Conference of the Isles - 7 May 2009

It is a great pleasure to be here in Newcastle today, and to have the opportunity to speak at this Conference of the Isles, to an audience so knowledgeable in the field of housing.  I’d like to thank the organisers for the invitation and congratulate you on holding the Conference in one of the most beautiful parts of the world.  For those of you attending the Conference from further afield, I’m sure you will agree that the beautiful setting of this hotel is second to none.

It is, of course, not news to anybody here that we are in the middle of the worst recession of this century. The house price bubble, which at one stage became inflated far beyond sustainability in Northern Ireland, has finally and inevitably burst.  In the quarter ending 31 December 2008, house sales were down by almost 37%, and average house prices had dropped significantly. Most of us I think knew that when average house prices locally had reached ten times the average income there was going to be a correction. I don’t think many of us expected it to be accompanied by a global financial meltdown and worldwide recession.  

With unemployment rising, banks restricting lending and businesses tightening their belts, it seems inevitable that housing, and particularly social housing, is going to be a key issue in the coming months and years.  Against this background, we need to rise to the challenge and do everything in our power to help those who are feeling the impact of this recession and the suffering which accompanies it.

However, I think we have some of the fundamental thinking done. On taking up office I inherited the Report of the Semple Affordability Review and I established an interdepartmental group to advance its implementation. I also commissioned an expert Housing Advisory Group under the Chairmanship of Professor Alastair Adair of the University of Ulster. It produced a very useful report on the dynamics of our local housing market.

We also knew that whatever happened we would need to be more innovative in housing – particularly in relation to housing finance. For this reason I invited housing finance expert Baroness Ford to look into how we could introduce more private finance into housing investment and leverage scarce public resources further. She produced another excellent report nad we have already implemented a number of her recommendations such as improving the ratio of taxpayer/Housing Association money in the newbuild programme and bringing private finance into co-ownership for the first time.

There are other major changes we are looking at such as reprofiling NI Housing Executive debt and leasing social housing – but we require the support of Executive colleagues to deliver on them. All in all I think we did the research and analysis necessary to support the New Housing Agenda launched in February 2007.

For all that, from my perspective as Minister for Social Development there are two key things that need to happen:

Firstly, we need to invest more resources in social housing. We need to build more houses. The Housing Executive has estimated that we need to build 3,000 new social houses per year in order to start making inroads on waiting lists. I agree.

There is evidence that increased investment in social housing may be the best way to keep businesses afloat and skilled workers in jobs - for every 10 jobs created by expanding the social housing programme, at least a further 7 jobs will be sustained elsewhere in the supply chain and in the retail sector.

According to a number of experts, house building offers a higher economic multiplier than larger infrastructure projects.  That is to say:

Leaving aside economics, we also have a compelling moral obligation to invest in social housing.  The latest figures show that actions for repossession are continuing to rise. The number of people now stating mortgage default as their reason for becoming homeless has more than doubled.  This is not a complicated formula; recession increases the demand for social housing, therefore we need to build more social houses.

Secondly, we need to stability in the housing market and in the financial sector.

There is an uncertain, but perhaps strengthening, sense that this stabilisation process is starting already.  Anecdotally, over the last financial quarter, there has been an increase in the number of inquiries made to estate agents.  It is too early to be definitive but I hope this is positive and a sign of better things to come.

There are also some hopeful signs on the financial front with some evidence of a relaxation of credit, enabling people to fund house purchase. The housing market is a continuum so getting the first-time buyer market going again must be a priority for all of us in Government.

There is no question of going back to the market’s peak in 2007 when house prices rose far beyond sustainable levels and Belfast became one of the least affordable places in the UK.

In the midst of this unprecedented rise, we probably forgot the most important function of a house.  This is not to be an investment, or a pension plan, or an asset to borrow against.  It is, quite simply, to be a home: a place to live and to put down roots.

Those who do not learn from the past are condemned to repeat it.  We need to study the causes of this most recent cycle of boom and bust and take care not to fall into the same traps again. Prices need to be sustainable in terms of incomes or it is only a matter of time before we go through another crash.

Of course the housing crisis is not peculiar to Northern Ireland.  The effects of the economic downturn are affecting all British Irish Council member administrations.  The result that the problems facing home owners and first time buyers are similar regardless of where they live within the British Irish Council jurisdiction.

I am very pleased that my colleagues in the British Irish Council, recognising the value of the work we have been doing, have asked me to lead on a work stream to consider the challenges facing the housing market across each of the member administrations.

In doing this, I want to identify creative solutions to help those in housing need, and to create the conditions to restore confidence in the private housing sector.  The work in this area can offer a more strategic and collective approach to finding innovative solutions for the housing problems affecting all our people.  

I am delighted to take the lead responsibility and I look forward to working with my Housing Minister counterparts from across the British Irish Council jurisdictions to ensure real progress is made in addressing the challenges we face today and beyond.   

Turning to the financial situation here in Northern Ireland, I am sure you are all aware that the Housing Budget is under significant pressure due to the collapse of the housing market and its impact on planned receipts from house and land sales.

Unless there is a dramatic improvement in the economic environment, the Housing Budget is facing

a serious shortfall of a magnitude of £100 million this year, and also in the next financial year.  This is equivalent to the loss of 1,200 new build houses each year.  I am sure you will agree that this situation is untenable.

As I have always said, my priority must be the provision of new social housing, with the Programme for Government target for new build in 2009/10 being 1,750.  Current market conditions are more suited than ever before to increase investment in social housing, to stimulate the economy, protect jobs in the overall construction industry and help the most vulnerable in this society by providing them with a home.

The Housing Executive has been notified of its budget allocation for this year and, due to the shortfall, funding will be directed to priority programmes and to where commitments already exist.  I realise that a number of Housing Executive programmes will have to be curtailed, however, it should always be our priority to protect the vulnerable. .

I will continue to press my Executive colleagues for their support for my proposals for increases in funding for the Social Housing Development Programme and Housing Executive programmes over the next two years. I believe the economic and social case for more investment is beyond argument.

I will also continue to make the point that housing needs to be once and for all put on a sound financial footing. This hand-to-mouth existence, where the entire housing sector is waiting in hope of extra money form quarterly monitoring rounds is simply not good enough.

I could mention a wide range of other things we have done, and are doing, under the New Housing Agenda. These included our work on the homelessness strategy, private rented sector. The opening up of equity sharing, Supporting People, Warm Hones, Mortgage Rescue, Northern Ireland’s first eco-village, North-South co-operation and further financial innovation.

There is not time here – but I will mention one other thing….I observed earlier that a house is first and foremost a home for individuals and families. It is also in the same sense the key building block of our communities and of our society. Our entire social development. The nature of housing in many ways determines the nature of our communities and it is my belief that radical reform of our desperately segregated housing sector is needed if we are to heal the damaging divisions in our community. I know you will hear more about this this morning, but let me tell you where I stand.

I believe in a shared future: a real shared future. Not just some platitutinous co-existence. Achieving mere tolerance is not an acceptable outcome for our community. We must therefore create a community characterised by mutual respect where our people have a common vision of living in harmony, while accepting and celebrating their difference.

This is a long-haul project: we have launched a Shared Neighbourhoods programme in existing estates and have a number of cross-community initiatives underway relating to new developments. But I want to go further.

Fifteen years after the ceasefires we have increased rather than decreased the number of peace walls. We have institutionalised division and segregation and it is my intention that we start to dismantle this – at least in the field of housing.

We have huge financial and economic challenges and, in time, I think we can overcome them, but we have a moral duty to heal a damaged and often dysfunctional society and that work will continue to permeate everything I do as Housing Minister and as Minister for Social Development.

In conclusion, I want to mention the role of the private rented sector as an integral part of the New Housing Agenda. I will shortly be launching for consultation a package of proposals aimed at delivering improvements in the private rented sector. The key issues, which the strategy addresses, emerged from a period of pre consultation with a wide range of stakeholders.  These issues have also been the subject of previous Assembly debates and questions.  I am confident that the strategy has identified the relevant issues that need to be addressed.  For example, concerns about the standard of practice by some landlords, and to a lesser extent, poor behaviour of some tenants; similarly, the lack of security of tenure for private rental tenants, and the right of landlords to give only short periods of notice to quit need to be addressed..

My proposals to address the issues have been carefully shaped and have their basis in a strong and clear set of principles.  These include supporting greater choice in housing tenure and promoting sustainable tenancies, while providing value for the tax payer.

Public consultation on the proposals will begin shortly and will last for 12 weeks.  I hope that all of you will take the opportunity to give the strategy careful thought and respond to the consultation so that collectively we can deliver a strong and sustainable sector fit for purpose both now and in the future.

Finally, I hope that you find the conference informative and enjoyable.

Thank you.