Rory Hearne TD: ‘The case for a state construction company’

Ireland’s housing emergency is worsening by the day. The Housing Commission called for a “radical strategic reset” of housing policy, but we have yet to see this become a reality, writes Social Democrats housing spokesperson Rory Hearne TD.

We in the Social Democrats want the State and the not-for-profit housing sector to directly deliver housing on a massive scale through a historic programme of social and affordable home building. This is what the State did in Ireland in the past through local authorities and the National Building Agency. Without such direct delivery, the radical reset required to solve the housing emergency cannot be achieved.

As a country, we have placed our economy and society in a very vulnerable situation, with the supply of housing hugely dependent on prevailing market conditions, and the whims, vagaries, and changing motivations of private financial institutions, real estate investor funds, the property industry, and for-profit developers.

Government spends a significant proportion of the housing capital budget buying housing from developers at prices dictated to them. Meanwhile a significant proportion of the current budget for housing is spent subsidising private home purchase via schemes that have been criticised by the ESRI and the Central Bank as serving mainly to keep prices artificially high, and to assist people who could already afford to buy homes to buy bigger ones.

This ‘strategy’ of throwing money at a failing market system seems primarily designed to create the impression that something big is being done, but serves mainly to inflate prices in the long run and maintain the same reliance on a private delivery model that has long failed us.

The boom-and-bust cycles generated by this model have left the Irish construction sector with far less capacity than is required to deliver on our housing and infrastructure needs.

That is why we believe that we need to shift to a State-led direct delivery of housing which will involve an enhanced role for local authorities and approved housing bodies. The Social Democrats in government will create a new state construction company.
This state construction company would mean the State itself would have construction capacity, allowing government to move away from the current dependency on various private and market actors for the delivery of housing.

It would also give the State a means by which to directly tackle one of the biggest issues facing the construction sector; that of labour force supply, recruitment, and retention through quality employment.

For the last decade-and-a-half, there has been a notable difficulty in attracting new workers to the construction sector at the rate required. A state construction company, offering decent apprenticeships with improved rates of pay, quality permanent employment, and good benefits would play a key role in building up the skills required to tackle Ireland’s housing emergency.

Our state construction company would also invest in modern methods of construction (MMC) to ensure the State has a regular supply of high-quality factory-built homes. In our most recent alternative budget, the Social Democrats ringfenced €120 million for investment in modular home factories to unlock the potential of this technology.

MMC is a manufacturing approach where much of the construction of buildings is transferred from building site to factory floor. MMC provide opportunities to increase productivity and efficiency in the construction sector; which in turn can accelerate the provision of housing.

The state construction company would set up four regional modular home factories which between them would produce up to 2,000 homes per year, mainly for local authorities.

It is important to note that private developers and private builders will still have a role in housing delivery. However, it is clear that the total reliance on private providers has failed to deliver affordable housing on the scale needed, and so a massive shift is needed.

The production and output of the state construction company will be in addition to that from the private sector, as the Social Democrats believe that housing is a fundamental need and so – just as in other areas of fundamental importance like health and education – the State must be at the heart of delivering a basic level of provision.

Just as we do not leave it up to only the private for-profit health providers to care for our citizens, and private schools to educate them, we should not take a laissez-faire approach in housing.

Under our proposal, a state construction company would operate alongside existing market delivery of housing, playing a significant role in the delivery of affordable and social housing. The state construction company would:

• directly employ all the necessary construction skills, including engineers, surveyors, block layers, scaffolders, carpenters, plumbers, electricians, fitters, and construction project managers;
• provide quality permanent employment and apprenticeships, to help attract a sufficient number of workers to the sector;
• create four regional modular home factories, which would between them produce up to 2,000 homes per year and allow Ireland to begin harnessing the potential efficiencies of MMC; and
• work with local authorities to deliver a significant increase in the number of new homes being delivered to meet our housing targets.

This would develop the public capacity to construct homes and key infrastructure. We also know there is much to be done on tackling derelict buildings and the retrofitting of existing homes now and into the future.

The potential for a state construction company to ensure everyone has a decent affordable home is huge. We should take this historic step to guarantee that young people have a future in this country.