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Central Bank were not consulted on merits of Help to Buy Scheme – Doherty

24 October, 2016 - by Pearse Doherty TD

Sinn Féin Finance Spokesperson Pearse Doherty TD has said that the Governor of the Central Bank Philip Lane has confirmed to him in a letter that the Bank was not consulted about the merits of the proposed ‘Help to Buy’ scheme. It was only consulted on whether the Central Bank would accept any rebate in meeting the deposit requirement.

Deputy Doherty said:

“Last week, I wrote to Philip Lane asking him to put on record the Central Bank’s view on the proposed scheme. Today, in his response to me, he has confirmed that in fact the Central Bank was not consulted on the merits of the scheme before it was announced. Given that this scheme was mooted months ago, this is hard to explain.

“The Governor in his letter repeats the criticism of any such scheme stating ‘If there is an insufficient supply side response, raising demand in a given segment of the housing market will just tend to put upward pressure on prices, with the sellers of properties effectively gaining more than the recipients of the subsidy’.

“The refusal to discuss the merits of the scheme with the Central Bank flies in the face of the Programme for Government commitment to ‘work with the Irish banks, the European Investment Bank, industry bodies, the Central Bank and the Irish Strategic Investment Fund to develop a new ‘Help to Build’ funding scheme for the development of affordable housing in the private sector’. Clearly, the government have simply decided not to ask the Central Bank about the effects of its proposal. The ‘Help to Buy’ scheme has quite rightly been attacked by almost all commentators with any knowledge of the issue.

“It is now time to drop this scheme before any permanent damage is done to the economy. I will be proposing a deletion of this scheme from the Finance Bill this week.  It is completely unacceptable that any political party who believe that this scheme could push up house prices would consider abstaining on this issue and thereby allowing it to pass into law; all the evidence points to the scheme increasing house prices, increasing debt on young families and increasing profits for builders.  I am calling all political parties to support my amendment when it comes before the Dáil to reject this scheme.” 

Note: The letter from Governor Philip Lane is attached

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