Credit unions currently have large amounts of excess funds held in deposits and investments
The ambitious housing strategy announced by Alan Kelly, the environment, community, and local government minister, to supply 35,000 additional social housing units at a cost of €3.8bn over the next six years is laudable but it still requires investment.
It is estimated that 29,000 construction jobs will be created as a result of this initiative which is a welcome development for every sector of our economy. The strategy envisages meeting the housing needs of some 75,000 households through local authority provision via the private rental sector — using the Housing Assistance Payment and the Rental Accommodation Scheme as well as reforming social housing delivery and management in Ireland.
The Irish League of Credit Unions welcomes this initiative and we feel that we have a very positive role to play in its delivery. Credit unions currently have large amounts of excess funds held in deposits and investments. We estimate that somewhere between €500m to €1bn of those funds could be redirected to the Government Social Housing Strategy, which would equate to 2,500 to 5,000 housing units.
It has been widely reported that there are now 90,000 households on the housing waiting lists and it is against this backdrop that the Irish League of Credit Unions has advised the Government that credit unions are willing to provide funds for social housing. It is a long-held aspiration of the credit union movement to be able to make investments in a way that is both more sustainable and socially aware and we have been actively pursuing this with Government for some time. The provision of social finance is an integral part of credit unions’ philosophy and, indeed, their operations. We believe that there is significant potential for the credit union movement to make an additional contribution towards broader community-based and social needs by investing funds in social housing.
Credit unions currently have large amounts of excess funds held in deposits and investments. The final report of the Government’s Commission on Credit Unions recommended that methods for credit unions to invest in State projects be devised, and this was reflected in the Credit Union and Co-operation with Overseas Regulators Act 2012. We now look forward to working with Government, and the Department of the Environment in particular, in the coming months to make the provisions contained within Social Housing Strategy a reality.
The rationale for credit unions becoming involved in the provision of funds for social housing is obvious. There is now an acute shortage of social housing and a clear need for large scale investment in the sector. The Social Housing Strategy specifically mentions sourcing private funding for social housing from credit unions and other institutions. This is an exciting and innovative method of addressing this need. As mentioned already credit unions have large amounts of excess funds held on deposit — it makes great sense that these funds could be used in ways which are more appropriate to the credit union ethos and operating principles while also assisting Government policy and addressing social needs. It is expected the new finance aggregator/special purpose vehicle mentioned in the strategy will potentially provide a new outlet for credit unions to invest their surplus funds, and still earn a return on these investments. We believe that if the provision of funds by credit unions for social housing proves to be workable, it could be used as a template for investing funds in other social or community initiatives.
In this way, credit unions will continue to survive and thrive and fulfil the economic and social objectives of the movement and their communities. It is in keeping with the credit union ethos and philosophy that they would do so and it would continue their unending contribution to Irish society as a whole, as they have done over the last 50 years.
As organisations rooted in the communities that they serve and just as credit unions had a vital place and role to play in the financial services industry in the past, credit unions today are still essential and are poised to play a vital role in continuing to help their members through the current economic times by offering them the financial services they want and need.