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 Header Item Social and Affordable Housing (Continued)
 Header Item Credit Unions

Tuesday, 9 April 2019

Dáil Éireann Debate
Vol. 981 No. 6

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(Speaker Continuing)

[Deputy Damien English: Information on Damien English Zoom on Damien English] The successful tender under bundle 1 of the social housing public private partnership, PPP, was assessed in this manner and was lower than the public sector benchmark, thereby representing value for money.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin None of what the Minister of State said reassures me that there is not a significant cost variance between approved housing body availability, payment agreements and public private partnerships. At the heart of this is the public sector benchmark, which is used to calculate that so-called value for money exercise. None of us get to see it. There is no transparency around it and we are not in a position to be able to verify what the Minister of State is saying, either here today or in previous parliamentary questions. On the basis of what the Minister of State said here today, the construction cost per unit is €225,000. That is higher than figures I have received from the Department of Housing, Planning and Local Government on comparative costs for local authority builds. In this contract with the public private partnership, there is a different inflation calculation to the one used for approved housing bodies, a different calculation for what the Minister of State called equality requirements, and an element of profit and risk adjustment. While I accept the two types of contracts, availability agreements with the approved housing body sector and PPPs are not the same, they do very similar things and nothing the Minister of State has said has reassured me that there is not a cost difference, if not a significant cost difference. Has the Minister of State seen the public sector benchmark? Is he satisfied that both the methodology used and the price comparisons represent value for money to the taxpayer?

Deputy Damien English: Information on Damien English Zoom on Damien English I am not given all of the figures but I am satisfied with the process of how this is handled. There are four stages at which we assess the value to make sure that the taxpayer is getting value for money and that is how we judge this too. I will talk the Deputy through the process. The key criteria for assessing whether a PPP project represents value for money for the executive follow the guidance set out by the central PPP unit in the Department of Public Expenditure and Reform. This guidance sets out four specific tests that are applied to PPPs over the course of the planning and procurement process. The tests focus on assessing whether the PPP approach compares favourably with the alternative cost of using traditional procurement to achieve the same result. There are different methods of traditional procurement but they are all compared to make sure that we get the best value for money and do not lose out. Only one of the social housing PPP programmes has met the relevant thresholds for each of the four tests in this rigorous process and I am confident that it demonstrates value for money. That is the Deputy's concern, which the Minister, Deputy Eoghan Murphy, and I also have, to deliver top quality, good value housing quickly. We are satisfied that the process delivers that. The Deputy wants to have information released. I understand why he wants that but it would not be appropriate to do that at this stage. We are committed to release it after three bundles.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin If I understand properly, the Minister of State has not seen the public sector benchmark, so he cannot unequivocally say that this represents value for money and he is taking it on trust. If one takes two housing projects that commenced construction today, the public private partnership that is currently under construction and traditional social housing delivered by a local authority and an approved housing body, it is unequivocal from the information that we have that the public private partnership will get a significantly larger amount of money to deliver, manage and maintain the units, and that is before we even get into the issue of risk adjustment or cost. Given that the Minister of State has not seen the public sector benchmark, why will he not publish it now? The contract has been signed and the contractors are on site. The Minister of State could publish this now because it is no longer of any commercial sensitivity to bundles 2 and 3 because they will have separate public sector benchmarks. Will the Minister of State give a commitment that, when that public sector benchmark is eventually published, he will come to the House or the committee where we can properly scrutinise it? If I am wrong at that stage and there is value for money, I am more than happy to accept it and hope the Minister of State would do the same.

Deputy Damien English: Information on Damien English Zoom on Damien English We are a very open and transparent Department. When it is appropriate to do so, we will have no problem publishing that and explaining and defending it at the committee. I am familiar with the figures relating to these houses and what they cost on all the sites and in all the schemes. I am confident and happy to confirm to the Deputy that this is in line with where it should be.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin Even though the Minister of State has not seen it.

Deputy Damien English: Information on Damien English Zoom on Damien English I have not seen the benchmark but I know the figures.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin That is the key.

Deputy Damien English: Information on Damien English Zoom on Damien English It would not be appropriate for me to see the benchmark because it is not published yet. It is not information that I would have in my hands or head. A process has been put in place which involves many proper procedures to be gone through to make sure we are getting value for money. The Deputy, with respect, is probably comparing apples and oranges. This is a 25-year contract. They will be paid per month for upkeep and management of the house and all that goes with it. At the end of 25 years, the State will own that house. It has to be in a condition that is fit for purpose, as set down in the contract. That is different to the contract that is operated by approved housing bodies. I ask the Deputy to understand that. I think he probably understands that but might not want to admit that in public. There is a process there and I am happy to bring the Deputy through it with regard to the next phase of it too.

Credit Unions

 62. Deputy Darragh O'Brien Information on Darragh O'Brien Zoom on Darragh O'Brien asked the Minister for Housing, Planning and Local Government Information on Eoghan Murphy Zoom on Eoghan Murphy 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; and if he will make a statement on the matter. [16450/19]

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Minister is probably used to answering this question at this stage. In light of the fact that for almost five years, the credit union has been advocating using approximately €10 billion in assets to invest in the social good, and not a cent has been used to date, I ask the Minister to give an update on the development of a special purpose vehicle by the Irish Council for Social Housing, ICSH, for the investment of funds in social housing.

Deputy Damien English: Information on Damien English Zoom on Damien English I will give the Deputy an update to the best of my ability because we have been through this on a number of occasions.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien We do it every month. It should get better every month.

Deputy Damien English: Information on Damien English Zoom on Damien English Absolutely. The Department, the Minister, Deputy Eoghan Murphy, and I would be delighted to see the credit union money invested in social housing projects.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien I will embarrass the Minister of State into actually doing something.

Deputy Damien English: Information on Damien English Zoom on Damien English We would be very happy to do it and, wherever we can, we have worked to that end, but we cannot and should not control or be involved in certain parts. Considerable work has been ongoing between the Irish Council for Social Housing, a number of larger tier 3 approved housing bodies, AHBs, and their financial advisers on the development of a vehicle for delivering private financing for AHBs providing social housing in line with ambitions set out in the Government's Rebuilding Ireland action plan on housing and homelessness.  The ICSH work is being undertaken in three phases, the first two of which have been completed, which are the phases designed to test the market interest in investing in social housing and the appetite among AHBs for private finance.  While the ICSH had hoped to have completed the final phase of the work by now, and we certainly hoped it would be completed too, it is focused on the structuring of special purpose vehicles and this important work is ongoing.

I understand that one of the issues which has given rise to the delay in concluding the work is the need to take account of other private finance arrangements and vehicles that certain AHBs have put in place in parallel. Three different bodies have put arrangements in place and I believe they are working quite well. The decision by EUROSTAT to reclassify AHBs has also influenced the progression of this final phase of work. Alongside this project, three individual approved housing bodies have been successful in accessing private finance from financial institutions to deliver new social housing, with each financial institution having its own specific requirements for lending and investing. While the completion of the outstanding phase of work is primarily a matter for the Irish Council for Social Housing, I hope that it will be in a position to finish it as soon as possible. We are committed to it. The Central Bank changed the rules to allow investment. Deputy Darragh O'Brien keeps referring to a figure of €10 billion. Under the rules, up to €800 million or €900 million-----

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien It is still significant.

Deputy Damien English: Information on Damien English Zoom on Damien English -----could be invested in housing and we would be delighted to see it.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien One could take this away from being a credit union issue and say it is a social housing issue. Government policy since 2014 has been to provide alternative sustainable sources of funding and here is one that has not been utilised in five years. The Minister of State has regularly replied to questions that I have tabled that one credit union body had a special purpose vehicle ready. What is happening there? Why has not a single red cent gone into the special purpose vehicle? Is there no appetite for it? Does the Minister of State not think it is needed? What is the final phase that we are still waiting for and what is the Minister of State's timeframe for that completion? He has mentioned rightly that AHBs are on-balance sheet now. He has another source of funding here that could be off-balance sheet to provide social and affordable homes. I really do not get it and that is why I ask the Minister of State questions repeatedly. Is this a priority or is it something that the Government does not want to do?

Deputy Damien English: Information on Damien English Zoom on Damien English We cannot be any clearer that it is something that we want to do and have facilitated as a Department, working with the Department of Finance and the Central Bank. All the rules and changes have been made to facilitate this to happen. We committed to it in our programme for Government and it makes common sense. If there is money to be invested and we want to fund social housing projects, we should put the two together. There is only so far that a Government can go. These are private finance arrangements and they have to design a special purpose vehicle themselves, separate to Government and to our Department. I cannot be clearer than that. The Deputy might not like that. If he wants to help with the design of one, work away.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien I could probably do a better job than whoever the Minister of State has doing it at present.

Deputy Damien English: Information on Damien English Zoom on Damien English With respect, I have not heard Deputy Darragh O'Brien come forward with solutions over the last six months in which he has asked the same question but good luck to him if he wants to bring forward a solution. To be clear, because the Deputy keeps wanting to mix up what I said, I confirm that one of the credit union bodies, the Credit Union Development Association, has indicated that it has completed all the work necessary to underpin a special purpose vehicle for investors but it has not yet formally established it as a corporate entity because the cost involved-----

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien That is different.

Deputy Damien English: Information on Damien English Zoom on Damien English -----would not justify it until such a time as a clear investment opportunity is available.


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