Investment in infrastructure must be a Budget 2023 priority
Budget 2023 must address Ireland’s poor performance on delivering basic infrastructure. At an international level, Ireland is ranked 41st out of 63 countries for basic infrastructure according to the latest World Competitiveness Rankings for 2022. Long-term investment in basic, or social, infrastructure should be part of Government’s response to improve living standards and reduce the cost of living in Budget 2023.
The context in which Budget 2023 is being developed is one of the most difficult in some time, due to an uncertain social and economic outlook. Government must also plan for a scenario where the current rise in the cost of living persists, contributing to a reduction in demand as consumer spending falls. This may also result in capacity becoming available within the economy which would support our infrastructure targets. Budget 2023 should focus on preparing for this and have investment plans ready to address some of our basic infrastructure deficits, social housing being the most obvious.
Social Housing – a priority area for strategic investment
The cost of housing is a key component of the cost of living overall, and a key driver of increases in the Living Wage over the past number of years. Housing affordability continues to present a serious issue in Ireland. The cost of buying a home increased nationally by 14.4 per cent to May 2022; and private rents increased by 11.2 per cent in the same period. In addition to the affordability crisis, where the cost of a home remains out of reach for many, we also have a persistent homelessness crisis, with the number of people accessing emergency homeless accommodation exceeding 10,500 in July 2022. The solution to these problems is investment in appropriate supply, rather than over-reliance on subsidies which artificially inflate housing costs.
The latest Social Housing Needs Assessment put the number of households on the social housing waiting lists at just over 59,000, however the real need for social housing is grossly under-reported as those in HAP and RAS tenancies, refugees, Direct Provision and many at risk of losing their home due to mortgage arrears are not included. We estimate the real number in housing need is closer to 133,000. In order to meet the needs of these households Government should double Ireland’s social housing stock by 2030. In order to achieve this target, major additional investment beyond what’s included in the current housing plan will be necessary. We estimate that an additional €1.4bn is required for social housing delivery in Budget 2023 which would bring the overall capital budget close to €4bn in 2023.
Although this is a significant amount of resources, it is a strategic investment for Government. It would increase the State’s social housing stock; it would move households from the private rental market into this social housing; In practice, these vacated houses would become available for renting to private tenants. In due course, this would mean an additional 60,000 properties, would be available to the private rented sector for use by private tenants.
Summary of Social Justice Ireland housing investment proposals Budget 2023:
Double social housing stock by 2030: Other European countries which we would like to emulate have a social housing stock that is 20 per cent of their overall housing stock compared to 9 per cent in Ireland. The real need for social housing is grossly under-reported To achieve this target , Government must double its Housing for All targets, starting with an additional cost of €1.4bn in Budget 2023, meaning the overall capital budget would be closer to €4bn in 2023.
Invest in a skilled workforce: This level of investment will require a skilled workforce. Inclusion of a new construction apprenticeship programme whereby one in every fifteen is required to be an apprentice earning at least the Living Wage must form part of any rebuilding scheme.
Remove demand side subsidies: The process of addressing housing affordability on the supply side should also begin as soon as possible with the establishment of a construction procurement working group and the winding down of demand side schemes that artificially maintain high house prices. The removal of the Help to Buy Scheme would save the Exchequer €200m in 2023.
Ensure Social housing stock and land remain social: Building on land already owned by the State makes the delivery of social housing at scale feasible. According to a 2014 Residential Land Availability Survey, there was sufficient land in the ownership of the State to provide for the construction of 414,000 dwellings. Using less than half of this land would meet the 20 per cent target we propose. Once the houses are built, it is vital that they remain social. Government should adopt legislation to prohibit the sale of State lands suitable for residential development and use this land to build social housing.
Legislation should also be introduced to ensure that Approved Housing Bodies retain their social housing stock as social housing and prohibit its sale on the private market.
Services and infrastructure: To ensure the sustainability of social lettings, the services and infrastructure communities require must be in place. This regeneration would require an initial investment of €100m in Budget 2023.
Homelessness and Homelessness Prevention: Protections introduced during the pandemic resulted in monthly decreases in homelessness during 2020/21. Notwithstanding commitments in Housing for All to eradicate homelessness by 2030, Government lifted these protections. Increasing social housing provision, winding down the use of Family Hubs and investing in Housing First for families experiencing homelessness should be a priority for Government. Social Justice Ireland propose an investment in Housing First for Families of €200m in Budget 2023 funded from the cessation of the failed Help to Buy scheme.
Tackle long term mortgage arrears cases: Among the households most at risk of homelessness are those in mortgage arrears for more than ten years. There are currently over 5,000 such mortgages. Government could prevent these households becoming homeless by acquiring an equity stake in properties in mortgage distress leaving families in situ and increasing the State’s social housing stock. Social Justice Ireland propose a pilot scheme for those mortgages in arrears of more than 10 years, at an initial cost of €100m in 2023.
Address housing data deficits: Housing strategy going forward must be evidence based. Setting and then failing to meet targets that seriously fall short of need will not solve the problem. We can only hope to meet the needs of citizens once their need has been recognised. We can begin this process by ensuring accurate data capture on homelessness. Government needs to align data collection with the ETHOS methodology and resource the necessary ICT infrastructure at an initial cost of €3m in Budget 2023.
Develop a functioning Private Rented Sector: Our Housing Costs and Poverty 2022 briefing showed how renters in the private rented sector are hardest hit by the current affordability crisis. The commitment to increase protections for tenants, increase inspections, investigate deposit protection schemes, and introduce long-term leases in ‘Housing For All’ must be expedited. To do this, Government must invest in increased rental property inspections, doubling the budget to €13m and implement the Deposit Protection Scheme set out in legislation in 2015. Legislate to increase tenants’ rights and introduce long-term tenancies.
Download Social Justice Ireland’s briefing Budget Choices 2023 here.