Dáil debates

Thursday, 27 September 2018

Ceisteanna - Questions - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Social and Affordable Housing Funding

10:30 am

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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1. To ask the Minister for Housing, Planning, and Local Government the status of the development of a special purpose vehicle by the Irish Council for Social Housing for the investment of funds in social housing. [39181/18]

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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This question will probably not come as a surprise to the Minister of State because I have asked it before on priority questions. I am again seeking an update on the development of the special purpose vehicle by the Irish Council for Social Housing for the investment of funds in social housing. Could the Minister of State provide an update? This relates specifically to the credit union sector. I remind the Minister of State that it is a commitment in the confidence and supply agreement. There is €750 million ready to be invested and I am seeking an update as to the progress of the initiative.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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My answer might not be a surprise either because I have also answered the question on more than one occasion. I am happy to engage with the Deputy on this because it is an important topic.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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The Minister of State might give a good answer this time.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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The Deputy will find that I answered it the last time but he might not have liked the answer. I will always give the best answer and the most up to date position. I am happy to discuss this.

Photo of Pat GallagherPat Gallagher (Donegal, Fianna Fail)
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I am going to be strict on time today so I advise Deputies to concentrate on the question and forget about the asides. I am going to give two minutes and that is all.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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I was just setting the scene.

Photo of Pat GallagherPat Gallagher (Donegal, Fianna Fail)
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I have been criticised for not getting through enough questions so let us take the business seriously.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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Following engagement with the credit union sector on proposals for credit unions to provide funding for the provision of social housing, the Central Bank undertook a review of the relevant investment framework in 2017 and our Department fully engaged in all parts of that.

On foot of this review, revised regulations commenced on 1 March 2018. The revised regulations included the addition of investments in tier 3 approved housing bodies, AHBs, as a permitted investment class for credit unions. Deputy O'Brien is correct in saying the credit unions have been very clear that they have a lot of money they want to invest in housing schemes, so that facility was put in place. As such, since 1 March 2018, credit unions are permitted to provide funding through a regulated investment vehicle to tier 3 AHBs for the provision of social housing.

While it is a matter for the credit unions themselves to develop specific special purpose vehicles, SPVs, to facilitate this, my Department did inform the credit unions' representative bodies that it was funding a project being undertaken by the Irish Council for Social Housing, ICSH, to examine the establishment of SPVs to facilitate investment in the sector. The Department put the bodies in contact with the ICSH with a view to those bodies examining further how they could invest in the sector.

Work has been ongoing between the ICSH, a number of larger tier 3 AHBs and their financial advisers on the development of a vehicle or mechanism for delivering private financing for AHBs in respect of social housing. This project involved a number of phases, including engagement with a range of financial institutions, having regard also to the recent reclassification decision by EUROSTAT of the larger tier 3 AHBs earlier this year.

I understand that significant progress has been made with the project, with one AHB having already established a special purpose vehicle. Further work is ongoing to enable the establishment of other SPVs and it is expected that there will be further developments in this regard over the coming months.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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With all due respect, it sounds like the Minister of State is beginning to wash his hands of this. Fundamentally, the SPV we are speaking about specifically relates to the credit union sector. PricewaterhouseCoopers, PwC, was taken on board by the social housing project to deliver this. It is that specific one that I am asking about and where it is at. I thought the Central Bank had approved this type of investment from 1 February - I stand corrected that it was from 1 March - but it was actually setting up the vehicle to allow them to do so and to invest in social housing.

Do I take it from the Minister of State's answer, because he mentioned the EUROSTAT decision, that the Government is moving away from this, or it is effectively saying this is not something that it now wants to see progress? The Irish League of Credit Unions is concerned. It stands ready to assist in resolving the supply issue, or being part of the resolution of the supply issue for our housing crisis, specifically on social housing. This is a real opportunity. I sense a major drift in this project. Could the Minister of State give me a timeframe for when the work will be completed? It was commissioned by his Department, after all. When will that SPV be established? When will funds be able to be put into the SPV for people to seek investment from it?

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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I have already been as clear as I possibly can on this. This is something into which we have put much work. We have worked with the Department of Finance and the Central Bank to make sure it could happen. The issuing and setting up of SPVs is not something the Department can do.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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I know that.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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We are clear on that. The Department has assisted with the funding, through the ICSH, to help develop that. It is in three phases, the first two of which are complete. Phase 3, on which the Deputy is asking for an update, is due in October, in the next couple of weeks. That is to allow a special purpose vehicle to be set up. The Deputy is right to say the Irish League of Credit Unions is involved in that. I want to be clear that the Department has engaged with the two credit union bodies.

I understand the Credit Union Development Association, CUDA, has made it clear to the approved housing bodies, AHBs, that it is ready to invest and open for business. It has done work on this, so CUDA is an option.

The Deputy mentioned another piece of ongoing work - a special purpose vehicle, SPV, option - being done by the Irish Council for Social Housing. I understand it is due in October. We helped to fund that arrangement, but we cannot make the council do it. I want to be clear, in that it is not for us to set up the SPVs.

10:40 am

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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The mention of October was definitive. Previous answers were more vague.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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That is my understanding.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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That is fine and I will take the Minister of State at his word, but the indications we have received are that credit unions will not be able to invest in the SPV once established thanks to how it will be structured. The Minister of State is not personally setting it up, but has he received the same indications and does he believe that, once the work is finished in October, the credit unions will be able to invest in the SPV? I hope that my indications are wrong. I appreciate that the Government wants to seek different streams of investment for social housing. This is a good idea and should work, but we are slightly frustrated with the delays. It is complex work, but if the establishment date is now October, then it should be October. The last thing I want is for the work to be completed in October only for us to find out that there is another hurdle to get over because the SPV has been structured in such a way that credit unions cannot invest in it.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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I would be surprised if credit unions could not invest in an SPV that was set up to facilitate their investment.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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So would I.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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That is what it is meant to do, so something will have gone seriously wrong if they cannot invest.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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I know, and I do not want to be discussing it with the Minister of State again in October.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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Someone is feeding the Deputy information. That is grand, but whoever that is is obviously involved in the process, and that process is meant to find a mechanism for whoever that is to invest money. If that process does not succeed, then an SPV will not be announced in October, as allowing investment is what it is trying to do.

There are two bodies involved - the ILCU and CUDA. We have engaged with both. My understanding is that CUDA has an SPV option, is ready to invest and is open for business to engage with AHBs. That work has happened. The second piece of work is another model to achieve the same thing, and I am led to believe that it will be completed in October. The Deputy seems to know something about it as well. Something will have gone wrong if credit unions cannot invest in it, as it will have been set up in conjunction with them for their investment. We want this to happen. I can be no clearer than that. We have gone out of our way to try to make this happen.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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I thank the Minister of State.