The Government is set to cede power to local authorities by allowing them to build more council houses without having to go through lengthy approval processes.

The change in existing laws is being discussed as part of the budget talks between Fianna Fáil and the Government, and is expected to form a significant part of a housing package to be announced next week.

It effectively means local authorities will be given greater freedom to build more council houses without going through a process which can take more than 18 months.

At present, councils must go through a four-stage approval process with the Department of Housing if they want to build developments over €2 million. Anything below that has to go through only one phase of approval.

Informed sources said the latest move would push that threshold for one-stage approval towards €7 million. This is likely to benefit, in particular, urban local authorities attempting to build social housing in infill sites.

The €2 million limit was seen as restricting the capacity of the Dublin local authorities to build social housing schemes. It is estimated that €20 million provides 50 social housing units, so a new level of €7 million would allow councils to fast-track developments of 15-20 units across the country.

It follows Taoiseach Leo Varadkar and Minister for Housing Eoghan Murphy criticising local authorities for not doing enough to solve the housing and homelessness crisis.

Demand

Fianna Fáil has described the €2 million threshold as “farcical” and has called for it to be changed. It made such a demand as part of the budget negotiations, along with other housing initiatives, such as an affordable housing scheme.

Party leader Micheál Martin raised the €2 million threshold in the Dáil as recently as Wednesday, the same day as thousands protested outside Leinster House about the housing crisis.

“The idea that a council that wants to build 10 houses at a cost of anything more than €2 million has to submit those plans to the department, go through a four-stage process and a 59-week timetable is ridiculous,” he said.

Mr Murphy told the Dáil he had tried to cut down on procurement times, and said the “one-stage process local authorities can go through . . . is a much quicker process”.

However, he maintains that about 200 projects that went through the longer process did not submit plans to the shorter system, even though they were eligible.

Alliance

Meanwhile, the Independent Alliance met Minister for Finance Paschal Donohoe last night and is understood to have secured the full restoration of the social welfare Christmas bonus.

Sources also said the Alliance was now likely to accept significant changes to the special hospitality VAT rate which is expected to rise from 9 per cent to 13.5 per cent for at least some sectors.

The Alliance was told it faced a choice of VAT rises or increases in excise duty on diesel to fund other tax cuts and spending increases. There have been tensions between the Alliance and Fine Gael this week.

Government sources have expressed exasperation that the Independent Alliance continually raises issues of concern to the elderly.

Proposals to help older people who want to convert family homes into sub-units they could then let out are also still under consideration.

Deputy Sean Canney, who left the Alliance but still supports the Government, has also been holding meetings with Mr Donohoe.