No Neat Trick

The Indo today has the unsurprising news that plenty of developers are simply not paying up on development levies and other charges to local authorities. Add to that people who can't afford to pay waste charges, plus businesses struggling to pay water charges and you have a €271m black hole. One builder in Monaghan owes the local authority€813,000 in unpaid development levies.

Development levies were one of the neatest tricks during the boomtime: rather than setting aside a fifth of a development as social and affordable housing (nominally a legal requirement) a builder could instead make a cash payment to the local authority. Hey presto - the developer can market their complex to snobs who don't like 'social and affordable' types and keep the price up, the local authority gets a fat wad of cash to spend on anything infrastructure-related, and the people who need social and affordable housing may get a hand. By 2006, it emerged that the one-off development levies accounted for 13.6 per cent of local authority budgets. 

In other words, local authorities across the country were spending money that just isn't there anymore. Now, it's revealed, not all of the money was actually stumped up. The Indo reports that debt collection agencies have been engaged to chase up the builders but, chances are, a good chunk of those fellahs are not insolvent. This mess is the next public sector finance time bomb.