The Irish League of Credit Unions has offered the Government a €5 billion fund, which could be kept off the State’s official borrowing figures, to build thousands of homes over the next six years.

The league, which represents 437 credit unions and has savings in excess of €11 billion and total assets of more than €13 billion, has told the Government it currently has “surplus” funds of up to €8 billion.

In letters to the Department of Finance, the league has told the State it is anxious to use its resources for “community-enhancing investments” in keeping with its long-established ethos of mutual support.

League president Brian McCrory said its proposal had “a double benefit” since it would help to deal with an “urgent” need for more housing and secure the future of the credit union movement.

“It provides for much-needed social housing, it keeps the finance off the government books and it is good for our members,” Mr McCrory told The Irish Times.

However, the offer has so far not met with an official response, while the credit unions’ regulator has implicitly told them to continue lending money to their members for cars, holiday and home improvements, rather than trying to expand their ambitions.

Private mortgages

The league is now offering up to €5 billion to fund a proposed State-controlled “special purpose vehicle”, which would lend to approved housing bodies to facilitate social housing.

According to a report commissioned by the league from economic consultants Moore Stephens Nathans, the social housing fund could be structured to keep the debt off government books – and so avoid upsetting State fiscal targets.

The plan was formally submitted to the Government last October, envisaging funding of to 26,000 homes between now and 2021.

However, Mr McCrory said, despite a flexible range of offers by him and his predecessors, the Government had yet to take the league up on any proposal for use of its funds.

Mr McCrory said the question of what interest rates might be paid by the Government for such funds had not arisen as talks stretching back a number of years had “not developed that far”.

He said such rates would not be onerous as the league was getting very little from the banks for its deposits, “and it is getting towards the stage where they want us to pay for handling our money”.

Social Housing Strategy

A key theme in the Government’s strategy was that the State would adopt a central role in direct provision of social housing through a resumption of building “on a significant scale”.

The Department of Finance confirmed it was in discussions with the league which, it noted, was regulated by the Central Bank. The Department of the Environment said it had received submissions on the theme of making use of credit union deposits.

The Central Bank said it had received “a number of proposals”, which ranged from involvement in mortgage funding to government bonds. It said its registrar of credit unions was ascertaining whether they were “proportionate, appropriate and viable”.

However, the Central Bank referred to a statement in 2015 by registrar Anne Marie McKiernan that “it is most important for credit unions to focus on getting the basics right”.