Official Report: Minutes of Evidence

The Acting Chairperson (Mr Dickson): Good morning. You are very welcome.

Mr Ian Snowden (Department for Social Development): Thank you to the Committee for the opportunity to discuss the Department's June monitoring round proposals for 2015. I was recently appointed the acting deputy secretary in the Department. With me is Deborah Brown, director of financial management in the Department for Social Development (DSD).

The Department's monitoring round proposals are due to be returned to the Department of Finance and Personnel (DFP) on Thursday 4 June. Inputs from all the main business areas in the Department have been compiled, and details were passed to the Committee Clerk last week. They are in the paper that you have. I hope that you found the briefing note to be helpful. I have to stress that, in monitoring round processes like this, the figures may be adjusted right up to the point of the final submission to DFP. There is nothing new in that; that is standard practice. The proposals that you have in front of you are the most up-to-date assessment of the Department's position.

I will hand over to Deborah, who will take you through the detail of what is in the proposals.

Ms Deborah Brown (Department for Social Development): The details of our proposals were summarised in the table and the associated narrative that we sent to you last week. Hopefully, you will have had a chance to look at those. I will go over the key points.

Within the table, you will see that we are bidding for £100 million of financial transactions capital. The housing division has submitted proposals to replace the housing association grant funding with the financial transactions capital loan funding, beginning in 2015-16. That would involve providing £100 million in 2015-16 to meet funding requirements over a four-year period. It would replace the conventional departmental expenditure limit (DEL) capital funding of £15 million that is currently in the baseline for 2015-16.

We also propose to place a bid for £10 million for the Northern Ireland co-ownership bid. The co-ownership scheme remains the Department's main measure for supporting potential first-time buyers and those returning to the market who wish to purchase their own home but cannot afford to do so outright. In the event that the financial transactions capital bid is unsuccessful, this bid will secure the necessary DEL capital funding to increase the allocation in-year to £25 million.

We are also proposing to place a bid for £10 million for the social housing development programme. The current level of baseline funding is sufficient to deliver the number of social homes required by the Programme for Government, which is 1,500 starts. However, the Department has an aspiration to exceed that target. Therefore, we are placing a bid for £10 million, which would enable an additional 150 homes to be built.

You will see that there are bids being placed under the urban category for £4 million. The urban group has identified capital and resource pressures in this monitoring round of approximately £3 million and £1 million respectively. The capital pressure arises in neighbourhood renewal, with a pressure of £1·1 million, and public realm, with a pressure of £1·9 million. Both of those are capital. In both cases, the bids are to enable the completion of a number of projects in advance of the transfer of powers to the councils. The completion of those projects will have a beneficial impact on several of the new councils and contribute to three of the five Programme for Government targets, including growing the economy, tackling disadvantage and building a strong and shared future.

The £1 million resource bid will support the delivery of year 2 of the Delivering Social Change/social enterprise hub project in respect of premises and social enterprise support. The social enterprise hubs pilot project is one of the signature programmes being taken forward with funding support from the Northern Ireland Executive’s Delivering Social Change framework.

I move to our easements, and these are all non-cash easements. These non-cash easements arise in the Social Security Agency of £1·8 million and in the Housing Executive of £3·2 million. These stem from reduced requirements with regard to depreciation and impairments, and, as these are non-cash, they cannot be used for any other purpose and, therefore, are being surrendered.

As a separate exercise, we have also placed our requirements under the voluntary exit scheme, and it is assumed that, for the purposes of this monitoring round, all requirements under the exit scheme will be met for the Department. The Housing Executive has also placed its bids towards this transformation fund.

We have also had confirmation that OFMDFM will be providing £290,000 in resource funding to meet the resource costs associated with Together: Building a United Community (T:BUC). It is our understanding that this transaction will be processed by DFP in the June monitoring round. I will also highlight the issue around the urban villages, which, again, is part of Together: Building a United Community. There are proposals to establish four urban villages to create and stabilise change within communities. These offer opportunities to utilise innovation and visionary proposals to make real and lasting change in areas that have witnessed years of decline, market failure and low capital investment. There are currently two agreed villages in the Colin area of west Belfast and lower Newtownards Road, east Belfast. Colleagues in OFMDFM have confirmed a resource transfer of £1·75 million in this monitoring round and that a capital bid of £2·2 million will also be submitted on DSD’s behalf.

I move to other Delivering Social Change initiatives. We collaborated with the Department of Education and the Department of Enterprise, Trade and Investment last year in relation to advancing a number of Delivering Social Change initiatives, including the nurture units and the social enterprise hubs. We are in consultation with colleagues in both those Departments and DFP Supply to ensure that we have the continued funding for these important initiatives.

The areas for which we expect funding to be forthcoming in the monitoring round — the exit scheme, T:BUC and Delivering Social Change — will be reflected in our cover paper to DFP and will not be placed as actual bids.

That is a brief summary of the Department's proposals. We are happy to clarify any points or answer any questions from the Committee.

The Acting Chairperson (Mr Dickson): Thank you. Before I invite Committee members to ask questions, may I ask about the bid submitted for £10 million in relation to social housing? In the previous monitoring round, the Department noted that it had not bid for additional funding for social housing because housing associations told us that they could not give assurances that they could spend the money before the end of the financial year due to various barriers that they faced. How can you be sure, this time, that they will be able to spend the £10 million that has been bid for, if, indeed, the bid is successful?

Ms Brown: We are hoping that, because it is so early on in the year and this is the June monitoring round, this is the ideal time to place the bid to ensure that we can deliver in-year.

The Acting Chairperson (Mr Dickson): You see this as a challenge to the housing associations.

Ms Brown: I think that, when we have a plan for 1,500 homes, anything over and above that is a challenge. We really do want to try to push that target.

Mr F McCann: This has been going on for a number of years. When you speak to the likes of NIFHA, the governing body of housing associations, you find that housing associations say that a lot of the problems lie within the Department and that there was stuff that needed to be cleared up to allow them to build. Housing associations have always said that, if they got the money early enough, they would be able to do it. Who does the money go to? Does it go to the Housing Executive? Does it go to NIFHA? Does it go to an individual housing association? Does it go into a central pot?

Mr Snowden: The programme is managed by the Housing Executive on the Department's behalf, so the Housing Executive allocates that funding to the housing associations to build the new houses.

Mr F McCann: Are you confident that they are able to pick?

Mr Snowden: If we had believed that they could have spent more, we would have attempted to bid for more. I think that this is our most realistic assessment of what the housing associations will be able to deliver in-year, additionally, on top of the baseline that we currently have.

Mr F McCann: Are you confident enough that the barriers that housing associations said were in place from the Department have been removed so that those will not stand in the way of the housing associations fulfilling their spending?

Mr Snowden: Obviously, we try to make sure that every scheme is processed as quickly as it can be, but there are a large number of reasons why a scheme might not proceed in the time frame that you would hope it would. Those include procurement issues, planning issues, land purchase issues and so forth. To make sure that we can achieve the target, we try to significantly over-programme. We may have schemes in mind that will achieve maybe double the number of new starts in the year in the expectation that quite a number of those will face some kind of difficulty and will not be achievable.

Mr F McCann: I have one final point on that. I and other members have raised at this Committee over many years the issue of starts and completions. It totally confuses the issue. A start could mean two or three years down the line. It could mean a financial move to ensure that it is included in the programme. It can mean a stake in the ground. Is there any chance of getting a breakdown of starts and completions so that we know exactly what is being done year-on-year?

Mr Snowden: The best measure of that is possibly the date on which somebody gets handed the keys to a new house for the first time. I will have a look at that. That is something that I have been thinking about in my new job.

Mr Allister: Will you explain a little more about the housing bids and the idea of £100 million for Northern Ireland co-ownership housing and financial transaction capital? You said that that £100 million is to substitute for the £15 million that is already in the baseline. What happens to that £15 million?

Ms Brown: We would have to surrender that to DFP.

Mr Allister: That is not in this proposal.

Ms Brown: No, because we have to wait to see if the £100 million financial transaction capital bid is successful. You will see that, against the £15 million that we have in the baseline, we are bidding for £10 million in the event that the £100 million is not met, so that £25 million is in the baseline for that co-ownership.

Mr Allister: Have we spent any of the £15 million?

Ms Brown: I am not sure about how much of that we have already spent at this stage, but that would then dictate how much we could surrender in the next monitoring round.

Mr Allister: You are bidding in the alternative. The £100 million is your top-line bid, and then you would surrender whatever amount of the £15 million has not been used. Failing that, you would add to the £15 million by your bid for £10 million.

Ms Brown: It will be presented to DFP in that way so that we do not end up getting £100 million financial transactions capital and another £10 million towards co-ownership. It will be an either/or issue.

Mr Allister: If you do not get either your £100 million or your fallback position of £10 million —

Ms Brown: We have only got the £15 million for co-ownership.

Mr Allister: That is why I asked how much has already been spent. It was to try to evaluate the demand.

Ms Brown: We spent £50 million last year on co-ownership, so we know that there is demand.

Mr Allister: For the whole of this year, presently, you only have £15 million.

Ms Brown: Yes, and that is because, as you will recall, the 2015-16 capital settlement for the Department was not as good as we had hoped.

Mr Allister: One might suspect that, a couple of months into the financial year, a good part of the £15 million might already be gone.

Ms Brown: It may.

Mr Wilson: Jim has pursued one of the points that I was going to ask about. Co-ownership has been very successful and, indeed, has probably been one of the main sources to enable first-time buyers to buy houses. It has also helped the private sector house-building programme. Whilst the £100 million gives certainty over the four years, it is a substantial reduction on the amount of money in previous years, albeit a lot of that was made up by in-year bids. It was not at the baseline. Is it still envisaged that, if you succeed in getting the £100 million over the four years, that could, if demand was there, be topped up with in-year bids for DEL capital?

Ms Brown: Absolutely. The issue around how much we surrender — it goes back to Jim's point — is about how much we have already committed, what the demand is and whether DFP will seek some recovery of what we have not spent on the basis that it gives us the financial transaction capital. We will have to have that discussion. We will absolutely want to try to maximise the amount that we can put into that area.

Mr Wilson: Once financial transactions capital is given, it can be carried over from year to year. It is not the case that, if it is not spent this year, it has to be surrendered.

I will move on to the social housing programme. You have bid for the £10 million, and it has been identified that, in the past, the social housing programme has not been able to deliver. I take it that that £10 million is against schemes that are already identified, have planning permission granted and are ready to move on site, or is that speculative?

Ms Brown: I am sorry, but I do not have that level of detail.

Mr Snowden: Not all of the schemes will have planning permission yet. As I said in response to one of the previous questions, there are a number of reasons why any one of these can fall. There is a pipeline, so there will be a number of schemes that you would hope to bring forward. The schemes that the money would be spent on would be ones that we already know about, but it can take about 18 months from the start to the finish of the process to get to a point where you are able to score the expenditure and the new starts. So, there will be some that will not have planning permission yet and some where the land purchase still has to be finalised.

Mr Wilson: Yet, we are bidding for money, even at this stage of the year, knowing that the housing associations have told us in the past that the process can take anything up to 18 months or two years.

Mr Snowden: Yes, but we have to make an assessment of the proportion of that pipeline that we think we will be able to bring forward during the course of the year. So, it is about trying to consider what we have achieved in previous years at this particular point and what is likely to be achieved.

Mr Wilson: So, it is really an extrapolation; it is not based on any hard evidence from the housing associations that we have schemes, albeit that we do not have planning permission, but the planning application is in, and we think that it is going to go OK and there have not been any big issues raised, or we have not bought the land, but we know that it will be available to us if we have the funding. It is not based on that; it is just an extrapolation of what you have thought from previous years that they might be capable of delivering.

Mr Snowden: It is a judgement based on how we see the programme delivered in previous years on the basis of experience.

Mr Wilson: We are not surrendering any money from the Department at this stage.

Mr Snowden: No.

Mr Campbell: Following on from what Fra McCann said, on the issue of co-ownership and the four-year period, have any discussions taken place with the housing associations, given that, if the £100 million over four years is successful, one would expect there to be more certainty around start dates, continuation and, hopefully, numbers coming out at the end of it? Have they given any assurances about how they could activate and complete within the four-year period?

Mr Snowden: The co-ownership process is slightly different from the social housing development programme. Co-ownership is pretty much a demand-driven approach where the potential property purchaser will approach the housing association with a property in mind and ask if they can get assistance with the purchase. The consistent message that we are getting from Northern Ireland Co-Ownership Housing Association is that it could use whatever amount of money we were able to provide to it. Because it is a demand-driven process, if we can provide [Inaudible.]

it can be fairly assured that it would be able to use it.

Mr Campbell: That is the impression that I get on the ground on a narrow constituency basis, and I assume that it is replicated across. If that is the case, are they saying to you, "Look, we can use the £100 million in four years, and we will not have a significant amount of that £100 million unspent at the end of the four years"? Is that effectively what they are saying?

Mr Snowden: I think that they would take the attitude that the £100 million would be a start for them, and they would require more than that over a four-year period. As Deborah pointed out, we spent £50 million on the scheme last year, which indicates that the £100 million would be used within two years.

Mr Campbell: Say that was the case, will you be back in again to try —

Mr Snowden: We will try to secure the funding that we need to do more, but that would be the approach that would be taken. We are assuming that the £100 million will carry us forward for a number of years into the future, but it is likely that it will be used up sooner than the four-year period, on the basis of previous experience.

Mr Beggs: Thank you for your presentation. Most of your bids are on the capital side. Have you been given an indication that there are capital moneys available? We are aware that, on the resource side, there is a void rather than money to be redistributed. Have you been made aware that there is money here to bid for in the first place?

Ms Brown: No, we have not been made aware. Every Department is working through its bids and easements, and we are hoping that some other Departments will give up some easements, but I have been given no indication of that.

Mr Beggs: There are bids for £1·1 million for neighbourhood renewal projects. It is one of the smaller amounts. Can you give us some more detail about types of expenditure that would be involved with those projects?

Mr Snowden: There are six projects included in that list, with relatively small amounts to each one, and they are all in Londonderry. There is St Joseph's boxing club. Sorry, there is one project in Strabane as well, which is about links to the new Melvin Bridge in Strabane. There are two play parks in Londonderry at Irish Street and Rose Court, and there is an outdoor gyms project that the local council has been developing. There is also a small grant to the Springhill resource centre.

Mr Beggs: Why are all the bids from one area?

Mr Snowden: We have to try to make sure that the projects we fund are capable of being delivered in the current financial year because of the reform of local government (RLG). Unless a council is willing to give detail of its expenditure past March 2016, we cannot commit to starting the project, because effectively there is no guarantee that all the money required to finish the project is there. The Department cannot carry the tail of expenditure beyond the end of the RLG period. The six projects in that particular area are the ones that are able to meet those criteria. Some of them are delivered by way of a technical transfer process through other Departments. For example, St Joseph's boxing club is actually a project being delivered by the Department of Education.

Mr F McCann: On the point about co-ownership, I know that Sammy said about on-site construction for co-ownership, but many of those that are identified and bought are not built from the ground up but are bought on the open market by co-ownership. It is not a big windfall for the construction companies.

Mr Wilson: Half of the new houses are bought under co-ownership now.

Mr F McCann: I understand that there are a lot of off-the-shelf dwelling places that have already been built, but many of the houses that are being built are bought by co-ownership now.

The point that I wanted to make is that, in my constituency, there are 3,500 people on a waiting list and over 2,000 people in housing stress. Much of the money that has been given to co-ownership, which is obviously a housing association, takes that money on a wider spread. It therefore removes the money that is being used to deal with high social demand. There are many who believe that it has been done purposefully so that money can be delivered outside the housing need formula.

You said that the money for co-ownership can be used, but do you have any idea what the waiting list is for co-ownership housing?

Mr Snowden: Off the top of my head no, I do not.

Mr F McCann: My understanding is that it is just over 500. Have you any idea what the waiting lists are for social housing?

Mr Snowden: It is in the 10s of thousands —

Mr F McCann: It is actually 40,000, with 20,000 in housing stress. That gives you the idea that you have applied for £10 million for social housing, but £100 million over four years. Does the £100 million go directly to co-ownership or is it a mixture of all the housing associations?

Mr Snowden: It is mainly the Northern Ireland Co-Ownership Housing Association that gets it.

Mr F McCann: So it goes directly to that. I do not want to put you on the spot, but that seems totally unfair to me. We are trying to come to terms with dealing with a serious housing problem, and yet it seems that many of the eggs are being put into one basket.

Mr Wilson: But, Fra, it is not £10 million as compared to £100 million. It is £10 million extra on top of all the other capital money that is spent on social housing, which amounts to — how much?

Mr Snowden: £100 million.

Mr Wilson: £100 million per year.

Mr F McCann: Sammy, you are one of the people who has argued in the Assembly — in fact, I think, it was when you were Minister of Finance — for a reduction in the grant going to housing associations. You said that housing associations should learn to stand on their own feet and take a chance by providing their own money. This is a housing association that has its own money, and that is being added to by the Government. I am saying that there is a huge difference between 500 on a waiting list and 40,000 on a waiting list. That is the problem. I have no arguments against co-ownership, per se, but it does not work for some people, when they look into it.

The Acting Chairperson (Mr Dickson): I want to pursue the issue of the £10 million for social housing and the difficulty that housing associations may have in being able to spend that money on projects. You said that it is a pipeline, but that pipeline is further clogged up this year because the reform of local government has led to a slowing down of planning permissions, not a speeding up. That is at the moment. Hopefully, it will speed up in the future, but at the moment it has slowed down, so this financial year may be even worse, rather than better.

Mr Snowden: Possibly yes and no. I will not name the council area, but there is one rather interesting example of a council where they have approved the planning permission for a social housing development but are prevaricating over whether to sell the land to the housing association to build the houses. The planning is not necessarily the issue, because it is still the same professional team of planners processing the applications, but there are other factors generally, and the reform of local government has no particular bearing on that situation: the council would still have had its concerns about the sale of the land.

The Acting Chairperson (Mr Dickson): Finally, when we were briefed on the business plan, the target for 2015-16 in respect of T:BUC was to progress five urban villages, but your paper refers to only four.

Mr Snowden: There are five.

The Acting Chairperson (Mr Dickson): It is five, so it is just a mistake.

Mr Snowden: Yes.

The Acting Chairperson (Mr Dickson): Thank you very much. If there are no other questions, I will thank Deborah and Ian for their presentation this morning. Is there anything else you want to say to the Committee at this stage?

Mr Snowden: No.

The Acting Chairperson (Mr Dickson): OK. Thank you very much.