LAST UPDATE | 18 Oct 2022

CABINET HAS AGREED to cut the concrete levy to 5% and have pushed out the introduction date to September rather than April.

The levy has been limited to concrete blocks and pouring concrete only, and will no longer apply to pre-cast concrete materials.

It is expected to raise €32 million over 12 months, under half the €80 million it was originally expected to raise.

Finance Minister Paschal Donohoe said there would be no sunset clause for the levy, as he believed it would be in place for longer than originally planned to fund the redress scheme. He said the levy will apply to concrete blocks that are purchased in Northern Ireland.

“I think it is important that this measure does not have a sunset clause so that we can keep it in place for as long as is deemed necessary to recoup back a good share of the additional money that is needed to help homes be rebuilt due to mica,” he told reporters in the Department of Finance today.

The climb down comes as Housing Minister Darragh O’Brien warned Finance Minister Paschal Donohoe that Fianna Fáil TDs and Senators have “serious reservations” over the 10% concrete levy.

However, Donohoe would not be drawn on whether today’s announcement was a u-turn or Government climbdown, stating he would leave that assessment up to others.

“I am accepting that there is a change versus what I announced the budget day,” he said.

“I think the credibility of the Government overall in relation to this Budget, and in relation to our ability to make difficult decisions, is absolutely intact.

“If you look at the scale of the change that we are making here, it is a change in terms of the rate, the loss of revenue, which is €30 million out of €87 billion of tax revenue for next year,” he added.

The 10% levy on concrete blocks, poured concrete and other products was announced as part of Budget 2023 as part of a plan to offset the cost of the mica redress scheme.

The Society of Chartered Surveyors warned that a 10% levy on concrete products could push up the price on homes by up to €3,000 – €4,000, with the price set to be passed on to prospective house buyers.

The Taoiseach took issue with such an assertion stating previously that the Department of Finance believe the amount it will add to new homes is much lower. 

Speaking today, Donohoe said said with the new 5% levy applied a three-bedroom house could increase in building costs of between 0.2% and 0.3%, and up to 0.2% to the cost of an apartment.

Letter

In a letter sent by O’Brien to Donohoe, seen by The Journal, the Housing Minister says that while Fianna Fáil TDs and Senators had broad agreement with the principle of the levy, they raised concerns over its timing, format and application.

“These concerns were particularly acute in the context of inflationary pressures on the building sector and need to boost housing supply,” the letter reads.

O’Brien said that party members believed the timing of the levy was “inappropriate” and that both the format and application of the levy needed to be “reconsidered”.

During Leaders’ Question, the Taoiseach said the houses most damaged by mica should be done very quickly, stating he wants progress made this year. 

Some houses are in a “very bad way”, said Micheál Martin, who added that Government wants those houses demolished and rebuilt. 

Independent Donegal TD Thomas Pringle said the concrete levy will result in those housing costing more to build now due to the levy. 

He said the levy should also apply to insurers and the banks. 

The levy has been defended in recent weeks by both the Taoiseach and Tánaiste, with Micheál Martin saying that the cost of the mica redress scheme needed to be funded either from the industry or through the taxpayer.

However, the levy has been raised at both Fianna Fáil and Fine Gael parliamentary party meetings, with TDs in both parties raising concerns.

In a statement today, the Construction Industry Federation said that “given the current volatility of the market and price increases, the concrete levy should be resisted until a fully regulatory and economic impact assessment has been completed”. 

“We need more clarity on what products the levy will be applied and its wider impacts,” the Federation said. 

“Even the September 2023 timeframe is out of step with the needs of the public and economy at this time, when we are facing a housing crisis and unprecedented inflation,” it said.

“The proposed levy is a blunt instrument, which is not targeting those responsible for defects. The first-time buyer, public and private client will ultimately pay the cost of this.” 

With reporting by Hayley Halpin