Sir, – Fintan O'Toole ("Opposition to social housing is matter of ideology not economics", Opinion & Analysis, October 20th) in part answers his own question when he asks why the State could afford to fund a major social house-building programme during the "hungry Fifties" when there was no free secondary education and many of the social welfare benefits available today did not exist. Relatively low spending on most other public services facilitated levels of public investment in housing which were the highest in western Europe at this time.
Growing spending on social welfare and health, particularly during the 1970s, is one of the reasons why spending on social housing was cut back. Therefore, unlike its counterparts in the inter-party government of the 1950s, the current Government faces the challenge of concurrently funding a social house building programme and a comprehensive system of benefits and public services.
However, the other part of the answer to the question raised by Fintan O’Toole sheds light on how the current Government can meet this challenge. High levels of social housing delivery were possible in the 1950s because the funding method spread out the costs of provision and kept them affordable for government. At this time social housing was funded by very long-term loans, which were repaid using a mix of central government subsidies, tenants’ rents and the proceeds of domestic rates.
This funding model collapsed when domestic rates were abolished in 1978 and after that the exchequer paid for social house building in lump-sum grants. The latter arrangement was less affordable because the costs of provision were paid up front rather than spread out over a long period, which helps to explain why insufficient numbers of social houses were built even during the Celtic Tiger period.
This lesson has been partially taken on board by policymakers and in recent years loan finance had been provided for social housing provision by non-profit housing associations by the Housing Finance Agency, which borrows on capital markets and from EU institutions for this purpose. The agency currently has some €500 million available for lending to this sector at a fixed interest rate of 3.25 per cent.
However, despite great work by some housing associations, it is not realistic to think that this sector, which delivered 25 per cent of social housing prior to the bust, has the capacity to meet the full scale of current housing needs, at least in the short term.
Therefore local authorities, which are currently debarred from accessing Housing Finance Agency loans, due to concerns about its implications for the national debt, need to be given permission to borrow again for social housing provision. This is the only realistic method of raising sufficient finance for and delivering a social housing programme on the scale required to meet current needs. A relatively small amount of public borrowing for this purpose could have enormous social benefits and cut spending on rent supplements.
Local authorities were traditionally the main providers of social housing in Ireland, and Fintan’s O’Toole’s article eloquently describes the huge contribution which council housing made to improving the lives of his own family in the 1950s.
I agree that they have to play a central role if we are to solve the current housing shortage. However, I disagree with his assertion that achieving this is a matter of ideology; an affordable method of resourcing this work has to be put in place as well. – Yours, etc,
Dr MICHELLE NORRIS,
School of Social Policy,
Social Work and
Social Justice,
University College Dublin,
Belfield, Dublin 4.