Government fails to spend €340m of housing budget despite record homelessness
Housing Minister Darragh O'Brien is seeking full capital carryover of 10% for his department. Picture: Sasko Lazarov / RollingNews.ie
The Government has been slammed for failing to spend its 2022 housing budget at a time of record homelessness and a persistent housing shortage.
Housing Minister Darragh O'Brien has told Cian O'Callaghan of the Social Democrats that his department will defer the maximum amount from its 2022 budget — €340m — to this year, due to a number of factors. Departments are allowed to carry over 10% of all capital allocations.
A parliamentary response sent to Mr O'Callaghan, the Social Democrats' housing spokesperson, in the days before Christmas states that capital expenditure for housing in 2022 had "progressed slower than profiled" due to construction activities being "significantly impacted as a result of ongoing economic issues including the restricted operating environment under Covid-19 health and safety protocols".
It also blamed a "significant level of price inflation to construction materials, supply-chain disruption, and inflation in the prices of fuel and energy".
The response said that there has been an improvement in the delivery environment and that "the bulk of housing capital expenditure occurs during the last months of the year" when local authorities submit large volumes of claims.
"This level of activity is expected to result in a very significant increase in capital expenditure on housing programmes in the final weeks of the year," it adds.
However, Mr O'Brien said he has confirmed to the minister for public expenditure and reform that he is seeking full capital carryover of 10%, amounting to €340m.
Mr O'Callaghan said it is "hard to grasp" that the capital spending is being deferred and that another €337m had been reallocated throughout 2022.
“There are now 11,397 people living in emergency accommodation, with 3,480 of them children.
"Reallocating €337m that was meant to build new local authority homes while carrying over the maximum allowed capital allocation means that €677m that was meant to be spent on housing and key infrastructure has not been spent as budgeted for at the start of the year. This is completely unacceptable."
It comes as a new analysis from Davy chief economist Conall MacCoille, for MyHome.ie, suggests that homebuyers are being stretched to a degree not seen since 2009, with the average residential transaction coming at 7.7 times the average income.
Mr MacCoille said the “surprise decision” by the Central Bank to loosen its mortgage lending rules to four times a person’s income from January means first-time buyers may act quickly to borrow more to try to secure a home in a market where supply remains very tight.
“In that context, would any of us be surprised if people borrowed as much as they could? Probably not,” he said.
He said the Central Bank’s rule change and the Government’s new First Home Scheme — a shared equity scheme for new builds for first-time buyers — could help to stimulate supply while also pushing up prices.
“There’s a lot of build cost inflation in the system,” he said.
On the underspend from the Department of Housing, Mr MacCoille said it again highlights that even with the funding there, challenges still remain acute in terms of actually delivering housing.
He said promising funding for a certain number of social homes in the budget is all well and good, but it means that so-called targets set out can then be repeatedly missed.
“You could say they’re setting a high bar to persuade local authorities that they really need to deliver,” he said.
“But in 2022, if they miss it, will they do so again in 2023?”
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