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Housing Crisis

Department of Housing returned more than €380m to exchequer due to underspend by Govt

The Government has faced criticism in recent times for the consistent underspend of its budget.

THE DEPARTMENT OF Housing had to return more than €380 million to the exchequer over the last four years amid underspends blamed in part on Covid-19, the war in Ukraine and construction halts, the Public Accounts Committee (PAC) has been told. 

A total of €246 million related to an underspend on housing delivery.

Secretary General Graham Doyle told committee members the return of funds to the Exchequer occured due to “all other actions” to maximise delivery being “exhausted, despite best efforts”.

TheJournal previously reported that the department has been struggling to spend the entirety of its budget over the last number of years, despite being in the midst of a housing crisis. 

The department will be able to carry over some of its capital funding allocation to be spent the following year under budgetary rules. 

Doyle explained that Covid-19 and subsequently the Russian invasion of Ukraine, led to significant interruption to infrastructure delivery, which he said is a critical backdrop to any review of output against expected delivery over recent years.

“Since 2020, three construction closures, followed by significant operational challenges in terms of how sites operated in a pandemic, impacted and delayed delivery.

“In terms of the life cycle of a project, it does not just impact on projects on-site being built,” he said. 

He added that disruptions to on-site work, uncertainty as to costs, supply chain difficulties and interest rate changes affected forward planning of projects.

“It meant new sites were not initiated, as well as resulting delays in completing sites. The catch up endeavour has been immense,” said Doyle. 

“Notwithstanding the challenges experienced over 2021 and 2022, last year saw the delivery of 7,433 new build social homes.

“Funding was initially provided to allow for a higher target of 9,000 new build homes with some underspend resulting from the gap to target. This highlights the need to continue to focus on improving new build delivery with both the LA and AHB sectors,” the committee was told.

Overall additions to the social housing stock, including social housing acquisitions and leasing programmes, were just over 10,200 social homes for households on the social housing waiting lists in 2022, said Doyle.

He said that “some underspend” resulted from the gap between the number of homes delivered and the 9,000-unit target for the year.

He adds that 2022 “was the first year of delivery of affordable homes in a generation” and that “from a standing start almost 1,800 affordable homes were brought about”, while he conceded this was also below the target.

Screenshot - 2023-06-01T102422.486 Secretary General Graham Doyle at the PAC this morning.

“We know that delivery must be scaled up where the need is most acute, and are confident that the key, large mixed-tenure schemes in Dublin, for example, are now progressing,” Doyle said.

The First Home scheme is also making a difference, said Doyle, adding that more than 3,500 potential buyers have registered interest in the scheme, with 82% of approvals of buyers in areas where affordability challenges are most acute, namely Dublin, Cork,
Kildare, Meath and Wicklow.

Doyle raised issues the Government is facing with cost-rental housing, which he said is a key tool to make rents more affordable and renting more secure.

“State support is being targeted to have an immediate impact, by achieving cost-covering rents which are at least 25% below comparable local market rents.

“However, ongoing viability challenges remain within the sector, given significant increases in construction costs, higher interest rates for borrowing, and supply chain issues, which have combined to have very real impacts on the cost of housing provision and delivery,” added Doyle.

Doyle said “they are trying very hard” to spend the money, when asked by Social Democrats Catherine Murphy if we’ll see another underspend at the end of this year. 

Murphy said it would be “criminal” if the department failed to spend its budget this year. 

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