The Government spending watchdog, the Comptroller and Auditor General (C&AG), has expressed concern about the rapid rise in the cost of rent supplement, which has grown from €151 million to €369 million in just five years.
The 144 per cent increase shows the scheme, designed to provide temporary assistance to those in short-term need of help with housing costs, had turned into "a major social housing programme in its own right", the C&AG's report says.
A total of €1,636 million was paid out by the State on rent supplements in the six-year period 2000 to 2005 inclusive. The report suggests that insufficient checks were carried out for fraud, and that tenants and landlords had little incentive to keep rents low under the scheme.
The Department of Social and Family Affairs pays rent supplement to people who rent private accommodation but are unable to afford the cost. The payments are means tested, and most recipients of rent supplement depend on welfare payments as their main source of income.
According to the C&AG, about a third of the increase could be explained by an increase in the number of recipients. "The remaining two thirds of the increase in spending on rent supplements was related to increases in the average payment - up from €73.70 a week at the end of 2000 to €124.40 a week at the end of 2005." This in turn is explained by substantial increases in the rent paid by rent supplement households.
The Department of Social and Family Affairs sets maximum rent limits for different household categories, with the highest limit being €276 per week for a family with two or more children in the eastern region. The rent limits are intended to control the level of expenditure on rent supplements.
"In practice, tenants [and landlords] have little incentive to agree rents below the rent limit levels." At the end of 2005, 84 per cent of rent supplement recipients were paying rents equivalent to the relevant limit. The recipient is required to make a minimum contribution of €13 per week towards the rent. At the end of 2005, recipients were making an average contribution of €22 per week.
While these rent limits were increased in response to rapid rent increases in 2000/2001, they were not reduced between 2002 and 2004, despite a 10 per cent fall in market rents. "Selective lowering of rent limits when market rents fell could have resulted in lower expenditure. In order to maximise the value of its spending and avoid the risk of windfall gains to landlords, the department needs to be in a position to promptly adjust the rent limits for new tenancies [nationally or on a selective basis], and to exploit its effective purchasing power in response to market conditions", the C&AG's report says.
While some overpayments were being detected as a result of checks taking place at community welfare service area level, "there is a need to make this work more effective by developing methods to identify the extent of fraudulent or unwarranted recourse to rent supplements".
The report notes that very few prosecutions had been brought over rent supplement fraud. "The department and the HSE should sort out the impediments that currently prevent prosecutions being taken, and adopt a policy of prosecuting quickly in serious fraud cases."
While the scheme was designed to help those in short-term need of a rent subsidy, "the examination established that around 70 per cent of those in receipt of rent supplement at a point in time are likely to be still in receipt of the supplement one year later and about 55 per cent two years later."
Labour's environment spokesman, Eamon Gilmore, yesterday called for the replacement of rent supplement with housing benefit. "The scheme is clearly not delivering value for money for taxpayers, but just as important, it's not delivering solutions to the housing crisis that has engulfed young couples and families in communities around the country," he said.
The Green Party's Dan Boyle said the report showed the scheme was not working. 2000 €151 million
2005 €369 million
+144%