Eamon Gilmore (Dún Laoghaire, Labour)

I move:

That Dáil Éireann, recognising that:

—due to high house prices, inadequate provision of social and affordable housing, and increased rents in the private rented sector, there are now approximately 60,000 households dependent on rent supplement; and

—the rent supplement as currently administered is causing serious poverty traps and disincentive to work;

calls on the Government to replace rent supplement with a new housing support which:

—would be related to housing need, income, and local renting conditions;

—would not discriminate between applicants on social welfare and those at work; and

—a recipient would not automatically lose on return to work and any reduction of which would be tapered as the recipient's income increases.

I wish to share time with Deputies Lynch, O'Sullivan and Sherlock.

This Labour Party motion directly affects 60,000 households and is of considerable interest to 200,000. It has implications for one in every five households in Dublin, Cork and Limerick and three in every ten in Galway. This motion is concerned with the needs of the men and women of no property in today's prosperous Ireland, with the tens of thousands of households and people who can not afford to pay rent and with Ireland's unique poverty trap, which locks low income workers into a choice between their State subsidy for rent and the taking up of an offer of work. The treatment of this motion in the House, in the media and among members of the public, will say much about the nature of modern Irish society.

According to the 2002 census of population, 11%, up from 7% in 1991, of housing was privately rented. The 2006 census will probably show private renting to be much higher again. The initial registration pattern in the Private Rented Tenancies Board would suggest there are now almost 200,000 private tenancies in Ireland, with approximately 120,000 individual landlords. Private renting is now the clear second to home ownership in the housing tenure league. The 2006 census will probably show there are now more than twice as many private renters in Ireland as there are tenants of local authorities.

The changed pattern of housing tenure is even more dramatic in urban areas. According to the 2004 annual report of Threshold, private renting now accounts for 29% of the housing stock in Galway, 22% in Dublin, 19% in Cork and 18% in Limerick. This pattern should not perhaps surprise us. It has been in the large urban centres that house prices have increased most dramatically in the lifetime of the Fianna Fáil-PD Government, and it has also been in the large urban areas that delivery of social housing has been most disappointing.

According to the recent report from the ESRI and Permanent TSB, the average price paid by a first-time buyer in June 1997, when the Fianna Fáil-PD Government took office, was €78,379. By the end of December last it was almost €250,000, an increase by a factor of 3.2. The result has been that young workers and families, deprived of the traditional opportunity to purchase a home of their own, have been forced to rent. Households, who might have expected to be housed by their local authority, have also been forced to rent privately for prolonged periods.

As house prices have increased, so too have rents. The rent for family-sized, three bedroom accommodation in Dublin is now €300 and €400 per week, depending on location, well above the rate of social welfare or the national minimum wage. Households who cannot afford these rents apply to their community welfare officer for a rent supplement or rent allowance. Depending on the circumstances of the applicant, the amount of the rent and the location, the community welfare officer may grant a rent allowance, which is effectively a State subsidy of the rent paid to the private landlord. The amounts paid can vary from €60 to €70 per week in Border and western counties to over €1,000 per month in Dublin.

Currently, more than 60,000 tenants in private rented accommodation receive a rent supplement, at a total cost of approximately €400 million per annum. At the beginning of the 1990s the number on rent supplement was less than 30,000 and the annual cost was less than €50 million. Put another way, there is now twice the number of households officially unable to pay their rent as there was before the Celtic tiger.

The 60,000 on rent supplement represent only a portion of those who cannot afford their rent. To qualify for rent supplement, an applicant must be on social welfare. Of the 60,176 on rent supplement, just 3,330 are in receipt of some form of employment support, such as back to work, community employment or back to education allowances. The rest are on a range of social welfare payments. I am circulating a table for the official record which gives the number of recipients of rent supplement at the end of 2005, broken down by the category of social welfare payment or employment support they receive.

Anybody in full-time employment, namely, employment of 30 hours per week or more, does not qualify for rent supplement. In the case of couples, if one member of a couple is in full-time employment, both are excluded from claiming rent supplement. This particularly nasty, anti-family provision was introduced by the former Minister for Social and Family Affairs, Deputy Coughlan, at the same time, ironically, that the Government introduced individualisation on tax. The denial of rent supplement to households where even one partner is working means there are tens of thousands of low-income families and low-income workers who are financially crippled with high rents. These are the working poor, who cannot afford to buy a home of their own, who have not been provided with social or affordable housing and who are literally working to pay the rent.

Professor Tony Fahey, Brian Nolan and Bertrand Maître, in the Combat Poverty Agency publication "Housing, Poverty and Wealth in Ireland" of 2004, state:

A key finding of the study is that affordability problems in the Irish housing system are most severe in the private rented sector. . . Private sector tenants are burdened with far higher housing expenditures than any other tenure category and experience considerable financial strain as a result.

To support the argument, their study showed that about one in five private renting households had housing expenditures above 35% of income as against 1% of house purchases.

This is now the worst poverty trap in our economy and society. It is a direct cause of poverty, a source of resentment and a massive disincentive to work. I have lost count of the number of constituents who are on social welfare and who have told me they cannot take up offers of full-time employment because they will lose rent supplement. Their accounting is absolutely impeccable.

The Labour Party motion seeks to replace rent supplement with a new form of housing support, which will be related to housing need, housing costs, the circumstances of the applicants and the rent levels pertaining in the area concerned. This new housing support should not discriminate between those on social welfare and those at work and its reduction should be tapered as income increases. Such a new form of housing support is necessary in the interest of fairness and to reduce the financial hardship on working households who have to rent in the private sector and who currently receive no support from the State. It would also act to incentivise and reward rather than penalise those who take up paid full-time employment.

Rent supplement, as we have known it, has served its time. It was introduced in 1977 to provide short-term assistance with private rent, hence, its administration by community welfare officers in what was then the health board system. The need for rent support has, however, become a permanent feature of our housing system. The Government has allowed house prices to rise beyond the means of many working families. Indeed, it has actively encouraged investment activity in residential property to the disadvantage of first-time buyers. It is a cruel irony that the taxpayer, through rent supplement, is subsidising some of the high rents paid to landlords who simultaneously benefit from tax reliefs under various property development incentives for the very dwellings which attract rent supplement.

The issue of rent supplements has been raised with the Government on a number of occasions. The social partnership agreement of 2000 — the agreement prior to the current one — described the operation of the rent supplement system, and the withdrawal of the supplement on taking up full-time employment in particular, as constituting "a severe unemployment trap". The agreement, to which the Government was a party, went on to state:

Specific consideration will be given to alleviating this unemployment trap, through the introduction of an appropriate tapering arrangement. The Government will consider this issue within the first year of this Partnership, in consultation with the Social Partners.

That was six years ago. It is worth recalling this week, when talks are underway on a new agreement, that the commitment on rent supplement affects some of the poorest families, who are caught in the wedge between being stuck on social welfare and getting employment. Six years ago, the Government committed itself in the social partnership agreement to introduce a tapering arrangement to get them out of that wedge but it has not happened. More recently, Threshold has drawn the Government's attention to the flaws in the rent supplement scheme. An excellent report by Threshold on rent supplement in Cork found that 21% of people on rent supplement are forced to pay top-up payments in addition to their required contribution. This is because the former Minister for Social and Family Affairs, Deputy Coughlan, introduced a cap, one of the cuts made in the rent supplement scheme. As a result, in practice there are now two rents, an official rent which is declared to the community welfare officer and on which a rent supplement is paid, and a top-up payment which the landlord extracts from the tenant in addition to the official amount. The recent Threshold report on rent supplements in Cork states that 21% of people on rent supplement are forced to pay a top-up payment to landlords.

The Simon Community confirmed this in a communication it sent to me in the past couple of days. It identified single people as being particularly vulnerable in this area because of the caps placed on the amount of rent supplement which can be paid to a single person who is not sharing accommodation. The reality for single people in private rented accommodation is that they either get a very poor standard of accommodation — a rip-off in itself — or if they get decent accommodation, they must pay a top-up.

The Government's response tonight may be that it is addressing these issues by introducing the new rental accommodation scheme, RAS, as reflected in the Government amendment. The House will recall that the RAS was the initiative announced by the Minister of State, Deputy Noel Ahern, in July 2004, whereby the local authority would rent accommodation from the private sector and effectively sub-let it, under the differential rents scheme, to those who had been on rent supplement for a minimum of 18 months. The scheme was to be piloted by eight local authorities, to be fully rolled out by all local authorities by the end of 2005 and fully operational by 2008. It is still at the pilot stage and it appears to be distinctly unpromising.

I have been informed that, to date, only 505 tenants have been transferred onto the rental accommodation scheme. Some 500 of these are from the voluntary housing sector, leaving only five tenants of private rented accommodation who have been moved off rent supplement on to the rental accommodation scheme. If it has taken 18 months to transfer five, how long will it take to transfer 60,000?

I understand that the reason behind the failure of RAS relates in part to a reluctance on the part of some landlords to commit properties to this privatised form of social housing and to a reluctance on the part of local authorities to take responsibility for accommodation which they consider to be sub-standard. Whatever the reasons, RAS will not solve the rent supplement problem for the foreseeable future and the rent supplement must be reformed or replaced to recognise the reality that State support for private renters will form a major part of our housing supports for some time.

The problem in the private rented sector and the immediate issue of the rent supplement would not be so acute if the Government delivered on social housing. The target in the Government's national development plan was for 35,500 local authority houses between 2000 and 2006. By the end of September 2005, 20,600 of these had been provided. By the end of 2006, the total is unlikely to reach 26,000, nearly 10,000 houses short of the Government target. The NDP also set a further target of 4,000 houses per year from the voluntary and co-operative sector. That target is coming in at 1,600 houses per year, mainly because of land acquisition and bureaucratic blockages caused by the Government.

The Minister and the Minister of State constantly heap praise on themselves for the record performance of the residential building industry. Over 80,000 houses were built in this country last year, but only 5.8% of those were social housing, down from 6.7% in 2004, 8.9% in 2003, almost 10% in 2002 and well down on the 12% recommended by the NESC.

If the Government delivered on social housing, there would be fewer trapped on rent supplement in the private rented sector. If the Government delivered on the promised affordable houses, there would be fewer working families forced into the private rented sector. The Government butchered Part V of the Planning Act and as a result only approximately 4% of the affordable houses achievable under Part V have been delivered. The Government has also failed to deliver on the promise of the 10,000 affordable houses promised under Sustaining Progress.

The Government has made it more difficult for workers and families to purchase a home of their own. It has created the circumstances whereby the State must subsidise the rents of those who cannot afford homes. This is not desirable, but it must be faced up to. Everyone has a right to a home and it is the responsibility of the State to vindicate that right. I ask the Government to accept the Labour Party motion on rent supplement and the House to support it.

See this speech in context