What the data says about fixing our dysfunctional housing market
Analysis: what do local authority facts and figures tell us about the State's expenditure on social housing?
By Gerard Turley and Stephen McNena, NUI Galway
After a lull due to the Covid-19 pandemic, public health restrictions and nationwide lockdowns, housing is yet again in the news. Similar to coronavirus and the vaccines, there is much misinformation about housing, and especially social housing. Just as epidemiologists and virologists rely on scientific data for their evidence, economists and other social scientists working on the issues of housing and shelter do likewise.
As local government in Ireland is the tier of government responsible for social housing, local authority expenditure on housing equates, more or less, to Ireland's public sector expenditure on housing. Given this, an analysis of local authority budgets, financial statements, performance indicators, and housing statistics from the Department of Housing, Local Government and Heritage provides us with some interesting facts about social housing.
From RTÉ Radio 1's Drivetime, Sinn Féin's Eoin O Brion TD and Fine Gael's Richard Burton TD discuss the Government's social housing policies
Housing is the main social service provided by local government in Ireland. Indeed, housing is the largest of the eight service divisions or statutory functions assigned to the local authorities. The housing service division involves responsibility for the provision of social housing, housing maintenance and estate management; supports to private rental accommodation; inspection and enforcement of regulatory standards for private rental accommodation; urban renewal and regeneration schemes; homeless services; and traveller accommodation.
The annual budgets of the local authorities report the day-to-day spending on housing. From a total estimated spend of €5.6bn in 2020, €1.9bn was for housing and building services, representing an increase of over 150% since 2013 when the recurring housing budget was at its lowest during the years of austerity. At 35% of the 2020 total revenue budget, this is far by the largest service division, with the others being roads (20%), environmental and fire services (12%), recreation and amenities (9%), development management and planning (9%), water services (7%) and others (9%).From RTÉ One's Six One News, April 2021 report on the lack of rental properties available for those on HAP payments
Of this €1.9bn, over €1bn is spending on supports to private rental accommodation in the form of two housing supports schemes, namely Rental Accommodation Scheme (RAS) and Housing Assistance Payment (HAP). This reflects an earlier move by successive Irish governments away from direct public provision of social housing to a greater reliance on the private sector to meet social housing need. €275m is spent on maintenance and improvement of local authority housing units, as is a further €273m on homeless services (equal to a four-fold increase since 2014), with another €130m spent on housing loans and grants.
According to the most recent amalgamated audited annual financial statements of the 31 local authorities, capital expenditure was €2.3bn with housing accounting for 60% or €1.4bn, up from a low of just €350m in 2014. Over a decade ago, the housing budget accounted for only about 35% of a much larger capital budget of over €6.5bn. When taking current and capital expenditure together, the total housing spend is now over 40% of total local government spending, as compared with only about 25% at the time of the 2008/9 financial crisis.
What about annual social housing output, and the stock of local authority housing? Leaving aside Approved Housing Bodies (AHBs) and Rent Supplement administered by the Department of Social Protection, local authorities provide social housing through a number of different mechanisms. Taking 2019 as a recent example, a total of over 24.000 local authority housing units were delivered in the form of new builds (2,271 units), acquisition (1,905), Part V of the Planning and Development Acts (589), voids (303), leasing (1,161), RAS (1,043) and HAP (17,025).
From RTÉ One's Nine News in Oct 2020, the 2021 Budget includes a pledge to build 9,500 new social housing units in the next year
In 2019, local authority new build and acquisition combined was over 4,000 units, a figure last seen at the outset of the Great Recession, which was then followed by years when local authority new build and acquisition was as low as 300 to 700 units per annum. Although RAS/HAP filled this gap and now account for a greater percentage of yearly output, the stock of social housing units is still primarily provided by local authorities, with almost 140,000 units in 2019, or about 55% of the estimated total social housing stock.
Given all these statistics, how can local authorities help to solve the housing crisis? Aside from direct provision of social housing funded by existing sources (primarily the Housing Finance Agency) other sources of finance such as the European Investment Bank or, in the longer term, use of a municipal bond agency or direct local authority issue of muni bonds, as in other local government systems worldwide, should be considered.