Most of the underspend was on a range of State housing programmes, including €228m which went unspent on local authority housing
Nearly €500m of the Government’s housing budget for the first nine months of this year was not spent, according to a secret memorandum given to m inisters last week.
The Sunday Independent can reveal that as the Coalition continues to face a major housing and homelessness crisis, the Cabinet was told in a memo brought by Housing Minister Darragh O’Brien on Tuesday that hundreds of millions of euro of his department’s unprecedented €4bn-a-year Housing for All budget is not being spent.
While the department expected expenditure on capital programmes to be at €1.475bn by the end of the third quarter, only €999m was actually spent. This amounts to an underspend of €476m or 32pc less than had been expected by the end of September.
The majority of this underspend — €429m — was on a range of State housing programmes, including a €228m underspend on local authority housing. Ministers were told this was due to fewer claims for funding from local authorities than had been anticipated arising out of “ongoing economic issues impacting delivery”.
The confidential memo given to ministers stated: “Some of the key challenges being faced by construction so far in 2022 have been the significant level of price inflation to construction materials, supply chain disruption and inflation in the prices of fuel & energy.”
Shortages of staff and difficulties in recruiting employees in local authorities have compounded the aforementioned problems, the memo also said.
There has also been a €122m underspend in the advance leasing facility capital programme which is the State funding scheme distributed by local authorities to approved housing bodies to build, acquire or refurbish new social housing units.
Ministers were told that this underspend was due to delays in claims being received by local authorities and the delay to projects caused by rising costs, supply chain distribution, fuel costs and skilled labour shortages.
Sinn Féin housing spokesperson Eoin Ó Broin said he did not accept that inflation and increased energy costs were behind a third of the department’s targeted expenditure going unspent, arguing that “those things should be leading you to spend more and not less”.
Mr Ó Broin said the biggest contribution to the delays were “the significant layers of bureaucracy” imposed on local authorities by central government.
“The system itself is not set up to deliver large volumes of good quality social and affordable homes in a timely manner,” he said.
“The real question is we’ve known about this for years and what has the minister done to address this. We need a radical shake-up of how the approved housing bodies and local authorities deliver new homes. We need to expand into new building technologies.
“Even though this year the total number of new homes that will be delivered will be in line with projections, the actual delivery of social and affordable homes will be below target.
“How is it possible that money is not being spent in the middle of the worst housing crisis in modern history?”
The memo also outlined underspends in other Department of Housing capital programmes, including a €19m underspend in the energy efficiency retrofitting due to slower than anticipated receipt of claims from local authorities and “ongoing engagement” over existing claims.
The cost-rental equity loan scheme is also nearly €17m behind target due to units that were initially projected to be completed being delayed until later this year.
There have also been fewer claims for the affordable housing fund than anticipated leading to an €11m underspend and €10.4m less than expected spent on the Croí Conaithe (Towns) fund launched last July.
The memo stated, however, that “very strong delivery” is forecasted in the last quarter of this year while the Department of Housing said in a statement: “It is important to note that such expenditure gathers pace throughout the year and a significant part of it tends to be typically weighted towards the year end.
“There is a very strong pipeline of housing under construction, with a significant number of housing projects to be completed in the final quarter of this year.
“This level of activity will see a significant increase in capital expenditure on housing programmes during Quarter 4 of this year.
“Some of the key challenges being faced in 2022 have been the significant level of price inflation to construction materials; supply chain disruption and inflation in the prices of fuel and energy.
“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, work assertively continues to ramp up the scale of activity across all areas.”