Social housing: Looser spending rules 'pose many risks'

Relaxed spending rules for social housing, championed by Fianna Fáil, would pose many risks and could lead to substantial overruns, according to a confidential briefing note.

If the rules were changed it would leave €2.86 billion of State expenditure governed by a system originally “devised for house extensions”, the note drawn up by officials in the Department of Housing said. It examined proposals to cede more control of social housing builds to local authorities.

According to the note, allowing social housing projects up to a value of €6 million to proceed after a single stage approval process “poses many risks and has the potential to substantially increase the size of cost overruns, and considerably reduce the visibility of progress and increase the uncertainty around delivery”.

Currently, projects up to a value of €2 million are approved through a single stage process, which was originally used for approving extensions to social housing units. Projects valued above that figure undergo more intensive scrutiny, including a four stage assessment.

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These rules on social housing spending have been at the centre of a political row, with Fianna Fáil claiming it had secured a new ceiling for the one stage process of €6 million in last year’s budget.

However, Minister for Housing Eoghan Murphy is against what he described at the Oireachtas housing committee last week as a "reckless" proposal.

According to the note, a new limit would mean in excess of 44 per cent of the multi-annual Rebuilding Ireland social housing budget would be spent with little or no oversight from central government.

Concerns

There are also concerns raised in the note about overly expensive schemes being pursued by local authorities, which the department would be unable to control if more power was ceded to councils. It cites one project where individual dwellings were priced “in excess of €750,000”. This is understood to be a development of five apartments on Fishamble Street in Dublin, which was vetoed by the department.

The note also suggests that time savings mooted as part of the reforms would be limited.

“The proposal has the potential to save at most 6-8 weeks off the construction target programme of 59 weeks.”

“In addition the value for money checking in stage 2 will be eliminated, in particular the ability to have uneconomic designs and over-specification adjusted in order to deliver value for money,” the report states.

Time savings

Achieving such a time saving would have to be balanced against warnings that the department would see its ability to monitor the progress of projects impacted, the note warns, with “a concern that any potential time savings may well evaporate and have a negative impact on actual annual delivery”. The officials also pointed out that some local authorities have delivered projects under the four-stage plan in just 44 weeks.

Fianna Fáil Micheál Martin claimed in his budget speech last year that he had “removed the ceiling of €2 million that requires authorities to apply for even very small developments”.

“The ceiling is now increased three-fold to €6 million,” he said.