£8.9 million in grants to housing associations did not result in social housing

Session: Session currently unavailable

Date: 20 October 2015

Reference: PAC 02/15/16

The Assembly's Public Accounts Committee has voiced serious concerns over the handling of grants to Housing Associations to purchase land for social housing in a report published today.

The Report, entitled Inquiry into DSD Advanced Land Purchases, looked at the way the Department for Social Development (DSD) provided monies to groups within the Housing Association sector. The rules set by DSD for Advanced Land Purchase (ALP) grant were amended in 2012 but it seems clear from the evidence given to the Committee that prior to then the scheme was wide open to abuse. Two grants to Helm and Trinity Housing Associations, with a combined value of £8.9 million resulted in no social housing being built.

Chairperson of the Committee Michaela Boyle MLA said: "It is deeply worrying that, despite DSD providing funds to both Helm and Trinity Housing Associations, no social housing resulted. We were also extremely concerned that not only did Helm not use land at Great Georges Street purchased by a Department grant of £8.1 million, a third party was able to buy the land at a lower price and then sell it to Helm—netting the third party a profit of £3.25 million within 24 hours. This is completely unacceptable and has never been explained, despite being investigated."

"Although an agreement has been put in place to ensure the full settlement of the grant paid, the Committee is hugely disappointed that it will have taken some 10 years from when the grant was paid to reach a full settlement. The Committee is further concerned that no interest is being charged".

A second case, involving Trinity Housing Association, also concerned the Committee, as it involved a grant of £0.8 million in 2008 to develop housing in Crossgar. No social housing was ever developed, due to problems in gaining planning permission, but when the Department requested that the grant be repaid in 2012, Trinity threatened legal action to retain the funds.
"The Committee views Trinity's decision to threaten legal action as unacceptable because the Association had a public duty to repay the grant when it had not been possible to progress the development. We are also appalled that the agreement to recover the grant, which was only reached in 2015, allowed Trinity to retain £0.2million to cover expenses incurred at the site even though no development had taken place. Again no interest has been charged to the Association," commented Ms Boyle.

The Committee was also disturbed by a potential conflict of interest with respect to the Chief Executive of Trinity Housing. The Committee felt that he should have declared a conflict of interest when Trinity first registered an interest in a potential development as it involved property in Newtownards owned by his brother. During his evidence to the Committee, the Chief Executive stated that he was unaware of the proposed Newtownards development until 2009. However, evidence subsequently submitted to the Committee by the Board of Choice Housing (which Trinity has now been amalgamated into) has led the Committee in its report to express its view that the evidence of Mr Canning lacked credibility in this regard.

Ms Boyle said: "The Committee was alarmed that even after the issue was brought to the Association's attention in 2009 it was not handled properly by either the Chief Executive or the Chair of Trinity. The Committee has made a number of recommendations relating to the identification and handling of conflicts of interest."

The Committee has also acknowledged that governance in the Housing Association sector had improved over the past few years, but the handling of these cases by the Department show that oversight procedures need to be constantly updated and monitored.

ENDS

Notes to Editors:

• The Housing Association sector in Northern Ireland receives a substantial amount of grant funding from the Department for Social Development each year to allow it to develop new social housing in Northern Ireland. Over the last three years DSD has paid grants to housing associations of £308 million and this has been even higher in the past.

• Advanced Land Purchases (ALP) grant is provided to Housing Associations as an up-front payment of Housing Association Grant (HAG) in order to allow them to have the funding available to purchase a site. Under normal circumstances, the development of social housing would then proceed and the ALP will then be netted off the HAG that the association would otherwise have been entitled to once the development was completed.

• In April 2007, the Department paid an Advance Land Purchase (ALP) grant of £8.1million to Helm for the purchase of a site in Great Georges Street, Belfast to develop 130 social housing units. The site was sold by the original owner to a third party for £6.5million who then sold it to Helm on the same day for £9.75million whilst also realising a profit of £3.25million. No satisfactory explanation of this transaction has ever been provided.

• Trinity were paid an ALP of £835,000 in August 2007 to purchase a site in Crossgar to develop 12 social housing units. No social housing units were ever developed and on 23 March 2015 an agreement was finally reached to recover £641,000 with the remaining £194,000 being treated as allowable costs that Trinity had already incurred on the site.

• Trinity Housing Association merged with Oaklee Housing Associaton in July 2014. This new body then merged with Ulidia Housing Association in June 2015 to form a new body called Choice Housing Association.

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