John Gormley (Dublin South East, Green Party)

My colleague, the Minister of State, Deputy Finneran, who has the delegated functions in regard to the housing area, will deal in more detail with the Dublin City Council projects. I want to use my time this evening to set out some of the very complex issues that are involved in undertaking large-scale regeneration projects and to outline clearly the Government's position on regeneration which seeks to address those complexities.

At the start I want to be clear in regard to my personal commitment and that of the Government to the broad regeneration process and to the regeneration programme being undertaken by Dublin City Council, in particular. In recent years we have seen a very significant growth in the funding committed to social housing in general and more particularly to regeneration projects. Since 2003, the Exchequer support for the main social housing investment programme, including improvements to the existing stock, has increased from just over €600 million to €1.2 billion in 2008. Some €200 million of this year's funding is earmarked to support a range of regeneration and remedial programmes. Coupled with resources provided by local authorities, I estimate that the total investment in the improvement of the local authority housing stock this year will exceed €350 million.

As we all know, the international economic climate has changed dramatically during the past 12 months and in this country we are facing difficult choices about where to direct public resources. It is certainly my intention, as Minister with responsibility for housing matters at the Cabinet table, to do everything possible to ensure that we maintain the necessary programme of public investment in housing in the years ahead. Within the parameters of whatever resources are available, I will continue to give a high priority to regeneration.

The regeneration of existing local authority estates that, for a variety of reasons, are failing the communities they are meant to serve is a major objective of Government policy, as set out in the Delivering Homes, Sustaining Communities policy document published last year. Apart from the Ballymun regeneration scheme, which has been under way since 1998, there are a range of projects at different stages of progress in Limerick, Cork, Waterford and Dublin. There are also a number of smaller, if no less important, projects in planning for towns such as Sligo, Dundalk and Tralee.

I would like to think that there is broad agreement on all sides of this debate about what we are trying to achieve through the regeneration programme. Clearly, the condition of some local authority housing estates, particularly some of the larger estates, represents a significant public policy failure stretching over a period of decades. The conditions involved are a blight on the lives of those who live there and, in many areas, give rise to a range of significant social problems. Yet, within these estates are found strong and vibrant communities which, despite the difficult living conditions that they face, will prove to be the foundation on which successful regeneration can be built.

What does regeneration mean? This is a crucial question as the answer will determine whether we are successful in our ambitions. It cannot be just about rebuilding public housing with a limited range of community facilities. This point was made by previous speakers. This has been tried before and it has failed, in some areas, miserably. What is clearly required is a much more holistic approach, focused on countering the issues of social deprivation and engaging a much wider range of stakeholders.

At the heart of this new approach should be the aim of creating sustainable communities based on a mixed tenure model. Mixed tenure helps bring income to an area, gives employment and provides the critical mass that supports a broader range of commercial and social services that all the community can access. There is no shortage of research in the UK and elsewhere that clearly supports this approach. I can certainly point to plenty of examples of large mono-tenure public housing estates in Ireland and internationally, with inadequate provision of the essential social infrastructure, that have fallen victim to deprivation. In this country we also have experience of trying to fix complex social issues by carrying out remedial works to houses and flat complexes, often not to great effect.

In setting out our stall from the beginning it should be clear that we do not believe regeneration can be achieved by simply trying to improve the physical environment. This will at best buy a little time but it will not address the key social problems and it would be an opportunity lost. We must have as our aim the building of a new, mixed and, ultimately, sustainable community. This brings us to the tricky question of how best to achieve this objective. If one aims for the creation of communities with a mix of public and private housing, local employment opportunities and access to services, one must engage the private sector. Local authorities are not generally in the business of providing housing for the private market, setting up enterprises or providing purely commercial services.

A number of approaches could be taken to procuring regeneration projects. For larger areas such as Ballymun and the major local authority estates in Limerick, Sligo and Dundalk, the standard approach is for the local authority or a specialist agency to set out an overall master plan for the area. Within this area they use a variety of methods to underpin the development, namely, standard public sector construction, the sale of plots of land to the private sector for development, public private partnerships and various forms of joint venture arrangements. For smaller regeneration projects — this would apply in particular to the regeneration of single estates or flat complexes — a PPP model is often used as a means of ensuring the proper integration of the public and private housing and the provision of ancillary commercial facilities.

One must remember that just about all social housing built for local authorities and the voluntary housing sector is ultimately delivered by private companies, as is much of the design, planning and project management expertise. This is unlikely to change. The issue, therefore, is what form of contract with the private sector the State should put in place that has the best chance of getting the desired results. If the question comes down to how best to engage the private sector, the reason the PPP model is often used is that it provides a method of procurement that allocates risk to the party that is best able to manage it. In the case of private housing and commercial services, this is generally the private sector.

Regarding the particular type of PPP used to deliver regeneration, it is worth noting that this is not typical of PPPs in general. The classic public private partnership involves a long-term contract, with or without the commitment of private finance, whereby a private sector company provides services traditionally undertaken by the State, paid for through annual payments over the life of the contract. PPPs in housing are quite different and are what are more properly termed design-build-finance contracts in which the private finance component is provided through the sale of private housing units and the development of commercial opportunities. Planning, construction and demand risk resides primarily with the private contractor. It is, however, intended as a partnership so there is some sharing of risk. For the State, there is always the danger that the project will fail if the conditions underlying the partnership change. The terms of the contract will try to make this less likely but in the end the approach is built around both parties seeking to achieve a common objective in partnership.

What are the potential benefits of a partnership approach? There are three main reasons for using the PPP model. The first is that it can release synergies through the closer ties between the different elements in the project. Design can be more closely tied in with management and maintenance, non-profit activities can be sustained by those of a commercial nature, one party can be made responsible for delivery rather than having this spread across a number of different bodies and so on.

The second potential benefit comes from the introduction of fresh ideas and innovative thinking in addressing complex problems. Although the public sector has a responsibility to set the broad parameters for the regeneration, it does not always have all the answers. Project implementation, in particular, benefits from broadening the range of inputs to the process. The private sector, voluntary bodies and the community have a part to play in expanding the capacity to deliver on the objective. Public private partnerships can provide additional funding which can permit an expansion of ambition within the project or release funding for elsewhere in the housing programme. Given the more constrained state of the public finances, this benefit cannot be overlooked.

For each development, and often for individual elements within a regeneration scheme, decisions have to be taken about the appropriate form of procurement. The PPP contract is just one model that in certain circumstances is capable of delivering the private sector input that is needed if the project is to succeed. The Fatima Mansions regeneration is one good example of how this can work very well. Even where the PPP model is chosen this does not mean that the process cannot be improved. I have set up a working group with representatives of Dublin City Council, the Department of Finance, the National Development Finance Agency, the Affordable Homes Partnership and my Department. This group is to look again at the way PPP projects are carried out within the housing sector and report back to me with recommendations for improvements as soon as possible.

Regarding the lessons to be learned from the Dublin City Council projects, issues have been raised regarding the dominance of one developer in all the projects involved. This matter can be examined within the overall constraints of the rules governing public procurement. Another area that will be examined is the responsibility for planning risk, which in this case would seem to have resulted in serious delays in the projects. I have also asked the working group to consider what actions can be taken to simplify the PPP process, which has been subject to charges of being overly complex and legalistic, a point the Deputies opposite made. As I indicated at the outset, I will leave it to my ministerial colleague to deal with the specifics of the Dublin regeneration projects. I reiterate my personal commitment to the central role of regeneration within housing policy and to continuing my Department's active engagement with Dublin City Council in support of its efforts to get the projects involved moving forward as quickly as possible.

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