Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

——we must always be mindful that for the most vulnerable in our society, the phrase book of recession rings hollow if front line services on which they depend are seriously compromised. Our focus in shaping the overall financial provision for housing in 2009 is on utilising available resources in a way which will most benefit those households facing the greatest challenge in meeting their own accommodation needs.

Against the background of the overall fiscal environment, next year's housing Estimate provides a very credible basis for achieving this. The total Exchequer provision for housing in 2009 will be almost €1.66 billion in current and capital finance. This represents a reduction of 4% on the record provision for 2008, which, it is worth recalling, was an increase of 16% on the 2007 Estimate. In addition and in line with my objective of prioritising the needs of the most vulnerable households, the social housing budget across capital and current funding is facing a reduction of just 1.7%. In the circumstances, this is a good outcome, particularly when account is taken of the fact that we have taken some of the pressure off the programme in 2009 by securing an additional €80 million of investment this year under the capital loan and subsidy scheme for voluntary housing. This means funding for affordable housing and other private housing measures is facing, proportionally, a more significant pulling back. However, significant resources have been provided in this area in recent times and the main housing market has, in parallel, gone through significant change. I will return to this issue later.

By any measure, the provision for 2009 is very significant. Representing an average of over €4.5 million per day, it gives a clear signal of the continued priority attached by the Government to housing in general. It is also a reflection of our continued determination to build on the considerable progress made in recent years in meeting the needs of households through a range of social and affordable housing programmes. In total last year over 13,000 social and affordable homes were delivered and, overall, the needs of almost 18,300 households were met through the broad range of social and affordable housing programmes. That represents a very significant increase of 24% on the level of needs met in 2006 and marks a major advance towards meeting our commitments. The record resources available to us this year allow us to build very significantly on this progress and I am confident that the €1.66 billion provided for in next year's Estimates will ensure we maintain strong momentum towards meeting our commitments in Towards 2016 and our longer-term goals under the national development plan. In earmarking the resources available to us in 2009, I will ensure the most vulnerable sections of society from a housing perspective, namely, the homeless, Travellers, the elderly and people with a disability, are accorded very clear priority.

I will turn to some specific areas of focus within the housing provision for 2009. While I have worked hard to minimise the impact of the tighter financial situation on the social housing programme, clearly even small-scale reductions present challenges for us and for local authorities in maintaining current levels of activity. Therefore, we must make every effort to optimise the use of available resources, particularly in light of the 2008 local authority housing needs assessment which, when finalised, is likely to show a substantial increase in net need. The extent of current housing need, notwithstanding the debate around how we best define it, demands a flexible and imaginative response to the structuring of our investment programme. In the context of a difficult economic transition, we must seek to maximise the return on public investment, as measured by the extent to which we are meeting housing needs.

More than ever we need to question the accepted ways of doing things. One option which my Department will be pursuing over the coming months will be the use of long-term lease arrangements for social housing purposes to supplement traditional local authority construction or acquisition. This would provide a more cost effective, targeted approach, in line with the principles of the life-cycle approach endorsed by the social partners. It also presents an opportunity for local authorities to get more for less, to take advantage of the greater value to be had in the current market. We must always aim to achieve value for money, but the tightened financial position, combined with the likelihood of our funding now going further, make it even more pressing.

Output under the voluntary housing programmes will again form a major part of the overall social housing investment programme. The capacity of the voluntary sector has been ramped up incrementally in recent years to such an extent that output in 2007 was ahead of the Towards 2016 targets. This year looks set to be another very successful year based on activity levels to date, which, as I indicated, have been bolstered beyond what was planned through an additional €80 million of investment under the capital loan and subsidy scheme. The overall social housing provision for 2009 will ensure that the capacity that has been built up in the sector will continue to be deployed to the fullest extent possible.

At a broad level, I will be continuing to maintain a high level of ambition for the regeneration and remedial works programmes of local authorities in 2009. The communities in regeneration areas are clearly deserving of support; they deserve to live in vibrant, sustainable communities. Nevertheless there are significant competing demands on the resources likely to be available for regeneration in 2009. Alongside existing projects under way, I am particularly keen to engage with the Limerick regeneration agencies as they bring the initial, crucial planning phase of their work to an advanced stage. Notwithstanding the difficulties experienced in certain public private partnership projects in recent times, notably in Dublin, it is important that we continue to explore ways in which we can secure private finance to supplement public funds. This is crucial not just from a funding point of view, but also because of its capacity to deliver the mixed development that is so crucial if the communities that are rebuilt are to be truly sustainable for the long term.

As I indicated at the outset, prioritisation of the most vulnerable in society will be an overriding objective in how we use the resources available to us next year. Against that background and with new Traveller accommodation programmes to be adopted by local authorities in early 2009, I will maintain a strong financial commitment to meeting the accommodation needs of Travellers in 2009 by matching the provision for 2008.

Tackling homelessness, undoubtedly one of the most complex areas of my overall brief, will also continue to be one of my top priorities in 2009. When I launched the Government's new homeless strategy in August, I outlined my vision for ending long-term occupation of emergency accommodation and the need to sleep rough, two challenging but achievable targets. Like any strategy, its success will be determined primarily by the effectiveness of its implementation. For my part, I will ensure that the resource requirements of the new strategy are taken into account when it comes to the distribution of funds from within the overall housing budget. I will therefore be increasing the provision for homeless services by over 5%. However, I am equally concerned to ensure that we use our resources efficiently and achieve optimum value for money, and I will be placing considerable emphasis on that in the months ahead.

Adaptation grants for older people and people with a disability play a vital role in the context of an overall continuum of care for the groups at which they are targeted. The high level of publicity surrounding the revised grant schemes since their launch in November 2007 has led to an increased level of activity being experienced by local authorities this year. I fully appreciate the importance of these schemes in supporting independent living at home and an 8% increase in funding for their operation in 2009 demonstrates the Government's concern for protecting the vulnerable in the challenging times ahead.

Support for first-time buyers also remains a significant priority for the Government. However, despite almost two years of cooling in the housing market which has seen house prices moderate significantly, returning to 2005 levels, there is still a widely held view that the process of correction is ongoing. It is vital that we do not arbitrarily interfere with that process. Sentiment in the housing market is heavily dependent on wider sentiment in the economy. Our approach must therefore be to focus on getting the broader economic fundamentals right and ensuring ultimately that the housing market is underpinned by these rather than by artificial interventions which are questionable in principle and dubious in terms of their likely impact in practice. In other words, given the current market situation, it is important that prospective purchasers are not incentivised into making decisions to enter the housing market at a time that would otherwise not be of their choosing.

While affordability may have eased significantly, the ongoing tightening in credit markets has resulted in a situation where people, who would previously have had ready access to a mortgage from one of the financial institutions, do not have such access. As the Minister for Finance announced yesterday, the Government decided to extend a line of credit to first-time buyers affected by the credit squeeze by introducing a new mortgage product for a limited period until the credit situation eases. The new home choice loan will be available to first-time buyers of new properties subject to a maximum loan of €285,000 and a maximum loan to value ratio of 92%. The scheme will be operated on a regional basis by a small number of local authorities, four in total, with support from the affordable homes partnership. A website at www.homechoiceloan.ie and a telephone line providing preliminary details of the product are live as of today. Prospective applicants can register their interest now and the final details and arrangements relating to the loan product will be finalised in the coming weeks, with a view to its full introduction from early November. This arrangement is designed to respond to a very specific set of circumstances in the housing market, fully in line with the Government's policy of only intervening in a targeted way, to achieve specific outcomes. It is about facilitating, rather than incentivising, first-time buyers who wish to purchase a home.

I will also be bringing forward significant changes to the way in which affordable housing is provided. A new single, streamlined, Government equity product is to be introduced. Under this new approach, the purchase transaction would be largely unchanged from the purchaser's point of view. However, instead of selling the units at a discounted price with the value of the discount to be subject to a reducing clawback, the Government would take an equity stake in affordable units sold, which the purchaser can either buy out in steps or at the end of a fixed period. This will replace the current approach through which affordable housing is made available under Part V, the 1999 affordable housing scheme and the affordable housing initiative. Its implementation will introduce greater equity into the system and provide a basis for achieving greater consistency across the schemes and across different areas of the country. The greater protection of the State's investment will also mean that funds would be recycled in order to assist further households with affordable housing. The issue of introducing an open market component of the scheme will be kept under review in light of developments in the housing market.

The introduction of the new home choice loan and changes to the provision of affordable housing will ensure that there is now a closed loop in terms of housing supports and appropriate housing responses in place to respond to the needs of households from across the low to middle income spectrum, by enabling them to withstand the worst effects of the economic downturn and the credit crunch.

For disadvantaged households at the lower end of that income spectrum, the continued strong output from the social housing investment programme will provide access to a quality housing environment in sustainable communities, with a possible subsequent avenue to home ownership through tenant purchase. A further route to home ownership will also be provided for low-income households through a new incremental purchase scheme. This will support home ownership for existing social housing tenants and households qualified for social housing support, whose incomes are too low to qualify for affordable housing but who could, over time and with appropriate supports, become the outright owners of houses newly built by local authorities or voluntary bodies. For households ready to take the step into home ownership but who require a modest level of support, the various affordable housing schemes provide a welcome means of bridging the affordability gap. The changes I have announced today to affordable housing delivery will provide a more equitable basis for the operation of the schemes and achieve greater consistency of implementation nationally.

Finally, for middle-income households at the far end of that spectrum who can afford to enter the market now and to service a mortgage of close to €300,000, but for whom home ownership is currently closed off due to the so-called "credit crunch", the new home choice loan provides a targeted and time limited option to get over a temporary accessibility issue. Of course, all of these provisions are in addition to the various priority supports for the most vulnerable sections of society from a housing perspective, that is, the homeless, Travellers, the elderly and people with a disability.

As I have already made clear, the current economic pressures require a prioritisation of funding and difficult choices to be made. My focus has been on maximising resources available for social and affordable housing next year. To achieve this and to ensure consolidation in the Department's other key funding programmes, a deferral of the new urban renewal programme for 2009 is required. I will be working next year to ensure that the new programme can be triggered early in 2010. I will also ensure, in collaboration with my colleague, the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, that the programme is structured to complement his Department's rural development programme so that both programmes are deployed in a way that has maximum effect on the ground.

Even in a buoyant economy, there is always a need to find smarter, more cost-effective and quicker ways to deliver schools, community facilities, parks, as well as the basic water and access infrastructure to support the development of new sustainable communities. This need is even more pronounced in the context of the budgetary pressures that we face. Under the developing areas initiative, we have put in place a sound basis for the future planning for our schools, in collaboration with the Minister for Education and Science and local authority managers. We are focusing now on the other areas and developing better processes and co-operative models of planning and delivery between central and local government and between the public and private sectors. I expect to be able to advance further proposals for action under the initiative by the end of the year.

Looking forward, it is clear to everyone that we are facing serious constraints on public expenditure in comparison to recent years. We have to cut our cloth to suit our measure and must do this in a targeted and prioritised way. We must also place a strong focus on obtaining value for money within the resources available and likely to be available to us.

We will be judged as a Government and as a nation by how we use the phenomenal gains we have made in the last two decades to protect the most vulnerable in our society over the coming years. The financial provision for housing for 2009 reflects the fact that we are in a phase of prioritisation, but above all it reflects our determination to maintain complementarity between our economic and social objectives.

I commend the budget, the 2008 Estimates and the very significant housing provisions contained therein to the House.

See this speech in context