# 10% levy on concrete to fund defective homes redress



## Brendan Burgess (27 Sep 2022)

Defective Concrete Products Levy​Earlier this year the government agreed a comprehensive redress scheme for those home owners who have been affected by the issue of defective products used in the building of their homes.
This redress scheme comes with a significant cost and therefore, I am bringing forward a levy on concrete blocks, pouring concrete and certain other concrete products.
The levy is expected to raise €80 million annually and will be applied from the 3rd of April 2023 at a rate of 10 per cent.


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## NoRegretsCoyote (27 Sep 2022)

Utterly ridiculous.


Demand for concrete is pretty inelastic so the burden will fall almost entirely on people buying new homes.


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## T McGibney (27 Sep 2022)

That will do wonders for managing building costs, road and pavement works etc.


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## sonandheir (27 Sep 2022)

The homes of the future will pay for the sins of the past.


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## sharkattack (27 Sep 2022)

Might even result in a boom for businesses north of the border


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## T McGibney (27 Sep 2022)

sharkattack said:


> Might even result in a boom for businesses north of the border


The former Sean Quinn-owned concrete plant in Derrylin will be lively after April.


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## sharkattack (27 Sep 2022)

Would have thought 1% would be a reasonable but 10% is absurd.


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## NoRegretsCoyote (27 Sep 2022)

sharkattack said:


> Would have thought 1% would be a reasonable but 10% is absurd.


Exactly, would have been a public signal that government is taking on industry but wouldn't have had a material impacts on the homeowners of the future.


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## Brendan Burgess (27 Sep 2022)

I wonder what proportion of the cost of a new house is the cost of concrete? 

If the cost of building is €200k, and say the cost of Concrete is 10% or €20k , so the additional cost would be €2k.

Brendan


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## sharkattack (27 Sep 2022)

You could double that...blocks, plastering, roof tiles, ground works supplies could all come under this levy?  Are sand and gravel included in the levy which caused the original mica issue?
And if you make your own pouring concrete on site how does that work.  Tell you Government you made10 sq metre today...yeah right.


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## Brendan Burgess (27 Sep 2022)

Brendan Burgess said:


> I am bringing forward a levy on concrete blocks, pouring concrete and certain other concrete products.



It seems to be just concrete products. 

I spoke to a retired Quantity Surveyor and he thought that the cost of concrete in a house for a FTB would be quite small.  Maybe less than €20,000.  But he wasn't sure.

I would expect that the House Building spokespeople will give us a calculation at some stage.

Brendan


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## arbitron (27 Sep 2022)

I wonder if this is also an environmental measure in disguise.

Concrete has an enormous carbon footprint whereas timber frame houses actually capture carbon.


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## Steven Barrett (27 Sep 2022)

arbitron said:


> I wonder if this is also an environmental measure in disguise.
> 
> Concrete has an enormous carbon footprint whereas timber frame houses actually capture carbon.


A lot of timber frame being used now. It's a lot easier. Everything made in the factory and then put in place. Windows can go in almost at the same time and the place is sealed. As opposed to block work which takes longer and is weather dependent. Plus the cost of concrete has gone through the roof. 

...but in saying that, there has been massive costs to the State on repairing defect homes. This levy is an insurance premium against future defects.


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## NoRegretsCoyote (27 Sep 2022)

Steven Barrett said:


> This levy is an insurance premium against future defects.


No it's not. 

It's a pure nonsense optical measure so the government can say the industry is paying for its mistakes.

It will not pay a material share of the (astronomical) redress costs nor will it incentivise the quarries today to invest more in quality control. 

The risk of this happening again can only be reduced by better supervision of the industry.


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## DazedInPontoon (27 Sep 2022)

Is the thinking here to add a bit of moral hazard? if the concrete industry provides bad concrete they'll collectively be the ones to suffer for it.


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## NoRegretsCoyote (27 Sep 2022)

DazedInPontoon said:


> Is the thinking here to add a bit of moral hazard? if the concrete industry provides bad concrete they'll collectively be the ones to suffer for it.


But the industry doesn't suffer very much because concrete is a necessary product and people are going to pay whatever the price is.

A bit like the levies on insurance over the years haven't caused me to insure my house for less. It's not a levy on industry, it's a levy on the customer.


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## Seagull (27 Sep 2022)

The issue is that the companies responsible for producing the defective materials should have been pursued, along with their insurers. It's not like they don't know who produced the dodgy concrete.


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## Horatio (27 Sep 2022)

10% on concrete might be just enough to start a debate and movement to move to alternatives. If that gets traction the industry will pay by its possible demise.


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## Brendan Burgess (27 Sep 2022)

Brendan Burgess said:


> If the cost of building is €200k, and say the cost of Concrete is 10% or €20k , so the additional cost would be €2k.



I heard Tom Parlon on the news saying it would cost up to €2,000 so my estimate wasn't too far off.

Brendan


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## ClubMan (27 Sep 2022)

sharkattack said:


> Might even result in a boom for businesses north of the border


Or even a boon?


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## faketales (28 Sep 2022)

Seems particularly unfair to ask future buyers pay for this mistake.


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## jpd (28 Sep 2022)

Yes, future taxpayers should pay


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## DirectDevil (1 Oct 2022)

That levy will be factored into builders' costs. 
That will increase rebuilding costs for a damaged house.
That will probably contribute something to increased household insurance costs.
Great.


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## DirectDevil (1 Oct 2022)

In relation to the original defective material I see absolutely no good reason why government cannot pursue the suppliers under the principle of subrogation.

Government [taxpayer really] are indemnifying the victims of the defective products. Thus, government will be entitled to subrogate against the suppliers. If the suppliers have no liability insurance they should be bankrupted for their performance.


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## ryaner (1 Oct 2022)

DirectDevil said:


> In relation to the original defective material I see absolutely no good reason why government cannot pursue the suppliers under the principle of subrogation.
> 
> Government [taxpayer really] are indemnifying the victims of the defective products. Thus, government will be entitled to subrogate against the suppliers. If the suppliers have no liability insurance they should be bankrupted for their performance.


At least one of the companies involved is already gone now, from a legal standpoint. https://www.independent.ie/irish-ne...-ordered-to-shut-concrete-plant-40998384.html


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## Purple (3 Oct 2022)

DirectDevil said:


> In relation to the original defective material I see absolutely no good reason why government cannot pursue the suppliers under the principle of subrogation.
> 
> Government [taxpayer really] are indemnifying the victims of the defective products. Thus, government will be entitled to subrogate against the suppliers. If the suppliers have no liability insurance they should be bankrupted for their performance.


If that's a realistic option then it should be pursued.


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## ashambles (3 Oct 2022)

Purple said:


> If that's a realistic option then it should be pursued.


The cost of this is expected to be 4B - and I'd guess that's an underestimate as there will inevitably be a lot of Donegal holiday homes squeezed into the scheme under our next government.

I think it's safe to say Cassidy Brothers does not have 4B, or even insurance to cover this type of problem, article below alleges they didn't have permission to build blocks on their site, what insurer would cover that?









						Concrete business involved in Mica scandal does not have permission to develop blocks on its site
					

The business was issued with an unauthorised development warning letter by Donegal County Council




					www.irishexaminer.com


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## NoRegretsCoyote (3 Oct 2022)

ashambles said:


> I think it's safe to say Cassidy Brothers does not have 4B, or even insurance to cover this type of problem, article below alleges they didn't have permission to build blocks on their site, what insurer would cover that?


Or not even clear that the quarry should bear all responsibility.

Many of these houses were self builds. I suspect most buyers did zero quality control of any substance used in construction at all. Should they have? I don't know. 

The other houses were built by developers. Should developers have done more quality control? I would think so yes, certainly more than self-builders given that they were building and selling at scale.

At what level should the quality control have taken place? Contractor level? Subcontractor level? 

There are not easy, obvious answers to these questions. What we know is that there no pot of gold at the responsible quarry. And any levy on industry will not improve things in future. So what's the point?


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## Purple (3 Oct 2022)

There seems to have been a failure of regulation at the State level and a quality control failure at the construction level. Did the construction companies have an approved supplier list? Did they conduct audits on their suppliers? Did they require a level of certification from their suppliers? Did they have a quality system and if so what did their quality manual specify in relation to control of purchased product? I would think that blocks would be considered a critical to function product when it comes to building houses. 

For one-off builds it's a different matter but it's not unreasonable for a person building their own home that the State is ensuring that businesses are meeting the minimum legal requirements when they put a product on the market.


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## Horatio (3 Oct 2022)

Some relevant manufacturer specs here:



			https://www.irishconcrete.ie/wp-content/uploads/2018/03/03-ICF-Information-Sheet-ISEN771.pdf
		


presumably, it is the expectation that manufactured products must meet at least the relevant specifications. In my mind, the specifications are almost certainly mandatory rather than optional. So to sell a block on the Irish market you must meet the relevant specifications. The link above is just one such specifications.


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## jpd (7 Oct 2022)

Unfortunately, in the Republic we do set out standards and rules in lots of areas of the economy but they are rarely, if ever, enforced.

Lots of moans and weeping of (crocodile) tears after the event and promises to do better next time - until the next time


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## mathepac (7 Oct 2022)

@jpd I agree 100%.  Get the legislators and the supposed enforcers out of their offices and onto building sites to check products against standards as apparently the current testing is inadequate or non-existent.

Why was the levy not placed on the net profits of the building / production companies, that'd get their attention, that and real testing not conducted by the wife's first cousin once removed.


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## Brendan Burgess (8 Oct 2022)

The government has admitted that the cost of new houses will rise by more than they had previously estimated 









						Concrete levy will have greater impact on new-build costs than previously thought, fresh estimates show
					

Department of Finance says when ‘soft costs’ such as finance and fees are included, the impact is higher




					www.irishtimes.com
				




_However, the department has now said that when “soft costs” are included, such as the cost of finance, fees, risk and contingency, the impact on range for a typical dwelling is between €1,400 to €2,200 and for a typical apartment is between €1,300 to €2,100._


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## Purple (10 Oct 2022)

Brendan Burgess said:


> The government has admitted that the cost of new houses will rise by more than they had previously estimated
> 
> 
> 
> ...


The market sets the price though so it won't really increase the selling price. Labour cost inflation is a far bigger issue than a few grand on the price of bricks.


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## Purple (17 Oct 2022)

It looks like the Government are bowing to the Construction Lobby on this.


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## T McGibney (17 Oct 2022)

Purple said:


> It looks like the Government are bowing to the Construction Lobby on this.


Not surprising. Like the exclusion of professional services providers from the energy subsidy, it was a stupid idea from the start.


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