Housing and enterprise
by Owen Connolly, with Jeannette Boyne
Where we live is directly related to where we work. It isn’t surprising that areas showing the most economic activity around the country are also the areas under the most pressure in relation to accommodation. Therefore, it’s logical that when approaching the issue of the housing crisis we should bear in mind the reasons why areas like Leitrim, Waterford, Wexford, Mayo, and Donegal among others have high levels of vacant housing: the painfully obvious need for employment in these areas.
We’ll need to be creative and radical in searching for a solution that will tackle the matching problems of low social housing and high regional unemployment. ‘We have to stop hoping for the best and move to an approach where we actively drive housing delivery to create vibrant, diverse, and inclusive communities’ (Catherine Murphy). If we then make those communities attractive to small start-up enterprises, self-employed entrepreneurs, and so on, using the many tools available to us (tax incentives or training and mentoring schemes, for instance), and equally attractive to motivated job-seekers (with community employment schemes, or back-to-work enterprise schemes, for instance), then with a little bit of cooperation and coordination, the community can supply and fulfil at least some of its own employment needs. If we then provide the financial services to support these young enterprises with a not-for-profit community banking system that takes as its operating principle that local deposits finance local projects, we have provided a stable economic infrastructure for our community. We will then have sustainable communities that can provide houses and jobs and, importantly, neighbourhoods where individuals and families can live together, work together, and grow together.
Sounds a bit Brigadoonish? None of the conditions I’ve suggested above is unfamiliar. It’s not revolutionary to suggest that we build houses to suit the various spatial plans governments occasionally put out there. There’s nothing outlandish in suggesting that we attract employers to locate there and some motivated workers to live there. There’s nothing new in banks offering financial products to support capital investment in infrastructure. What is new is the scale. We’re not talking about banks handing over multimillion-euro loans to developers fresh out of NAMA to build multi-storey blocks of luxury apartments. We’re talking about financing the carpenter who wants to open a shop selling hand-made furniture and to hire a couple of apprentices on CE schemes, or the organic gardener who wants to turn a hobby into a small business selling fruit and veg at farmers markets. What we need is a bank whose vision and ambition is local: a bank that is less interested in maximising profits, bonuses, and shareholder returns than in supporting and sustaining their community. That part might sound as if it came straight out of Brigadoon, but there is a successful precedent to take look at.
Richard Werner, a German economist and professor at the University of Southampton, argues that the safest bet in money creation is to ensure that the awesome power to create money is returned directly to those to whom it belongs: ordinary people, not technocrats:
This can be ensured by the introduction of a network of small, not-for-profit local banks across the nation. Most countries do not currently possess such a system. However, it is at the heart of the successful German economic performance in the past 200 years. (Richard A. Werner ‘Can banks individually create money out of nothing?’ [International Review of Financial Analysis 36, 2014, 1–19])
In Germany, Public Savings] Banks (Sparkassen) have 42% of the overall market with 50 million customers; they have 75% of the SME start-up market and 30% of the farm lending market. (http://publicbankingalliance.ie/).
In Ireland, public savings banks would operate on an established set of principles that will
- maximise sustainable lending on the principle that local deposits finance local projects;
- maximise the competitiveness of their region;
- guarantee that surpluses remain with the bank and within the region;
- guarantee that surpluses will be used to increase equity and for non-profit social purposes;
- prohibit the NSB or any financial institution within the community banking system from engaging in financial speculation or securitisation;
- ensure that the community banking system is controlled by community stakeholders (adapted from http://publicbankingalliance.ie).
While government spending is imperative (a project on this scale will require investment in the order of €1 billion per year over a five-year period), improved access to financial services locally will be vital for a continuing economic recovery and future development. The simple truth is that this country needs a National State Bank (NSB), not driven by profit, to act as a pillar of a sound community banking system consisting of a combined network of credit unions, post offices, and local authorities. With more than 1100 post offices and nearly 400 Credit Unions, such a banking system would already have an established presence in towns and villages across the country, could offer greater access to financial services for local enterprises, and will ensure that local savings are invested locally to develop and sustain local enterprises and support local communities.
It’s clear that local authorities have a key role to play in the development of their communities, but it’s equally clear that they are insufficiently funded, resourced and motivated to deal with the crisis locally. We urgently need a national community housing/enterprise sector created with a Junior Minister in Cabinet working with local government to develop a coordinated strategy that includes provision of the resources, financial and otherwise, needed to create sustainable communities.
Cooperative Enterprise Communities
We need a National Housing Agency (NHA) to be responsible for coordinating housing needs and provision across the country—preferably utilising properties or sites currently resting in a repurposed NAMA.
A National Employment Agency (NEA), working in collaboration with Enterprise Ireland would provide support for community enterprises, and would source and incentivise local employment—for instance by ensuring that local authority contracts are specifically earmarked for local enterprises and the self-employed.
And a National State Bank (NSB) would ensure the availability of financial resources and support to build sustainable communities.
Together, a National Housing Agency (NHA), National Employment Agency (NEA), and National State Bank (NSB) will work to provide funding and strategic planning for sustainable communities. This will require cooperation with and from government both local and national, and a commitment from all parties concerned to provide the backing that will ensure that these communities are sustainable in real terms.
These three agencies will support community cooperatives during the early years, not least with the provision of funding, training, and mentoring. The NHA will source and, where necessary, build housing; community employment (CE) schemes will allow the transition from unemployment to full employment for community members, while providing labour for local start-up enterprises, with access to mentoring services and community-banking loans, helping them to create and keep jobs in the local economy. Community banking will support community development.
National Housing Agency
The NHA will coordinate housing over the entire country, initially targeting for development the top ten areas with the most vacant houses and the highest unemployment, using buildings or land currently owned by State or local government, or languishing in NAMA. Compulsory purchase/leasing orders where necessary will enable communities to acquire other suitable vacant properties or sites with prospects for housing and enterprise.
There are almost 100,000 people on the social housing list. This community development initiative will allow those waiting on the list to move to new communities and work in community-owned enterprises or pursue self-employment. There will also be a provision for those who want to move to these developing areas but are already tenants of a County or City Council; the NHA, as a national agency, will facilitate the transfer of tenancy. Those with a home and a ‘distressed’ mortgage will be given an opportunity to ‘house swap’, leaving the original house and the responsibility for renegotiation of the mortgage repayment to the local government (LG), and accepting a lifetime tenancy in one of the new communities. This provision will allow the government to rent the swapped property to cover the mortgage and to provide low-cost accommodation in pressured areas. Depending on the arrangement the LG has made with the mortgage holder, this single addition to the housing stock will be low or no cost. It will also reduce personal debt in our society and increase competition in the rental and property market.
National Employment Agency
While the National Housing Agency will deal with housing individuals and families, the National Employment Agency (NEA) will work with Enterprise Ireland to create community enterprises in cities, towns, and villages across the country. It will be the task of the National Employment Agency to encourage the self-employed, small businesses, and cooperatives to create socially strong and economically resilient communities.
Strategies for supporting local employment in local enterprises include introducing new apprenticeship programmes and other educational resources to match the skill sets of the local unemployed with the skill sets required by local enterprises. Further strategies include facilitating the development of small enterprises by improving the tax status of the self-employed to match those of a PAYE worker; by making tax credits available for small enterprises to cover start-up costs; and by making training/education/mentoring resources available to the self-employed, start-ups, and all local enterprises.
National State Bank
The National State Bank (NSB) would be given a ‘community purpose’ status with a mandated priority to develop local communities across the country, working with the National Housing Agency and the National Employment Agency to identify community needs for development and growth. It will be a not-for-profit organisation and any interest charged will be kept at 2% or lower (as agreed with the community banking network).
The NSB will focus on providing funds and security to a community banking system involving post offices, credit unions (on a voluntary basis), and, importantly, local authorities. ‘The local authorities could be stakeholders of the Local Public Banks. The legal set-up of the bank would have to ensure that a Local Public Bank once established cannot be sold to investors’ and that the population within the community is adequately represented on the supervisory board (Local Public Banks Ireland).
The community banking sector will have its services enhanced in line with other banking institutions; in addition to issuing debit cards and providing ATM services and saving/current accounts, they will administer loans to local cooperatives and enterprises and have a special representative of the Strategic Banking Corporation to work with local entrepreneurs and cooperatives to develop and grow their businesses.
Together the National Housing Agency, the National Employment Agency, the National State Bank, and the local government will form the pillars of a more radical view of Rebuilding Ireland that recognises access to secure, decent, affordable housing as a right, not a privilege restricted to ‘the people who get up early’. That radical view has to recognise that feeding and nurturing multinationals isn’t the only way to grow the Irish economy and provide jobs. It has to recognise and encourage the strength and resourcefulness of our communities. And it has to democratise our political system by decentralising power—devolving authority and responsibility to local government and through them to the people they represent.