Committee on Housing and Homelessness debate -
Tuesday, 24 May 2016

Housing Finance Agency

Chairman

We will resume in public session. I draw the witnesses' attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. The opening statement submitted to the committee will be published on the committee's website after this meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I welcome the representatives from the Housing Finance Agency, HFA, Mr. Barry O'Leary and Mr. Seán Cremen. They have submitted documentation, which has been circulated among members. I invite them to summarise it, after which my colleagues will ask a number of questions.

Mr. Barry O'Leary

I thank the Chairman for the invitation to speak to the committee. Mr. Cremen and I will, I hope, address some of the members' questions in the course of our presentation. I will skip some of the items in our written submission.

The HFA, was established in 1982 to advance loan finance to local authorities and, more recently, approved housing bodies. Our role is to facilitate and support the delivery of social housing. We have a statutory borrowing limit of €10 billion and an outstanding loan book of €3.7 billion. We raise the majority of our funding via the National Treasury Management Agency, local authorities, the European Investment Bank and the Council of Europe Development Bank. We still have available to us facilities of approximately €6.3 billion. The majority of the HFA's loan book is provided to local authorities for mortgage and non-mortgage lending. From late 2011, the HFA began lending to approved housing bodies. At this stage, we have 15 approved housing bodies through our certified body status, which means they can draw down funds from us.

There is information in our submission on net lending to local authorities and the loan approvals to approved housing bodies. We can deal with those as the afternoon proceeds. Last year, we made quite a few approvals in the approved housing body area. We made approvals for the development of 650 houses last year, which is a significant increase in comparison with the previous year.

The submission we have for the committee this afternoon focuses on our area of finance. There are obviously a number of areas in the general housing scene concerning planning and regulation, development cost structures, procurement and the availability of land. The committee will focus on these but our proposal concerns the provision of finance. Having in recent years considered and dealt with the approved housing bodies, with which we are in constant contact regarding their development plans, we believe that the 15 with which we are currently doing business have the ability to produce, over the next four or five years, approximately 4,500 or perhaps 5,000 houses.

They are doing very good work and have significantly improved on the delivery they achieved last year. Even if the estimate is out by 1,000 or 1,500, the likelihood is that there will be relatively few houses over 5,000 delivered. In terms of complementing the strategy of the Department of Housing, Planning and Local Government, which focuses on the provision of 35,000 units, we need to look at lending money to local authorities again for them to build social housing.

Our submission is that to get the scale, local authorities need to be involved. Within the period, they could produce twice the number of houses. We have suggested in our submission that would be 9,000 homes. The breakdown of the funding requirement is in our submission where we show that there would be gross lending involved of approximately €2 billion. The normal life of our existing loan book is such that there are repayments coming back in from mortgages and in a normal way our book is falling. Members will see within the submission that the red figures show the normal repayments of annuities. We are saying that capacity plus some additional new borrowing should allow for gross lending of €2 billion which would be split between local authority lending and AHB lending. There would be a net lending situation of €1.3 billion. That would allow the building of 13,500 units which would be roughly 40% of the total requirement under the Government strategy on 35,000 units which we spoke about earlier.

Why do we come to that conclusion? First, what is required at the moment is for homes to be built for people. We think the capacity of local authorities is such that they are best placed to do that building. Historically, the cost of finance is so low at the moment that it produces a unique opportunity. We are in a position to borrow money and the European Investment Bank is keen to give it to us. The bank will give us fixed rate money for 25 years at something below 2%. We can pass it on to local authorities cheaply. There are very few of us in the HFA and we do not need a lot of overheads. We can pass the money on at a very tight margin and enable the houses to be built.

The cost of funding is such that it is not going to be this low forever. Something is going to happen in the next year or two and rates will start drifting away. If one were to borrow €1 billion at the moment it means one could service the loan on an interest-only basis for approximately €17.5 million. One could pay principal and interest and cover the servicing of it for approximately €50 million a year. One sees reports all the time that the cost of emergency accommodation is such that we are probably spending that kind of money already. It is an opportunity that should be looked at. While it is very easy to say that, it would be silly not to also acknowledge that there are certain borrowing constraints on the Government. Our contention, however, is that there has to be a decision made to do this and build the houses. The opportunity is there and, temporary as it is, somebody must make a decision to facilitate the borrowing and get the homes built. At some point in the future, we can look at the local authorities either selling them or providing mortgages to people if they can service them without putting risk onto the books of local authorities. Alternatively, the units could be transferred to approved housing bodies.

The primary objective is to get the houses built. People need homes. The money can be provided relatively cheaply and that is the essence of the proposal. Our proposal targets the finance side of things. It allows those who can respond quickest to achieve the necessary scale of development. The current interest rate environment is such that we should do it. That in essence is the proposal we bring to the committee today.

Chairman

I thank Mr. O'Leary. Before I open it up to questions, I have one or two quick comments. Mr. O'Leary indicated that the cost of borrowing to the HFA would be under 2%. Is that correct?

Mr. Barry O'Leary

Yes.

Chairman

As that is advanced to local authorities, what rate would be charged?

The agency has set out an ambitious programme. Deputy Durkan will be pleased to see local authorities back providing housing. Apart from the finances, has the agency any feedback from local authorities on their capacity to deliver these units? I am not being in any way critical but this is a financial document. Has the agency drawn it up in tandem with the capacity of the local authorities? There is no point in putting the funding in place if there is no drawdown.

It was stated there would be other repercussions for the State's finances. I presume this means that it will be an on-balance sheet expense.

Mr. Barry O'Leary

As it stands, our lending is at a fixed rate of 1.75% for 25 years. That takes the shock out of variable interest rates and other factors.

Chairman

To whom would the agency advance it?

Mr. Barry O'Leary

We would advance it to the local authorities.

On the capacity of local authorities to build and lend, we have had conversations with them. We have been in contact with local authority heads of finance and the County and City Management Association, CCMA. They are interested and would love to be able to borrow. However, there are issues for them. They want to be sure that if they borrow, they will not be put into a position where, at some point in the future, they will be struggling for the capacity to repay it. They like the idea that it is a fixed rate and there is certainty about it. However, there are issues for them in interacting with the Department and ensuring there is a system in the style of the payment and availability agreement available for approved housing bodies. This would ensure they have certainty that their own financial situation is kept stable.

All our borrowings are on-balance sheet, meaning it is one of the challenges. It is our contention that there are many potential solutions that will contribute to this. There are off-balance-sheet vehicles, public private partnerships and activity with credit unions. All these options take time, however. An intervention where local authorities could get involved with a signal given to them to go ahead and build would, we feel, be quicker than all the other options. This does not preclude them being transferred later into some other option to get them off-balance sheet. We feel the primary consideration is to get the houses built.

Deputy Bernard J. Durkan

I am delighted to welcome a re-emergence of local authority house-building programmes as a major contributor to alleviating the problems we have. Incidentally, I am delighted the representatives from the Housing Finance Agency are in attendance. I was instrumental in helping facilitate one of the first Housing Finance Agency loans ever approved. The person who got it is still living in the house they bought with it. That proves the point that the person who started off in that house was quite happy to buy it for a lifetime and remain in it.

I noticed the approved housing bodies are emerging once again. The committee heard from the credit unions several weeks ago who stated they are willing to lend through the approved housing bodies. However, to my mind, this would defeat the whole purpose of the exercise, as they would be then getting involved in the property business in the same way that the lending institutions did before the boom. We do not want to get on that treadmill again.

To what extent can the Housing Finance Agency facilitate local authorities by way of the local authority loans fund? This used to be a fundamental part of how local authorities met the housing needs of those on the housing list. Is it possible to provide funding, directly or indirectly, as opposed to just going through the voluntary housing bodies?

Does the agency agree there is far too high a dependency on private rented property? When the various interested bodies attended the committee over the past few days, reference was made to the fact that there is not much sense in inviting the private residential sector into the business and beating them up once they are in it.

As the Government can borrow from the European Investment Bank at a rate of 0.8%, I presume the Housing Finance Agency can do so too. It then lends that at a rate of 1.75%.

Somebody is taking approximately 1% to 1.75% out of it by way of a handling fee, or whatever it is. I would like clarification of it.

I would also like to know about the structures on and off balance sheet. We have had much discussion on it and it is fundamental to what we are doing. To what extent can the Housing Finance Agency assist the local authorities in their programme by way of co-operatives or public private partnerships? I am specifically side-stepping the voluntary approved housing bodies. The combination of what the witnesses have spoken of would bring in approximately 13,500 houses into the marketplace. I believe the requirement is closer to 16,000. I have held this view for a long time and have brought forward various proposals, as has everybody else around the table, to various Ministers with responsibility for the environment, public expenditure and finance. Given that there are approximately 100,000 families on the local authority housing list, give or take 20,000 or 30,000 depending on who one talks to, it would take five years, at best, to overhaul the system entirely. This is presuming there will be no growth in the number on waiting lists in the meantime. We need to make a more significant impact.

I congratulate the witnesses on appearing before the committee. The way the Housing Finance Agency proceeds is very important. The Housing Finance Agency will determine in a large way the manner in which we will deal with the housing crisis. I suspect the agency is in a position to make a major contribution. However, if it is not in a position to do so, the situation will implode again and we will be back here in a year's time to discuss the same thing. If we depend on the private rented sector, we will be back in two years' time and five years' time talking about the same issue.

We are talking about reliance on the approved housing bodies. They are excellent and are much better than the local authorities for the special needs, sheltered housing and niche market to the area. However, they are not capable of dealing with the main thrust and weight of the requirement of the public housing programme. How will the witnesses respond?

Deputy Fergus O'Dowd

I welcome the witnesses. It is great to have a body that has the capacity to borrow at the very low rate the Housing Finance Agency can, which is very beneficial to the State. The witnesses are saying they can get the money and that it is a question of passing it to the agencies that can spend it. The Housing Finance Agency can then do due diligence on them by local authority or association. What is missing in the equation to fast-track the agency's work? The programme for Government specifically talks about going to the EU to borrow an increased amount. While this is not a matter for the Housing Finance Agency today, the question is whether we can spend it. Why are we not spending it? What are the barriers?

The Housing Finance Agency must get the money back. How can the Housing Finance Agency use the money? One of the major issues is the infrastructure deficit. The programme for Government has allocated €100 million for infrastructure deficits. Would it theoretically be a plan to take, for example, 60 acres of the 200 acres of State-owned land in Gormanstown which has no infrastructure, such as sewerage and water, and install services with a local authority or an approved housing body as a partner? How can we fast-track what the Housing Finance Agency wants to do or is it already happening?

Deputy Maurice Quinlivan

I thank the witnesses for the presentation. I agree with Mr. O'Leary and with Dr. Michelle Norris, who was quoted in The Irish Times as saying we should seek permission to extend Government borrowing to finance social housing.

I have already asked the Minister, Deputy Michael Noonan, at this committee whether he will push for greater flexibility at European level in EU fiscal rules to support long-term investment programmes, with social housing being a top priority. He informed me that he had already "pushed very hard" and that "we do not meet the criteria for applying, particularly in light of the economic cycle and other factors". Is Mr. O'Leary aware that the Government has pushed hard for this and what is his view on the assertion that we do not meet the criteria? Will he outline whether he believes we do meet the criteria and what exactly are they?

Chairman

There are a number of questions for Mr. O'Leary and Mr. Cremen.

Mr. Barry O'Leary

We will go back to the beginning. First, the HFA proposal is just a suggestion which has not yet been approved by the Department of Finance.

We will lend to the local authorities if they have two things: a council resolution and sanction from the Department of the Environment, Community and Local Government or the Department of Housing, Planning and Local Government, as it now is. Once they have these two elements, they will receive funding from us within one week. No further due diligence is required on the assumption that the State is not going to let local authorities go bust. Local authorities have no arrears and have never had any in our 30-year existence; therefore, we do not waste time in engaging in due diligence. We give them the money and they pay us back. We are very keen to get the money back, as Deputy Fergus O'Dowd suggested, and that is how it works. We engage in due diligence with AHBs, 15 of which we have approved, which we listed in our submission.

On the lending rate to local authorities, our margin typically is of the order of 25 basis points, or 0.25%. The indicative rate in our proposal is 1.75%. If we can do it at a lower rate, we will do so, but we have picked 1.75% as the potential rate. We are not getting money from the EIB at the rate suggested by the Deputy. The State may get it at that rate, but we are getting it at a slightly more expensive rate. If we can get more money from the Council of Europe Development Bank and blend it in such a way that we will have no interest rate risk exposure, we will be delighted to lend it at a rate of less than 1.75%. We included 1.75% as a number with which to work.

I do not know if we have any particular comment to make on over-dependency on the private rental sector. On dealing with the local authorities, we could do more than a figure of 13,500, but that number ties in with the social housing strategy of the Department of Housing, Planning and Local Government. If it was decided that more needed to be done, it could be done. There would be no particular difficulty in doing so. AHBs certainly have a big part to play in the delivery of those 13,500 houses and the reality is they are providing general housing units also. Our suggestion is that local authorities need to contribute more and be asked to borrow to do so.

On money being available, a question which was raised by Deputy Fergus O'Dowd, it is certainly available. The EIB, in particular, has indicated to us that we could get more money from it at any point. The barrier to spending it is the financial constraints within the budgetary environment; therefore, the decision is in that domain rather than ours.

Deputy Fergus O'Dowd

Whether it is off balance sheet is a different issue. However, if the EIB was to agree to have it off balance sheet or if the HFA could find a vehicle to do this, theoretically, as an example, could NAMA do it, with the HFA acting as guarantor. Is there a way around this because, theoretically, there should be? It would make a huge difference.

Mr. Barry O'Leary

A lot of work has been done in the past two years by the Department's social housing strategy group in looking at new funding models. The reality is that we have seen other State entities struggle in the past two years to get off the balance sheet. It is a very difficult task, given that the European Union is making it more difficult by the month to get things off balance sheet. What we are saying is the State should, by all means, pursue the issue in the future and, if it is successful, that will be terrific. However, in the meantime, it should build the houses needed. If it wanted to sell local authority houses at some point, something some people might not like, or transfer them to some other vehicle, that would be terrific, but at that stage they would have been built.

Deputy Bernard J. Durkan

I asked about local authority loans, which used to exist but now are just a memory.

Mr. Barry O'Leary

The local authority loans fund evolved into the HFA and ceased to be in the late 1970s or early 1980s-----

Deputy Bernard J. Durkan

I know.

Mr. Barry O'Leary

-----and then the HFA started. However, the agency advanced mortgages. About one third of our book, as it stands, is in mortgages, whereby we lend to the local authority and it passes it on. We have the capacity even now to lend mortgages to local authorities which can lend the money on to people. We were discussing last week, with the heads of finance in local authorities, the attractiveness or otherwise of a 25-year fixed rate loan and what would be the position if local authorities being able to give out such a loan to creditworthy people within their areas. The local authorities' books are significantly in arrears, and one would like them to be conscious of the risk involved in such a proposal. However, the reality is that if one gives out a fixed rate loan at, say, 2% or 2.25% to the consumer, that provides a level of affordability which means that owning a house and paying a mortgage is possibly more affordable than renting-----

Deputy Bernard J. Durkan

That would be good.

Mr. Barry O'Leary

There are a number of possibilities in that area.

Chairman

Deputy Quinlivan asked a question.

Mr. Barry O'Leary

There was a question - I forget who asked it - about infrastructure. The answer is that we can lend for housing and housing-related purposes, so we can certainly lend if the infrastructural work is being done in order to facilitate house creation, and the rates would be similar.

Regarding Deputy Quinlivan's question, I am not party to any discussions whereby people in the Department of Finance have been involved in making representations to Europe so I am afraid I cannot help him on that front.

Chairman

Officials from the Department of Finance will come before the committee before it concludes its work. It might be worth following some of those lines of questioning at that stage.

Deputy Mick Wallace

My question relates to the same issue. Mr. O'Leary said that Europe puts up barriers monthly to prevent off-balance-sheet borrowing, yet we see that Spain, France, Italy, Lithuania and Austria will all break that rule this year and it does not appear that they will suffer any penalties for doing so. It seems as if Europe will give France permission to borrow off-balance sheet without any of the penalties involved to deal with extra spend on security because of ISIS. Mr. O'Leary has just answered the question, but I was wondering how in God's name Ireland cannot be given some sort of flexibility in view of the fact that we have a housing emergency, our response to which surely has greater merit than what France is up to, given that it is probably still spending more money bombing the living daylights out of people in Iraq and Syria. My question to Mr. O'Leary would have been - but he has just answered it - whether he has had any part in the negotiations with the Department of Finance in this area. Sometimes we wonder whether the Department of Finance even asks if we can have the money off-balance sheet without incurring penalties or whether it takes the decision not to ask anyway because we are such good boys and do not want to challenge the rules. Does Mr. O'Leary have any input in this area?

Deputy Ruth Coppinger

It is a pity we are discussing this now rather than at the forthcoming session with the Department of Finance because it would be more appropriate to that. However, I also want to ask about the EU rules, which are a critical issue for the housing situation in this country. To clarify, is it the case that the EU rules are preventing the Housing Finance Agency from lending to local authorities? If so, is that the only reason? Can our guests clarify whether, for example, if the State were to spend more on social housing in circumstances where it raised more tax to fund that social housing, that would be in keeping with the EU rules? The wealth of the 250 richest people in this country rose by 3% last year. If one decided to bring in a 3% wealth tax, for example, or a corporation tax and used that to fund housing, if the State - the Government - took the decision to raise taxes, would that be in keeping with the rules? My understanding of the EU rules is not that they prevent spending, it is that the income must be found to justify that spending.

The net profits of the top 1,000 companies in Ireland increased by 25% in the past year, so a corporation tax increase could be considered for the homelessness emergency. I am interested in hearing the witnesses' views on this because it will be critical. I met the Minister with responsibility for housing, who told us NAMA cannot be directed to build social and affordable housing because it is a special purpose vehicle and it would be on balance sheet. With regard to the issue of on and off balance sheet, it seems that off balance sheet is becoming increasingly impossible to achieve. Irish Water and PPPs are being recategorised as being on balance sheet. For years, the Department has been looking for ways to be off balance sheet but it cannot be. If this is a straitjacket the EU has imposed we need to be able to tell the public.

In the past, Dublin City Council raised bonds to fund social housing. This was said at a meeting this morning by Dr. Michelle Norris of the Housing Finance Agency. The local authority was self-financing through rents, because in the past local authority housing estates had a diversity of people with low and middle income workers and not just low income workers. It was possible for the local authority to be self funding and get higher rents. Is it plausible that if the income threshold qualification for social and affordable housing was raised, and there is a need for both, we could do something like this again, rather than keeping the income limits for social housing very low with the result that the rents accruing to the housing agency or local authority would also be very low?

I wish to clarify something I said at a previous meeting. I said NABCO had not repaired windows but I understand it has done so since. I am very happy it has done so and I would not like to give it a bad name. There is a problem with the Housing Finance Agency simply funding housing agencies because not many people believe they have the scope and ability to provide social and affordable housing on the scale that is needed. It must involve local authorities.

Chairman

I ask Mr. O'Leary to address these issues, after which I will take the remaining Deputies.

Mr. Barry O'Leary

I will try to do so. I would not advance the Housing Finance Agency as being expert in the EU rules. They are extremely difficult to understand and they change all the time. My understanding of the situation is the existing budgetary constraints on deficit and expenditure prevent local authorities from being allowed to borrow. I am not in a position to state whether they are classified as EU rules or decisions within the existing fiscal space, but there is a distinction between choices made in the fiscal space and the EU rules. People in the Department of Finance know much more about this and the committee would be safer speaking to them about it.

From our point of view, the barrier is that the Department of Housing, Planning and Local Government will receive an allocation from which local authorities will be allowed to borrow in the course of the year and at present this is very tight. Local authorities are allowed to borrow if it can be financed and serviced within their own resources, but very few of them can achieve this. Within the current budgetary environment, choices will have to be made and priorities will have to be decided. Something we believe ought to be a priority is allowing local authorities to borrow up to a net sum of €620 million but a gross €1.3 billion, which would allow them build the 9,000 homes. We do not have the wherewithal to comment on the fine print in the EU rules and whether the question on this has been asked.

If other taxes were introduced it would create additional space, but this is not our area.

We are an organisation of 12 people and are reasonably good at borrowing and lending money cheaply and getting it repaid before rolling it over again. That is what we are bringing to the table with this proposal.

The Dublin bonds worked in the past, and there is nothing to stop them working in the future. An affordability model involving a certain mix is being worked on in the Department. We would be quite happy to lend money in that direction. There is a balance to be found. We have the benefit of a Government guarantee and no State aid questions arise, given the fact that we are providing for a social housing need, but as more private or affordable renting enters the mix, one must be cognisant of whether State aid issues arise. One could do a fair bit of activity before that became a problem, though, given the fact that the nature of the social housing requirement is approximately 35,000 houses. One would have a great deal of affordable housing provided before State aid issues arose. In principle, we would have no issue about lending into that environment to facilitate that work, because it facilitates housing, which is what we are here to do.

Have I missed any question?

Mr. Seán Cremen

I do not believe so.

Chairman

Officials from the Department of Finance will address for the committee the specific point requested, so we will continue the discussion.

Deputy Brendan Ryan

I have a quick question in a slight deviation from the witnesses' core submission. In the past in my part of the world in north County Dublin, small, local co-operatives successfully built between 20 and 25 houses for local groups. Is this something that the Housing Finance Agency could facilitate by lending directly or indirectly?

Mr. Barry O'Leary

In our main business with approved housing bodies, AHBs, they must qualify. They go through three-tiered assessments of their corporate structures, histories and future plans. It is rigorous, and 15 decent-sized AHBs have qualified. We have a secondary product that we call a tier 2 product. Anyone who is registered as an AHB and has signed up to the financial chapter that the housing regulator has brought into place can borrow up to €1.5 million from us on a reduced assessment basis. If an AHB gave us a set of accounts that proved it was solvent, we would consider giving it up to €1.5 million, but that would be the extent of our offering. This is targeted to spread the risk across the sector because there is quite a number of players therein.

Every AHB that approaches us must have a payment and availability agreement, PAA, in place. That is an arrangement with the local authority whereby the authority has nomination rights, in that it nominates people from its housing list to the houses. If all of that is in place and one has a solvent set of accounts, one will get approximately €1.5 million from us within approximately two weeks. I doubt whether one could get 25 units done for that, but the help is there on a small scale to encourage activity.

Chairman

We will take the remaining two members. I call Deputy Butler.

Deputy Mary Butler

The witnesses have brought sunshine today because we have had many bleak sessions and have been tearing our hair out wondering how to move forward with the housing and homelessness crisis. We have needed to get through much in the past month.

I welcome that the agency has funds and can fast-track them within a couple of weeks. Do the witnesses accept that local authorities have a large part to play going forward, to coin a phrase? The witnesses may not have the answer now - it is not a problem as they can forward it to us - but how many local authorities applied to the agency for finance in the past five years, how many were successful and how many were unsuccessful or was it Government policy that local authorities would not build? Local authorities appeared before us at one of our early sessions. They told us that they did not have the finance and, even had they been allowed to build whatever they wanted, they could only have supplied between 10% and 15% of what was needed. They also pointed out that they were local authorities, not builders. The agency has given us a ray of hope, but there seem to be obstacles wherever we turn. What are the witnesses' thoughts on this matter?

Deputy Maureen O'Sullivan

Mr. O'Leary said that the Housing Finance Agency is committed to financing the local authorities and approved housing bodies and to targeting that funding at those who can respond quickest. What engagement is currently taking place between the agency and the local authorities and are any of them ready to avail of this funding and move on building?

Mr. Barry O'Leary

On the number of applications from local authorities, I do not have those figures with me but I can forward them to the committee. Anyone who applied from the local authority world got money. The agency has never refused a loan to a local authority.

In regard to lending to approved housing bodies, AHBs, approved housing bodies face many hurdles in terms of qualifying for funding from the agency. However, when they qualify we have a 100% record of application approval. We have never refused an application but we frequently do not qualify applicants because we might have concerns about their existing track records, corporate governance or future plans but we would work with them to improve in that regard. Once an applicant qualifies and has in place the famous payment and availability agreement that is fine. We have a 100% record in that regard.

In regard to our interaction to date with AHBs, our proposal is part of a strategy that is being produced for our own organisation. Naturally enough, we have had interaction with all our stakeholders, including the Departments of Finance and Public Expenditure and Reform and the Department responsible for housing. Within the past fortnight, we spoke to the CCMA's housing committee and last Thursday we spoke to the heads of finance of local authorities. They are interested but this is not a panacea. I am delighted to hear that what we are proposing has brought a bit of sunshine to the debate but we are not suggesting it is the solution to all ills. It is a reasonably well-thought out proposal that requires somebody else to move it on a step in terms of a political decision to go this route. This is not a proposal that will solve the problem on its own.

There are still barriers for local authorities, some of which I alluded to in my opening statement. There are issues around planning, procurement and land that need to be looked at. It is not the case that the Housing Finance Agency can simply turn up with the money and everything will be solved. The finance part of the equation is the only part we are representing we know something about. I am aware that there is work going on around what can be done in the planning area, what needs to be done on procurement and what needs to be done on land. Local authorities are interested in doing this. While, as stated, they are not builders, they are in a position to tender to procure builders. What is required at this stage is a signal to them that if they were to do this they will be supported financially. The local authorities must be certain that if they commission this work there will be a guaranteed stream of funding in place from central government to allow them repay these loans because at the end of the day we will want our money back.

Chairman

I thank the witnesses for their presentation and answers to members' questions. This is a complex area. While the Housing Finance Agency has delivered on one side of the equation, the on and off-balance sheet debate is an issue that as a committee we will continue with the Department of Finance.

The committee adjourned at 4.10 p.m. until 10.30 a.m. on Thursday, 26 May 2016.