Watchdog says Government will struggle to deliver on housing promises

Borrowing plan could overheat economy and leave less room to react to future shocks

The council warned  that moving too quickly on demand measures could push up house price inflation. Photograph: iStock

The council warned that moving too quickly on demand measures could push up house price inflation. Photograph: iStock

 

The Government will struggle to deliver on promises in its new housing plan on the planned timescale, according to a new report from the National Competitiveness and Productivity Council (NCPC). It has also warned that moving too quickly on demand measures could push up house price inflation.

It has called on the Department of Housing to conduct an urgent examination of the demand-side measures in the recently published Housing for All plan – which include the new shared-equity scheme – to determine when they should be rolled out, given the time it will take to increase supply.

The council, in its latest report – Ireland’s Competitiveness Challenge 2021 – said it welcomed the ambition in the new housing plan. However, it warns that the Government may find it difficult to achieve the ambitious delivery targets, with a wider range of policy changes planned to take place over the next year.

It says that it is vital to identify priority areas for urgent action so that resources can be directed to areas where real change can be delivered.

The NCPC, chaired by economist Dr Frances Ruane, has made 20 recommendations to Government to improve Ireland’s competitiveness in what it says is a vital period heading out of the pandemic lockdowns.

Borrowing

Dr Ruane warned that despite positive forecasts, the economic outlook remained uncertain, making it vital that the Government addressed areas under its control. The council warns that the plans by the Government to borrow more in the years ahead could run the risk of overheating an economy already due to grow strongly or leave less room to react to future economic shocks by keeping the national debt at a high level.

In the short term the report says it is essential that supports continue for firms which are “ viable but vulnerable” , while recognising that some others may not continue in their current form.

Moving into 2022 it says it may not be possible to decide what firms should be supported simply on the basis of what sector they are in, with other factors like previous performance and prospects also relevant. For those that need to restructure, the council calls for wide awareness of the new scheme aimed at helping small business in difficulty to restructure, called the Small Companies Administrative Rescue Process .

Insurance

Among the key areas which the council says need to be addressed are the ongoing high cost of insurance. It says the impact of the new Personal Injuries Guidelines needs to be assessed and monitored and it also calls for an assessment of the introduction of a scheme of fixed legal fees to be published.

The report also says that moves to increase competition in the banking sector need to follow a review of the banking sector, being undertaken by the Department of Finance. The departure of Ulster Bank and KBC threatens to damage competition in the provision of loans and drive up costs, it warns, and action must be taken urgently to try to avoid this.