAF projects and the fund’s impact on housing development. Some 30 projects proposed by local authorities with an aggregate projected cost of €196 million were approved by the Department for LIHAF support. The Department committed to providing funding of €147 million, or 75% of the cost, with the remaining 25% to be funded by the sponsor local authorities from their own capital resources. The approved projects were mainly roads-related and were to be completed by the end of 2021. They were expected to support the delivery of almost 20,000 housing units on the sites serviced by the new infrastructure. The examination found that six of the projects were not proceeding. In effect, this reduced the target housing delivery under the scheme to just over 16,000 units.

Funding from the Department for the remaining 24 projects was expected to amount to €197 million, compared to the original commitment of €147 million for 30 projects. At the end of 2023, two years after the target completion date, 12 projects had been completed, eight were still in progress and four had not commenced. The housing output achieved on the sites served by LIHAF projects was approximately 6,400 housing units at the end of 2023.

This was just 40% of the reduced target. Consequently, the expected acceleration of housing delivery does not appear to have been achieved under the scheme.

The Accounting Officer may be able to provide a further update on the output of the scheme.