First time buyers grant abolished

 

HOUSING: The abolition of the €3,610 first-time house-buyers' grants, with immediate effect, was just one of the "tough choices" the Government had to make on the Estimates, the Minister for the Environment, Mr Cullen, said last night.

He said experience had shown the grant "returned little benefit to consumers" and had "simply been absorbed in the increased profits of builders" over the past five years.

Noting that the National Economic and Social Council had called for its abolition in 1993, he said the grants had helped to push up house prices. Abolishing them now should encourage home builders to "look at their margins".

Mr Noel Ahern, the Minister of State for Housing, said that when the scheme was first introduced in 1977 the £1,000 (€1,270) grant then given to first-time buyers was "much more significant" when houses could be bought for as little as £11,000.

Mr Cullen said grants would be paid where applications were received or approved prior to yesterday, where a contract to purchase or build had been entered into or, in the case of self-build houses, where the foundations had been poured.

The annual savings from abolishing the scheme - estimated at €40 million in a full year - would be put into social housing and grants for disabled people. Because so many grants remain to be paid the impact next year is likely to be much lower, at €8 million.

The Department of the Environment's Estimate for 2003 shows a 5 per cent cut in the allocation for social housing to €1,017 million. Mr Ahern said the "real figure" was closer to 2 per cent, as the out-turn for 2002 would be higher than anticipated.

Asked about the impact this would have on the local authority waiting lists, which are up by 23.5 per cent on last year, he said it had to be borne in mind that the largest fraction of this increase was for single-person households.

Mr Ahern said there were 4,000 such households in this category, while a further 2,700 were "approved refugees". He admitted that the total of 13,000 housed this year would not bring down the overall figure substantially.

"We set out to protect as much as we could of the social housing budget, which is a big capital drain on the State," Mr Cullen said. This was in the context of an overall cut of 5 per cent in the budget from €2,433 million to €2,303 million.

He agreed it was also an "unfortunate conjunction" in the light of the uranium water scare in Co Wicklow that this year's €500,000 allocation for the radon remediation scheme for housing in affected areas had been cut to zero.

Mr Cullen said it was "not in our power" to continue it, at least in 2003. But the local authorities had "scope within their budgets" to deal with special cases in the areas worst affected.

Asked how he could defend a 4 per cent cut in the allocation for fire and emergency services in the light of a recent review recommending increased provision, he said he would be meeting with all of the parties involved to "move a whole range of issues forward".

Referring to a 4 per cent cut in the allocation for architectural heritage grants - on top of this year's 50 per cent cut - he said the scheme was simply not being taken up by local authorities. The Heritage Council's grant-in-aid for administrative expenses has also been cut by 17 per cent to €2.27 million while its allocation from the National Lottery has been reduced by 10 per cent to €7.04 million. The overall allocation for heritage is up by 7 per cent.

Others to suffer cutbacks include the Radiological Protection Institute (down by 5 per cent to €2.58 million) and the Environmental Protection Agency (down by 1 per cent to €18.8 million).