Secret government memo reveals €476m housing budget not yet spent as crisis unfolds

While the ministry expected €1.475 billion in investment program spending by the end of the third quarter, only €999 million was actually spent. This corresponds to an underspending of 476 million euros or 32 percent less than was expected at the end of September.

The bulk of this underspending – €429 million – was accounted for by a range of government housing programmes, including €228 million underspending on municipal housing. Ministers were told this was due to fewer than expected funding requests from local authorities stemming from “ongoing economic problems affecting delivery”.

The confidential memo handed to ministers said: “Some of the biggest challenges facing the construction sector so far in 2022 have been significant price inflation for building materials, supply chain disruptions and inflation in fuel and energy prices. “

Staff shortages and difficulties in recruiting staff in local authorities have compounded the above problems, the memo said.

There was also an underspending of €122 million under the Pre-Lease Facility capital scheme, which is a government financing scheme distributed by local authorities to approved housing developers for the construction, acquisition or refurbishment of new social housing.

Ministers were told that this underspending was due to delays in receiving applications from local authorities and delays in projects caused by rising costs, supply chain distribution, fuel costs and skills shortages.

Eoin Ó Broin, spokesman for Sinn Féin Housing, said he doesn’t accept that inflation and increased energy costs are to blame for a third of the ministry’s targeted spending not being spent, arguing that “these things should result in you spend more, not less”.

Mr Ó Broin said the biggest contributor to the delays was “the significant levels of bureaucracy” being imposed on local authorities by the central government.

“The system itself is not designed to provide large amounts of good quality, social and affordable housing in a timely manner,” he said.

“The real question is we have known this for years and what the Minister has done to address this. We need a radical reorganization of the way licensed housing associations and local authorities deliver new homes. We need to expand into new building technologies.

“Even if the total number of new homes delivered this year is in line with forecasts, the actual delivery of social and affordable housing will remain below target.

“How is it possible that money isn’t being spent in the middle of the worst housing crisis in modern history?”

The memo also outlined underspending in other housing ministry capital programs, including a €19 million underspending on energy efficiency retrofits due to a slower-than-expected receipt of claims from local authorities and an “ongoing commitment” to existing claims

The cost-rent equity loan program is also nearly €17 million behind target as units originally forecast for completion are delayed until later this year.

There were also fewer applications for the Affordable Housing Fund than expected, resulting in underspending of 11 million euros and 10.4 million euros less than expected spending for the Croí Conaithe (Cities) fund launched in July

However, the memo said that a “very strong performance” is forecast for the final quarter of this year, while the Housing Department said in a statement: “It is important to note that such spending will continue throughout the year and for a significant part of it.” gain momentum it is usually weighted towards the end of the year.

“There is a very strong pipeline of housing under construction, with a significant number of housing projects due for completion in the last quarter of this year.

“This level of activity will result in a significant increase in capital spending on housing programs in the fourth quarter of this year.

“Some of the key challenges in 2022 were significant price inflation in building materials; Supply chain disruption and inflation in fuel and energy prices.

“Despite the very challenging situation of a very limited construction sector during the Covid pandemic and new challenges emerging in 2022 with the impact of pricing/supply and the war in Ukraine, the scope of activities in all areas will be vigorously further expanded.”