Little chance of construction industry being made to pay towards mica redress

The prospect of the Government compelling industry to make a significant financial contribution to the cost of mica redress has receded amid concern in the Coalition that the cost of any levy would be passed directly on to consumers.

Minister for Housing Darragh O’Brien signalled several months ago that he had asked Attorney General Paul Gallagher to examine the feasibility of levies, in an attempt to lessen the load on the exchequer arising from the need to rebuild and repair thousands of homes in Donegal and Mayo damaged by the presence of the mineral in building blocks.

Although Minister for Finance Paschal Donohoe is said also to be keen on “revenue-raising measures” to meet some of the redress costs, concern has risen in Government that imposing charges on the construction or insurance sectors would lead inevitably to higher prices for consumers.

“Taxpayers are already paying the bill. Why punish consumers?” said a senior Government figure who is involved in talks on a new redress scheme. “If you are talking about a levy, how would that impact on the housing sector overall?”

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Despite persistent political talk of levies, Construction Industry Federation director general Tom Parlon told The Irish Times that the question of a charge on companies he represents has never been raised by the Government.

“We have an open relationship with Government on all issues. This has never been mentioned,” Mr Parlon said.

Complications

Coalition leaders discussed potential complications arising from levies during talks last week on a new remediation programme, which is soon to be finalised after months of pressure from Donegal homeowners for a “100 per cent redress” scheme.

Following the talks, a senior Government figure said an industry charge was unlikely to be pursued much further unless Department of Finance officials “come back with a very ingenious levy that wouldn’t impact on the consumer”.

Given efforts to tackle the escalating cost of new homes by boosting the construction of houses and apartments, the source said the reluctance to pursue a construction levy reflected anxiety that building costs are already rising sharply.

Mr O’Brien raised the notion of an insurance levy after home insurers said mica damage was not on the list of insured perils and was therefore not covered.

Now, however, the Government is concerned that insurers would simply add a levy onto the cost of policies, running counter to difficult efforts to cut the cost of insurance. There is also concern that a levy would curtail any prospect of boosting competition in the Irish market.

The Government expects banks to pause mortgage repayments on mica homes while they are being rebuilt or repaired, but Coalition leaders did not at their meeting last week discuss the idea of imposing “extra costs” by way of a levy on banks. This is in line with the assessment of senior banking figures, who have long said that the sector’s “contribution” would be limited to suspending loan repayments.

Failing blocks

The mica affair centres on homes in which the walls are crumbling because of failing blocks. A Government-appointed panel blamed the damage on excessive “deleterious material” in the form of muscovite mica in the aggregate used in the blocks. Micas are minerals that can absorb and store water, which can cause blocks to crack and crumble like sand.

A Government working group report found that the overall remediation cost to the exchequer, currently estimated at €1.4 billion, could rise to €3.2 billion if all homeowner demands are to met.

The saga is set to culminate in coming weeks as the Government settles terms for a new redress scheme for as many as 6,600 homeowners, mainly in Donegal and Mayo. There are signs similar aid may be required in Sligo, Limerick, Clare, Tipperary and in some Dublin developments.