Neoliberal Urban Policy and the Transformation of the City: Reshaping Dublin

Neoliberal Urban Policy and the Transformation of the City

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Neoliberal Urban Policyand the Transformationof the CityReshaping Dublin

Edited by

Andrew MacLaranAssociate Professor, Trinity College Dublin, Ireland

and

Sinéad KellyLecturer, National University of Ireland Maynooth

Selection and editorial matter © Andrew MacLaran and Sinéad Kelly 2014Individual chapters © Respective authors 2014

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First published 2014 byPALGRAVE MACMILLAN

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Contents

List of Figures and Tables vii

Preface viii

Acknowledgements ix

List of Abbreviations and Acronyms x

Notes on Contributors xii

Part I Setting the Context

1 Neoliberalism: The Rise of a Bad Idea 3Andrew MacLaran and Sinéad Kelly

2 Irish Neoliberalism and Neoliberal Urban Policy 20Andrew MacLaran and Sinéad Kelly

3 Light-Touch Regulation: The Rise and Fall of the IrishBanking Sector 37Sinéad Kelly

4 The Political Economy of Legislative Change: NeoliberalisingPlanning Legislation 53Enda Murphy, Linda Fox-Rogers and Berna Grist

5 The Changing Ideology and Operation of Planningin Dublin 66Andrew MacLaran and Niall McCrory

Part II The Property Boom and Its Legacy

6 Ready Money: Over-Development in the Offices Sector 93Andrew MacLaran

7 Ready Money: Residential Over-Development andIts Consequences 107Brendan Williams and Declan Redmond

8 The Financialisation of Irish Homeownership and the Impactof the Global Financial Crisis 120Dáithí D. Downey

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vi Contents

9 Bailing Out the Banks: The Role of the National AssetManagement Agency 139Brendan Williams

Part III Reshaping Urban Policy and Reshaping the City

10 Actually Existing Neoliberalism: Public–Private Partnerships inPublic Service and Infrastructure Provision in Ireland 157Rory Hearne

11 Taking Liberties: Gentrification as Neoliberal Urban Policy inDublin 174Sinéad Kelly

12 Neoliberalising the City ‘Creative-Class’ Style 189Philip Lawton, Enda Murphy and Declan Redmond

13 Neoliberal ‘Regeneration’ and the Myth of CommunityParticipation 203Paula Brudell and Katia Attuyer

14 The Collapse of PPPs: Prospects for Social HousingRegeneration after the Crash 219Rory Hearne and Declan Redmond

15 The Role of Private Consultancies in Neoliberal UrbanRegeneration 233Paula Brudell

Part IV Considerations and Conclusions

16 Contested Urban Environments: Community Engagement andStruggle in Central Dublin 249Michael Punch

17 Neoliberal Urban Policy and Challenging the IdeologicalStraightjacket 265Andrew MacLaran and Sinéad Kelly

Index 277

Figures and Tables

Figures

5.1 Tax-incentive areas in inner Dublin 696.1 Completion of office space in Dublin, 1980–2011 946.2 Average size of developments reaching completion,

1995–2012 986.3 Dublin docklands development, 2013 1016.4 Vacant newly completed and older modern office space 1036.5 City-wide vacancy rates, 1992–2010 1048.1 Euro-area credit growth, June 1998–June 2012 (�M) 1238.2 Ireland’s housing boom–bust cycle compared with other

advanced economies, 2005–12 1268.3 Capital switching into and out of Irish housing, 1994–2008 130

11.1 Location of IAPs and remit of the DDDA master plan, 1999 177

Tables

3.1 Assets, customer loans and profits growth of Irish banks andbuilding societies, 2000 and 2007 47

7.1 Annual change in housing supply, GDP and GNP 1087.2 Finance for property development 1097.3 Mortgage lending for new and second-hand dwellings 1107.4 Mortgage lending for residential purposes 1117.5 Average annual house price changes (� equivalent),

1996–2012 1128.1 The volume and value of Ireland’s mortgage equity release

‘top-up’ loans 1249.1 Increasing recapitalisation requirements for Irish

banks, 2009–11 14611.1 Age structure of the inner 40 wards, 1991, 2002, 2011 18014.1 Selected local-authority estates in Dublin’s inner city

planned for PPP regeneration 22114.2 Planned private and social units in selected PPP

projects, 2008 22114.3 Occupancy rates on PPP regeneration estates in Dublin city,

2008 and 2013 22414.4 Status of regeneration plans for selected Dublin PPP estates,

September 2013 225

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Preface

Neoliberalism, what it involves and how it has been implemented, variesconsiderably from place to place. In a context of high rates of unemploy-ment, sluggish economic development and large-scale emigration, the Irishstate enthusiastically espoused neoliberalism. This book focuses on the char-acter and impacts of ‘actually existing’ neoliberalism in Ireland, specificallyin its capital city of Dublin. The city provides a particularly apposite loca-tion for an investigation into the urban impacts of neoliberal urban policybecause Dublin, with a population of over a million people, dominates theIrish urban hierarchy and the nation’s economy and has been the focus forthe ‘new urban policy’ of neoliberal thinking in urban renewal.

The book shows the manner in which neoliberalism infused Irish govern-ment thinking at national and local levels. Thus, market-based approachesand facilitating private-sector operations became increasingly ingrained intothe ideology of decision makers and established as an essential element ofpolicy. Taking key international themes from contemporary urban researchand focusing on Dublin, the book demonstrates the way in which neoliberalurban policies brought about a reconfiguration of both social and spatialrelations in the city through the implementation of new approaches in Irishurban planning, notably by facilitating the property-development sectorand through urban-regeneration policies promoting ‘gentrification’. It alsoshows how it became possible for the much-lauded ‘Celtic Tiger economy’,heralded worldwide as an icon of what might be achieved under ‘light-touch’ neoliberal financial regulation, within a few years, to bring about thealmost total collapse of its banking system, the ‘nationalisation’ of enormousprivate-sector debts, the rapid decline in the Irish economy, the imposi-tion of an austerity regime involving swingeing cuts to public services,the imposition of pay-cuts in the public sector, new and increasing taxesand charges and the effective bail-out of the Irish economy by the ‘troika’of the European Union, the European Central Bank and the InternationalMonetary Fund.

The book comprises four parts, setting the contextual background, exam-ining the property-development boom and its legacy, reviewing the impactsof neoliberal urban policy in reshaping Dublin and, finally, noting aspects ofpublic resistance to the operation of neoliberal urban policy. The conclud-ing section highlights some salient points which might be drawn from thecontinuing Irish experience of neoliberalism and policies of austerity andstresses the imperative for structural analysis of what happened and why.

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Acknowledgements

The editors wish to thank the following individuals who have helped inbringing this project to fruition: Elaine Curran and Terry Dunne (Trinity Col-lege Dublin) and Ronan Foley (Department of Geography, NUI Maynooth)for their assistance with technical and cartographic work; Peter Barrow forpermission to reproduce the photograph in Figure 6.3; Dr Laurence Cox (edi-tor of Interface: A Journal for and about Social Movements) for permission toinclude an edited version of an article by Michael Punch which appeared inVolume 1 (2), November 2009, of that journal; and Justin Gleeson and AoifeDowling (NIRSA, NUI Maynooth) for their assistance in extracting relevantCensus data.

We especially wish to thank those community leaders with whom thecontributors to this book have worked over many years, who providedthe inspiration for the production of this volume and who stimulated andhelped with much of the empirical research which underlies it. It is impossi-ble to name everyone individually but we particularly wish to thank CharlieHammond, Seanie Lambe, Betty Ashe, Lena Jordan, John Gallagher, RitaFagan, Gerry Fay, Martin Carroll, Tony McDonnell, Charlie Murphy, DoloresWilson, Joe Donohoe and Danny Pender (1957–2010).

Finally, the editors want to thank Andrew James, Naomi Portnoy andBeth O’Leary at Palgrave Macmillan for their help, patience and support inbringing this work to publication.

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Abbreviations and Acronyms

ABP An Bord Pleanála (The Planning Appeals Board)AIB Allied Irish BanksBIS Bank for International SettlementsBoI Bank of IrelandCBI Central Bank of IrelandCDA Creative Dublin AllianceCDOs collateralised debt obligationsCDSs credit default swapsCEO chief executive officerCHDDA Custom House Dock Development AuthorityCHDDC Custom House Docks Development CompanyCIE Córas Iompair Éireann (Ireland’s national public

transport provider)CSO Central Statistics OfficeDART Dublin Area Rapid TransitDCC Dublin City CouncilDDDA Dublin Docklands Development AuthorityDoECLG Department of the Environment, Community and Local

GovernmentDoEHLG Department of the Environment, Heritage and Local

GovernmentDoELG Department of the Environment and Local GovernmentDRA Dublin Regional AuthorityEA enterprise areaEBS Educational Building SocietyECB European Central BankESRI Economic and Social Research InstituteEU European UnionFTB first-time buyerFVCs financial vehicle corporationsGDP gross domestic productGFC global financial crisisGNP gross national productHARP Historic Area Rejuvenation ProjectHBOS Halifax Bank of ScotlandHRBA human-rights-based approachIAP integrated area planIBF Irish Banking FederationICDT inner-city development team

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List of Abbreviations and Acronyms xi

IDA Industrial Development AuthorityIFSC International Financial Services CentreIFSRA Irish Financial Services Regulatory AuthorityILP Irish Life and PermanentIMF International Monetary FundINBS Irish Nationwide Building SocietyLAP local area planLDDC London Docklands Development CorporationLRP Liberties Regeneration ProjectLUAS Dublin’s light railway (Luas meaning ‘speed’ in Irish)MARP Mortgage Arrears Resolution ProcessMCO Mission Coalition OrganizationMMFs money-market fundsMNC multi-national companyNAMA National Asset Management AgencyNATO National Association of Tenants OrganisationsNTMA National Treasury Management AgencyOFIs other financial intermediariesOTC over-the-counterPBR principles-based regulationPCAR Prudential Capital Assessment ReviewPDs Progressive DemocratsPFI private finance initiativePPP public–private partnershipRBOS Royal Bank of ScotlandRMBS residential mortgage-backed securitiesRRIAG Rialto Rights InAction GroupSAP strategic area planSDZ strategic development zoneSEC Securities and Exchange CommissionSHEC social-housing exemption certificateSHLI social housing leasing initiativeSILC Survey on Income and Living ConditionsSIVs structured investment vehiclesSMI strategic management initiativeSPA special-purpose authoritiesSPC strategic policy committeeSPV special-purpose vehicleSRP site resolution planTINA There Is No AlternativeUDAG urban development action grantsUDC urban development corporationsURS urban renewal schemeWTO World Trade Organization

Contributors

Katia Attuyer is a Research and Teaching Fellow at the University ofSt. Andrews, Scotland. Her research interests lie in urban and social geogra-phy. She obtained her PhD in Geography from Trinity College Dublin (TCD),her doctoral research reviewing the neoliberalisation of urban-regenerationpolicies over a 20-year period in Ireland and France, adopting a com-parative approach examining the importance of pre-existing institutionaland socio-political settings on the evolution of such policies. She hasalso acted as a postdoctoral researcher at LATTS (Laboratoire Techniques,Territoires et Sociétés), Université de Paris-Est, where she conducted researchon the financialisation of the property sector and its implications for urbandevelopment.

Paula Brudell worked as a researcher and policy analyst in Dublin’s innercity during the years when communities were subject to the relentlessproperty-development pressures accompanying the Irish state’s neoliberalurban-development agenda. The experience of working closely with com-munities who refused to acquiesce with a development agenda, which theyrecognised as seriously injurious to their interests, provided the impetusfor an extensive public-record critique of the experience of inner-city com-munities within state-engendered renewal programmes. She subsequentlycompleted her PhD in Geography at TCD, which explored the way theIrish state sought to negate, eclipse and incorporate criticism and dissentamong working-class communities during Ireland’s property boom, whilesimultaneously presenting the interests of the property-development sec-tor as synonymous with the public good. Her continuing work in thisarea is informed by an understanding of the inherently political nature ofresearch and a commitment to realising the potential of the research andpublication process to mobilise and focus public attention on issues of crit-ical importance to the social, economic and environmental well-being ofthose whose lives are severely disadvantaged by the workings of the marketeconomy. She is a research associate at the Centre for Urban and RegionalStudies, TCD.

Dáithí Downey is Deputy Director and Head of Policy and Service Deliveryat the Dublin Region Homeless Executive (DRHE). He represents the DRHEon a number of national and EU platforms and networks. He has workedin the housing and homeless sectors in Ireland and the United Kingdomsince the 1990s, and his current research interests include globalisation andthe financialisation of housing systems; changing urban housing markets

xii

Notes on Contributors xiii

and comparative urban and housing policy within advanced economies. Hisprevious publications include work on housing affordability and the econ-omy as well as homelessness, social exclusion and poverty. He holds a PhDin Geography from TCD.

Linda Fox-Rogers is a researcher in University College Dublin’s (UCD)School of Geography, Planning and Environmental Policy. Her researchinterests centre on planning theory, political economy, neoliberalism andplanning and creative economy. A particular focus of much of her researchis on the operation of power in the planning system. She has publishedin journals such as Planning Theory, Town Planning Review and Growth andChange.

Berna Grist is Head of Spatial Planning in the School of Geography, Plan-ning and Environmental Policy at UCD. A barrister and chartered townplanner, she holds a PhD from the University of Ulster. She has contributedwidely to literature in the fields of planning and environmental law, pub-lic policy and governance and has recently published the second edition ofAn Introduction to Irish Planning Law (2012). During the period 2001–6, sheserved as a member of An Bord Pleanála, and she is currently a member ofthe National Transport Authority.

Rory Hearne is a lecturer in the Department of Geography at the NationalUniversity of Ireland Maynooth. He is involved in research, policy devel-opment and activist practice in the areas of the geo-political economyof neoliberalism, privatisation, public–private partnerships, human rights,social movements, left political parties, social justice advocacy, social hous-ing, community development and urban regeneration. He has a PhD inGeography from TCD. He was previously employed as a Barnardos com-munity worker on the regeneration of Dolphin House, a disadvantagedcommunity in Dublin’s inner city. His publications include Public PrivatePartnerships in Ireland: Failed Experiment or the Way Forward?; ‘Realising the“Right to the City”: Developing a Human Rights Based Framework for theRegeneration of Areas of Urban Disadvantage’, International Journal of Law inthe Built Environment, Vol. 5, Issue 2, April 2013, and Starting Afresh, Hous-ing Associations and Regeneration in Ireland (2013), co-authored with DeclanRedmond.

Sinéad Kelly is a lecturer in Human Geography at the Department ofGeography, National University of Ireland Maynooth, and holds a PhDin Geography from TCD. Her main research interests and publicationsfocus on urban political economy; property development and processes offinancialisation; urban regeneration and planning policy; gentrification; andpost-crisis neoliberalism. Sinéad is currently researching the myriad ways

xiv Notes on Contributors

in which processes of financialisation are affecting cities. She was a visit-ing fellow at the School of Environmental and Life Sciences, University ofNewcastle, New South Wales, and has acted as Director of the Forum for IrishUrban Studies.

Philip Lawton is a lecturer in Culture and Urban Development, Centrefor Urban and Euregional Studies, Department of Technology and SocietyStudies, Maastricht University, the Netherlands. His research is focused onunderstanding the connections between urban governance, planning andurban space. Between 2008 and 2010, he was a postdoctoral researcheron the FP6-funded ACRE Project at UCD. The ACRE Project examinedthe relationship between notions of creativity and urban change within13 European cities, including cities such as Amsterdam, Barcelona, Sofiaand Dublin. Publications emerging from this have predominantly focusedon Dublin, but also include reference to other cities in Europe, such asAmsterdam. He has also published on topics including public space, urbansocial mix, urban design and the notion of the ‘European city’. In so doing,his work has drawn on case studies predominantly in the Netherlands andIreland. He is currently engaged in two strands of research. One examinesthe relationship between urban development and culture in Maastricht andthe surrounding Maas–Rhine Euroregion. The other is focused on exam-ining the connection between urban governance and questions of equityand justice, which draws upon a global frame of reference, but is par-ticularly focused on European urbanisation. He has a PhD in Geographyfrom TCD.

Andrew MacLaran is an associate professor in the Department of Geogra-phy, TCD, and Director of the Centre for Urban and Regional Studies inTCD. His research interests lie in the field of property development andurban planning, notably with respect to the impacts of the property sectoron inner-city communities and the changing nature of Irish urban planningunder neoliberalism, especially the increasing marginalisation of deprivedworking-class communities in the planning process. Dublin: The Shaping ofa Capital (1993) won the RTPI (Irish Branch) Manning Robertson Awardin recognition of its contribution to a better understanding of Irish plan-ning. He also edited Making Space: Property Development and Urban Planning(2003).

Niall McCrory recently completed his PhD in Geography at TCD and isa research associate at the Centre for Urban and Regional Studies, TCD.His doctoral research focused on the changing ideology and practice ofurban planning in Ireland under the increasing influence of neoliberalismat local-state level. It examined the degree to which the adoption ofmore entrepreneurial practices and increasingly facilitative attitudes towards

Notes on Contributors xv

the property-development sector had created conflicting views within theplanning profession with regard to its intended social function.

Enda Murphy is a lecturer in Regional and Urban Planning at theSchool of Geography, Planning and Environmental Policy, UCD. He hasa PhD in Geography from TCD. His research interests centre on theareas of urban transportation and spatial planning; neoliberalism andneoliberalisation; planning theory and urban policy; and environmentalnoise. He is author/co-author of more than 50 academic journal papers, bookchapters, conference papers and reports. Enda has also held a visiting lecturerposition at the University of Economics, Ho Chi Minh City, and is a memberof the Editorial Board of the journal Urban Studies Research.

Michael Punch is a lecturer in the School of Sociology in UCD, with aPhD in Geography from TCD. Over recent years he has been involved withcommunity action in working-class communities in Dublin, both throughresearch and voluntary consultancy. He is currently on the steering com-mittee and policy sub-group of Tenants First, a cross-city network of localauthority tenants’ associations and anti-poverty groups working on housingand urban regeneration issues with the aim of empowering people locally toengage in decision-making about issues affecting their homes and commu-nities. He has also completed research on Irish housing issues and policiesfrom social-justice and social-theology perspectives in collaboration with theJesuit Centre for Faith and Justice and co-authored Out of Reach: Inequalitiesin the Irish Housing System, published in 2005.

Declan Redmond is a lecturer in Urban and Regional Planning at the Schoolof Geography, Planning and Environmental Policy, UCD, and has a PhD inGeography from TCD. His main research interests relate to housing, plan-ning and regeneration, and he has published widely in this field, notablyco-editing and contributing chapters to the standard book on Irish housingpolicy, Housing Contemporary Ireland. His research has examined the social-housing system, in particular how social-housing neighbourhoods might beregenerated into sustainable neighbourhoods as mixed tenure estates andthe conflicts which this can generate. He is currently undertaking researchon the consequences of the property collapse in Ireland, exploring theimpact of negative equity and mortgage arrears on households.

Brendan Williams is a lecturer in Urban Development and Urban Eco-nomics at the School of Geography, Planning and Environmental Policy,UCD, and is a practicing Planning and Development Chartered Surveyor. Heis Director of the Urban Environment Project at the Urban Institute Irelandat UCD and has taught and researched at a number of universities in NorthAmerica and Europe. Since February 2011, he has also acted as Visiting

xvi Notes on Contributors

Professor to the School of Public Policy and Urban Affairs at NortheasternUniversity in Boston. He has published approximately 70 scientific papersand edited/co-authored four books on various aspects of planning and devel-opment in Ireland and internationally. His doctoral research in Geographyat TCD investigated the impacts of fiscal incentives on urban regenerationin Dublin. He currently lectures at undergraduate and postgraduate levels inUrban Development and Urban Economics and supervises a team of PhDstudents in related research areas.

Part I

Setting the Context

Introduction

The contextual background to the examination of the growing influence ofneoliberalism and its impacts on urban policies and practices in Dublin areestablished in five chapters. Although the rise of neoliberal ideology andits influence on policy have been well covered in the literature, for thoseunfamiliar with this material the first chapter provides a brief introduction toneoliberalism, noting its rise from obscure academic origins to dominate thecharacter of state policies internationally. It is followed by chapters whichexamine its increasing influence in Irish decision making at national andlocal levels, the nature of the financial architecture which was established tofacilitate the functioning of finance capital, the changing legal frameworkfor Irish urban planning and the increasingly entrepreneurial manner of itsoperations.

1Neoliberalism: The Rise ofa Bad IdeaAndrew MacLaran and Sinéad Kelly

Introduction

For almost 30 years, governments internationally have become increasinglyseduced by an agenda which has sought to place ‘the market’ at the heartof economic life. It is well summarised by Brenner and Theodore (2002,p. 350) when they state that ‘the linchpin of neoliberal ideology is the beliefthat open, competitive, and unregulated markets, liberated from all forms ofstate interference, represent the optimal mechanism for economic develop-ment’. Neoliberalism comprises a range of ideas and a theory of economicpractices which propose that human well-being is best advanced by liber-ating individual entrepreneurial freedoms and skills within an institutionalframework characterised by strong private-property rights, free markets andfree trade. It is a somewhat unfortunate term because the word ‘liberal’ isoften used in common parlance to describe actions which are socially pro-gressive. Here, however, the term ‘liberal’ describes the liberalisation of theconditions under which capital is able to operate and profit seeking facili-tated. When applied to policy, it has commonly proved to possess highlynegative consequences for labour.

There remains considerable disagreement as to what should be under-stood as neoliberalism, ranging from its conception as an omnipresenthegemonic force to an unstable contextually specific hybrid (see Brenneret al., 2012). Neoliberalism does not comprise a specific range of policies,a particular strategy or agenda. Within varying geographical and temporalcircumstances, it characterises policies which draw upon fundamental gen-eral principles which are then applied to specific economic conditions andsocial problems. The form and content of neoliberalism is therefore quitevaried, such policies having been applied with equal enthusiasm by Repub-lican and Democrat administrations in the United States, by Conservativeand Labour governments in the United Kingdom and in countries as diverseas Australia, New Zealand, South Africa and Mexico. It is therefore especially

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4 Setting the Context

useful to examine in a single volume the manner in which ‘actually existing’neoliberalism (Brenner and Theodore, 2002) has been effected within a sin-gle jurisdiction (Ireland) and the impacts that the local application of suchpolicies have had on a single city.

The modern origins of neoliberalism can be traced to the writings of theAustrian political philosopher Friedrich von Hayek who, in 1947, estab-lished the Mont Pelerin Society, of which Milton Friedman was an associate.Believing markets to be the most appropriate way to ensure the efficientallocation of resources, the Society was committed to free-market principlesof neo-classical economics and vehemently opposed state interventionismand regulation as had been advocated by the UK economist John MaynardKeynes and which typified government policy in many countries in the post-Second World War years. Friedrich von Hayek was awarded the Nobel Prizefor Economics in 1974 and Milton Friedman received it two years later.

To neoliberals, the state’s fundamental role was to guarantee the qualityand integrity of money (that is, its value by controlling inflation), secur-ing private rights in property, by force if necessary, and to create marketsor market relationships where they hitherto had not existed (see Harvey,2005). Naturally, these ideas attracted ready support from wealthy individu-als and businesses who would benefit from such arrangements as marketsserve primarily the interests of those with market power – the wealthy.Indeed, mainstream neo-classical economics generally ignores the impor-tance of human need by instead focusing attention on demand, defined asdesires backed by money. ‘Demand’ is therefore conveniently assumed to benon-existent if there is no money to support it, even if considerable socialneeds still exist. The danger of relying upon the market for the distributionof social resources and for dictating policy should therefore be evident wherestate functions are accorded such a limited role as conceptualised underneoliberalism.

The history of the penetration of political thinking by neoliberalism hasbeen well documented (see Larner, 2000; Jessop, 2002; Harvey, 2005; Peck,2008, 2013) and needs only to be briefly addressed here. Gradually, the advo-cates of neoliberal ideas became dominant not only among newly appearingand well-funded ‘think tanks’ and in private-sector financial institutions,which had much to gain from the implementation of such ideas, but also inuniversity economics departments and in key state institutions, especiallyfinance ministries and central banks. It also became a dominant ideol-ogy within international organisations such as the International MonetaryFund (IMF) and the World Bank, which ‘became centres for the propagationand enforcement of free market fundamentalism and neoliberal orthodoxy’(Harvey, 2005, p. 29; see also Peet, 2009). In the developing world, countriesseeking the assistance of the IMF and the World Bank were thus requiredto pursue policies conforming to the new neoliberal orthodoxy. This com-monly included the ‘fire-sale’ of public-sector assets, the opening up of their

Andrew MacLaran and Sinéad Kelly 5

domestic markets to foreign competitors and permitting the free interna-tional flow of capital (Klein, 2007). It was a treatment that was later to beapplied in first-world countries, such as Ireland, which sought assistancefrom the IMF in 2010 to cope with the consequences arising from the dereg-ulated operations of finance capital which had brought down the financialsystem and virtually bankrupted the state itself (Fraser et al., 2013).

A key event in the infusion of neoliberal thinking into the corridors ofnational government decision making was Paul Volcker’s appointment inJuly 1979 to the post of Chairman of the US Federal Reserve by DemocraticParty President Carter. Volcker was committed to fight inflation, whateverthe social cost or unemployment consequences. The so-called Volcker Shockwas notably associated with the raising of interest rates. Whereas the realrate of interest had previously been negative, by July 1981 it stood at 20per cent. It created a deep recession and large-scale unemployment in theUnited States which effectively broke labour trade-union power (Harvey,2005).

The rise of neoliberal ideas to the position in which they became forcefullyadopted in public policy in the United Kingdom occurred against a back-ground of seemingly intractable economic problems during the 1970s. Theseincluded economic stagnation and general price inflation (so-called stagfla-tion), labour militancy and unrest, unemployment, high levels of personaltaxation, the cost of ‘underperforming’ nationalised industries and the ever-increasing cost of the welfare state. Born into a wealthy family, the owners ofone of Britain’s largest construction companies (Bovis), it was Keith Josephwho was the architect of Britain’s interpretation of neoliberalism. At a timewhen the underlying ideas of the mixed economy, embracing Keynesianideas of planning and social engineering, went largely unchallenged, it wasKeith Joseph who put together a heterogeneous range of free-market-basedideas into a political strategy which was to become known as Thatcherismand it was he who acted as the driving force for their adoption (Yergin andStanislaw, 1998).

Since the 1960s, Joseph had been linked to the Institute of EconomicAffairs, an offshoot of the Mont Pelerin Society which had provided a plat-form for Hayek and Friedman. Typical of neoliberal thinking, its agendainvolved the achievement of economic goals by setting free the power ofcapital. Through the 1970s, Joseph became increasingly deeply affected byneoliberal ideas and aimed to convert the Conservative party to its free-market principles. He became intent on exposing the contradictions of themixed economy and ending the ‘one-nation Conservatism’ which domi-nated the party’s policies during the years of the post-Second World Warsocial compact or settlement. He regarded that consensus and the activitiesof the interventionist state as the source of Britain’s post-war woes. Thus,consensus politics was to be replaced by conviction politics. He establishedthe Centre for Policy Studies, a think tank to promote the implementation of


policies for free-market Conservatism, and it was he who persuaded MargaretThatcher to espouse the monetarist ideas of Milton Friedman. Joseph did notadvocate a free-for-all, but the role of the state was conceived of as makingand enforcing ‘rules to ensure the security of human life, protection againstforce or fraud, and the protection of those values and standards – social,economic and ecological – which represent the accumulated and currentaspirations of our community’ (Yergin and Stanislaw, 1998, p. 103).

The general election of 1979 brought to power a Conservative-partygovernment led by Margaret Thatcher. Taking over from a Labour-party gov-ernment which had been on the verge of calling in the IMF to oversee therunning of the UK economy, the new government vowed to end trade-unionpower and put an end to the years of stagflation. Thatcher was convincedof the need to abandon Keynesianism, in which the state would activelyintervene to smooth out booms and slumps in the economic cycle. Instead,the government was to encourage entrepreneurial initiatives by creating afavourable business climate for private-sector expansion and the inflow ofglobal capital. This would be facilitated by the deregulation of the businessenvironment, notably financial operations, by reducing taxes to promoteinitiative, entrepreneurialism and risk taking, by privatising public enter-prises, by directly confronting trade unions and the power of organisedlabour and by ‘rolling back’ the welfare state, which was viewed as beinglargely parasitic on the productive private sector of the economy (Peck andTickell, 2007).

Subsequently, in January 1981, Ronald Reagan was sworn in as Presidentof the United States. His conception of the role of the state was succinctlyencapsulated in his inaugural address when he stated that ‘[g]overnment isnot the solution to our problem; Government is the problem’. Reagan con-firmed Volcker in position as Chair of the Federal Reserve, his approach toeconomic problems having been favourably received by the new Republi-can administration which, like Thatcher’s, was dedicated to cutting taxes,trimming public-sector spending, curbing the power of labour, deregulatingindustry and liberating the power of American finance capital. The failureof the American air traffic controllers’ strike in 1981 and the summary dis-missal of the striking workers heralded a long decline in US salaries andwages (see Harvey, 2005). The Federal minimum wage fell from having beenequal to the poverty line in 1980 to just 70 per cent of it by 1990, whilethe share of National Income going to the top 1 per cent rose to comprise15 per cent of the total by the year 2000. The income of company chiefexecutive officers (CEOs) in the United States, which in 1970 had stood ata ratio of 30:1 compared to the median income of workers, rose rapidly to500:1 by the year 2000. Meanwhile, US corporate taxes were reduced from70 per cent to 28 per cent and the highest tax rate for individuals droppedfrom 78 per cent to 28 per cent (Harvey, 2005). Similar shifts in the distribu-tion of income occurred in the United Kingdom, where the share taken by


the top 1 per cent of income earners rose from 6.5 per cent in 1982 to 13per cent by 2005, while the poverty rate increased to nearly 16 per cent.

Neoliberalism involved disparate components, not all of which werepresent in all countries following the new economic path. Neoliberal eco-nomic policy became commonly associated with the deregulation of mar-kets, the privatisation of public-sector assets, by the withdrawal of the statefrom the direct provision of many aspects of social services, either throughselling off those operations to private-sector interests or by ‘outsourcing’such functions to the private sector. This enabled the creation of newavenues for profitable capital investment, affecting the supply of water, elec-tricity, gas, telecommunications, health care, education and even prisons.In later years, increasing use was made of private finance initiatives (PFI),or public–private partnerships (PPPs), to develop infrastructure such as tollroads, light-rail systems and the building and management of schools andhospitals (see Chapter 10). Commonly pursued under the belief that the pri-vate sector was more adept at assessing and dealing with risk, this allowednew projects to be developed but to keep those sums off the public-sectoraccounts. However, as governments can normally borrow more cheaply thanthe private sector, the latter would therefore need to be highly efficient tomake up for the difference in borrowing rates and justify a PFI-based solution(Rogers and Ball, 2012). Moreover, with regard to the transfer of risk to theprivate sector, if the private-sector partner got into difficulty and had to with-draw, it was normally the state and ultimately the taxpayer that had to pickup the bill.1

A key step in the advance of neoliberalism occurred in 1987 whenPresident Reagan appointed Alan Greenspan as Chairman of the FederalReserve. Greenspan served under several administrations, including that ofDemocratic President Clinton,2 until 2006. Greenspan was an interestingappointment as a Federal regulator because he was an almost Darwinianproponent of the free market. He had been greatly influenced by the liber-tarian philosopher Ayn Rand, who ardently believed that government wasa destructive force and that ‘each man must live as an end in himself andfollow his own rational self interest’ (Rand, 1959). She opposed all forms ofgovernment control, favouring an absolute laissez faire, free and unregulatedeconomy and the complete separation of the state and economics (Rand,1959).3 In his autobiography, Greenspan states that ‘Ayn Rand became astabilizing force in my life. It hadn’t taken long for us to have a meetingof the minds – mostly my mind meeting hers’ (Greenspan, 2007, p. 51).By 1968, Greenspan had ‘long since decided to engage in efforts to advancefree-market capitalism as an insider, rather than as a critical pamphleteer’and, in agreeing to accept the nomination as chairman of the president’sCouncil of Economic Advisers, he realised that he ‘would have to pledgeto uphold not only the Constitution but also the laws of the land, manyof which I thought were wrong’ (Greenspan, 2007, p. 52). As Chair of the


Federal Reserve for nearly 20 years, he held a profound belief that marketswould regulate themselves and that regulation would merely hinder theirefficiency.

‘Neoliberalisation’ also came to mean the ‘financialisation’ of everything,a movement of policy away from a concern with the world of productionto that of the world of finance (see Chapters 3 and 8). Robin Blackburn’s(2006, p. 39) simple definition of financialisation as ‘the growing and sys-temic power of finance and financial engineering’, while brief, certainly hasstrong resonance in the continuing financial crisis where the influence ofthose engaged in financial activities has strengthened. Neoliberalism becameassociated with a deepening control by finance capital over all aspects of theeconomy, over the state (requiring the state to guarantee the financial sys-tem itself as a fundamental policy goal) and over daily life itself. Thus, whilewithdrawing from welfare spending, when the financial sector faced seriousproblems, the state was expected to bail it out. For example, the US Savingsand Loans crisis of the late 1980s, which resulted in the liquidation of 747such institutions, was estimated to have cost American taxpayers US$124bn(US General Accounting Office, 1996).

Towards ideological hegemony and its consequences

By the 1980s, the intellectual dominance of neoliberal ideas amongeconomists, politicians and the business sector was virtually complete,expressed by Margaret Thatcher’s dictum that ‘There Is No Alternative’(TINA). Following the Conservative governments of Margaret Thatcher andJohn Major, the New Labour governments under Tony Blair and GordonBrown ardently accelerated the deployment of neoliberal policies, reflect-ing the ideological hegemony which neoliberalism had achieved by the mid1990s (Peck and Tickell, 2002, 2007).

The neoliberal ‘agenda’ sought to facilitate free trade and the interna-tional mobility of capital so that national regulations could be avoidedand local (unionised) workforces could be effectively disempowered. Shift-ing production to low-wage developing countries enabled capital to tap intoan enormous pool of unorganised labour. Within the developed world, bythe mid 1980s, labour movements had become effectively tamed by thethreat of large-scale redundancy resulting from the relocation of produc-tion overseas or from ‘outsourcing’ to independent production units locatedin low-wage countries and merely ‘branding’ their sub-contracted productswith an appropriate logo (see Saad-Filho and Johnston, 2005).

Aided by new communication technologies, a new financial architectureof global financial institutions and practices was constructed to facilitate theglobal movement of capital and this, in turn, set in place the potential forenormous financial volatility on an unprecedented scale (see Chapter 3).Ushered in by the Thatcher government which aimed to expand the role


of London as a world centre for financial operations, the so-called Big Bangof 1986 initiated a period of ‘light-touch regulation’ of financial markets.In America, it was associated with the repeal in 1999 by President Clintonof the Glass-Steagall Act of 1933 which had established banking controlsin response to the role which speculative activities by banks had played inbringing about the Great Depression. The new ground rules once again per-mitted investment-banking firms to gamble with depositors’ funds held bytheir affiliated commercial operations. The longer-term consequences of thisaction were to prove immense.

The unleashed financial power of the banks and the unregulated ‘shadowbanking sector’ of private-equity funds and ‘hedge funds’ were able to gen-erate asset bubbles by purchasing at low costs, bidding up the price furtherand then selling these at higher prices to more ponderous investors beforeprices collapsed (see Gowan, 2009). In this way, the process of ‘bubbles’ and‘blow outs’ meant that huge amounts of wealth could be extracted from theorganised savings and pensions of ordinary people and transferred to thosewho already possessed enormous wealth.

Under neoliberalism, the redistribution of social product was spectacularlysuccessful, the wealthy extracting an ever-increasing proportion (Duméniland Lévy, 2004; see also Peet, 2013). Indeed, Harvey (2005) was led todescribe neoliberalism as being fundamentally a policy of class warfarewaged by the rich and those who own and control the means of produc-tion against the rest of us. However, this over-accumulation of wealth alsocreated a problem for capitalism. As a result of 30 years of neoliberal poli-cies favouring the wealthy and business organisations, massive volumes ofspeculative finance capital now scour the planet in an endless search forprofitable outlet, creating enormous asset ‘bubbles’.

Moreover, it has been within that same neoliberal ideological mindset thatgovernments have reacted to the catastrophic financial meltdown and eco-nomic depression caused by the very deregulation of finance capital that waspursued by neoliberal governments (Peet, 2011). States have therefore pur-sued austerity policies of forced dispossession through reductions in publicservices, wage cuts, unemployment, tax increases and the sale of public-sector assets. Not only do many of these policies significantly diminish reallevels of household income and effective demand, all too frequently leadingto the repossession of families’ homes but they actually exacerbate the crisisof ‘over-accumulation’ of capital by accelerating it into a process of ‘hyper-accumulation’ by the rich at the expense of widening impoverishment, inwhich the state acts increasingly as a ‘bailiff’ in the transfer of income andwealth to the already wealthy.

While unemployment levels, austerity measures and public debts soar inmany developed countries, in spite of their having been at the root of thefinancial crisis, banks and financial activities remain of paramount concernin the politico-economic strategies of supra-national, national, regional and


city governments. Governments across the Western world have hastened tothe aid of the financial system and its agents, publicly berating the actionsof bankers and regulators while simultaneously transferring vast amounts ofcapital to individual banks, yet attaching few terms or conditions to the useof such funds. Much of this has been achieved under a consensus promotedby the state-finance nexus itself that no alternative exists and that withoutsuch actions the financial system would collapse, leading to social chaos andan economic nuclear winter (see Harvey, 2010).

Fortunately, since 2008, this conundrum has become more open to publicdiscussion with the fundamental role that banks play in an economy comingup for debate (Christophers, 2013). Significant consideration has been givento whether banks are actually productive or non-productive, whether theyform part of or stand apart from the ‘real economy’ and whether or not theyshould be bailed out by ordinary workers and citizens or allowed to fail. Thevalue of such activities was even questioned by Lord Adair Turner, Chairmanof the Financial Services Authority in the United Kingdom, in his City ofLondon Mansion House speech on 22 September 2009. He observed that

while the financial services industry performs many economically vitalfunctions, and will continue to play a large and important role inLondon’s economy, some financial activities which proliferated over thelast ten years were ‘socially useless’, and some parts of the system wereswollen beyond their optimal size. And if you disagree with that, youhave a bone of contention not only with me, but with the Chairman ofthe British Bankers’ Association, Stephen Green, who has said exactly thesame thing in very similar words, when he argued that ‘in recent years,banks have chased short-term profits by introducing complex products ofno real use to humanity’, and when he recognised that ‘some parts of ourindustry have become overblown’.

However, it is obvious which interests have greater political support asprivate debts in the financial sector continue to be socialised and theirrepayment imposed via austerity (Blackburn, 2011; Fraser et al., 2013).

Whether or not we consider the current financial crisis to be ‘the“autumn” of a capitalist development of world-historical significance thathas reached its limits in one place and the “spring” of a development ofeven greater significance that is beginning in another place’ (Arrighi, 2010,p. 374), the politics and machinations of financialisation will continue tomatter for the foreseeable future. Financial innovation continues apace, assetpricing in different markets has been highly volatile and capital and wealthhave been increasingly concentrated in the hands of the few. As the unevenprocesses of financial expansion and contraction unfold, they generate apatchwork of localised crises and place-based devaluations of capital (Harvey,2006). These processes cannot be ignored and, as Harvey (2006, p. xv)


insisted, ‘the probability of monetary and financial crises obviously must,in light of recent history, be at the forefront of our theoretical concerns’.

The urban impacts of neoliberalism

The impacts of neoliberalism on local government and urban planning sys-tems have proved considerable and have been the focus of a considerablevolume of urban scholarship over the last 25 years, variously conceptualisedas the ‘new urban politics’ (Cox, 1993; see MacLeod, 2011), entrepreneurialurbanism (Harvey, 1989; Hall and Hubbard, 1998; Ward, 2003) and morerecently as urban neoliberalism (Brenner and Theodore, 2005; Harvey,2006; Hackworth, 2007; Künkel and Mayer, 2012). The operations of urbanplanning in the United States have long been facilitative of property-development interests. The initiative for promoting urban redevelopmentoften originated with a local coalition of business leaders and governmentofficials (Fainstein, 1994; MacLaran and Laverny-Rafter, 2003), with renewalpolicies pursued in many US cities since the 1949 Housing Act, having seencity governments ‘acting effectively as brokers for private developers’ (Kivell,1993, p. 8), assembling sites for redevelopment and providing requiredinfrastructure. Even the 1977 Housing and Urban Development Act whichprovided urban development action grants (UDAG) to tackle poverty andhousing problems had often been diverted into subsidising private develop-ment for the benefit of property developers and the more affluent (Feagin,1983; Fainstein, 1994).

However, the closing decades of the twentieth century were marked byan increasing degree of entrepreneurialism in urban planning which wasoften of a markedly different character to previous arrangements and whichreflected broader changes in the operations of urban government itself. Ear-lier examples of a proactive approach had commonly reflected a reformistplanning ideology and a response to the desire to reconfigure urban environ-ments to facilitate the changing demands of capitalist operations. Latterly,change stemmed from a growing entrepreneurial culture in urban admin-istration itself, largely directed and orchestrated by initiatives from centralgovernment (McGuirk, 1994). Thus, the character of urban-planning sys-tems became increasingly transformed with the traditionally restrictive andoppositional stance with regard to property-development interests shiftingtowards more overtly facilitative positions.

In the United Kingdom, the effective power of urban planning had ‘cen-tred around the ability of the state to orchestrate land-use developmentthrough large-scale public expenditure on the built environment’ (Ball,1983, p. 246). Public spending, particularly on infrastructure, allowed plan-ning authorities to manipulate the profitability surface for development bycreating the possibility of greater potential profitability in locations wheredevelopment was required. However, the deepening fiscal difficulties of


the state and reduced public spending during the 1970s undermined thispower to influence developers’ decisions. The limitations of planning wereespecially exposed in periods of economic stagnation when few develop-ment proposals were forthcoming. By the late 1970s, Goldsmith (1980,p. 144) commented that ‘planners now appear as rather weak, perhaps irrel-evant, pawns in an economic and political environment which is muchmore hostile than it was twenty years ago’. Urban planning had been ren-dered an almost inconsequential administrative exercise and other forms ofintervention were required.

From the 1980s, a deepening degree of entrepreneurialism infused localgovernment in the United Kingdom and became reflected in urban-planningsystems in which planners sought to work more closely with the property-development sector. Shorn of large-scale public-sector spending, at leastovertly, reliance had increasingly to be placed on the private sector tobring about planning goals. At the very least, this would require that devel-opment plans should conform to developers’ profitability considerations.Where development risk proved too great, ‘pump-priming’ by public spend-ing on infrastructure, or fiscal inducements might subsidise developmentcosts. Thus, planning increasingly became part of a strategic process of urbandevelopment, providing a guiding role in response to the agendas of urban‘boosterism’ lobbies. Strategic alliances were forged between urban planningauthorities, the economic growth lobby and property development, rein-venting both the image and reality of the city, helping to create an urbanlandscape which was iconographic of economic success, growth and change.

Entrepreneurial styles of urban ‘governance’ brought changes in the meth-ods and instruments of regulation (that is, what went on and how). Thisgenerated a redistribution of responsibilities between the different spheresof government, the community and the private sectors, creating a trans-formation in the cultures of interaction between them (Painter, 1997).Urban governance became associated with networks of negotiation and con-sultation, bringing together government departments, quasi-governmentorganisations, private-sector business interests and voluntary-sector bodies.These governance regimes, typified by PPPs, appointed quangos, allianceswith non-government actors and entrepreneurial initiatives, engendered a‘creeping enfeeblement’ of local government (Peck and Tickell, 1994). Thus,the administrative context for urban planning became transformed. Duringthe 1980s, a range of strategies became associated with the emergence ofan entrepreneurial culture focused around urban regeneration (Deakin andEdwards, 1993). Common elements of this new entrepreneurialism includedthe use of special-purpose authorities (SPAs), property-based urban regener-ation strategies (Healey et al., 1992; Turok, 1992; Newman and Thornley,1997; McGuirk and MacLaran, 2001; MacLaran, 2003), flagship develop-ments (Smyth, 1994) and revitalisation based on the exploitation of culturalcapital (Kearns and Philo, 1993; Boyle and Hughes, 1994).


Local-government planning powers were sometimes rescinded altogetherand vested in alternative quasi-private agencies, weakening local demo-cratic input or control.4 In the United Kingdom, this was accomplishedby establishing special-purpose development authorities (urban develop-ment corporations) which were given administrative responsibility for theregeneration of ‘brown-field’ former industrial sites and tracts of under-useddocklands. Their boards of directors were commonly dominated by property-development interests and financiers, normally being appointed by therelevant government minister rather than their being elected. These specialagencies were often endowed by the state with huge financial resources andsweeping powers. The remit of the London Docklands Development Cor-poration (LDDC) was to bring land into ‘productive’ use. The Corporationovertly subsidised property development through enormous investment ininfrastructure to improve the accessibility of docklands in order to promoteand facilitate property development there. It used its powers to assembleland, compulsorily if necessary, to treat it for industrial pollution and toconvey it to private-sector developers at much reduced real cost (Ambrose,1986; Brownill, 1990; Fainstein, 1994).

Planning functions might be allocated to a number of area-based devel-opment agencies, to the extent that an absence of strategic spatial planningcould arise (Newman and Thornley, 1997). Furthermore, the adoption ofentrepreneurial forms of governance heightened the necessity to complywith the aims of economic and financial interests, especially where area-based SPAs had been created to promote redevelopment (Malone, 1996).Thus, the options available to public-sector policy became transformed intoquestions concerning private-sector profitability.

In its early stages at least, entrepreneurial urban planning frequentlybecame focused around a narrowly conceived goal of physical renewaldriven by financial incentives (McGuirk and MacLaran, 2001). Alternatively,more active forms of partnership might extend beyond simple physicalregeneration into broader economic development, education and trainingand the provision of entrepreneurial leadership (Peck, 1995). Operatingunder such conditions, urban planning appeared increasingly to becomea depoliticised form of development planning locked into a pro-growthagenda (Breitbach and Mitchell, 2003) where broader social, cultural or envi-ronmental objectives could become residualised or diluted, overridden bya centralised agenda of competition, growth and entrepreneurialism (Imrieand Thomas, 1995).

Moreover, paradoxically and contrary to the anti-public-sector rhetoric ofthe neoliberal agenda, the state actually devoted massive public subsidies tothe task of attracting capital back to the inner city. ‘Feeding the downtownmonster’ was a phrase coined by Harvey (2000) when referring to the spi-ral of public money sunk into downtown plans which did not serve thepublic interest. Indeed, the much-vaunted ‘rolling back’ of the state was


rarely achieved in terms of aggregate spending under neoliberal government.Rather, spending was redirected to benefit capital (Swyngedouw et al., 2002;Hackworth, 2007).

Under an ethos of market competition and entrepreneurial urbanism,cities, regions and whole economies marketed themselves to the globalpower of capital as they became obliged to compete to attract footlooseinvestment. At a time when ‘image’ counted so highly, cities often alsosought to rebrand themselves to attract footloose investment, ‘Glasgow’sMiles Better’ being one particularly sickly sweet smiley-faced ‘branding’ logoof the early 1980s. Older, decaying inner-city areas and city centres them-selves became subject to ‘make-overs’. But the declining areas of the citywere not normally being ‘made over’ for those who lived there. They werebeing ‘regenerated’ for incomers, usually for a younger, higher-class clien-tele with cash. The property-development sector was encouraged, often bytax incentives or new infrastructure, such as light rail systems, or urbanbeautification projects to ‘re-fashion’ such areas, transforming previouslyindustrial working-class areas by bringing land into ‘higher and betteruses’, in property-development terms. This saw the wide-scale refashion-ing of many older urban areas (Smith, 1996; Lees et al., 2008). Offices,hotels and expensive residential developments displaced low-grade indus-trial functions which had provided employment for a local labour force.Socially, areas were being ‘gentrified’ as low-income residents were dis-placed by new functions and a new residential population much betterable to afford the higher costs of accommodation. A policy of ‘renewalthrough gentrification’ transformed the social composition of inner-cityareas (see Chapter 11), justified by newly emerging ideas about the ‘cre-ative city’ and the important role of the so-called creatives in stimulatinggrowth.

Thus, recently, the writings of Richard Florida (2002, 2005) and the‘creative-city thesis’ proved highly influential among urban administrationsand planners around the world. They were entirely appropriate to neoliberalideas regarding competition between regions, cities and individuals, as wellas to the proclaimed importance accorded to minimising public expenditureand directing it instead towards those who could best help cities achieveeconomic success (see Chapter 12). Thus, there developed the belief withinurban administrations internationally that in order to attract capital invest-ment it was imperative to attract the right type of resident, a ‘creative’,someone much sought after by potential incoming employers. The the-sis claimed that if a city could attract such creative individuals, other jobswould automatically appear. So, urban policy and resources should logicallybe directed towards accommodating the ‘creatives’ – the already privileged –and the city itself should undergo a ‘make-over’ to ensure that it becomesmore attractive to this élite. Although the thesis does not stand up wellto rigorous academic scrutiny (Peck, 2005), it has nevertheless had a major


influence on urban administrations internationally and its impacts continueto be felt by disadvantaged communities which happen to stand in the wayof such new visions for the city.

The chapters which follow in the remainder of Part I examine themanner in which neoliberal ideas became manifested in Irish policy atcentral-government and local-authority levels (Chapter 2) and the finan-cial architecture which was put in place to facilitate their operation in thefinancial sphere (Chapter 3), thereafter examining the changing legal basesof Irish planning (Chapter 4) and the transformation which took place inthe operations of Irish urban planning towards more overtly facilitativeentrepreneurial modes of operation (Chapter 5).

Notes

1. In the modernisation of London’s underground railway in 2003, two private-sectorcompanies were awarded 30-year contracts to upgrade the service. Within fouryears Metronet, which had been responsible for the maintenance, renewal andupgrading of the infrastructure on nine lines, went bankrupt. The cost, amountingto almost St£2bn, was met by the state, much of which went to repay the privatelenders to Metronet. However, PFI did provide valuable new channels for profitmaking. In 2012 in the United Kingdom, 719 PFI contracts were in operation witha final cost of St£301bn for projects with a capital value of St£54.7bn. NationalHealth Trusts had entered into 118 PFI contracts for the construction and manage-ment of new hospitals to the capital value of St£11.6bn. The eventual total cost tothe taxpayer by 2049 will be more than St£79bn (HM Treasury, 2012; Rogers andBall, 2012). With the average cost of capital for a low-risk PFI project amounting toabout 8 per cent, double that of government gilts, the House of Commons TreasuryCommittee (2012), reviewing the performance of PFI over the previous 20 years,was led to conclude that

the price of finance is significantly higher with a PFI. The financial cost of repay-ing the capital investment of PFI investors is therefore considerably greater thanthe equivalent repayment of direct government investment. We have not seenevidence to suggest that this inefficient method of financing has been offset bythe perceived benefits of PFI from increased risk transfer. On the contrary thereis evidence of the opposite.

2. The Clinton White House included Robert Rubin and Larry Summers. Rubin hadpreviously run Goldman Sachs and was appointed as Assistant to the President forEconomic Policy and director of the National Economic Council (1993–95) andserved subsequently as US Secretary of the Treasury. He was said to be responsiblefor populating the Clinton White House with apostles of the free market. Summerswas appointed in 1995 as Deputy to Rubin and replaced him as Secretary of theTreasury for the period 1999–01. He lobbied in the Reagan and Clinton WhiteHouses for reductions in corporate and capital gains taxes and succeeded Rubin asSecretary of the Treasury (1999–01). In the field of labour economics, he arguedthat unemployment insurance and welfare payments were a major contributor tounemployment and should therefore be scaled back.


3. Interestingly, this intellectual separation of the economic and political spheresignores their functionally inseparable relationship. The fundamental role of thepolitical state, in capitalism as under previous modes of production, is to protectthe politically (legally) defined power of private owners (the economic élite) tocontrol the means of production (an economic element). Effectively the state actsas guarantor of prevailing social relationships, guaranteeing the class position ofowners, who have the power to exclude non-owners from using the means of pro-duction (and thereby gaining their means to life) except under the terms set bythe owners. This relationship is unstable, the threat to the position of the own-ing class being ever present from the existence of a class of non-owners. Stabilityis accomplished by forging a belief that the contemporary relations of produc-tion, namely the ‘rights’ of private ownership and the power relationship betweenowners and non-owners, are entirely legitimate (even ‘natural’), despite the factthat physical things possess no inherent attribute of belonging to anyone. Own-ership describes an ideological concept; an ‘idea’ that individuals can possess aresource and thereby exclude others from gaining access to it. Things exist. All elseis relationship. Thus, people are led to believe that current social arrangementsare unchangeable and somehow ‘natural’. If ideological programmes fail, the judi-cial system and, if necessary, use of force effectively guarantee the rule of thateconomic élite. The idea that capitalist relations and the power of the economicélite could continue in the absence of an active interventionist state enforcingclass rule is a fiction. Economic, political and ideological elements are intimatelyinterrelated.

4. The Conservative government of Margaret Thatcher even abolished the GreaterLondon Council altogether, the tier of administration standing above the 32 local-government boroughs which concerned itself with the strategic planning of thewhole of Greater London.

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crisis and the global-local disorder, in Amin, A. (Ed.) Post Fordism: A Reader. Oxford:Blackwell, pp. 280–316.

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Leitner, H., Peck, J. and Sheppard, E. S. (Eds) Contesting Neoliberalism: Urban Frontiers.New York: Guilford, pp. 26–50.

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2Irish Neoliberalism and NeoliberalUrban PolicyAndrew MacLaran and Sinéad Kelly

This chapter examines the infusion of neoliberalism into Ireland during the1980s through its initial influence at central-government level, its forcedintrusion into local administration and its consequences for the trajectoryof urban policy and planning, pointing to several of the topics which areexamined in greater depth in subsequent chapters. It reveals that while manyof the policies pursued in Ireland by central government and local admin-istrations reflected the more general elements of neoliberalism, there alsoexisted significant differences which occurred in response to unique nationalcircumstances.

Background

Following entry to the European Economic Community in 1973, the Irisheconomy underwent major restructuring as a result of intensified compe-tition from abroad. Expansionary budgets of the late 1970s attempted toaddress these economic difficulties but resulted in rapid increases in infla-tion, with rates exceeding 20 per cent for three consecutive years in theearly 1980s (MacLaran, 1993). A crisis in the public finances forced cuts inpublic-sector spending and an embargo in public-sector recruitment, furtherexacerbating the impacts of the general economic crisis.

Nowhere was this restructuring felt more intensely than in Dublin with itsolder manufacturing plants, employment in its traditional industries declin-ing by 45 per cent between 1971 and 1981. At a time when Dublin’s pop-ulation was increasing significantly, employment in the services sector alsofaltered. Unemployment in Dublin more than doubled from 36,500 in 1981to 82,000 by 1987. Simultaneous declines in industrial, office and residentialdevelopment resulted in unemployment in the construction sector, rising toover 45 per cent by mid decade. Moreover, in spite of the continued popula-tion growth, the residential population of the inner city had been reducinginexorably since the mid-1930s as a consequence of slum clearance pro-grammes, accompanied by suburban development of low-density housing

20


developments by the local authorities and private-sector developers. Theresidential population of the inner city (broadly defined as the area lyingbetween the Royal and Grand canals) declined by a further 27 per centbetween 1971 and 1981.

By the late 1980s, Dublin had become Ireland’s problem region par excel-lence. The number of unemployed residents in Dublin (Dublin CountyBorough, County Dublin and Dun Laoghaire) exceeded the total num-ber unemployed in all the western seaboard counties, traditionally viewedas Ireland’s problem regions. By mid decade, the unemployment rate inDublin’s inner city reached 35 per cent, with some social-housing areasrecording rates of over 80 per cent (MacLaran, 1993). By 1989, it had risento 41 per cent in the north inner city (Alliance for Work Forum, 1988),where long-term unemployment of more than a year’s duration became par-ticularly problematic, being experienced by 58 per cent of those who wereunemployed (McKeown, 1991). The physical environment of the inner cityreflected the depressed economic situation with 600 cleared sites and derelictbuildings in the inner city in 1986, totalling 65ha (MacLaran, 1993).

Towards neoliberalism

Given the difficult economic circumstances, it was not surprising thatthe neoliberal politics being pursued in the United Kingdom under PrimeMinister Margaret Thatcher’s Conservative party governments (1979–90)strongly influenced the political agenda pursued in Ireland during the 1980s.The continuation of such policies under John Major (1990–97) and underthe New Labour party leadership of Tony Blair (1997–07) and GordonBrown (2007–10) gave added credence to Thatcher’s dictum that ‘ThereIs No Alternative’ (TINA).

Of considerable importance in shaping the policies of a series of coali-tion governments led by Fianna Fáil (from 1989 to 1992 and three furtheradministrations between 1997 and 2009) was the small party of the Progres-sive Democrats (PDs), launched in late 1985 comprising politicians who hadresigned from the two main conservative parties, Fianna Fáil and Fine Gael.The PDs supported fiscal conservatism, economic liberalisation, the privati-sation of state assets and lower rates of taxation, reminiscent of neoliberalideas which had been promoted by Thatcher in the United Kingdom andby Reagan in the United States. Its neoliberal pro-business ethos was warmlyreceived by the leadership of Fianna Fáil and the party’s backers, notably bythe property-development sector with which Fianna Fáil possessed a closerelationship. The PDs thereby gained a degree of influence over govern-ment policy which belied its small size and number of representatives inDáil Éireann (parliament).

The adoption of neoliberal ideals happened initially at national-government scale. It was reflected in the gradual relaxation of state controls,


placing greater reliance on market-based solutions to problems, and in theprivatisation of key public-sector companies, such as the Irish Life Assur-ance Company (1991), Telecom Éireann (1999), the Trustee Savings Bank(TSB) (2001), ICC Bank1 (2001) and ACC Bank2 (2002) (Barrett, 2004). As theneoliberal agenda deepened during the late 1990s, public-sector partnershipswith the private sector for the development of key infrastructural elementsand for social-housing renewal became an increasingly important elementof Irish national-government and local-authority policy (Hearne, 2011; seealso Chapter 10). Introduced on an experimental basis in 1999 following rec-ommendations from consultants Farrell Grant Sparks (FGS, 1998) and theIrish Business Employers Confederation (Allen, 2007), public–private part-nerships (PPPs)3 were destined to become of major significance. The nationalbudget of 2004 set targets for PPPs to increase from just 3 per cent of public-sector capital investment in 2004 to 15 per cent in 2008 (Hearne, 2011).Although originating with the central state, PPPs became forcibly implantedinto the local-authority sector, notably in the large-scale renewal of socialhousing.

Incentivising urban redevelopment

The state became increasingly and more overtly orientated towards servingthe interests of capital, opening up new outlets for capital investment andprofit making, marking a movement towards laissez faire principles as marketforces were given freer rein. The state also engendered a change in the veryway in which the public sector operated, from one which had been highlybureaucratic to one whose operations became increasingly entrepreneurialand facilitative of the requirements of capital. Nowhere was this more evi-dent than in urban regeneration where, from the mid-1980s, substantialproperty-based tax incentives for renewal were introduced in certain desig-nated areas of Dublin and certain other smaller Irish towns under the UrbanRenewal Act (1986) and Finance Act (1987) (see MacLaran, 1993; MacLaranand Williams, 2003). With the primary aim of boosting employment andprofits within the ailing construction sector, the legislation provided for

(1) capital allowances of 50 per cent for investors relating to expenditureof a capital nature involved in the construction or reconstruction ofcommercial buildings (set against income or corporation tax);

(2) an annual tax allowance amounting to twice the value of the rent paidby the occupiers of new or refurbished properties;

(3) a remission of commercial rates (property tax) for a ten-year period ona sliding scale, relating to the erection, enlargement or improvement ofcommercial premises;

(4) income-tax relief for owner-occupiers’ expenditure relating to newlyconstructed or refurbished private dwellings; and


(5) tax allowances for landlord investors in rented residential properties(within specified size limits) enabling them to off-set construction costsagainst rental income.

These generous fiscal incentives engendered a boom in office property devel-opment in central Dublin which, in just two years, increased the stock ofmodern (post-1960) office space by 20 per cent (see Chapter 6). Drawing onthe model of urban regeneration pursued by the Thatcherite governmentin the United Kingdom, notably in London’s docklands and certain othercities which had suffered from structural economic decline, the Irish govern-ment adopted the concept of the ‘urban development corporations’ whichhad been created to facilitate or ‘fast track’ regeneration in such areas andbring derelict or underused ‘brown-field’ sites in UK cities into ‘higher andbetter’ use.

In Dublin, this concept became crystallised in the regeneration of thedocklands. As in London, where redevelopment had been overseen by theLondon Docklands Development Corporation, planning powers were expro-priated from Dublin Corporation and vested in the Custom House DockDevelopment Authority (CHDDA), a special-purpose authority charged withoverseeing the redevelopment of 11ha of redundant docks close to the cen-tral business area. Here, available tax incentives were even more generous,including 100 per cent capital allowances for business premises and, in thecase of residential properties (houses of 35–125 sq m or apartments of 30–90sq m), landlords could off-set the cost of new premises against rental incomefrom all sources.

The CHDDA swiftly set about achieving the goal of an integratedredevelopment of mixed commercial and residential functions (MacLaran,1993; MacLaran and Williams, 2003; Moore, 2008). The renewal processmoved at a rapid pace. Early in 1987, the site was transferred from thePort and Docks Board to CHDDA. The CHDDA devised an outline plan-ning scheme for the site and held a competition for development projects.Submissions were evaluated on the basis of their design, financial backingand ‘deliverability’, the winning scheme, lodged by a British–Irish consor-tium comprising British Land, Hardwicke and McInerney Properties, beingannounced in October 1987. It envisaged the development of 70,000 sq mof office space, a 300-bedroom hotel, a 5,000-seat conference centre, 200residential apartments, 3 museums (folk, science and modern art), retail-ing, restaurants, pubs, an entertainment centre, community and trainingspace and underground parking. Once the Master Project Agreement wassigned (January 1988), the land passed to the development consortium (Cus-tom House Docks Development Company (CHDDC)) on a 200-year lease asindividual components of the development were undertaken. Subsequentchanges to the scheme did not require consent from the CHDDA if they


accorded with the planning scheme, a system of ‘light-touch’ planning reg-ulation reminiscent of what occurred in the enterprise areas of London’sdocklands.

Light-touch planning and financial liberalisation in docklands

Light-touch planning control and the entrepreneurialism exhibited by theauthority facilitated the rapidity of the development process in the CustomHouse docks. Furthermore, influenced by Irish financier Dermot Desmond,the newly elected Fianna Fáil government under Charles Haughey adoptedplans in 1987 to include an International Financial Services Centre (IFSC)within the redevelopment. Here there were to be no restrictions on foreigncurrency transactions nor any capital gains tax on trading income generatedwithin the Centre. A further inducement to attract commercial occupierswas the adoption of a Corporation Tax rate of just 10 per cent on profitsderived from off-shore activities (MacLaran and Williams, 2003).

The contrast with the prevailing highly restrictive regime of capital controlcould hardly have been sharper. During the mid-1980s, Irish institutionalinvestors had been constrained to direct only 10 per cent of availablefinance generated in Ireland, from life assurance policies, pension funds,investments and savings to overseas investment. The remainder had to beallocated to Irish stocks and shares, Irish government bonds, Irish prop-erty and short-term cash deposits with financial institutions. The effectivede-regulation of financial dealings relating to off-shore business was to provea milestone in the trajectory of government policy towards neoliberalism.

By mid-1991, committed employment in approved IFSC projectsamounted to around 2,800 in 140 companies, involved in such diversityof interests as financing and treasury operations; investment fund, currencyand futures funds management; municipal bond financing; asset and tradefinancing; securities trading; insurance, reinsurance broking; aircraft leasingand financing; international stock-broking and the insurance and financ-ing of bloodstock (MacLaran, 1993; Murphy, 1998). By 2010, the IFSC hadbecome the second largest off-shore financial centre in Europe involving 450international operations and over 1,000 managed entities. It was host to halfthe world’s 50 largest banks and half the top 20 insurance companies. It hadgenerated employment, amounting to 24,000 jobs with estimated averagesalaries of �60,000 per annum, with a further 6,000 jobs being createdindirectly. Despite the low percentage rate of company taxes, internationalfinancial services generated tax valued at �2.1bn per annum (�1.4bn inCorporation Tax,4 �198M on payroll taxes and �515M on income taxes)on operations which, in the absence of the IFSC, would possibly not haveentered the jurisdiction of the country at all.

However, in a competitive environment for financial operations, the logi-cal way to attract more business to one’s own financial centre was to ensurelow taxation and a regime of financial control which was less restrictive


than those of competitors. The idea that a culture of light regulation wouldencourage economic growth, create employment and boost government rev-enue seemed to have been well demonstrated by the success of the IFSC.It was an ideology that became firmly embedded in government thinking.The loosening of financial regulations from the late 1980s permitted Irishinstitutions to borrow freely on global money markets and lend loosely withfew controls to Irish clients (see Chapter 3). However, the regime of lightregulation initiated with the IFSC spread inexorably to the domestic bank-ing sector, a belief in the value of deregulation having become dominantwithin the Central Bank of Ireland (CBI) and the Irish Financial ServicesRegulatory Authority (IFSRA). The Irish government’s faith in the neoliberalagenda of ‘light-touch’ regulation of financial institutions gradually led to avirtual absence of state interference. The lax regulation of the banking sectorled to increasingly reckless lending policies, which were eventually to provedisastrous for the Irish economy, for Irish citizens and for the financial sectoritself, as subsequent chapters show.

However, those consequences had yet to arise. Throughout the 1990sand into the early years of the third millennium, neoliberal ideas werewarmly embraced by Irish governments. Having emerged from the yearsof economic stagnation and emigration of the 1980s, real gross domesticproduct (GDP) grew at more than 3 per cent per annum through the 1990s.In 1992, Irish GDP per capita had amounted to only 68.9 per cent of theEU average (15 states), compared to 102 per cent for the United Kingdom.By the late 1990s, Irish GDP per capita had surpassed that of the UnitedKingdom. Ireland was experiencing unprecedented economic growth, theso-called Celtic Tiger years, initially based largely on massive foreign directinvestment in non-traditional elements of the economy, such as the high-technology, pharmaceutics and business-services sectors (O’Riain, 2004;Bartley and Kitchin, 2007; Breathnach, 2010). In just one year (2002), thenet inward flow of foreign direct investment mounted to �22bn (Brawn,2009). Unemployment dropped nationally from 18 per cent to less than4 per cent. Reflecting this booming economy, Ireland also experienced thenet immigration of 448,000 from 1997 to 2007.

When interpreting trade figures, it is necessary to bear in mind the roleof ‘transfer pricing’, where international companies locate highly profitablereturns in low-tax regimes such as Ireland, which distorts the ‘true’ pictureto a considerable extent. Nevertheless, from the mid-1980s, increasing sur-pluses were recorded in Ireland’s balance of trade, their having been negativein the early 1980s. They rose from less than �5bn in 1992 to �25bn in 1998and to a record surplus of �38bn in 2002. Similarly, the repatriation of prof-its from Ireland to overseas headquarters increased from �5,948M in 1995to �29,393M in 2007 (Allen, 2009). It seemed that a policy agenda based onneoliberal ideas had provided a recipe for success. Indeed, Ireland was oftencited as an example of what might be achieved under neoliberalism.


Social partnership

It is perhaps ironic to note that this neoliberal programme for economicrecovery, which placed ever greater faith in the role of market-based solu-tions and deregulation, was associated with a ‘social partnership’ modelof negotiated national wage-bargaining rounds. Under a series of nationalprogrammes from 1987 until its collapse in 2009, pay restraint would berewarded by improvements in the provision and quality of public servicesand by reductions in taxation. This policy was strongly linked to the pro-motion of an integrationist ideology in which capital, labour and the state(expanded in later programmes to embrace the voluntary sector) were spo-ken of as ‘social partners’. This social-corporatist ideology, into which thetrade unions were seduced in order to ‘save the economy’, effectively deniedthe essential conflict of interest between labour and capital and obscuredthe capitalist state’s fundamental role of securing conditions favourable tocapital accumulation. Clearly, while deregulation of capital was the order ofthe day, the latent power of labour in wage bargaining was to be stronglycontrolled by a self-imposed policy of wage discipline.

Commencing with the Programme for National Recovery in 1987, insti-tuted under Charles Haughey’s Fianna Fáil administration, the ‘partnership’approach and the implementation of a series of such agreements over the fol-lowing two decades delivered a quiescent labour force and effective controlover wages and salaries in return for rising real incomes. Interestingly and incontrast to the controls over labour, the agreements ignored incomes frominvestments, property or shareholding dividends. They also deflected atten-tion from rising levels of business profits and excluded incomes from self-employment. Capital gains tax was reduced from 40 per cent to 20 per centand, at a time when the marginal tax and related social-insurance rates onsalaries and wages commonly exceeded 40 per cent, the Deposit InterestRetention Tax (DIRT) rate on interest from savings stood at just 20 per centuntil well after the financial meltdown and the banking crisis of 2008. Thegeneral tax rate on business profits was also reduced from the prevailing rateof 32 per cent in 1998 to just 12.5 per cent by 2003, providing a windfallbonus to Irish businesses.5

As a result, the proportionate share in the economy (GDP) that was dis-tributed as wages and salaries declined from 75 per cent in 1983 to just58 per cent by 2011 (European Commission, 2011). By 2007, the rich-est 1 per cent of the Irish population had increased their personal wealthby �75bn (Bank of Ireland, 2008) and possessed assets exceeding �100bn,amounting to over a third of national non-housing wealth (Allen, 2009).

Local-authority transformation

During the 1990s, the system of local government in Ireland had also beenin a state of flux and, by the end of the decade, a significant shift had


taken place in the management philosophy, operational techniques andhierarchical organisation of Dublin Corporation towards entrepreneurial-ism. Government policy had addressed the reform of local administrationwith a view to enhancing democracy and participation, improving servicedelivery and the efficiency of local-government operations, together withthe problem of local authorities’ resource base following the abolition ofdomestic rates (property tax) on private residences in the late 1970s.

Urban administration and planning in the Dublin Region fall within theremit of four local authorities. Dublin Corporation, renamed Dublin CityCouncil (DCC) in 2002, administers Dublin County Borough and com-prises the central city, the inner suburbs and much of the outer northernsuburbs. Fingal County Council, South Dublin County Council and DunLaoghaire-Rathdown County Council comprise elements of outer suburbiatogether with adjacent rural districts. Until the early 1990s, some degree ofco-operation between the metropolitan authorities (which had previouslycomprised the centrally located Dublin Corporation, a largely suburbanCounty Dublin and the small borough of Dun Laoghaire) had been ensuredthrough a single City and County Manager. Similarly, the most senior plan-ner was the Chief Planner for the city and for surrounding county areas(MacLaran and Williams, 2003). The reorganisation of the local authoritiesand associated changes in managerial personnel transformed the admin-istrative organisation of the metropolis (MacLaran, 1993; McGuirk andMacLaran, 2001). The national government’s Strategic Management Initia-tive (SMI) (1994–96) noted a need for change from traditional bureaucraticmodes of operation to more flexible public-sector management techniques.The publication of the report Better Local Government (DoELG, 1996) fur-ther signalled central government’s desire to pursue this agenda locally byforging a holistic, rather than a functionally divided approach to local gover-nance (Bartley and Treadwell Shine, 1999; Ó Broin, 2003). The transformedvision for local government engendered a reconfiguration of local-authorityoperations, primarily through obliging them to conform to new codes ofoperation, commonly described as ‘best practice’. Policy documents beganto reflect a corporate ethos, characterised by an almost brainless vocabularydrawn from the business world. It heralded a new era of ‘mission statements’,‘cost centres’, ‘stakeholders’, ‘benchmarking’ and ‘performance indicators’,accompanied by a growing managerial ethos of authoritarianism and strictcontrol over employees.

The changes are well illustrated by examining the example of DublinCorporation/Dublin City Council. A Corporate Planning Unit was formedwithin the Corporation to analyse and facilitate changes to the Corpora-tion’s structure, involving the reorganisation of departments and instillinga new operational culture into the local authority’s ethos (Dublin Corpora-tion, 1998). The Corporation was restructured from a functional basis to onebased on five geographically administered Area Departments with responsi-bility for management and delivery of a range of services relating to planning


and urban design, environment and engineering, housing and commu-nity services. For those services considered more appropriate to a broadergeographical base, staff were engaged in multidisciplinary project teamsacross a further five integrated city-wide departments covering economicdevelopment and planning, transportation and traffic, housing, social andcommunity affairs, arts and culture, together with certain broader aspectsof environment and engineering. Included in the Planning and EconomicDevelopment Department were the Economic Development Unit, aimed atattracting and facilitating inward investment, and a Development AdvisoryTeam to assist property owners and developers in progressing developmentproposals for targeted redevelopment sites (McGuirk and MacLaran, 2001).Additionally, six central departments, addressing finance, staffing, law andcorporate affairs, together with the City Manager’s Department, providesupport to area- and city-wide departments. Finally, addressing centralgovernment’s desire to redress the balance of power between managersand democratically elected councillors (DoELG, 1996), six strategic policycommittees involving councillors were established.

Entrepreneurial urbanism in Dublin

Gradually, Irish urban policy and planning became infused with an ethos ofentrepreneurialism. Local authorities began to work actively with propertydevelopment interests to effect their housing, planning and developmentgoals (see Chapter 5). Outsourcing of local-authority operations to the pri-vate sector also took place, affecting services such as refuse collection andelements of public transport. As noted earlier, the agenda also involved anincreasing use of PPPs, where private capital is engaged directly in partner-ship with the state under a variety of arrangements to provide infrastructure(such as toll roads and school buildings) and services (such as light-rail opera-tions, school management) which would have been traditionally undertakenby the public sector directly (Hearne, 2011; Chapter 10). Again, taking a leadfrom Thatcherite Britain, local-authority roles were sometimes by-passedcompletely as key functions became vested special-purpose developmentor regeneration agencies, such as the CHDDA, Temple Bar Renewal Ltd.,Temple Bar Properties and the Dublin Docklands Development Authority(MacLaran, 1993; MacLaran and Williams, 2003).

Neoliberalism also changed the Irish regime of urban developmentplanning. Rather than continuing to function in their traditional reac-tive and essentially passive modes of operation, from the mid-1980s, anew entrepreneurial ethos in Irish local authorities resulted in planners’being required to adopt an increasingly facilitative role, working closelywith property-development interests (McGuirk and MacLaran, 2001; seealso Chapter 5). This was achieved by ensuring that plans conformedto developers’ profitability criteria, by permitting increased development


densities to enhance the prospective profitability of development projects,6

by ‘pump-priming’ of private investment through public-sector expenditureon infrastructure to reduce developers’ costs, by subsidising developmentcosts through tax incentives and by facilitating private-sector site assemblyby obliging local authorities to dispose of their inner-city land holdings toprivate developers (McGuirk and MacLaran, 2001). Thus, by the mid-1990s,some 78 sites that had been owned by the local authority in central Dublin,destined for the development of parks or social housing, had been sold toprivate-sector property developers (Dublin Corporation, 1997). At SheriffStreet in the north inner docklands, less than 1km from the commercialcore, a 4ha site adjacent to the Custom House Dock and the IFSC, which hadaccommodated 113 social-housing units, much in need of physical upgrad-ing, was sold to a private-sector developer for just Ir£2.4M. By the early2000s, when the booming economy of the Celtic Tiger was in full forceand a crisis of affordability was intensifying in the Irish residential sector,reflected nationally in a growing waiting list for social housing amounting tosome 46,000 households, local authorities, having previously been obligedto divest themselves of their portfolios of sites, were generally unable to pur-chase land for social-housing development due to the enormous escalationin land prices.

Planning, housing and partnership with the private sector

In the development of new social housing, reliance was to be placed on theprivate sector and, thence, indirectly on the purchasers of newly constructedhousing. The Planning Act, 2000, provided for all private-sector residentialdevelopments of more than 4 units to allocate 20 per cent of the site forthe provision of a mixture of social-rented or affordable owner-occupiedhousing, the precise mix being determined by the relevant local author-ity. Although the measure was challenged as unconstitutional by developersand rejected by the courts, an amendment in 2002 permitted land to beprovided at alternative locations within the same local-authority area orfor payments to the local authority to be made in lieu. While it had beenwidely believed that the social housing so created would be additional tothe normal modes of provision, it soon became evident that the ‘20 per centrule’ was destined largely to supplant the normal methods of provision.Of course, the danger of relying on the spin-off from private-sector devel-opment to provide affordable housing was that, in the event of a collapsein the scale of private-sector development, 20 per cent of nothing wouldconstitute nothing at all.

In an era of reduced emphasis on the direct provision of urban facilitiesby the state, increased reliance was placed on private-sector participation forthe achievement of plans. As noted in Chapter 1, it meant that the ‘viabil-ity’ of public policy became increasingly transformed into the facilitation ofprivate-sector profitability, reflected in an increased degree of ‘flexibility’ in


development planning and in the relaxation of plot-ratio norms to facilitategreater levels of profitability from sites.

Meanwhile, the effective influence of the general public over urban plan-ning was diminished with the establishment of special-purpose agencies, bythe increasing use of joint ventures between the state and private capitaland especially through the ‘fast tracking’ (Section 25) of development plan-ning (see MacLaran et al., 2007a, 2007b). As noted in Chapter 1, a strategicalliance became forged between urban planning, the economic boosterismlobby and the property-development sector to reinvent the image of the city,to make it ‘liveable’ and more attractive to the middle class. The influenceof the ‘creative city’ concept, which became core to the thinking of manyIrish urban planners, underpinned the ‘gentrification’ of the inner city as astrategy for regeneration (see Chapters 5, 11 and 12).

As outlined earlier, from 1986, key inner-city areas had been designatedas qualifying for fiscal incentives for property-related renewal. The measuresprovided a signal for capital to return to run-down inner-city areas, many ofwhich, excluding the main shopping streets and central office core, had seenalmost no private-sector property development during the twentieth cen-tury. The operations of the early urban renewal incentives were subjected towidespread public criticism, notably for their property-related emphasis andignoring of community concerns. Such shortcomings were largely acceptedby the government’s appointed consultant reviewers (KPMG, 1996).

From the mid-1990s, initial changes towards greater community partic-ipation in regeneration had marked the first phase of the Historic AreaRejuvenation Project (HARP), located in an area of the north inner city lyingto the west of O’Connell Street, focused around Smithfield and the fruit andvegetable markets area (see Figure 11.1). A framework plan was prepared byDCC, tapping into funds available from the EU together with some limitedfunding made available by the local authority itself. The project involvedthe strong participation of the local community, the City Enterprise Board,An Taisce (the Irish National Trust) and other agencies. Of key importancewas the creation of a Steering Committee established to oversee the project(see Chapter 13). However, the committee became an arena for growing con-flict between the community and the increasingly entrepreneurial DCC overthe intensity of the scale of redevelopment, especially in the Smithfield area,and the uses to which community-gain funds were to be used (Attuyer, 2010;see also Chapter 13).

From the late 1990s, area-based urban regeneration came to be embodiedin integrated area plans (IAPs), balancing subsidies to property capital byprospects of community participation and community gain. The approachwas described by Gleeson (1999, p. 52) as incorporating

a more holistic planning philosophy, with the social and economicagenda balancing the more traditional emphasis on environmental


aspects. Emphasising consultation, the IAP can respond with focusedstrategies to address local issues on the ground.

In theory at least, IAPs were to operate as localised planning mechanismsaiming to develop a holistic approach towards achieving social, economicand environmental goals, translating broad planning aims into locallyfocused implementation strategies, providing for the integration of public,private and community sectors to create a collaborative effort towards holis-tic regeneration (Gleeson, 1999). The IAP approach was formalised by centralgovernment as the key element of its 1998 urban renewal scheme (Depart-ment of the Environment and Local Government, 1997). In theory, theapproach offered the prospect of community participation in regenerationthrough the creation of local IAP Monitoring Committees. However, theMonitoring Committees of the new IAPs, including HARP IAP, differed sig-nificantly from the Steering Committee of the original HARP. Crucially,they lacked the power of HARP’s Steering Committee, which had provedsomewhat inconvenient to DCC. The IAP Monitoring Committees had nosatisfactory clear terms of reference and their powers were limited to an expost facto ‘signing off’ an annual report stating that development had con-formed to the plan (see Chapter 13). However, no remedy was provided inthe case of developments which contravened the plan and, in one IAP, thesuccessful operation of the Monitoring Committee was signifiantly under-mined by the provision of misinformation. Thus, IAPs seemed rather tofunction as a means of facilitating the incorporation of working-class protestand became increasingly viewed as instruments acting largely as facilita-tors for property capital (Brudell et al., 2004; MacLaran et al., 2007a, 2007b;Punch et al., 2007).

The economic boom of the 1990s had created a strong demand for landand office buildings in the core and generated a property-developmentboom of unprecedented scale which was to transform Dublin’s inner city.A profusion of office developments was undertaken to accommodate thegrowing numbers employed in the expanding services sector (see Chapter 6).Additionally, the decade witnessed the development of numerous residen-tial schemes to house the growing workforce, many of whom expresseda preference for inner-city living. Under an unstated policy of renewalthrough gentrification, frequently assisted by tax incentives, some 18,000residential units had been developed in the inner city by 2004, whereimpacts on land price were especially strong (Kelly and MacLaran, 2004;MacLaran et al., 2013; see also Chapter 11). Subsequently, the area-basedtax incentives for inner-city redevelopment in Dublin were estimated bygovernment-appointed analysts to have amounted to �1,993M (Goodbodyet al., 2006).

The declining number of available sites for development resulted in enor-mous increases in land price, the cheapest inner-city sites selling at �24M


per ha while sites in prestigious inner-suburban Ballsbridge fetched as muchas �234M per ha. As the property-development boom accelerated throughthe early years of the twenty-first century, the rising value of urban landeven threatened the continuing existence of social housing in the inner city.Often in acute need of refurbishment resulting from chronic inadequacyof maintenance by Dublin Corporation/Dublin City Council (Fahey, 1999),the attention of the local authority turned increasingly towards its own flatscomplexes, especially those in locations which seemed ‘ripe for plucking’near to newly completed infrastructures, such as the light-railway (Luas), oramenities such as the Phoenix Park.

PPPs as urban policy

A government circular to local authorities from the Department of theEnvironment (Circular PPP 2/03, June 2003) instructed them to considerengaging in PPPs in all cases of social-housing regeneration which wouldinvolve projects exceeding more than �20M (see Chapter 10). Such part-nerships would normally involve transferring the land and the existingsocial-housing units to the developer, who would then construct a largernumber of new residential units for sale to owner occupiers or landlords forprivate renting, the local authority in turn receiving a far smaller numberof social-housing units than had been originally present. This was deemedby the central government and local authorities like Dublin City Coun-cil which warmly embraced the model, to provide a ‘no cost’ solution tosocial-housing regeneration (Chapter 14).

However, at a time when few sites in central Dublin could be obtained atless than �24M per ha, the real cost was considerable. At St. Michael’s estate,occupying a 5.6ha site in Inchicore on the south-west boundary of the innercity adjacent to the new light-rail connection to the city centre, an initialPPP projected the replacement of 346 social-housing units by just 80 units ofsocial housing, 220 ‘affordable’ owner-occupied units and 550 private-sector(owner-occupied or private-rental) units. In return for the site, which mightwell have commanded a market price exceeding �100M and which wouldhave been given to the developer under the PPP deal, the local authoritywould gain just 80 social-housing units, having a possible construction costof around �16M. Disturbingly, it emerged that no independent professionalvaluation of the site had been undertaken, the Assistant City Manager andDirector of Housing noting, in reply to an oral question at a conferencein 2004, ‘The valuation of St. Michael’s estate? I don’t know. We haven’tdone any valuation of Michael’s estate’. It was later admitted in writing by acouncil officer that a 4.6ha section of the St. Michael’s estate was worth ‘atleast �70M’ (see Kelly and MacLaran, 2004).

Even under the terms of normal accounting, the logic of such PPPs couldbe seriously challenged. Effectively, what was happening was that assets inland which the state had expensively acquired for such functions as the


provision of public-sector housing were being transferred to private-sectordevelopers at enormously discounted values, thereby massively subsidisingtheir development costs and boosting their levels of profitability. It was farfrom comprising a ‘no cost’ model and managed only with some difficultyto obscure the expropriation of public assets.

Of course, for the state, this tactic could work successfully only insofaras the private residential sector continued to boom. Yet the central gov-ernment and local authorities had become so inured to the possibility ofany property crash occurring that the PPP model had become the domi-nant model for regeneration. When the crash inevitably occurred and thedemand for owner-occupied and private-rental units evaporated, it broughtan immediate stop to Dublin’s social housing regeneration programme (seeChapter 15). Dublin City Council’s main PPP partner in social-housingrenewal schemes unilaterally pulled out because of the impossibility of sell-ing the private units to fund the new social-housing units, the City Councilbeing left with worthless contracts which had cost some �6M to drawup. It soon emerged that there was no ‘Plan B’, with social-housing estateslike St. Michael’s and O’Devaney Gardens, which had been waiting for regen-eration for over ten years, being effectively left in limbo. Meanwhile, by2012, waiting lists for local-authority housing in Ireland had doubled to98,000 households.

PPP was also the route selected by the central state for the developmentof Dublin’s Convention Centre. This was to be developed under a ‘design,build, finance, operate and maintain’ PPP arrangement, the contract beingawarded to a consortium whose bid (at �380M) was over �150M more thanits rival (see Comptroller and Auditor General, 2010). The winning bid’scostlier selection was made possible due to higher marks being awarded toits design, construction, operation and maintenance elements, which out-weighed the lower marks awarded on financial criteria. For the first five years,the state would pay the developers �46.8M annually and �24M per annumfor the following 20 years. Essentially, the state after 25 years would own theConvention Centre, paying a collossal �714M in the process. With a capac-ity of 8,000 and an auditorium for 2,000 persons, it hosted events during itsfirst year of operation with an average attendance of just 300.

Urban policy in Dublin has been marked by the growing pervasiveness ofneoliberal ideas. While the first phase of entrepreneurial urbanism marked ashift in focus of urban policy away from development control and regulationto development facilitation (McGuirk and MacLaran, 2001), the more recentperiod suggests that there has been a significant ‘rolling-out’ of more explic-itly neoliberal policies in Dublin with the local state having become muchmore confident in initiating urban redevelopment through the packaging ofland for PPP exploitation, reflecting similar neoliberal policies implementedat national government level. In the era of inter-place competition, in theirpursuit of neoliberal policy agendas urban authorities can be characterised


as more overtly becoming agents of capital (Smith, 2002). In the contextof Dublin, while this policy agenda successfully reduced levels of physi-cal blight and vacancy and transformed the physical and social landscapeof the city, it also generated additional pressures for existing inner-citycommunities, notably with regard to accommodation issues, and in manyrespects tied the fortunes of the city to the highly cyclical performance ofproperty-development markets.

Notes

1. Formerly the Industrial Credit Corporation.2. Formerly the Agricultural Credit Corporation.3. The arrangements can include any or all of the following: designing, build-

ing/developing, financing and operating infrastructure or services (see Chapter 10).4. This is a generous estimate based on a rather broad definition of IFSC-related activi-

ties which include the export of all international financial services, including thosenot necessarily resident in the original IFSC (see Accenture and Financial ServicesIreland, 2010).

5. The special rate of 10 per cent for manufacturing business and for companies inthe Shannon Free Zone and the IFSC ended on 31 December 2003, the general ratebeing set at 12.5 per cent.

6. The permitted development density for inner-city apartments had traditionallybeen 115 dwellings per ha. This increased to over 240 per ha, some applicationshaving densities greater than 500 per ha.

References

Accenture and Financial Services Ireland. (2010) The IFSC: The international finan-cial services sector in Ireland, Available at: http://www.fsi.ie/Sectors/FSI/FSI.nsf/vPages/Media_and_Publications∼Publications∼fsi-accenture-ifsc-report/$file/FSI-Accenture+IFSC+Report.pdf.

Allen, K. (2007) The Corporate Take-over of Ireland. Dublin: Irish Academic Press.Allen, K. (2009) Ireland’s Economic Crash: A Radical Agenda for Change. Dublin: Liffey

Press.Alliance for Work Forum. (1988) Impact: A Research Report on the Impact of Urban

Renewal on Communities in Dublin’s North Inner City. Dublin: Alliance for WorkForum.

Attuyer, K. (2010) Neighbourhood Regeneration in the Neoliberal Era: Dublin and Paris,a Comparative Perspective, unpublished Ph.D. thesis, Department of Geography.Dublin: Trinity College.

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Pluto Press.Bartley, B. and Treadwell-Shine, K. (1999) Urban Redevelopment and Social Polarisation

in the City (URSPIC): Governance and the Dynamics of Urban Regeneration in Dublin.Brussels: EU Commission Targeted Economic and Social Research.

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Breathnach, P. (2010) From spatial Keynesianism to post-Fordist neoliberalism: Emerg-ing contradictions of the Irish state, Antipode, 42 (5), 1180–99.

Brudell, P., Hammond, C. and Henry, J. (2004) Urban planning and regeneration:A community perspective, Journal of Irish Urban Studies, 3 (1), 65–87.

Comptroller and Auditor General. (2010) Report of the comptroller and auditor gen-eral, Vol. 2. Dublin: Government of Ireland, Available at: http://www.audgen.gov.ie/documents/annualreports/2009/ReportVol2_09_rev2.pdf.

Department of the Environment and Local Government (1997) 1998 Urban RenewalScheme Guidelines. Dublin: DoELG.

DoELG. (1996) Better Local Government. Dublin: Government Publications Office.Dublin Corporation. (1997) Half Yearly Report on Urban Residential Renewal. Dublin:

Dublin Corporation.Dublin Corporation. (1998) Modernising Dublin. Dublin: Dublin Corporation.European Commission. (2011) Statistical annex of European economy, Autumn

2011, Available at: http://ec.europa.eu/economy_finance/publications/european_economy/2011/pdf/2011-11-10-stat-annex_en.pdf, accessed 11 June 2013.

Fahey, T. (1999) Social Housing in Ireland. Dublin: Oak Tree Press.Farrell Grant Sparks. (FGS) (1998) A Report Submitted to the Inter-departmental Group in

Relation to Public Private Partnerships. Dublin: FGS.Gleeson, D. (1999) Changing approaches to planning in Dublin’s inner city, in

Killen, J. and MacLaran, A. (Eds) Dublin: Contemporary Trends and Issues for theTwenty-First Century. Geographical Society of Ireland, Special Publication 11. Dublin:Centre for Urban and Regional Studies, Trinity College, pp. 49–54.

Goodbody Economic Consultants in association with Mazars and HKR. (2006) Reviewof Area-Based Tax Incentive Renewal Schemes. Dublin: Department of Finance.

Hearne, R. (2011) Public Private Partnerships in Ireland: Failed Experiment or the WayForward for the State? Manchester: Manchester University Press.

Kelly, S. and MacLaran, A. (2004) The residential transformation of inner Dublin, inDrudy, P. J. and MacLaran, A. (Eds) Dublin Economic and Social Trends, Volume 4.Dublin: Centre for Urban and Regional Studies, Trinity College, pp. 36–59.

KPMG. (1996) Study on the Renewal Schemes. Dublin: Department of the Environment.MacLaran, A. (1993) Dublin: The Shaping of a Capital. London: Belhaven/Wiley.MacLaran, A., Clayton, V. and Brudell, P. (2007a) Empowering Communities in Disad-

vantaged Urban Areas. Dublin: Combat Poverty Agency.MacLaran, A., Clayton, V. and Brudell, P. (2007b) Empowering communities in dis-

advantaged urban areas: A research summary, Journal of Irish Urban Studies, 6,73–88.

MacLaran, A., Kelly, S. and Brudell, P. (2013) Dublin’s neoliberal agenda and the socialcost of entrepreneurial planning, in Foi, S., Lehman-Frisch, S. and Morange, M. (Eds)Ségregation et Justice Spatiale. Paris: Presses Universitaires de Paris Ouest.

MacLaran, A. and Williams, B. (2003) Dublin: Property development and planning inan entrepreneurial city, in MacLaran, A. (Ed.) Making Space: Property Development andUrban Planning. London: Arnold, pp. 148–71.


McKeown, K. (1991) The North Inner City of Dublin: An Overview. Dublin: Daughters ofCharity.

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Financial Services Centre going global, Area, 30 (2), 157–65.


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O’Riain, S. (2004) The Politics of High-Tech Growth: Developmental Network States in theGlobal Economy. Cambridge: Cambridge University Press.

Punch, M., Redmond, D. and Kelly, S. (2007) Uneven development, city governanceand urban change: Unpacking the global-local nexus in Dublin’s inner city, inHambleton, R. and Gross, J. S. (Eds) Governing Cities in a Global Era: Urban Innovation,Competition and Democratic Reform. New York: Palgrave, pp. 45–56.

Smith, N. (2002) New globalism, new urbanism: Gentrification as global urbanstrategy, Antipode, 34 (3), 427–50.

3Light-Touch Regulation: The Riseand Fall of the Irish Banking SectorSinéad Kelly

Introduction

Recent scholarship has insisted on conceptualising neoliberalism as a returnto hegemony of finance (Duménil and Lévy, 2004; Arrighi, 2010; Harvey,2010). This conceptualisation views finance-driven capitalism as a new phaseof accumulation born out of the 1960s–1970s crisis of production, in whichthe solution to declining profits, the overproduction of goods and fallingreal wages was found by extending credit in ‘weird and wonderful’ waysto increase overall demand. Indeed, financial liberalisation formed a keypillar of the ‘Washington Consensus’ and informed many of the market-led solutions and policy measures espoused by neoliberal doctrine fromthe late 1970s onwards (Peck, 2013). The key principles of neoliberalisationhave involved the freeing up of capital controls facilitating the unfetteredmovement of capital across space, the application of market solutions topublic goods and a re-articulated role for the state focused on guaranteeingthe value of money while vesting private-sector actors with greater ‘free-dom’ to innovate and act. This chapter examines the transformation underneoliberalism of Irish financial regulation since the 1980s from one of closecontrol over international capital flows to an environment of ‘light-touch’regulation. The freeing up of controls over capital movement permittedgreater inward flows of funds seeking high returns from Irish economicgrowth of the late 1990s. Increasingly, the Irish financial institutions soughttheir funding from ‘wholesale’ financial markets and the more that could beborrowed and lent on in this way, the greater would be the potential prof-itability. Intensified competition between Irish financial institutions to lendfunds and a culture of bonus payments to financial managers on the basis ofshort-term success in meeting or exceeding lending targets resulted in theirengaging increasingly in reckless lending practices leading to a situtationwhere property-related lending grew to comprise some 60 per cent of bank

37


lending by the time that the inevitable crash occurred. Almost inevitably,the high levels of gearing of the financial institutions, their dependency onshort-term sources of funding and their over-reliance on property-relatedlending and on maintaining high property prices for the security underly-ing their lending brought the whole system to the verge of collapse and, forcertain institutions, resulted in bankruptcy.

Market liberalisation and the new internationalfinancial architecture

The liberalisation of financial markets and deregulation of banking can beconsidered as strategic and practical elements of a broader neoliberal agendain which efficiency, as determined by competition in a fully open globaleconomy, is a central tenet. According to this perspective, the state’s roleis to enforce rules of competition, remove existing barriers to global flowsand to construct new legal and institutional frameworks that promote suchefficiency objectives, including within the financial system. In practice, ofcourse, many variants, hybrids and mutated versions of these principleshave emerged, as these new ideas collided with existing Keynesian-orientedmodes of regulation, controlled financial systems and other local cultures,conditions and dependencies (Peck and Tickell, 2002). The reach of financialliberalisation, however, has indeed been deep as governments and capital-ists, in search of solutions to the stuttering economic growth of the 1970s,latched onto credit-expansion and capital-mobilisation measures offered bythe new economic consensus of neoliberalism.

Introduced in the United States in 1933 in the aftermath of the GreatDepression, the Glass-Steagall Act established strict controls in bankingactivity to keep investment banking separate from retail banking, therebyreducing the risk of credit bubbles and subsequent credit crunches occur-ring. In 1999, the Glass-Steagall Act was repealed, permitting investmentbanks to operate in the retail and commercial banking sectors and, morebroadly, financial activities rapidly to expand (Blackburn, 2006). The resultwas a dramatic growth in the size of the financial sector including thecreation and proliferation of new financial products (notably of deriva-tives, their subsequent securitisation and onward sale on global investmentmarkets); massive expansion of banks’ balance sheets as regulations set-ting out debt-to-deposit (liquidity) ratios were heavily relaxed, leading tosome banks operating ratios of over 30 to 1; and crucially, the unfet-tered growth of the unregulated shadow banking system of private-equityfunds, hedge funds, structured investment vehicles, mortgage brokers andlarge-scale trading in unregulated over-the-counter (OTC) derivatives (Wade,2008; Gowan, 2009). A further consequence was the diffusion internation-ally of Wall Street-influenced financial liberalisation. For example, underThatcher’s government in the 1980s, the United Kingdom imported many

Sinéad Kelly 39

features of the US financial model in an attempt to attract American financialactivities to London. The relaxation of financial regulation in the UnitedKingdom was closely associated with deepening integration of Eurodollarmarkets and marked the growing presence of American banks in Britain’sdomestic financial system (Konings, 2008). While financial liberalisation ini-tiatives in continental Europe occurred later and were far more variegatedthan the Anglo-American model, by the late 1990s, there had nonethelessbeen a dramatic expansion in financial activities and financial innovationin Europe and increased integration of European financial institutions andbanks internationally (Engelen et al., 2010).

Furthermore, the regulatory frameworks guiding international bankingand European Monetary Union became increasingly influenced by theAnglo-American system of banking. Despite the East-Asian, Brazilian andRussian financial crises of the late 1990s, which exposed serious struc-tural deficiencies in the newly constructed financial system, the doctrineof extending competitive practices in finance continued to gather momen-tum and influence (Wade, 2008). Rather than introducing stricter controls,such as leverage limits or vetting new financial products, a range of newpublic and private international bodies emerged, producing ‘best-practice’guidelines in corporate governance, bank supervision, financial account-ing and data dissemination (see Wade, 2007, 2008). This sent a clear signalthat regulators would continue to support the expansion and deepening offinancial markets, an ethos which became expressed in the Bank for Interna-tional Settlements (BIS) international standards for banking regulators, morecommonly known as the Basel and Basel II accords which, among otherrecommendations, lowered the ratios of capital-liquidity requirements forbanks (Wade, 2007).

Credit expansion and asset bubbles

The major consequence of financial liberalisation has been a massive expan-sion of lending, debt and the money supply globally. Furthermore, becauseof the problem of overaccumulation (Harvey, 1982, 2010), where sufficientnew profitable outlets could not be found through trade and commodityproduction, capital turned to assets and to the trading of financial productsin search of profit. This generated a succession of variously located asset-price booms and busts and instigated a process of fine-tuning the ‘art’ ofmaking money out of money by manipulating booms and exiting prior tothe crash (Gowan, 2009). During the 1990s, debt levels began to soar asdid speculation on asset values (Duménil and Lévy, 2004; Harvey, 2010).The boom in dot.com stocks absorbed much of this speculative capital untilthat bubble burst in the early 2000s and, subsequently, much of the capi-tal switched to speculating in property-based assets or in the newly createddebt products derived from those assets, such as residential or commercial


mortgage-backed securities (Christophers, 2011). Property booms rapidlytook the form of housing bubbles and/or commercial property price bubbles,particularly in those countries which had liberalised their banking and finan-cial systems and facilitated rapid credit expansion, such as the United States,the United Kingdom, Spain, Ireland and some eastern European countrieswhich had recently joined the EU.

Also of crucial significance was the expansion of the derivatives marketwhich allowed banks rapidly to expand their balance sheets and expeditedthe rising size and influence of the shadow-banking sector. The slicing,packaging and securitisation of mortgage and other forms of debt, tradedthrough the newly created financial instruments such as collateralised debtobligations (CDOs)1 and structured investment vehicles, propelled the scaleand power of the financial sector to new heights. Led by the big financehouses located in New York and the City of London, all kinds of debtswere bundled and sold on to all kinds of investors, who aimed to profit,ultimately from the future payment streams due on the original asset,index or interest rate, such as home owners’ monthly mortgage repay-ments for residential mortgage-backed securities. The growth of hedge fundsand private-equity funds also reflected and drove credit expansion, as fur-ther pools of funding were gathered to purchase assets, companies anda growing range of derivatives and their associated insurance, hedge andswap products (see Blackburn, 2008). By the time the financial crisis broke,global hedge funds were estimated to be managing assets to the value of$1.95 trillion. Meanwhile, the scale of growth in the derivatives marketwas astounding. By June 2008, the face value of all outstanding (unregu-lated) OTC derivative contracts exceeded $683.7 trillion (BIS, 2008). To putthis into context, according to World Trade Organization (WTO) figures,total world exports of manufactured goods for 2007 were valued at $9.5trillion, while, on the eve of the financial crisis, the total value of all globalstocks was $62.5 trillion, the face-value of OTC derivatives amounting toover ten times this figure. Even the gross market values of OTC derivatives,which measure the cost of replacing all existing contracts, amounted to anincredible $20.4 trillion (BIS, 2008). Clearly, the profits to be made fromfinancial deals continued to accelerate while simultaneously becoming yetmore divorced from trade and production (Arrighi, 2010). By March 2008,the volume of credit intermediated by the US shadow banking system wasalmost $20 trillion, more than twice the volume mediated by the traditionalbanking sector at just over $11 trillion (Pozsar et al., 2010). While esti-mates for the scale of Europe’s shadow banking system in 2008 are vague,a European Central Bank (ECB)-commissioned paper estimated that by mid-2011, assets held by shadow-banking sectors in the Euro area amounted to�10.8 trillion or 28 per cent of the total banking system; the equivalentfigure for the United States for 2011 was 53 per cent (Bakk-Simon et al.,2012).

Sinéad Kelly 41

Another important factor was the growth in the size and importance ofwholesale money markets which contributed rapidly to overall debt expan-sion and asset-price inflation. By the end of 2007, total global assets managedby mutual, pension and insurance funds was estimated at $74.3 trillion,having doubled since 2000 (Christophers, 2011). This pool of funding pro-vided loans to commercial and investment banks (inter-bank lending) andbecame a major purchaser of large volumes of CDOs and other asset-backedsecurities, the pre-eminent financial weapon of the shadow banking system(Gowan, 2009).

In retail and investment banking, the defining impact of financial lib-eralisation, was the way in which balance-sheet expansion became theprimary driver of banking policy and practice (Gowan, 2009). This goalbecame manifest through increased lending in scale and number, a relax-ation of the terms and conditions for lending, a reduction in collateralrequirements from borrowers, greater levels of lending to sub-prime, higher-risk and more precarious activities and an acceleration in the turnoverof loan applications (Blackburn, 2008). Effectively, banks adopted policiesand products that would maximise lending and, as regulators reduced thecapital-reserve requirements, banks correspondingly increased their lendinglevels. In addition, to avoid regulation, some investment and retail banksdeveloped ‘off-balance-sheet’ instruments further to expand their lendingand profits. They lent large volumes of debt to hedge funds and private-equity funds, thus indirectly funding further financial trades. Moreover, thecommercial and investment banks could in turn securitise and sell theseassets onwards to other financial institutions, thereby raising funds for yetmore rounds of lending. Additionally, some commercial and investmentbanks established their own special investment vehicles and conduits inorder to engage in financial-trading activities directly, the transactions beingrecorded off-balance sheet, avoiding regulation and not affecting debt-to-equity ratios. Thus, the creation and trading of derivative products suchas CDOs and credit-default swaps (CDSs),2 typically considered to comprise‘shadow-banking’ activities, formed an increasing component of some com-mercial and investment banks’ operations (see Gowan, 2009; Bakk-Simonet al., 2012).

Interestingly, the pace of financial expansion was ramped up after 2004when, following persistent lobbying by the Wall Street banks led by HankPaulson, then CEO of Goldman Sachs, the Securities and Exchange Com-mission (SEC) in the United States relaxed capital-reserve requirements forinvestment banks which effectively allowed them to decide on their ownleverage ratios. Unsurprisingly, ratios of debt-to-equity of the big investmentbanks (Goldman Sachs, Morgan Stanley, Bear Stearns, Lehman Brothers andMerrill Lynch) leapt from 2004 through 2007. For example, in 2003, MerrillLynch operated a debt-to-equity ratio of 15.6 to 1. By 2007, the ratio hadjumped to 30.9 to 1 (Willis, 2011).


From the late 1980s, banking and financial activities have been revolu-tionised, centered on the creation of new types of credit, new ways of tradingthat credit and, ultimately, rapidly expanding the volume and scale of credit.However, processes of financialisation are fundamentally and geographicallyuneven, being contingent on local conditions, controls, pathways and gov-ernance and legal structures. Ireland, as a small and open economy, washighly susceptible to the imperative to mimic the changing conditions beingestablished under this new international financial architecture.

Restructuring the Irish financial architecture

Until the mid-1980s, the Irish banking system was reputedly one of the mostheavily regulated systems of the western world with significant interest-rate, credit and capital controls in place (O’Sullivan and Kennedy, 2007).However, in line with financial-liberalisation and banking-deregulation ini-tiatives adopted in the United Kingdom and the United States and inpreparation for European monetary union, the terms and conditions forcapital movements, domestic banking and stock-market trading in Irelandchanged dramatically in the late 1980s and early 1990s. In the bank-ing sector, credit-growth restrictions and interest-rate rules were effectivelyremoved by 1992 and banks’ reserve requirements (liquidity ratios) succes-sively dropped from 10 per cent to 6 per cent in 1992 and to 2 per centby 1999. Moreover, controls on capital movements and on non-governmentsecurities trading were removed.

Meanwhile, in line with provisions of the Single European Act, the Cen-tral Bank of Ireland introduced new monetary policy initiatives aimed atincreasing competition in retail-lending markets while more strategic mon-etary policy was now controlled by the ECB (see Kelly and Everett, 2004).The important point to note here is that from the early 1990s, Irish banksbecame increasingly integrated with European financial markets. They hadmuch greater freedom to set their own liquidity-management and interest-rate policies and were increasingly guided by the new liberalisation ethosinfecting banking regulation internationally. Furthermore, the InternationalFinancial Services Centre (IFSC) established in the late-1980s, became aphysical emblem of and operational network for a more liberalised, inter-nationalised and expansive model. The new financial community, workingin international banks and financial companies such as Citibank, MellonInvestment, Merrill Lynch, Chase Manhattan and Deutsche Bank, broughtwith them considerable knowledge of financial innovation and, impor-tantly, access to wholesale international financial markets (Murphy, 1998).New modes of governance and regulation more suited to the ethos ofliberalisation were subsequently constructed.

Thus, banking supervisory and regulatory bodies became more heav-ily committed to increasing competition within the banking sector and

Sinéad Kelly 43

liberalising its activities. While officially, the Irish Financial Services Regu-latory Authority (IFSRA), established in 2003, had responsibility for main-taining stability in the banking system and protecting consumer interests,in reality, the establishment of IFSRA heralded the adoption of ‘light-touch’regulation in tune with broader strategies to liberalise the Irish economy,to free up capital movement and to facilitate and reinforce the pro-businessethos of Celtic Tiger Ireland (Westrup, 2005). The liberalised nature of theapproach was perhaps best exemplified by the adoption of a principles-basedregulation (PBR) framework for banking supervision whereby ‘the prudentialregulator would not be prescriptive in terms of product design, pricing andthe specific risk decisions adopted by a firm, as long as that firm had a robustgovernance structure, together with reliable oversight and control systems,especially for managing risks’ (Nyberg, 2011, p. 43). Much of the emphasisof this City-of-London-born regulatory approach was on individual banks’compliance with basic principles in relation to solvency, governance, con-sumer protection and disclosure (O’Sullivan and Kennedy, 2010). In essence,however, principles were flexible, to be the subject of consensus and cru-cially, by definition, were subject to change, their inbuilt flexibility aimingto promote innovation in compliance procedures, business models andfinancial-product development. Moreover, the ‘principles-based approach’requires consensus and mutual trust between different actors; between indi-vidual banks and between regulators and banks. Thus, the pressure toobserve and comply with general behavioural or outcome-based principleswas highly likely to diminish as competition between banks for market shareintensified. In the context of Ireland, one of IFSRA’s (2008, p. 36) explicitgoals was ‘to foster an internationally competitive and successful financialservices industry’ within the framework of the PBR approach. These contra-dictory elements of the financial-regulation model, in addition to an ECBmonetary policy more attuned to the economic conditions of core EU coun-tries, set the scene for rapid credit expansion and added a significant impetusto asset-price inflation.

Blowing bubbles: Financial expansion andthe property boom in Ireland

The transformation of the Irish financial and banking model had profoundand widespread impacts. As they facilitated and provided the fuel for massivelending, two in particular merit serious consideration: internationalisationand financial innovation.

Internationalisation of banking

Banking in Ireland became internationalised in three main ways. First, aswas occurring across the EU, Irish banks expanded operations overseas,largely through mergers and takeovers of small local banks, in order to


widen their deposit base and extend further lending to activities in Irelandor overseas. For example, Bank of Ireland (BoI) and Allied Irish Banks (AIB)opened branches in the United Kingdom and the United States, with AIBalso entering the retail banking system in Poland, while Anglo Irish Bank(henceforth referred to as Anglo) developed international operations (mainlydeposit raising) in the United Kingdom, the Isle of Man, the United Statesand Austria (Ross, 2009; Carswell, 2011). Secondly, the late 1990s and early2000s saw the entrance of a number of non-Irish banks to the Irish bank-ing system. In addition to the six Irish banks and building societies, HalifaxBank of Scotland (HBOS), Rabobank, Northern Rock, Royal Bank of Scotland(RBOS) (trading as Ulster Bank) and Danske Bank (trading as NationalIrish Bank)3 were all operating in Ireland by 2003. The arrival of thesenew entrants meant that retail banking became much more competitive inIreland, thus achieving some of the objectives of the Irish financial regulator.Crucially, the new banking doctrine drove a transformation of banking prac-tice, product innovation, modes of corporate governance and, indeed, thevery definition of banking success. The measure of banking success becameequated with expanding balance sheets regardless of risk. In this respect,the operations of Irish retail banks can be compared to the operations ofthe US investment and retail banks and their drive for balance-sheet expan-sion: the derivatives market and the sale of sub-prime mortgages providedample opportunities for US banks to expand debt while the property bubbleprovided the opportunity for banks operating in Ireland to expand debt.

The Irish financial system also became more fully integrated withEuropean and wider international financial systems. The new financial archi-tecture connected banking much more closely to wholesale capital markets,thus facilitating the trading of securities and bonds as a way of raising newfunds to leverage new rounds of lending. Banks operating in Ireland, as inother jurisdictions, were more than willing to avail of this cheap, easilyaccessible and (seemingly) limitless source of funding. Greater volumes oflending permitted increased scales of profit and personal bonuses for bankmanagers. Moreover, the new international financial architecture facilitatedthe increasing use by banks of short-term cross-border inter-bank lendingand, as with the emergence of ‘short selling’ and ‘contracts for difference’in stock-market trading,4 retail banking in many regions became infusedwith a short-term outlook and an increasing use of inter-bank lending andshort- and medium-term securities to facilitate large-scale long-term lend-ing. One notable example was Northern Rock, one of the United Kingdom’slargest mortgage lenders which became increasingly dependent on short-and medium-term borrowing from capital markets to fund mortgage lend-ing. Banks operating in Ireland were also at the forefront of this trend.In 2004, the total stock of foreign borrowings by Irish banks was �15bn;by early 2008, this had soared to �110bn (Honohan, 2010) and while someof this was due to the operations of banks based in the IFSC, it was clear

Sinéad Kelly 45

that the Irish retail banks were using short-term foreign borrowings to fuelmortgage and other long-term property-based lending.

Financial innovation

A core element of financial liberalisation agendas internationally is the inno-vation of financial products, management methods, risk distribution andcorporate governance models. While much of the international literature onfinancialisation focuses on such innovations, in particular on the creationand diffusion of financial derivatives (Blackburn, 2006; Christophers, 2009),the types of innovation which drove the financial bubble in Ireland were ofa more traditional variety with banks and building societies at the forefrontof the transformation.

Three important elements of innovation are considered here. First, thearrival of foreign banks to the Irish banking system intensified the competi-tion for market share, especially in mortgage markets and while the housingmarket had been booming for at least five years, the introduction by Halifax(Bank of Scotland) of a 3.99 per cent mortgage interest rate in 2001, dramat-ically transformed mortgage-lending models (see Ross, 2009). Profit marginson mortgage lending fell dramatically as the other banks reduced interestrates in line with Halifax and, to off-set falling margins, banks began tolend in greater volume. The introduction of reduced mortgage interest ratessparked further policy innovations in the banking industry in Ireland. Banksbegan to offer loans on a longer-term basis with new products offering mort-gages of 30, 35 and even 40 years duration. By 2007, 64 per cent of all newmortgages for first-time buyers were for 31–35 years or longer; in Dublin,the figure was 75 per cent. Notably, an increasing proportion of overall banklending was on the basis of 30 years or more while the funding underpinningthis lending was raised from short-term sources.

Moreover, in the early 2000s, banks began to offer higher loan-to-valueratios. By 2005, all the major banks were offering mortgages of 90 per cent ormore with First Active, a building society acquired by RBS in 2004, becomingthe first to introduce a ‘100 per cent mortgage’. As with sub-prime mortgagelending in the United States, the vetting of borrowers’ ability to repay wasconsiderably relaxed (see Chapter 8) resulting in an escalation during theearly 2000s of the income-to-mortgage multiplier. A further development inthe mortgage industry saw the EBS Building Society actively promote equity-release loans, enticing middle-aged, middle-income households effectivelyto ‘re-mortgage’ their house and use the cash to assist their adult childrenin meeting the ever-rising price of housing (see Chapter 7). From the per-spective of the banks, at least in the short term, the new mortgage-lendingmodel facilitated a rapid expansion of their balance sheets. However, therewas an obvious contradiction; to expand balance sheets, short-term sourcesof funding had to be used but, at the same time, the duration of lendinghad to be extended. After all, rises in wages and salaries lagged a long way


behind mortgage-size and house-price rises; between 1996 and 2006, averageearnings increased by 56 per cent, while new house prices increased by 241per cent (DoEHLG, 2009).

From 2001 to 2007, the scale and number of mortgages increased dramat-ically, as of course did the credit-linked price of housing. The total value ofmortgage loans, of which the vast majority was held by banks and build-ing societies, increased from �47.2bn in 2002 to over �139.8bn at theend of 2007 (CSO, 2008). In 2006 alone, total mortgage debt increasedby 24 per cent, while the average size of a new mortgage almost doubledbetween 2002 and 2007 to �266,000. The impact of more freely availablecredit on housing price was significant. In Dublin, average new house prices,which had already tripled between 1994 and 2001 to �243,095, increasedby a further 71 per cent in the six years up to 2007, peaking at �416,225.Nationally, new house prices increased by 76 per cent between 2001 and2007 peaking at �322,634 (DoECLG, 2013).

Another important shift which characterised the Irish banking systemwas the leading role played by smaller financial institutions in banking-model innovation. Two prominent examples include Anglo Irish Bank andthe much smaller Irish Nationwide Building Society (INBS), each of whichconstructed its business model on a number of key principles and rela-tively straightforward strategies. Until the late 1990s, both institutions hadoccupied niche positions in Irish banking with Anglo concentrating oncorporate-sector lending to a specialised client base and INBS focusing onits mortgage-lending business. However, from the late 1990s, both Angloand INBS adopted aggressive lending strategies, moves which propelled thesize and influence of these financial institutions but which also transformedbanking systems, practices and, crucially, the scale and pace of lending inIreland more generally. Anglo and INBS, despite the latter’s retaining itsmutual-society status, re-focused their activities on lending large amountsto major clients in the commercial property sector and making investmentdecisions rapidly.

With a small number of branches nationwide, Anglo could not competewith the bigger banks of AIB, BoI and Ulster Bank for retail banking. Instead,the bank’s business model was developed around three core principles whichsought to maintain a low-running-cost structure for the bank, to manageand lend to major corporate-sector clients with a good track record and ‘fast-track’ decision making on loan applications. While not offering the cheapestfinance on the market, the Anglo business model encouraged an accelerationin the rate and volume of lending, the speed of decision making being a sig-nificant advantage over the larger and initially far more conservative bankssuch as AIB and BoI, which might take weeks to sanction lending to a large-scale single project involving hundreds of millions of Euros. Anglo’s AnnualReports showed that the bank’s annual new lending jumped from �2.78bnin 2002 to �18bn in 2007 with a 45 per cent increase recorded in 2006 and a

Sinéad Kelly 47

37 per cent increase in 2007. Essentially, larger volumes of credit were beinglent ever more rapidly to key clients, clients whose main business was prop-erty development, the commercial property sector in particular. The fundsproviding for such increased lending were generally secured on short-termwholesale European money markets.

To operationalise the model, Anglo developed management and rewardsystems which were structured to drive lending. The bank’s senior managerswere conferred with significant decision-making powers and responsibilitiesfor pushing lending. Senior managers had considerable autonomy in forgingclose relationships with borrowers, in making loan-approval decisions andin proposing further lending opportunties and facilities that clients mightconsider in future business dealings. The bonus and incentive structure forsenior managers generated a reward-system which equated success directlywith massive credit expansion and increased turnover of decision making;the more money managers lent, the greater their financial reward in theform of cash, shares and/or personal-loan terms (see Ross, 2009; Carswell,2011). The incentives for managers to meet higher yearly, monthly anddaily lending targets, which had reached �60M per day at Anglo in early2008 (Carswell, 2011), eventually led to situations where bankers began topropose development projects to property developers, essentially creating afinance-driven model of property lending.

For Anglo, the business model was a resounding success, initially atleast. By 2007, the bank claimed assets of �96.7bn including customerloans of �67bn. Just eight years previously, the corresponding figures were�11bn and �7.8bn, representing an eight-fold increase in seven years (seeTable 3.1). Anglo was also highly profitable with annual pre-tax profits

Table 3.1 Assets, customer loans and profits growth of Irish banks and buildingsocieties, 2000 and 2007

Total assets Total customer loans Annual profits(pre-tax)

2000 2007 Incr. 2000 2007 Incr 2000 2007 Diff.(�bn) (�bn) (%) (�bn) (�bn) (%) (�M) (�M) (%)

Anglo∗ 11.0 96.7 775 7.8 67.1 760 134 1,243 828AIB∗ 79.7 177.9 123 46.0 127.6 177 1,251 2,508 100BoI∗ 68.0 188.8 178 44.8 125.0 179 920 1,958 113PTSB∗ 11.5 80.1 596 7.9 39.1 395 312 477 53INBS 3.8 16.1 328 2.7 12.4 362 64 391 511EBS 6.5∗∗ 19.5 200 4.8∗∗ 15.9 229 38∗∗ 67 77

Source: Annual Reports (2000, 2007, 2008), AIB, Anglo, BoI, PTSB, INBS, EBS.∗Group figures.∗∗Data for EBS is based on Annual Reports for 2001 and 2007.


increasing on average by 35 per cent between 1998 and 2007. With aclient-focused management model and emphasis on corporate-sector ratherthan retail banking, which would have required a staffed branch network,Anglo had one of the lowest cost-to-income ratios in Irish banking at22.3 per cent in 2006 (Carswell, 2011), creating a significant advantage overits competitors.

On a much smaller scale, INBS also acted as a harbinger of change in Irishbanking practice. Following the much-lobbied-for Building Societies Act of1989 and subsequent amendments in 1992 and 2006, building societies’activities were no longer limited to residential mortgage lending. Signifi-cantly, they became empowered to engage in development lending and, toraise funding for such lending activities, could now tap wholesale moneymarkets in addition to their traditional customer deposits. Under the 2006Act, the investment and funding powers of building societies were furtherextended and the way paved to facilitate the conversion of building societiesto public limited companies. Effectively, the new legislation enabled build-ing societies to engage in activities far broader than those in which theyhad traditionally engaged and had begun to resemble and operate more likebanks. The most evident example of this transformation was INBS. In 1998,INBS’s loanbook, comprising mainly residential mortgage loans, had beenvalued at �632M with the building society recording annual pre-tax profitsof �32M for that year. By the early 2000s, INBS had begun to diversify withdevelopment lending becoming an increasingly important component of itsactivities, its growing asset base and its soaring profits (Table 3.1). In a sim-ilar vein to Anglo, though on a much smaller scale, INBS’s business modelfocused on lending large volumes of money to key clients (for their com-mercial and personal financing needs) and making decisions quickly on loanapplications. The distinctive feature of the new INBS model, however, was itstendency to provide finance for highly speculative development-site trans-actions, a high-risk activity not normally associated with building societies.By 2007, the building society had an asset book of over�16bn, a 328 per centincrease in only seven years. Just 30 developers accounted for half of itsloanbook of �12.4bn, with just one development company owing �265M(Curran and Lyons, 2013).

The rapid growth of INBS and, more significantly, that of Anglo hadmajor impacts on the wider banking community in Ireland. Anglo’s aggres-sive lending strategy ensured a greater overall market share for the bank,making serious inroads on the market shares of bigger banks such as AIB,BoI and the RBOS-owned subsidiary, Ulster Bank. In 2000, Anglo’s loanbookamounted to about one sixth the size of AIB’s or BoI’s. By 2007, Anglo’sloanbook was over half the size of each of its two main competitors. WhileAIB and BoI had each expanded its customer loanbook by over 170 per centbetween 2000 and 2007, this growth was dwarfed by Anglo’s 760 per centincrease over the same period and was a serious cause for concern. More

Sinéad Kelly 49

particularly, despite the size of these financial institutions, Anglo and INBSaccounted for a disproportionately large and increasing amount of lend-ing to commercial property – a property sector which traditionally offerspotentially greater returns compared to other property sectors, such as resi-dential. Even by the early 2000s, the other financial institutions had alreadyadopted additional credit expansion measures, much of which was depen-dent on and actively fuelling an expansion of the property-developmentsector. Increasingly, the other banks, including AIB and BoI, altered theirown banking models and management structures to mirror those of Anglo,leading to a situation where ‘the share of bank assets in property-relatedlending grew from less than 40 per cent before 2002 to over 60 per centby 2006’ (Honohan, 2010, p. 26). Moreover, with limited potential to raiseadditional deposits through their domestic operations, as was happeningwith banks internationally, banks operating in Ireland increasingly becamedependent on the relatively cheap and readily available international whole-sale funds as a source to fuel credit expansion. By the end of 2007, wholesalefunding accounted for around 45 per cent of both AIB and BoI’s total bal-ance sheets and by the end of 2008, wholesale funding underpinning thesix main Irish financial institutions amounted to �129bn, having increasedalmost fivefold since 2002 (Nyberg, 2011). The combination of an increasedreliance on short-term foreign liquidity sources and an increased reliance onproperty as an outlet for lending, in the short term, inflated asset bubblesfurther and, in the medium term, created the perfect storm for one of themost spectacular property and financial crashes in the history of capitalism.

Financial meltdown

Although Irish residential property prices had been declining since early2007, the trigger for the (long-overdue) property-market crash and bankingcrisis in Ireland was the collapse of Lehman’s investment bank in mid-September 2008 which immediately precipitated an international creditcrunch; suddenly banks and providers of wholesale funds sought to retrieveand hoard their cash. As in other countries, this had obvious and immedi-ate implications for banks operating in Ireland as their short-term liquiditysources were due to be repaid but, crucially, would not be renewed. Moresignificant than the immediate liquidity considerations was the growingrealisation that many of the investments and transactions in property thathad taken place in Ireland had been of a highly speculative nature and thatuser demand had been substantially surpassed by supply. Effective demandfor property dissipated, investors sought to cash in on their rapidly depreciat-ing assets and property developers sought to off-load unsold buildings whilepostponing the completion of further developments. The property bubble,which had been inflating rapidly for over a decade, burst. The banks, whichhad been centrally involved in the property bubble, now faced a bank run


and insolvency as plummeting property prices and rapidly mounting baddebts undermined the value of their assets.

In late September 2008, in one hasty and radical move, the state tookdecisive action in the financial crisis by introducing a ‘bank guarantee’,thereby assuming responsibility for all debts and deposits held in the sixmain financial institutions. This move, which guaranteed �485bn of assetsand liabilities (amounting to 271 per cent of GDP) (Drudy and Collins,2011) was to shape many further government interventions in propertyand finance including bank nationalisations, recapitalisations, mergers andrestructuring, so that by June 2012, the government had committed �64bnof state funding to prop up the banking system (Fraser et al., 2013). Thegovernment also established two new banks, the National Asset Manage-ment Agency (NAMA) in 2009 and the Irish Bank Resolution Corporation(IBRC) in 2011, taking into state ownership a sizeable portion of the banks’impaired loanbooks, mostly relating to commercial property (see Chapter 9).For �31.8bn, NAMA purchased loans with a face-value of �74.2bn fromthe six Irish financial institutions, representing an asset value write-down of57 per cent (NAMA, 2012). Loans provided for development sites (for whichthere had been some spectacular prices paid in central Dublin in 2005 and2006) recorded the highest levels of impairments, with valuations being writ-ten down by as much as 90 per cent by 2009 (see Kelly, 2009; Kitchin et al.,2012). Predictably, the loanbooks of Anglo and INBS were worst affected.�34bn of loans from Anglo were transferred to NAMA for �12.9bn, whileNAMA paid �3bn for �8.5bn of INBS loans, representing write-downs of62 and 64 per cent respectively. The NAMA initiative alone has recorded(socialised) losses of �41.8bn (Nyberg, 2011) giving a good indication of thescale of risks involved in promoting an expansive, liberalised financial modeland economic policy which adopts property development and real estate askey drivers (Aalbers, 2008).

Since the financial meltdown, media attention in Ireland has tended tofocus attention on key actors in the banking sector who were responsiblefor leading their institutions into financial disaster. However, it is impor-tant to recognise that it was not simply the individuals involved in the Irishbanking sector who were uniquely responsible for the financial meltdown.It is also imperative to acknowledge that neither was the Irish banking sec-tor characterised by actions and activities which were especially differentfrom those taking place elsewhere. However, it is important to emphasise theextent to which the state is controlled by financial, economic and politicalélites which act to further their own interests and power through state pol-icy. It was the ready adoption by the state of the transformed internationalfinancial architecture, associated with deepening international adoption ofneoliberal ideas, which forged a structure which ensured that tighter regula-tion would not take place, which was highly profitable in the short term butwhich was also inherently unsustainable.

Sinéad Kelly 51

Notes

1. Collateralised debt obligations (CDOs) on residential assets comprise original homeloans which are packaged up and bundled together in different tranches accordingto levels of risk and subequently sold on to investors (Christophers, 2009).

2. Credit default swaps (CDSs) are insurance contracts on CDO investments (seeChristophers, 2009).

3. In 2004, Danske Bank acquired National Irish Bank (NIB) which, since 1988, hadbeen a subsidiary of the National Australia Bank.

4. Short selling is a speculative activity where a trader, believing that a company’sshare price is likely to decrease in the near future, borrows company shares andsells them. When the share price drops, the trader will look to buy back companyshares at the reduced price and make a profit from the trade.

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Department of the Environment, Heritage and Local Government (DoEHLG). (2009)Housing Statistics Bulletin, Q2 1999. Dublin: Stationery Office.

Drudy, P. J. and Collins, M. L. (2011) Ireland: From boom to austerity, CambridgeJournal of Regions, Economy and Society, 4, 339–54.

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4The Political Economy of LegislativeChange: Neoliberalising PlanningLegislationEnda Murphy, Linda Fox-Rogers and Berna Grist

Neoliberalism, neoliberalisation and the planning system

The ideas associated with neoliberalism have become deeply entrenchedwithin state institutions in a large part of the world, and these ideas havea specific political economy. Accompanying them is the notion that themarket should discipline the political system (Sager, 2011) and thereforethe general population, if we accept the mainstream assumption that thepolitical system is a representation of the will of the people. The recentexplosion of literature on neoliberalism (see Peck, 2010) has demonstratedthat the concept is a powerful lens through which to examine regulatoryand institutional transformation at a range of spatial scales and differ-ent socio-political contexts. Of particular import here is the work whichemphasises that neoliberalism is not a static concept but a dynamic pro-cess. Here, neoliberalism can be seen as a form of regulatory reorganisationto impose, extend and consolidate marketised commodified forms of sociallife (Brenner et al., 2010). It is, as Peck (2010, p. 9) notes, about the cap-ture and reuse of the state in the interests of shaping a ‘pro-corporate,free-trading “market order” ’. However, the process by which this happens(neoliberalisation) is rarely identical from one place to the next, at dif-ferent scales, or indeed, across different socio-political contexts. In otherwords, processes of neoliberalisation are dynamic, slippery and highly adapt-able, and this is precisely what contributes to the persistence of neoliberalideas.

Like other institutions of the state, the planning system has undergonesignificant change along neoliberal lines over the last three decades. In awide-ranging review of neoliberal planning policies, Sager (2011) outlinesthe pervasive neoliberalising of planning practice across a range of policyprocesses. These include urban economic development policies including

53


city marketing, development incentives, competitive bidding and creativeclass strategies; infrastructure provision through public–private partnerships,private-sector financing and operation of infrastructure (transport andwater); utilisation of property-led regeneration, ‘fast track’ planning legis-lation, ‘business friendly’ and ‘flexible’ land-use zoning and privatisationof the public realm; and housing strategies that focus on the broad lib-eralisation of housing markets, gentrification and quangos, among others.While neoliberal ideas have become embedded across planning systems,Sager (2011) outlines the varying ways in which this has occurred withinestablished political and planning cultures.

The Irish planning system has not been immune to these broader pro-cesses and ideas; it has become increasingly neoliberalised over the past threedecades. Not only has the state sought to incentivise the activities of pri-vate developers through a series of urban renewal schemes, but it has alsoreduced the regulatory nature of planning by marginalising local authorityplanning departments, forcing them to adopt a more entrepreneurial phi-losophy (McGuirk, 1994). Indeed, private development interests have alsobeen facilitated in the political sphere as evidenced by the failure of thestate effectively to regulate the lobbying process, leading to widespread cor-ruption in the planning system (Government of Ireland, 2012). Such trendsreflect the ‘creeping enfeeblement’ (Peck and Tickell, 1994) of the state rela-tive to private capital. These power imbalances are crucial to understandingwhy the state has failed so desperately to control the worst excesses of unfet-tered development activity because they emphasise the extent to which thestate is controlled by the political and economic élite. Such is the extentof the problem in Ireland that recent research has concluded that ‘a shadowplanning system exists adjacent to the “official” planning system, which canbe accessed only by powerful economic interests’ (Fox-Rogers and Murphy,2013, p. 19). Moreover, a series of legislative changes in the planning systemhas been introduced which overtly facilitate private interests and reduce thedemocratic nature of the planning system (Fox-Rogers et al., 2011). In thecontext of this chapter, it is these changes, in particular, which are the focusof the following analysis.

‘Actually existing neoliberalism’ (Brenner and Theodore, 2002) in Irelandthen has had devastating consequences. Not only has the neoliberal turnin planning facilitated a property crash and unsustainable patterns of devel-opment, it has also contributed significantly to the worst economic crisisexperienced in the history of the Irish state. And yet, the government hascontinued ‘to “roll-out” responses from the existing suite of neoliberal policyoptions (e.g. austerity measures, privatisation, drastic reductions in publicspending etc.)’ (Murphy and Scott, 2013, p. 16). Above all, this highlights theextent to which such ideas are not only embedded but adaptable to differentcontexts and changing socio-political relations.

Enda Murphy et al. 55

Neoliberalising planning legislation: Facilitatingdevelopment

Strategic development zones

Strategic development zones (SDZs) are essentially an adaptation of theUnited Kingdom’s Simplified Planning Zones (SPZs) introduced duringThatcher’s neoliberal administrations of the 1980s. In Ireland, SDZs wereintroduced purportedly to facilitate specified development of economic orsocial importance to the state. Through the Minister for the Environment,the government has the power to designate a site for the establishment ofan SDZ where the establishing order indicates the type(s) of developmentthat are considered appropriate for the zone. Two key features of SDZs arethe following:

• once a scheme is approved by An Bord Pleanála1 (hereafter referred toas the Board), the relevant local planning authority is obliged to grantplanning permission for applications that are consistent with it, and thereis no right of appeal against the planning authority’s decision, even inrespect of conditions; and

• planning authorities are given powers of compulsory purchase for thepurposes of securing or facilitating the provision of the lands within adesignated SDZ for development.

The introduction of SDZs under Part IX of the 2000 Planning and Develop-ment Act (hereafter the 2000 Act) was essentially a deregulatory planningmechanism which conferred comparative advantages upon the develop-ment industry and improved the profitability potential of the developmentprocess. Flynn (2000, p. 101) notes that SDZs reflect an overall desireof the legislature to ‘streamline’ and ‘fast track’ the planning process inorder to address the perceived delays in the delivery of housing and keyinfrastructural developments. During the passing of the Bill, Part IX was(controversially) amended to include the designation of sites for residen-tial development, which was not the originally intended objective of thelegislation.

Moreover, the legislation enabled a planning scheme to be made for onlypart of a designated SDZ site. This assists developers and landowners inundertaking more manageable schemes which are likely to be more eco-nomically viable and suited to current market conditions and ultimatelyreduces their strategic commitment to the development and their expo-sure to risk. As Grist and Macken (2010) point out, this ‘curious provisionwould seem to undermine the strategic coherence of the entire SDZ mech-anism’. It allows the planning outcomes to be less strategic in nature butmuch more viable for development interests. It can also serve to reduce the


already limited levels of public participation in the SDZ process as it createsa more complex and bureaucratic procedure that erects a further barrier topublic participation.

In overall terms, SDZs demonstrate the extent to which the state’s legalapparatus facilitates private interests to secure local economic investmentand property development by creating what can only be described as aninherently pro-development planning environment. This creates a signifi-cant comparative advantage for investors, particularly those in the propertydevelopment sector, over the general public in the planning system. Thus,SDZs are representative of a planning system that has become increasingly‘embedded in the logic of the capitalist spatial development in which com-petition seems to operate not as a beneficial hidden, but as an externalcoercive law’ (Harvey, 1989, p. 12).

‘Corporatist participation’ and pre-application consultations

Prospective developers have always wanted to have pre-application discus-sions with the planning authority in order to advance their chances ofsuccess, but, under the 1963 Act, there was no obligation for local authoritiesto accede to such requests. However, the 2000 Act made formal provisionsfor consultations in s.247 of the legislation, even though the legislationdoes not require a planning authority to make staff available for such con-sultations. However, when this is considered together with the MinisterialGuidelines on Development Management, it is clear that there is strongpressure from central government for public servants to be allocated therole of advisers to private development interests. The guidelines give a fullchapter to the pre-application stage of the planning process and go so faras to contain the suggestion that senior planning staff and representativesfrom all relevant departments should attend in the case of large-scale orcomplex developments, to ‘save the applicant time in arranging a series ofconsultations’ (DoEHLG, 2007, p. 21).

Upon initial inspection, the provisions contained in s.247 of the 2000Act for pre-application consultations might appear innocent in that theyfacilitate a stakeholder’s right of engagement with the planning process andhelp to ensure that applications submitted are in accordance with adoptedplanning policies and guidance documents. However, research carried outby McGuirk (1995) found that pre-application consultations were the mostpertinent means of development interests’ informal leverage on planningpolicy. More recent research by Fox-Rogers and Murphy (2013, p. 14) foundthat these consultations have ‘enabled the facilitation of more informalmeetings between applicants and the executive’2 and that they are ‘widelyused by prospective applicants to liaise with planning staff to “iron out”potential issues prior to the submission of an application’. The facilitationof these meetings by the legislature assists ‘corporate participation’ whereby


reciprocal relationships and a level of understanding based on unwrittenrules develop between the executive and developers. Ultimately, this suggeststhat a ‘permanent liaison’ (Simmie and French, 1989) between planningdepartments and corporatist interests can develop via the s.247 provision,thus ensuring that development interests ‘are in-built in the decision mak-ing process’ (McGuirk, 1995, p. 69). It goes without saying that such liaisonsreduce the potential of the public to engage in any form of meaningfulparticipation as implied agreements can be and are reached between theexecutive and developers before any public consultation takes place (seeFox-Rogers and Murphy, 2013).

Fast tracking of planning applications

Applications for strategic infrastructure (SI) are made under Sections 37A to37J of the 2000 Act, as amended by the 2006 Planning and Development(Strategic Infrastructure) Act (hereafter the 2006 Act). S.3 of the 2006 Actinserted a Seventh Schedule into the 2000 Act, setting out some 28 classes ofdevelopment that can constitute strategic infrastructure. These are groupedunder three headings relating to energy, transport and environmental infras-tructure. A fourth class, health infrastructure was subsequently added by the2010 Act.

The application process begins with pre-application consultations withthe Strategic Infrastructure Division of the Board to provide developers withadvice as to whether the development meets one of the criteria set out ins.37A. Prior to the 2006 Act, there was no provision for any pre-applicationconsultation at the level of An Bord Pleanála, only at the local-authoritylevel. At these consultations, the procedures involved in the applicationprocess, as well as considerations that may have a bearing on the Board’sdecision, can be discussed by the promoters with Board staff (but not BoardMembers, who are the decision makers). The Strategic Infrastructure Divisionthen decides whether the prospective development qualifies as a strategicinfrastructure application. If it does, the application is made directly to theBoard, by-passing what had come to be regarded as merely a ‘preliminarystage at planning authority level’ (Grist, 2008). In effect, the strategic infras-tructure legislation downgrades the role of the local planning authority toa similar status to other observers; in other words, the local authority is nolonger a decision maker.

The 2006 Act arose from concerns about delays in the delivery of projectsof strategic importance and the consequent cost increases imposed on devel-opers, as such applications were almost inevitably appealed to the Boardfollowing the local decision (Grist, 2008). There is a general consensus thatthe primary aim of the 2006 Planning and Development Act was to cre-ate a fast-track process for major projects and to limit their exposure topublic objections, thereby effectively streamlining the planning process forinvestors and marginalising the role of the general public.


Changing the role of An Bord Pleanála

The 2006 Act allows for a variety of contacts to take place in private withthe promoters of strategic infrastructure projects which were not permittedprior to the 2006 Act. These include the pre-application meetings outlinedabove; meetings during the currency of an application in order to resolveissues with the applicant or where it appears ‘expedient in order to determinethe application’ (which can also be used instead of an oral hearing) anddealing with post-decision requests from the developer to alter the terms ofthe granted permission.

There has been a series of criticisms of the legislation which deserves atten-tion. Grist (2008) highlights that the 2006 Act has seen the role of the Boardshift from a decision maker of proposed developments to a facilitator ofstrategic infrastructure development (much of which is privately promoted).This facilitative role has emerged as the Board can provide advice and requestmodification of applications which may serve to improve the chances ofobtaining permission. The Board can also assist in the post-decision pro-cess by altering one or more of the conditions which were attached to thepermission granted where the applicant is unhappy with them. This canbe done without reference to third parties who submitted observations andparticipated in the application.

The second issue of concern relates to the power of the Board to hold meet-ings with any relevant parties when considering formal applications. Grist(2008, p. 8) points out that s.37 applications have manoeuvred third par-ties into the ‘position of outsider’ rather than an equal party, given the scaleof meetings and face-to-face contact that take place in private between thedeveloper and officials of the Board and the ‘minimalist’ statutory provisionsfor public consultation.

The final aspect of the 2006 Act concerns the Board’s power to materi-ally contravene a development plan in evaluating a s.37 application. Whenconsidering a standard appeal where the application was refused by the plan-ning authority because it materially contravened the development plan, theBoard is empowered to grant permission only if one of four specific circum-stances apply (Grist, 2012, p. 61). When considering a strategic infrastructureapplication, the Board is required to ‘consider’ the development plan butis completely free to disregard it. As the 2006 Act enlarged the matters towhich the Board must have regard in discharging its functions to includethe ‘national interest’, it may be deduced that economic interest ratherthan the ‘common good’ was intended by the legislation to provide broaderscope and justification for granting permission for an application that mate-rially contravenes the development plan (see Fox-Rogers et al., 2011). Takentogether, it can be seen that the 2006 Act has shifted the role of the Boardfrom decision maker to a facilitator of development and has increased the


already privileged position of private development interests relative to thegeneral public.

Local area plans and planning permissions

The 2002 Act allowed planning authorities to include zoning objectives inlocal area plans (LAPs). This provision destroyed the strategic coherence ofthe Act and created a system of developer-led rezoning of land through theLAP system. Rather than remove this power, the 2010 Act requires LAPs tobe ‘consistent with’ the newly established core strategies, an amendmentthat effectively shuffles the chairs on the deck rather than removing thepossibility for developer-led rezoning through the LAP system.

A provision has also been made in the Act for the phasing of land alreadyzoned for development under existing LAPs even if that zoned land is incon-sistent with newly devised developments plans. This phasing designationprovides an alternative to ‘down-zoning’ in cases where excessive areashave been zoned for development in a previous LAP, such as during theboom period (Grist and Macken, 2010). The introduction of this mechanismundermines the new requirements where LAPs must be consistent with thehierarchy of plans and guidelines. Rather than requiring councillors to takecorrective measures to retract developer-led zoning decisions, the Act pro-vides elected members with a politically safer option than down-zoning. Theprovision is highly supportive of developers in that it supports the value oftheir development land which would be worth considerably less if the landwere to be down-zoned.

In relation to planning permissions, under past legislation, planning per-mission withers after five years unless implemented. While it has alwaysbeen possible to obtain an extension of this period where substantial worksare complete, s.29 of the 2010 Act allows for the extension of the life ofplanning permissions, even if no development at all has taken place, in cir-cumstances where a planning authority is ‘satisfied’ that considerations ofa commercial, economic or technical nature beyond the applicant’s control(that is, economic conditions) prevented the commencement of develop-ment or the carrying out of substantial works. There is little doubt that thischange was specifically targeted at development interests; it allows them tosit on existing planning permissions for a considerably longer period thanwould have been possible otherwise in the hope that market conditionsimprove and they can initiate development.

Moreover, s.23 of the 2010 Act amends the Principal Act whereby planningpermission was regarded as having been granted if the planning authorityfailed to issue a decision within the appropriate period, known as a ‘default’permission. In order to afford more adequate protection to the environ-ment and members of the general public who might be adversely affected bydefault permissions, the amending Act now enables planning authorities to


make a decision within 12 weeks of the expiration of the appropriate period,but subject to payments of compensation to the applicant. The decision canbe to refuse or grant permission and conditions can be attached to such per-mission in the normal way. If a decision is not made within the additional12 weeks, a ‘deemed’ permission is regarded as having been granted. Themaximum compensation payable is �10,000. However, in cases where anEIA (Environmental Impact Assessment) or AA (Appropriate Assessment) isrequired, no provision can be made for a deemed permission (Grist, 2012);rather, a series of mounting fines rising to a maximum of�50,000 is imposedon the planning authority. While it is recognised that these compensationpayments are undoubtedly less valuable to a developer than a default plan-ning permission, it is nevertheless noteworthy that the penalties imposed ona planning authority to promote timely decision making are paid directly tothe developer, rather than the Department of the Environment or anotherpublic body. Effectively, it means that the public must now pay develop-ers for the delays experienced by them which arise during the evaluation oftheir applications in the planning system.

Curbing democracy

Curtailment of public participation

The general statutory right of appeal available to third parties from 1963onwards was restricted in March 2002, when s.37 of the 2000 Act came intoforce. This section limits the possibility of appeal to the applicant and per-sons who make submissions in writing on a planning application to theplanning authority. Grist points out that the ‘complaints of the construc-tion industry led to a deafening crescendo’ resulting in this limitation onthird-party rights of appeal in the 2000 Act (Grist, 2001, p. 83). The restric-tions that have ultimately resulted have been highly significant. When takentogether, analysts of the 2000 Act have pointed out that there has been‘a sorry series of successive limitations . . . on the rights . . . of third parties’(Grist, 2008, p. 7).

Not only did the 2000 Act impose an obligation on third-party appel-lants to have first made a submission to the local authority before an appealcould be made to the Board but it also introduced a fee of �20 for mak-ing such a submission at local level. Previously, third parties had a generalright to make submissions on an application free of charge. It is obviousthat the introduction of a fee for making local submissions, together witha statutory obligation to do so prior to appealing a decision (for whichthere is also a more substantial fee), is archetypal of a ‘hidden mecha-nism’ which benefits the more privileged and well positioned people insociety rather than the general public (Harvey, 1973). The fee acts as a dis-incentive to many third-party participants, as not all persons have equaleconomic means and resources. These provisions are highly regressive (and


designed to be so) in that they effectively prevent individuals from poorersocio-economic cohorts from public participation in the planning processand further marginalise their already-weak position relative to the power ofdevelopment interests (see Chapters 5, 13 and 15).

The statutory obligation to make a formal submission on an applicationeffectively curtails the involvement of third parties in the appeal processbecause many are discouraged from participating for reasons relating toeconomic resources, expertise/education and an increasingly impermeablebureaucratic and complex appeal process. Recent research of third-partyappellants demonstrates that, even before the imposition of the heightenedrestrictions on third party appeals by the 2000 Act, the majority of appel-lants are drawn from affluent social groups (Ellis, 2001, p. 66). The barriersimposed by the 2000 Act can be seen as ‘governance effects’ which haveexacerbated existing cultural (education, skills, contacts, efficacy) and struc-tural (segregation, domination, marginalization) barriers to participation(Albrechts, 2002).

The issue of the curtailment of third-party participation is also evident inthe SDZ mechanism. It dramatically limits the rights of third parties because,once a scheme is adopted, opportunities for appeals for individual projectsare essentially lost. It is worth reiterating also that no appeal applies to theBoard in respect of an application within an SDZ. Planning authorities areobliged to grant permission for a development that is in accordance withthe adopted schemes. Such limitations to the rights of third parties are wel-comed by developers and industrialists as they increase the efficiency andultimately the profitability of projects while simultaneously reducing therisks associated with the development process. SDZs can be seen thereforeas being representative of the wider objectives of the 2000 Act which areintent on placing planning and development on a higher level than thelocal (Macken, 1999). Effectively, they create a ‘rule of law’ (Allmendinger,1996) to reduce the discretionary nature of planning decisions. This ‘rule oflaw’ represents an attempt to satisfy the interests of private developers, whohave long complained about the delays and time constraints inherent in theIrish planning system (Grist, 1983). Crucially though, this ‘streamlining’ isdone at the expense of the democratic process.

Judicial review is the legal procedure by which, in common-law coun-tries, the legality of an administrative action can be tested before the courts.It is not an appeal of a decision but a review of the manner in which thedecision was made. Connolly (2000, p. 62) contended that the 2000 Actsought to ‘limit the potential losses to developers arising from delays indevelopment being carried out which arise from court challenges to plan-ning permissions’. Dodd (2004) analysed the stricter locus standi that wasintroduced, which required an applicant to show ‘substantial interest’ in thematter which was the subject of the judicial review application. The term‘substantial interest’ replaced ‘sufficient interest’ used in previous legislation


and constituted effectively a ‘higher threshold requirement’ for access tothe courts (Dodd, 2004, p. 9). The rationale behind this requirement was tolimit the court’s discretion to grant judicial review (Dodd, 2004) and thisamendment was made in order to reduce time constraints and uncertaintiesbeing faced by developers. It was only to allow the long overdue ratificationby Ireland of the Aarhus Convention that the 2011 Environment (Miscella-neous Provisions) Act reduced the locus standi for securing leave to apply forjudicial review back from a substantial to a sufficient interest.

In addition, s.33 of the 2010 Planning and Development Act providedthat in judicial-review cases involving Environmental Impact Assessment,Strategic Environmental Assessment or Integrated Pollution Prevention andControl licensing, all parties must bear their own costs irrespective of theoutcome. Normally, costs are awarded to the successful party in any litiga-tion but this requirement placed yet another barrier in the way of contestingplanning decisions, making challenges through the judicial review mech-anism prohibitively expensive for the vast majority of the general public.In this respect, the amendment can be seen as yet another attempt to reducedemocracy in the planning process through legislative change. Again, toallow for ratification of the Aarhus Convention, one of the three pillars ofwhich is access to justice, the 2011 Act gave the courts discretion to awardcosts to the applicant for judicial review to the extent that they succeed inobtaining relief.

Taken together, it can be seen that there is a consistent legislative inten-tion to curtail public participation in the planning process. These changesare highly facilitative of development interests because they reduce thedemocratic nature of public participation which tends to slow down thecirculation of capital in the built environment and thereby enhances risk fordevelopers. These changes undoubtedly reduce the delays and costs imposedon developers and by doing so facilitate greater maximisation of profit.

Diminished rights to an oral hearing

In analysing the neoliberalisation of planning legislation, it is useful to drawattention to what Grist (2008) refers to as the ‘innocuous looking’ s.39 of the2006 Strategic Infrastructure Act. S.39 of the Act provides that the Board has‘absolute discretion’ in the matter of having an oral hearing in all compul-sory acquisition cases. Consequently, individual landowners no longer havethe right to an oral hearing where their property is proposed for compulsoryacquisition for local-authority purposes, or perhaps more worryingly, for pri-vately funded strategic infrastructure developments. Instead, the legislaturehas facilitated the making of such decisions in private, although submissionscan be made by affected parties.

Any reduction to the rights of personal property ownership is normallythought of as social reform away from capitalism. In this case though,the provision has enhanced the position of large-scale private developers


relative to individual landowners. Thus, where there is a conflict betweenproperty interests, the legislation favours the more economically powerfulstakeholders (or corporate interests). In effect, the provision facilitates theaccumulation of capital on a much grander scale.

Conclusions

This chapter has provided an exposition of the pervasiveness of neoliberalideas in the Irish planning system. It demonstrates the success of neoliberalproponents at moulding and shaping institutions along lines that areincreasingly facilitative to the major holders of economic and political powerin society. These neoliberal ideas centre on notions of privatisation, dereg-ulation of institutional practices and greater facilitation and openness toinvestment flows. While the institution of planning is used here to demon-strate the nature of the process of neoliberalisation, the analysis generalisesmore broadly in the Irish context where many institutions have been trans-formed along similar lines (see Chapter 3). In fact, the very transformation ofthe planning system along ever more facilitative lines meant that it was abso-lutely incapable of regulating development during the boom period; rather,the system tacitly supported the reckless development patterns (An Taisce,2012) which contributed in no small part to the extensive hardship nowbeing faced by communities and the general public across the nation (seeMurphy and Scott, 2013).

The foregoing analysis has shown the range of ways in which planninglegislation has been altered since the onset of the millennium. Effectively,what we have witnessed is the development industry gradually chippingaway at the 1963 Local Government (Planning and Development) Act.This Act was grounded in post-war UK planning ideals whereby planningwas viewed not only as a socially progressive institution but also a redis-tributive one. The analysis in this chapter has documented the manner inwhich the planning system has been recast to favour élite interests ratherthan the general population. In particular, legislation has facilitated theemergence of an increasingly ‘pro-growth, pro-development’ planning sys-tem, while at the same time it has reduced and marginalised elements ofthe system that enabled democratic input from the general public. Eventhe 2010 Act, which was heralded as being more restrictive on develop-ment interests, continues a trend of successive rounds of legislative changewhich are facilitative to the interests of private power, such as develop-ment interests. It maintains and indeed reinforces the overt neoliberal trendtowards legislating for property development in Ireland. Bearing in mindthe depth of the Irish economic crisis, it is quite a remarkable achievementfor neoliberal proponents to maintain a path towards legislative liberali-sation which reveals much about the embededness of these ideas in stateinstitutional structures.


Notes

1. An Bord Pleanála is an independent, statutory, quasi-judicial body that is responsi-ble for the determination of appeals and certain other matters.

2. The term ‘executive’ includes all planning authority staff such as technical officers,administrators and senior management as well as planners.

References

Albrechts, L. (2002) The planning community reflects on enhancing public involve-ment: Views from academics and reflective practitioners, Planning Theory andPractice, 3, 331–47.

Allmendinger, P. (1996) Thatcherism and Simplified Planning Zones: An ImplementationPerspective. Oxford Planning Monographs, 2. Oxford: Oxford Brookes University.

An Taisce (2012) State of the Nation: A Review of Ireland’s Planning System 2000 – 2011.Dublin: An Taisce.

Brenner, N., Peck, J. and Theodore, N. (2010) After neoliberalization? Globalizations,7, 327–45.

Brenner, N. and Theodore, N. (2002) Cities and the geographies of ‘actually existingneoliberalism’, Antipode, 34, 348–79.

Connolly, J. (2000) The Planning and Development Bill 1999 and access to the Courts,Irish Planning and Environmental Law Journal, 7, 62–64.

Department of the Environment, Heritage and Local Government (DoEHLG). (2007)Development Management Guidelines for Planning Authorities. Dublin: StationeryOffice.

Dodd, S. (2004) Substantial interest, locus standi and judicial review: Recent develop-ments, Irish Planning and Environmental Law Journal, 11, 9–16.

Ellis, G. (2001) A review of third party planning appeals, Irish Planning and Environ-mental Law Journal, 8, 63–69.

Flynn, T. (2000) Strategic Development Zones and the Planning Act 2000, IrishPlanning and Environmental Law Journal, 7, 101–04.

Fox-Rogers, L. and Murphy, E. (2013) Informal strategies of power in the localplanning system, Planning Theory, DOI: 10.1177/1473095213492512.

Fox-Rogers, L., Murphy, E. and Grist, B. (2011) Legislative change in Ireland: A Marxistpolitical economy critique of planning law, Town Planning Review, 82, 639–68.

Government of Ireland. (2012) The Tribunal of Enquiry into Certain Planning Matters andPayments. Dublin: Dublin Stationery Office.

Grist, B. (1983) Twenty Years of Planning: A Review of the System since 1963. Dublin:An Foras Forbartha.

Grist, B. (2001) Curtailment of Third Party Planning Appeals in the Republic ofIreland, Scottish Planning and Environmental Law, 86, 80–82.

Grist, B. (2008) The Planning and Development (Strategic Infrastructure) Act – oneyear on, Irish Planning and Environmental Law Journal, 15, 3–11.

Grist, B. (2012) An Introduction to Irish Planning Law. Dublin: Institute of PublicAdministration.

Grist, B. and Macken, J. (2010) The Irish Planning Law Factbook. Dublin: ThomsonRound Hall.

Harvey, D. (1973) Social Justice and the City. London: Edward Arnold.Harvey, D. (1989) From managerialism to entrepreneurialism: The transformation of

urban governance in late capitalism, Geografiska Annaler, 71B, 3–17.


Macken, J. (1999) The Planning and Development Bill, 1999, Bar Review, 5, 148–57.McGuirk, P. (1995) Power and influence in urban planning: Community and property

interests participation in Dublin’s planning system, Irish Geography, 28, 64–75.McGuirk, P. M. (1994) Economic restructuring and the realignment of the urban

planning system: The case of Dublin, Urban Studies, 31, 289–307.Murphy, E. and Scott, M. (2013) Mortgage-related issues in a crisis economy: Evidence

from rural households in Ireland, Geoforum, 46, 34–44.Peck, J. (2010) Constructions of Neoliberal Reason. Oxford: Oxford University Press.Peck, J. and Tickell, A. (1994) Jungle law breaks out: Neoliberalism and global-local

disorder, Area, 26, 317–26.Sager, T. (2011) Neo-liberal urban planning policies: A literature survey 1990–2010,

Progress in Planning, 76, 147–99.Simmie, J. and French, S. (1989) Corporatism, participation and planning: The case of

London, Progress in Planning, 31, 1–57.

5The Changing Ideology andOperation of Planning in DublinAndrew MacLaran and Niall McCrory

This chapter examines the changing ethos and operation of planning inDublin under the impact of neoliberalism. It reviews the transformation ofplanning from the mid-1980s towards more overtly entrepreneurial systemsof engagement with the property-development sector, working more closelywith such interests to facilitate development and emphasising the need forplanners to distance themselves from their more traditional self-professedrole as guardians of the ‘public interest’ or ‘common good’. It draws onresearch into the different views and evaluations of the changes in theethos and functional operation of Irish urban planning which have beenexpressed by a broad range of planners working in both the public and pri-vate sectors, also drawing on interviews with urban managers and academicplanners engaged in professional training (see McGuirk, 1992; McGuirk andMacLaran, 2001; MacLaran et al., 2007; McCrory, 2012).

Background

The basis for modern urban planning in Ireland was the 1963 Planning Actwhich established local authorities as the bodies charged with the task ofadministering the planning system that was newly put in place. The Actobliged local authorities to adopt a development plan and to update it atfive-yearly intervals, setting out the appropriate zoning of land uses. It alsobecame the duty of the local authority to ensure that prospective devel-opment conformed to the development plan, the Act creating a systemof development control through requiring any development or change ofbuilding use to seek planning permission (see MacLaran, 1993; McGuirk andMacLaran, 2001).

Irish local authorities comprise two elements, the elected councillors whorepresent area-based constituencies and the officers of the local authoritywho are full-time administrators, headed by a City or County Manager.Certain local-authority functions are ‘reserved’ to the elected members,

66

Andrew MacLaran and Niall McCrory 67

including those relating to the adoption of development plans. Councillorswere empowered to revoke or modify a permission to develop land and couldrequire the manager to grant planning permission that would result in amaterial contravention to the development plan.1 Executive responsibilitiesinclude all functions not reserved to the elected members. Thus, it is theCity Manager in Dublin who has overall responsibility for decisions relatingto planning applications. In appraising an application for planning permis-sion, the professional planners assess its compliance with the developmentplan, its scale and intensity of development and the architectural appear-ance of the scheme and act in an advisory capacity to the City Manager(MacLaran, 1993; McGuirk and MacLaran, 2001).

Although in the early stages of the 1987 Draft Development Plan Review,business interests in Dublin had their views solicited by questionnaire sur-vey from the planning department and, despite a contemporary notice in thePlanning Department of Dublin Corporation that ‘Discussion with officersof this department reflects our general policy of being as helpful as possibletowards property developers and their agents in drafting proposals’, therewas little real evidence that planning policy in Dublin during the early 1980swas particularly responsive to private-sector business interests in any majorway. Indeed, the planning system was regarded by private-sector developersas being essentially negative, restrictive, bureaucratic and highly time con-suming when, for developers, getting the timing right in the completion ofdevelopment schemes could be crucial to achieving profitability or suffer-ing serious loss (see McGuirk and MacLaran, 2001; MacLaran and Williams,2003).

McGuirk (1992) found the planning system to have been traditionallycharacterised by an essentially managerialist agenda. In interview (1996),a senior planner in Dublin Corporation spelled out his role as an ‘officialin a large organisation. Everything I do is laid out by procedure, legisla-tion, traditional practice, guidelines . . . We are very hierarchical here. It’s veryauthoritative [sic] which, in many ways, is a rigid straight-jacket. The realityis that we operate in tight confines’ (McGuirk and MacLaran, 2001, p. 441).

However, in evaluating the impacts of changes to the urban plan-ning system in Dublin which have taken place recently under a grow-ing entrepreneurial ethos engendered by the deepening influence ofneoliberalism within the Irish state and its transformation to one which hasbecome highly facilitative of property development, it is imperative not toregard such changes as representing a catastrophic fall from some ‘goldenage’ marked by a high degree of public participation. Although plannershad commonly regarded themselves as guardians of the ‘public interest’ or‘common good’, they were often dismissive of the role of public participa-tion. One interviewee quoted by McGuirk (1992, p. 266) remarked, ‘what’sthe point? Participation is like buying a dog and barking yourself’, whileanother, commenting on public participation relating to the development


plan noted, hopefully with tongue in cheek, that ‘we are expert enough tomake it complex enough for the average person not to understand’.

By the mid-1980s, significant shortcomings in the Irish urban planningsystem were evident (see MacLaran and Williams, 2003). A major deficiencywas its almost complete separation from other national, regional, economicor physical planning processes. It thus lacked strategic significance and local-authority planning departments could pursue policies which ran counterto those of their neighbours. Additionally, land-use planning and transportplanning were completely divorced, the latter lying within the remit ofthe relevant transport authorities. Planners also came under pressure fromcouncillors and members of the Dáil (parliament), lobbying on behalf ofconstituents, with pressure sometimes also being exerted by central gov-ernment (see McGuirk, 1992). The use of ‘prescriptive formulae’ covered awide range of elements from housing setback lines, housing densities, theallocation of open space and the width of roads. The tendency for develop-ers to build only up to these minimum criteria created suburban residentialenvironments often of overwhelming monotony.

Furthermore, the twin elements of land-use zoning and development con-trol had created an urban planning system which was essentially reactive.At times of development boom, planners tended to be overwhelmed withthe number of applications lodged, while at times of development inac-tivity the power of planning was highly constrained. Moreover, little wasbeing done to address the long-term dereliction in central Dublin, amount-ing to 600 cleared sites and derelict buildings with a combined area of 65ha(MacLaran, 1993).

Marginalisation of local-authority planners

During the mid-1980s, the national government became particularly con-cerned over the 45 per cent rate of unemployment in the construction sectorand by the widespread dereliction at the heart of the capital. As noted inChapter 2, drawing on the urban development corporation model of regen-eration being pursued by the neoliberal government in the United Kingdom,the Irish government responded by promoting regeneration through finan-cial inducements to property developers, investors and building users incertain urban designated areas.2 In devising these policies, which had amajor impact on the thrust of redevelopment activity in Dublin until afterthe end of the century, limited consultation had taken place between cen-tral government ministries and local-government departments (McGuirkand MacLaran, 2001). Indeed, to circumvent traditional local-authorityurban planning entirely, certain special-purpose development agencies wereestablished for key sites, as had the UK government.

The provisions of the Urban Renewal Act (1986) and the Finance Act(1987), which promoted the development, refurbishment and occupation


of properties in designated areas requiring renewal, were noted in Chapter 2(see also MacLaran, 1993; MacLaran and Williams, 1996). They increasedsubstantially the potential redevelopment value of inner-city sites. Propertyowners who failed to benefit because their sites were located on the ‘wrong’side of the incentives boundary, commenced a lengthy process of lobbyingof the government Minister, urging the geographical extension of the des-ignated zones. Expansion duly occurred between 1988 and 1990, by whichtime the incentive areas covered a large proportion of the central city outsidethe main shopping streets and prime office area (see Figure 5.1).

In the redevelopment of the Custom House Docks, the government estab-lished a special-purpose development agency, the Custom House DocksDevelopment Authority (CHDDA) in 1987 to promote and oversee renewal,vesting it with full planning powers expropriated from Dublin Corpo-ration. The geographical remit of the CHDDA was later extended fromthe original 11ha site to over 20ha and, in 1997 on its being suc-ceeded by the Dublin Docklands Development Authority (DDDA), thiswas increased to embrace 526ha of decaying docklands. Although the

Designated areas 1986

Designated areas 1988–90 Designated areas 1994

Dublin enterprise areas1994

Designated streets 1994

Temple Bar 1991

FitzwilliamSquare

CoreSt. Stephen'sGreen

Office

DublinCastle

TrinityCollege

ParnellSquare

NRoyal Canal DART

DART

MerrionSquare

Grand Canal

Figure 5.1 Tax-incentive areas in inner Dublin


DDDA did not have the same sweeping planning powers as had the CHDDA,the new authority could establish special detailed planning schemes forareas considered to be in need of particular redevelopment assistance andthese Section 25 areas were largely exempt from local-authority planningcontrol.

In 1991, the government also made special provision for the renewal ofTemple Bar, an 80ha district situated immediately south of the river Liffeybetween the city’s two main retailing streets. Its original development couldbe traced back to the seventeenth century and there still existed build-ings dating from the 1720s. It had suffered from blight and decay resultingfrom long-term plans to redevelop a proportion of the site as a bus sta-tion. Cheap premises on short-term (two years and nine months) leasesand the proximity to the central area had created a ‘left-bank’ atmospherecomprising a heterogeneous mix of hotels, pubs, cheap cafés and restau-rants, theatres, galleries, recording studios and second-hand clothing stores(MacLaran, 1993).

With funding from the EU, the government’s aim was to create a cultural,artistic and tourist quarter by protecting and enhancing the types of func-tion present. Two companies were established to oversee the rehabilitationof the district. Although Dublin Corporation retained formal planning con-trol, the initiative paid little heed to the city planners’ existing ‘Action Plan’for the area. Tax incentives provided for the purchase price of an appro-priately refurbished residence to be allowable against an owner-occupier’sincome tax. Unlike elsewhere in the original designated areas where taxincentives were available for all property-related developments regardless offunction, in Temple Bar incentives were only for buildings accommodatingfunctions approved by Temple Bar Renewal Ltd., the company charged withcreating the required functional mix. The second company, Temple Bar Prop-erties Ltd., acted as a developer. It took over the publicly owned propertiesin the district, primarily the property portfolio of the transport authority(CIE), immediately embarking on a programme of refurbishment and infilldevelopment of derelict sites. Thus, despite retaining planning powers, therole of the Corporation planners was still largely marginalised (Montgomery,1995).

In 1994, the government created two enterprise areas adjacent to thedocklands, where fiscal incentives were available to promote industrialoperations. However, it was the Industrial Development Authority (IDA),rather than the Corporation, which was charged with securing and approv-ing appropriate companies, again limiting the role of local-authorityplanners.

While the incentives created by central government were helping tore-shape the inner city, increasing pressure was put on the local author-ity from central government and from the private sector to respond


proactively to the development opportunities being created through central-government incentives. The local-authority response emerged not from thePlanning Department but from the Corporation’s Development Department.In the late 1980s, an inner-city development team (ICDT) was created to pro-mote the ‘designated areas’ as suitable locations for profitable developmentand to provide a facilitative channel through which prospective developerscould be directed (McGuirk and MacLaran, 2001).

The ICDT acted as a catalyst for renewal by using the sale of inner-cityCorporation-owned sites, earmarked primarily for social housing, to brokerinnovative development deals. The team nurtured a cooperative, negotiativerelationship with private-sector interests, operating as mediator and catalyst.With a negotiated development brief in place, Corporation-owned sites werereleased to selected developers and ‘escape clauses’ were built into the agree-ments to entice developers to take on projects considered as risky. In thismanner, 78 projects were developed on Corporation-owned sites by the endof 1996 (Dublin Corporation, 1997). The team’s operations were expresslypro-development and were disconnected from any wider broader planningpolicies that might have interfered with its operations. One member of theICDT summarised its staff and mode of operation. ‘The team we put togetherwas headhunted. We needed people with entrepreneurial flair. You had toemancipate yourself from the bureaucracy and adopt a pro-active attitude.We have tried to put a stamp on the way we deal with development –a way that is different to the bureaucratic way’ (McGuirk and MacLaran,2001, p. 444).

Thus, while the city was undergoing a period of intense developmentactivity, the Planning Department was increasingly obliged to adopt a spec-tator role. Undermined by the new renewal agencies, there developed asense of powerlessness among planners, a process which elsewhere hasbeen termed ‘creeping enfeeblement’ and reflects the weakening of localplanning structures (Newman and Thornley, 1997). Resentment on thepart of planners could be strong, expressed by a senior planner in DublinCorporation:

I want to know who is drawing up those (designated-area) boundaries,who is doing it, what is the functional reason for it. I’m not reallyinvolved at all. Central government’s accountability is not really clear.Without being conspiratorial about it, there is this golden circle withentrepreneurs, the Department of the Environment, the Department ofFinance and the special structures set up in a comfortable relationshipwith the private sector. The local authority is coming from a low base.We don’t have the resources. We just get the crumbs . . . Our ideas are noton the table in discussion of these things.

(McGuirk and MacLaran, 2001, p. 442)


He noted a growing marginalisation of planners within the local authority,suggesting that there was a pervasive feeling among local-authority plannersthat others were ‘stealing their clothes’:

The ad hoc bodies are a threat to us. They don’t want our type around.Even within our own organisation there is an underlying feeling that anytwo-bit consultant planner is the way to get things done. I wasn’t con-sulted about the new Docklands proposal. Our [City] Manager was in onit but he’s not telling me.

(McGuirk and MacLaran, 2001, p. 446)

In contrast, private-sector planners predictably agreed that there had beena need for change, welcoming the establishment of the CHDDC, believ-ing that ‘Dublin City Council would not act quickly or efficiently enough’and would therefore not have been able to deliver docklands regeneration(Private-Sector Planner, McCrory, 2012, p. 149). This was a view also sharedby planners at the Department of the Environment, Heritage and Local Gov-ernment (DoEHLG), one of whom stated that ‘from [the] government’s pointof view, there is an attraction to the special-purpose vehicle, because ineffect, it’s a “get in to it, get the job done, get out of it” approach over adefined period of time’ (Planner DoEHLG, McCrory, 2012, p. 149).

Marginalised and alienated by this facilitative conception of planning,planners worked in local authorities which were also being forced to re-aligntheir own modus operandi towards more entrepreneurial ways of operat-ing, one local-authority manager noting that ‘the relationship between usand central government is (that) they set the broad parameters for develop-ment and we just go and implement them. We’re a local government systembut we’re very much subservient to the centre’ (Local-authority Manager,McCrory, 2012, p. 150).

Where Corporation planners did remain more strongly involved, theybecame increasingly co-opted by a pervasive pro-development managerialstructure. It heralded the emergence of a new atmosphere of ‘flexibility’within the planning system, a common characteristic of entrepreneurialurban planning. This became evident in the greater degree of ‘flexibil-ity’ accorded to the City Development Plan (1999) which aimed to be a‘more stream-lined strategic plan, capable of responding to the complexdevelopment needs of the city’ (Dublin Corporation, 1999, p. 9).

Managerial power

A key event in the transformation of planning in Dublin had been theappointment in 1996 of a new City Manager who espoused a more proactive,more dynamic regime (McCrory, 2012). A planner at the DoEHLG claimedthat the local authority had previously ‘lacked ideas’ and that the new


appointment ushered in a period of civic leadership which had fostered amore overtly facilitative approach in planning:

I know that word transformation has been over-used but [he] really ener-gised the city council when he became city manager and he introducedan entrepreneurial, very pro-development mentality in the city council.

(McCrory, 2012, p. 162)

Simultaneously, power became more concentrated in the hands of the CityManager, with a commensurate loss of the elected representatives’ influence:

[T]he Irish local-government system has this person known as a CityManager, who is absolute and has been made more absolute in recent leg-islation. The 2000 Local Government Act has almost made them a Princein their own kingdom . . . even in appointing staff and side-lining staff andso on. Very, very powerful! The councillors commensurately have losteven more influence.

(Former City Planning Officer, MacLaran et al., 2007, p. 21)

The Manager runs the place as the Manager sees fit. He has absolute powerover the officials. No official does anything without the Manager’s say-so . . . I advise the Manager as to what should or should not be done andthe Manager may or may not take my advice.

(Former City Planning Officer, interviewed 2005, MacLaran et al.,2007, unpublished transcript)

In 1999, a senior planner within the Corporation, critical of the new ethos,described the transformation of the role of Dublin Corporation as havingbecome ‘Dublin Inc . . . . like a firm running the city according to a corpo-rate vision of build, build, build’ (McGuirk and MacLaran, 2001, p. 453).The aim seemed to be the reinvention of the city, to create a ‘Can-Do’city and makeover the urban space for new middle-class residents under aunstated policy of renewal through gentrification (see Chapter 11). The CityPlanning Officer at the time, highly critical of the outcome of such poli-cies for deprived inner-city communities, likened the impact to a processof ‘social cleansing’ and apologised to them directly at a public meeting in2003 (MacLaran et al., 2007, p. 12). Those planners who contested the newregime were increasingly marginalised, as the former City Planning Officerhimself discovered:

My opinions on what good planning should be and how the thing shouldbe administered and who should be responsible to whom were not gladlyaccepted by management and they did their damnedest to dislodge meover the years. They persecuted me in every possible way . . . I used to


think they can’t take the development plan off me and they did. Theygot clerical guys and some of my junior staff to do the plan, leaving meon the margins.

(McCrory, 2012, p. 153)

Thus, there had developed a prevailing mood among planners that it wasbest just to go along with whatever decisions were taken at a managementlevel and not ‘rock the boat’ too much:

It’s a fact of life, you have to be aware of what your masters want, theyare paying, and you can be principled, but . . . I’ve heard of many instanceswhere planners in local authorities have been sidelined because of theirprinciples, so if you want to stay involved in what’s going on, you haveto be a little bit pragmatic.

(Planning Inspector, An Bord Pleanála, McCrory, 2012, p. 158)

In this process of changing planning practice, the dissenting views of thosewith more traditional views regarding the role of planning thus gradu-ally fell silent as career paths clearly depended on compliance with thenew entrepreneurial agenda. Thus, a former City Planning Officer describedIrish urban planning as being under the control of ‘the regime of a verypowerful managerial class’ (McCrory, 2012, p. 170), which made it clearto the administrative staff and planners that they were there to promotedevelopment:

I like the idea of working for the public; you weren’t compromised, youwere a free agent, and you had security of tenure. Now it’s changed. Nowyou’re really working for the manager and the manager is working for thedevelopment sector, and the development sector is part of the politicalsystem. Planners are gone as a force and it’s been proved by what’s goingon around the country.

(Former City Planning Officer, McCrory, 2012, p. 171)

Changing local-authority structures

The restructuring of local-government operations which took place follow-ing the report Better Local Government (DoELG, 1996) resulted in a significantredistribution of power in the city administration. It entailed the disman-tling of the old ad hoc committee system, which included the powerfulPlanning and Development Committee in Dublin Corporation, which metmonthly. These committees were replaced by new strategic policy commit-tees (SPCs) for various services, including planning which meets quarterly,and the creation of Local Area Committees. It had been intended that thereplacement of the Planning and Development Committee with a Planning


SPC would broaden the focus from local to city-wide issues and include arange of other interests (such as the Construction Industry Federation, thePlanning Institute and relevant public bodies like CIE, the public transportcompany) in addition to the councillors. Indeed, an aim of Better Local Gov-ernment had been to enhance the councillors’ policy-making role. It wasfrequently cited in interviews as illustrative of the more widespread shift inthe ethos and methodology guiding the operation of urban planning at thelevel of the local authority. One of the most alarming features of that reporthad been the removal of the position of County Planning Officer and theestablishment of a Director of Services. Unlike other specialist functions, theDirector of Services for planning did not necessarily have to be a planner:

Every head of function under ‘Better Local Government’ is held by aprofessional in that function. So the person in charge of computer ser-vices is a computer specialist, the person in charge of water services isan engineering specialist, the person in charge of personnel is a person-nel specialist and in every functional area, the head is experienced andmore likely than not, qualified in the area, so the head of architecture andbuilding would be an architect, and the head of librarianship would be alibrarian and it works in every single function case except for planning.

(Academic Planner, McCrory, 2012, p. 176)

Alarmed by this development, a former City Planning Officer recalled aconversation held with the Assistant Secretary at the Department of theEnvironment about the abolition of the position and the rationale behindcreating a new post of Director of Services to oversee planning:

I said ‘Where do we stand? There seems to be no place for us in this thing’and he said ‘You’re right, there isn’t a place. I don’t want to be insultingor anything but the way things are going to work, and I’m not decryingyour profession, but your planning standards may not correspond withmanagement, and if you want to be part of this new team, I’m afraidyou’ve just got to leave your ideas outside the door’.

(Former City Planning Officer, McCrory, 2012, pp. 176–77)

The restructuring of DCC’s committee system was also regarded by thisformer City Planning Officer as having resulted in the extinction of the pow-erful and influential Planning and Development Committee and its replace-ment by a largely ineffective Planning SPC, reducing the councillors’ roleto the rubber-stamping of management’s decisions with little meaningfuldebate of the issues.

So . . . you have the management . . . dictating the agenda and writing theminutes and producing the papers, so it’s signed, sealed and delivered


more or less. And there’s no meaningful discussion . . . It’s a sad reflectionof what was previously a very strong, powerful and useful committee.It [the Planning and Development Committee] did deal with local thingsbut when a local thing was a big development, all the councillors werefree to discuss it. Now what you have is Area Committees and thecouncillors only deal with planning applications that arise in their area.So, you might have, say, a councillor who’s down the Docklands, terri-bly interested in, say, a 32-storey building, up overlooking the PhoenixPark. But, since it doesn’t occur on their agenda, they’re not really invitedto make any comments. And the minutes from those Strategic PolicyCommittees and the Area Committees are brought to City Council . . . andthey’re usually noted and approved. There’s no real further discussion onany of those issues . . . So, unless it’s brought up as a special discussion onthe agenda, which is unlikely because . . . that’ll only hold up the monthlyCouncil meeting, it won’t be discussed.

(Former City Planning Officer, MacLaran et al.,2007, pp. 24–25)

Further difficulties were noted in relation to local-government restructuringregarding the City Manager’s increasing statutory powers and the erosionof the policy-making role of councillors; changes which had often failed tobe opposed by the councillors themselves as many saw their role merely asadvocates for their constituents, raising local concerns with management.This erosion of the power and influence of the councillors and its increasingconcentration in the hands of the local-authority executive was regarded ashaving created a ‘public representation deficit’:

The councillors are quite happy with this, you see, because a lot of thecouncillors see themselves as very much delivering a local service to localcommunities because they’re the people who vote for them . . . . I thinkthe hubris of some of these senior civil servants and senior local gov-ernment officials is just amazing. But, again, there’s a reason for it, youknow, there’s a vacating of the field by the elected representatives, whoseem quite happy to allow this thing to cruise on.

(Former City Planning Officer, MacLaran et al., 2007, p. 26)

Development plans and public participation

The shift towards entrepreneurial urban planning was characterised by a newethos of flexibility within the planning system and attributed by one plannerto a growing concern within the urban boosterism lobby that

the artificial restrictions of planners were holding back a dam of otherwisevery good, potentially wealthy development for the city, which the city


needed. Somehow, the strictures of planners, the strictures of the devel-opment plan, the negative attitude of development plans, the negativeattitude of planners, were restricting the city’s potential to develop andrenew itself. And that’s part of a package now that has been changed, tosay that ‘Well, if that was the way, let’s get rid of a lot of those restrictions.Let’s push the planner to one side’.

There is an ethos around that the economy will only prosper if youremove a lot of ‘unnecessary’ controls or restrictions on development.The assumption is that all development prima facie is good and your onlyrole is to intervene where things are getting very bad. And the more devel-opment there is, the better . . . There was a new atmosphere of flexibilitytoo. A development plan is now seen as the instruction book for devel-opers, how to go about developing the city. It’s sort of a how far can yougo type of thing. What are the limitations? And flexibility is the word.In other words, less and less limitation or restriction on development.But, the main thing is build, build, build!

(Former City Planning Officer, interviewed 2005,unpublished transcript)

Thus, development plans became increasingly flexible, resulting in substan-tial increases in permitted building heights and densities, giving developersmuch more freedom and vastly increasing the development potential ofmany sites. While accepting that developers had not been given a partic-ularly greater role in the formulation of plans, the former City PlanningOfficer was highly critical of this new flexibility, particularly with regard tothe standards set out in the development plan, because the lack of prescrip-tive limits led to heavy reliance on planners’ judgement on a case-by-casebasis:

[I]t’s reflected in the development plan that things like plot ratio, site cov-erage, have gradually been whittled away. So, that’s the flexibility. Thereare advisable plot ratios but there’s no real, firm restriction on it. So eachone is, sort of, considered on its merits.

(MacLaran et al., 2007, p. 18)

The indiscriminate ‘town cramming’, as he characterised it, of the inner citywhich this had permitted raised serious concerns with regard to the qualityof life there:

[Y]ou have to consider what sort of atmosphere, what sort of envi-ronment, what sort of infrastructure you want to deliver, you know.Because the developer will keep on building, you know, until the thingcracks! . . . People are left sitting in a dismal little flat in the bottom of


a five-storey block, looking onto a courtyard, roaring traffic outside,transient population.


Interviewed again in 2009, the former City Planning Officer consideredthat the City Council had been so transformed by this new entrepreneurialapproach that ‘planning as it currently exists has lost its purpose’ (McCrory,2012, p. 166) noting that

[t]he development plan, instead of being prescriptive, or almost pre-scriptive, became indicative, and indicative became flexible, and flexiblebecame facilitative.

(McCrory, 2012, p. 148)

This was confirmed, though in a highly approving manner, by a planner inthe DoEHLG:

We deliberately use the phrase ‘Development Management’ rather than‘Development Control’ because it precisely embodies that philosophy.Development Control was the old name and was there for 25 years ormore and it really meant . . . the planner sitting there waiting for devel-opment proposals to come in, responding, trying to eliminate the worstaspects, but that’s what it was, it was essentially a passive response. Devel-opment Management is, we hope is much more pro-active . . . and as I say,I’m not at the coal face, but certainly I think [named City Planner] andCity Council would be very much of that mind.

(Planner, DoEHLG, McCrory, 2012, p. 155)

Another senior planner from the DoEHLG, presumably unaware of the con-siderable interaction which had actually taken place between senior plannersand the councillors when drawing up the 1987 Draft Development Plan, alsobelieved strongly that the Planning Act 2000 had radically changed for thebetter the way in which development plans originated:

The 2000 Planning Act hugely changed the consultation and participa-tion environment. That’s one of its raisons d’être. There are now hugeopportunities for communities to contribute to the development plan.I think communities don’t focus in enough at the development planstage. They focus in at the development control stage, when the frame-work is already in place. The Planning Act wants to bring them in earlier.The development plan used to go in as a fait accompli and the publiccommented on it. There is now an opportunity for communities or indi-viduals to comment prior to the draft development plan. So, they cannow make submissions and comment prior to the formulation of the


draft plan, before anything’s set down on paper . . . The Planning Act hasfront-loaded the preparation of the development plan with consultation.The Planning Act set the stage for participation to be much more focused.And then [there’s] the fact that Local Area Plans were put on a statutoryfooting, with consultation with the elected representatives.


Local-authority planners also sought to stress their efforts at enhancingparticipation, highlighting their attempts to embrace ‘consensus planning’,where community input is sought as part of the decision-making process,enabling planners to draw on local knowledge and build consensus througha process of explanation and negotiation. However, a community plan-ner closely involved with planning issues in inner Dublin, where intenseproperty-development activity had created considerable conflict with localresidents, strongly argued that Dublin City Council’s shift towards the lan-guage of consensus planning, with its promotion of active citizenship,largely failed to recognise the impossibility of building a consensus aroundcertain contested areas, within the contemporary context of unprecedentedlevels of development pressure. This was also recognised by a planner in theDepartment of the DoEHLG:

Dublin City Council is trying to facilitate development. That’s theconstant conflict of planning and looking after the common good.


The creation of integrated area plans (IAPs) had further promised closecollaboration between the local authority, other public agencies, develop-ers, businesses, interest groups and the local community to create ‘holistic’local area plans covering a limited number of areas in need of regeneration(Gleeson, 1999). They provided tax incentives to approved developmentsonly on specific sites, rather than their being available across the IAP.These planning schemes aimed, at least in theory, to achieve social, eco-nomic and environmental goals, translating broad planning goals intolocally focused implementation strategies and providing for the integrationof public, private and community sectors to create a collaborative efforttowards holistic regeneration. Nevertheless, these too fell under the spell ofthe neoliberal ‘agenda’. While the ‘experimental’ example of the HistoricArea Rejuvenation Project (HARP) in the north-west inner city had beenendowed with a Steering Committee in which the local community pos-sessed an important role, later IAPs, together with the reconstituted HARPIAP, were provided only with ex post facto Monitoring Committees whichwere required annually simply to ‘sign off’ in agreement that developmentshad conformed to the plan. However, no adequate procedures were put inplace to deal with cases where breaches had either occurred or were about


to take place as a result of non-conforming development. Thus, in spite oftheir lofty aims and their special provision for monitoring by their commu-nities, Chapter 13 reveals how IAPs became regarded by some communitiesas operating largely to facilitate development by effectively incorporatingdissent.

Clashes of ethos and some reflections

Among the planners who had been interviewed during the course of theresearch projects reported on here, there was widespread recognition thatthere had been a marked change in the predominant planning culture. It wasregarded as shift away from ‘traditional rational planning’, where plannersacted in the interests of the ‘common good’, making logical decisions onthe basis of rational methodologies, towards a more facilitative role. How-ever, few had given much consideration to more profound changes in theunderlying philosophy of planning during the past 25 years, and many werewholly unaware of them. However, all were aware that changes in the prac-tice of planning had taken place over the same period even if they had littleknowledge of their driving force. Some planners put this shift down to agreater professionalisation of planning which, for many years, had been thedomain of engineering departments in local authorities.

Although all the planners interviewed across the private sector and thoseworking in the public sector in local authorities, An Bord Pleanála, theDublin Regional Authority and the DoEHLG considered that they stillworked for the ‘common good’, unsurprisingly, it was also evident that theyhad quite different conceptions as to what the ‘common good’ comprisedand the best way in which it could be achieved:

Dublin City Council has had a very clear facilitative policy, [an]entrepreneurial policy. Talking to planners privately, some of the keyplanners I know are very, very facilitative of development. They do seetheir key role as facilitating development; they’re quite explicit on thatand they get quite annoyed with any notion of opposition.

(Academic Planner, McCrory, 2012, p. 168)

Indeed, one planner at Dublin City Council acknowledged that facilitatingthe private sector was a means of serving the common good:

I would be of the view that the common good is served by working withdevelopers to ensure development. You can talk all you want, but the pri-vate sector is going to deliver development. I would be viewed internallyhere as possibly too sympathetic to developers.

(Local-authority Planner, McCrory, 2012, p. 158)


Some local-authority managers identified an ideological division within Irishurban planning, attributing it to the expansion in the role of private-sectorplanning consultancies during the previous 20 years, claiming that private-sector planners did not advance the ‘common good’ or ‘public interest’ but,in providing services to the private-sector, instead were obliged to take onan advocacy role for their developer clients. Private-sector planners, on theother hand, considered the shift in planning practice as instrumental in theemergence of a more ‘professional’ corps of planners (McCrory, 2012).

At the Department of the Environment, one planner proclaimed thatthere existed ‘a unity of purpose facilitating a business-like, can-do attitude’(McCrory, 2012, p. 163). Yet another public-sector planner was of the opin-ion that ‘you have to recognise that planning is about development . . . it isabout a lot of other things as well, but it’s development-led and developer-led and you will not get any of your stuff delivered unless somebody goesout and does something. So you have to reflect the needs of the market’(McCrory, 2012, unpublished interview transcript). However, there was alsosome recognition that this entrepreneurial ethos may have been too stronglypursued:

[T]he reliance on the private-sector for development funding had cre-ated situations in which local planning authorities have been found tobe breaching their own development plans and that there may be thesense in some local authorities that they may be chasing the Euro a bithard compared to say the social or the environmental issues.

(Planner DoEHLG, McCrory, 2012, unpublishedinterview transcript)

Of all the interviewees, only one planner found it acceptable that a local-authority manager could overturn the decisions of the planners:

I think it’s a reasonable thing to say that a manager who’s appointed ata certain level and has a holistic view of the whole city and has . . . theauthority and is capable of dealing with the transparency in saying‘you called it wrong there, you’re not seeing the big picture and we’reoverturning it’. It’s entirely reasonable.

(Public-sector Planner, McCrory, 2012, p. 171)

All others found this to be unacceptable and one planner from theDoEHLG, considered that this would neither constitute ‘proper planning’nor ‘sustainable development’:

Proper planning and sustainable development is what we’re all about;that is getting a balance between the social, economic and environmental


dimensions and I think you’ve got to get that balance. If you get thatbalance and you’re able to support the economic dimension very stronglyso that’s fine, but if you’re distorting your whole policy and assess-ment processes in the pursuit of the economic objective . . . that’s notappropriate.

(Planner DoEHLG, McCrory, 2012, unpublishedinterview transcript)

Understandably, in view of the scale of development undertaken in the cityover the past 30 years and the manner in which urban planning had changedduring that time, there was more than a hint of regret among some plannerswhen evaluating what planning had managed to achieve during the boomand the opportunities which had been lost:

Had the City Council known in 1992 that the economy was going togrow at 6.9 percent on average for fifteen years would you have expecteda better city at the end of it? I think when you look at parts of [inner]Dublin 1, 7 and 8, notwithstanding the level of development that didtake place, that anybody would have to come to a reasonable answer andsay something went wrong . . . It’s a startling statistic from 1992 to 2006that the economy grew at 6.9 percent a year and if you were starting atthat point and you look at . . . parts of the Liberties, one would be forgivenfor thinking the economy didn’t grow at all . . . Maybe I’m too hard. Thecity has changed significantly but I still think the biggest challenge isthat the City Council and decision-makers here, and planning and othersections of management don’t, dare I say it, really understand the issuesat hand.

(Public-sector Planner, McCrory, 2012, interview transcript)

Notes

1. Changes to this procedure were later made to prevent abuse of this powerresulting from corrupt payments by developers to councillors to rezone certainlands.

2. The series of area-based tax incentives for inner-city development in Dublinwere estimated by government-appointed analysts to have amounted to �1,993M(Goodbody et al., 2006).

References

Department of the Environment and Local Government (DoELG). (1996) Better LocalGovernment. Dublin: Government Publications Office.

Dublin Corporation. (1997) Half Yearly Report on Urban Residential Renewal. Dublin:Dublin Corporation.

Dublin Corporation. (1999) Dublin City Development Plan. Dublin: DublinCorporation.


Gleeson, D. (1999) Changing approaches to Planning in Dublin’s inner city, inKillen, J. and MacLaran, A. (Eds) Dublin: Contemporary Trends and Issues for theTwenty-First Century. Geographical Society of Ireland, Special Publication 11. Dublin:Centre for Urban and Regional Studies, Trinity College, pp. 49–54.


MacLaran, A. (1993) Dublin: The Shaping of a Capital. London: Belhaven/Wiley.MacLaran, A., Clayton, V. and Brudell, P. (2007) Empowering Communities in Disadvan-

taged Urban Areas: Towards Greater Community Participation in Irish Urban Planning?Dublin: Combat Poverty Agency.

MacLaran, A. and Williams, B. (1996) Incentive Areas for Urban Renewal, in Drudy,P. J. and MacLaran, A. (Eds) Dublin: Economic and Social Trends, Volume 2, Centre forUrban and Regional Studies, Trinity College, Dublin, pp. 43–46.


McCrory, N. (2012) The Changing Role of Irish Urban Planning under a Neoliberal Agenda:Evidence from Dublin, unpublished Ph.D. thesis, Department of Geography. Dublin:Trinity College.

McGuirk, P. (1992) Perspectives on the Nature and Role of Urban Planning in Dublin,unpublished Ph.D. thesis, Department of Geography. Dublin: Trinity College.


Montgomery, J. (1995) The story of Temple Bar: Creating Dublin’s cultural quarter,Planning Practice and Research, 10, 101–10.

Newman, P. and Thornley, A. (1997) Fragmentation and centralisation in the gover-nance of London, Urban Studies, 34, 967–88.

Part II

The Property Boom and Its Legacy

Introduction

In the late 1990s, there had developed in Ireland a crisis of diminishinghousing affordability in which house prices rapidly outpaced general priceinflation, the rising cost of construction and rates of increase in salaries andwages (see Downey, 2003; McNulty, 2003). Between early 1996 and 2001, res-idential property prices tripled. The cost of sites for newly built houses rosefrom 15 per cent of housing price to absorb some 50 per cent of the pur-chase price by the early years of the new millennium. However, rather than‘interfere’ with the private market in land and the oligopolistic ownershipof much of the development land at the fringe of Dublin, which was in theownership of a relatively few families, speculators and development compa-nies (see Casey, 2003), the market-based solution to declining affordabilitywas simply to extend ever-increasing amounts of credit to borrowers. Thissuited not only the property sector by allowing it to realise rising prices forits product but also the banks which were keen to grow their balance-sheetassets.

Chapter 3 showed that the entry of foreign financial institutions into theIrish market significantly transformed the Irish mortgage market by creatingstrong competition for lending and cutting margins between deposit ratesand lending rates. Historically, during the 1980s, Irish mortgage-lendinginstitutions had advanced loans calculated on the conservative basis of lowmultipliers of household incomes, commonly 2.5 times that of the mainearner plus the annual income of the second person. Potential borrow-ers were also expected to have saved regularly with a building society for12 months prior to making a mortgage application. Loans ran for 15–20years and would not normally have exceeded 90 per cent of the purchaseprice of the house in the case of first-time buyers or 75 per cent for otherpurchasers. By 2004, the average new house price in Dublin was �322,000(DoEHLG, 2009). A couple, each earning �30,000 under traditional lendingcriteria would therefore have been able to borrow only �105,000, leaving ashortfall of �217,000.

Irish entry into the European Monetary Union in 1998 and its subsequentadoption of the Euro currency, which entered circulation in 2002, gave Irishborrowers access to low interest rates, which were available through Irishfinancial institutions borrowing on international wholesale money markets

86 The Property Boom and Its Legacy

(see Chapters 3 and 8). Additionally, in the wake of the so-called dot-comstock market crash in high-technology shares and Internet-based companiesin March 2000 and the attacks on the World Trade Centre in New York in2001, governments feared the onset of a global recession and central banksaround the world created the basis for a consumer boom by reducing interestrates (Harvey, 2005). After 2002, rates of foreign direct investment in Irelandfaltered and the basis of the continuing ‘success’ of the Celtic Tiger changed,from one based on manufacturing and strong exports to one fuelled bycheap credit which sought to prop up the economy by creating a consumerboom. The credit boom lasted for five years and saw private-sector lendingto businesses and individuals expanding from �128bn in January 2003 toover �400bn by September 2008 (Brawn, 2009).

Traditional mortgage-lending criteria were disposed of and normal pru-dence in lending was discarded. Loans based on valuations of over100 per cent of the price of the dwelling (to provide also for solicitors’ fees)and amounting to 8 or 12 times people’s annual household income were farfrom uncommon, with loan repayment periods sometimes being extendedto 35 years or more. This was a recipe for disaster. The almost non-existentregulation of lending practice became a major factor in housing-price infla-tion, potential purchasers bidding up prices and developers responding bypricing their product according to what the market could bear.

Initially, banks and building societies did well from this situation, withpersonal bonuses often being calculated on the quantity of funds being‘pushed out’ onto borrowers, greater scales of lending becoming reflectedin higher pay. Scrutiny of personal circumstances, including the declaredincomes of mortgage applicants, upon which loans were calculated, wasfrequently minimal, sometimes completely lacking or restricted to thoseapplicants whose employment status and pay levels were considered to beof unimpeachable quality. In order to grant larger mortgages, applicantswere even encouraged to exaggerate the size of their incomes by includingprospective income from renting a room to a lodger or to take account ofcash gifts received during the previous year. The Educational Building Soci-ety (EBS) actively promoted and advertised equity-release loans to enableparents to provide cash to assist adult children in meeting the ever-risingprice of dwellings.

For residential property developers and the fortunate owners of sites anddevelopment land, rapidly escalating prices and low rates of increase inhouse construction costs (primarily labour and materials) created enormousprofits. This encouraged more and more developers to become active. How-ever, by February 2007, the market had peaked. The huge scale of residentialdevelopment had resulted in completions rising from 40,000 dwellingsper annum in the late 1990s to 93,000 in 2006 (equivalent to 20 newdwellings per 1,000 of the population compared to 5 per 1,000 in the UnitedKingdom), leading to an over-supply of housing which could not be sold (see

The Property Boom and Its Legacy 87

Chapter 7). This, in turn, brought about a property crash of enormous pro-portions resulting in many completed residential housing estates being leftunoccupied and others in large part unfinished. The ‘ghost estate’ enteredthe common vocabulary and, as prices tumbled so did the reality of ‘neg-ative equity’, where the amount outstanding on a mortgage exceeded thelikely resale price of the dwelling (Kitchin et al., 2012). Those who had pur-chased a dwelling during the last few years of the boom, particularly thoselocated in the outer commuting belt of Dublin where there was consider-able over-supply, or in the rural Border Midlands and West (BMW region)of Ireland where special tax incentives had driven development to absurdheights, soon found that the resale price of housing had collapsed by asmuch as 60 per cent of the original purchase price.

Reckless lending also occurred against commercial property ventures withlittle evaluation being undertaken by the financial institutions involvedwith regard to the likely profitability of schemes. However, here the scaleof individual loans was measured not in hundreds of thousands of Eurobut in tens or hundreds of millions of Euro. Developers were often bad-gered into taking enormous loans from bankers eager to secure greaterlending-related bonuses. A former CEO of the Bank of Ireland (2002–4)subsequently commented that decisions to lend �400M against a propertydevelopment project might be made with as little consideration as that givenfor a �40,000 car loan (Soden, 2010). It also subsequently transpired thateven basic loan documentation relating to the precise nature of the security,which would have permitted the lending institution to obtain legal recourseto the development project in the case of financial default by the developer,was sometimes not properly completed. Within the first �10bn tranche ofloans taken over by the National Asset Management Agency (NAMA), thespecial-purpose vehicle (SPV) established by the government to buy up badproperty-related banking debt, some delay had been caused by the discoverythat required loan-record documentation or security did not exist relating tosome �700M worth of loans (Irish Times, 2010).

Property-related lending by banks to commercial and residential prop-erty developers and investors increased rapidly during the credit-fuelledboom. As a share of bank assets, property-related lending rose from lessthan 40 per cent in 2002 to over 60 per cent in 2006 (Honohan, 2010).Almost inevitably, the commercial development boom created a legacy ofunfinished development sites, uncompleted buildings, empty retail mallsand vacant office blocks. With the onset of slump conditions, the funda-mental weakness of the Irish financial sector’s over-exposure to the propertymarket, where asset values of the ‘security’ against which loans had beenadvanced were rapidly diminishing, went largely unrecognised – at least forthe time being.

Despite warnings that asset markets (stocks, bonds and property) tend tobe highly volatile and that smooth adjustments are the exception rather


than the rule, the prevailing view, echoed by spokespeople from a wide rangeof Irish institutions, was that the Irish property market would achieve a ‘softlanding’. A few months before the crash, a television programme warning ofa ‘future shock’ to the property sector was criticised by the property editor ofone newspaper as being ‘partly inaccurate and wholly sensationalist whilelacking sufficient balance – elements that call into question its credibilityand authority’ (Irish Independent, 20 April 2007). It noted, on the otherhand, that

John Fitzgerald (ESRI economist) stated that if he believed there was acrash coming he would sell his house and rent it back. Tellingly, he is notdoing so because he believes, as I do, that if (and that is a big ‘if’) themarket is going to crash it will do so in a patchy, selective way which willnot impact to any great degree on many existing homes in Ireland.

The Fianna Fail Taoiseach (Prime Minister) at the time, Bertie Ahern,attacked the gainsayers and critics who were ‘talking down’ the economy,telling an audience that ‘sitting on the sidelines cribbin and moaning is alost opportunity. In fact, I don’t know how people who engage in that don’tcommit suicide’. A property crash was clearly inconceivable.

However, the housing market entered into a downturn in spring 2007.In June, the Economic and Social Research Institute (ESRI) reported that theeconomy had entered into recession for the first time in 25 years, result-ing from the collapse of the property market and the government’s overlyheavy reliance on the income generated by the property-development sector,from value added tax on building supplies and notably from Stamp Duty onthe sale and letting of properties which alone had yielded �3.1bn in 2006.The ESRI predicted that unemployment would rise above 7 per cent by theend of the year, that there would be a return to emigration, that the pub-lic finances would deteriorate sharply and that the massive budget surplusesof recent years would disappear. It argued that the government should breakEU rules and borrow �11bn. This the government did not do, opting insteadto undertake a programme of spending cuts.

Overseas events exacerbated an already-serious situation. Following thetakeover of Merrill Lynch by Bank of America and the collapse of Bear Sterns,Lehman Brothers, one of the world’s largest investment banks, filed forbankruptcy on 15 September 2008. It sent shock waves around the financialworld and banks stopped lending to one another, fearing further defaults.The Irish Financial Regulator attempted to reassure the public and the mar-kets that Irish banks were resilient, well capitalised and that deposits weresafe, denying that over-exposure to the property market posed any threat,despite rapid declines in property-asset values (Neary, 2008). In official cir-cles, there seems to have been little comprehension, at least none which wasvoiced publicly, of the fundamental nature of the problem. The problem


was misinterpreted as a banking liquidity crisis arising from the fact thatbanks had engaged in short-term borrowing while making longer-term loans(see Chapter 3). This meant that borrowing had to be repeatedly renewed orreplaced by new borrowings and could only work if no suspicion were raisedregarding the credit worthiness of the borrowing institutions. Following thecollapse of Lehman Brothers, there was indeed a short-term liquidity crisis.But, underlying this reluctance of the institutions to lend to one another laydeeply seated fears regarding other banks’ basic financial soundness. A fun-damental insolvency crisis was developing in which the security againstwhich Irish banks had lent billions of Euro, namely property-related assets,was rapidly diminishing in value. Thus, in spite of repeated reassurances bythe Financial Regulator, a heavy outflow of funds from the Irish bankingsystem resulted and the price of Irish bank shares rapidly plummeted.

By early 2008, it was evident that the highly entrepreneurial operationsof Anglo Irish Bank had rendered it effectively insolvent. Its share price col-lapsed. On the verge of being put into involuntary liquidation by a Germanbank seeking repayment of its loans, Anglo approached Bank of Ireland inlate September 2008 soliciting a takeover, which was declined. A requestfor help from Allied Irish Bank (AIB) was similarly refused. However, theproblem was not confined to Anglo Irish Bank. Both Bank of Ireland andAIB were also heavily exposed to large-scale default resulting from a prop-erty crash. As Chapter 3 noted, both AIB and Bank of Ireland had massivelyincreased their total customer loans and grown their assets, largely on thebasis of property-related lending and were also heavily reliant on short-termborrowings on wholesale financial markets while having undertaken lendingon far longer terms.

On 30 September 2008, an emergency meeting took place in governmentbuildings between senior government ministers, their advisers and the chair-persons and CEOs of Bank of Ireland and AIB. Fearing contagion from theinevitable demise of Anglo, the banks sought state help to address the con-sequences of their reckless and largely unregulated free-market operations.Anxious that in the aftermath of the collapse of the banks economic chaoswould ensue – an ‘economic nuclear winter’, in the words of Finance Min-ister Brian Lenihan – the Irish state agreed to guarantee all the Irish banks’debts to the extent of �440bn (subsequently revised upwards to �485bn –see Drudy and Collins, 2011), the government assuring the Irish populationthat this would be at ‘no cost’ to the exchequer.

It was one of the most important decisions made by the Irish state andwas also an incredibly reckless step in the light of the knowledge that valuesin Irish property markets had been in decline for well over a year and thatthere was no sign of their bottoming out. Moreover no information was pro-vided by the banks on the likely eventual scale of their exposure to furtherdeclines in property values. Instead, they continued to insist that the prob-lem was one of liquidity and that a guarantee would enable them to carry on


borrowing on wholesale money markets. While the guarantee worked suc-cessfully in the short term, the Irish banks (including Anglo) remaining openand able to access funding, the longer-term problem of massive exposure toassets which were of reducing value eventually required further interventionin the form of a massive state ‘bail-out’ (see Chapter 8).

The virtual collapse of the Irish financial system (a ‘meltdown’ which onecommentator compared to that of Zimbabwe) and the state’s ‘bail-out’ ofthe Irish banking sector, which has cost �60bn to date (2013) and with aprojected final cost of perhaps �100bn, resulted in the enormous increasein the national debt, to be serviced by a population of just 4.5 million peo-ple. Between 2007 and 2012, government debt rose from 25 per cent to 117per cent of GDP (Eurostat, 2013). Such figures looked worrying to potentialpurchasers of Irish government bonds (debt) and the interest rate demandedby those willing to lend to do so increased rapidly. Thus, the Irish state,itself unable to borrow on financial markets at acceptable rates of inter-est, was obliged in November 2010 to seek assistance from the EuropeanUnion (EU), European Central Bank (ECB) and the International MonetaryFund (IMF).

The collapse in the construction sector was marked by a drop in the valueof output from �30bn in 2007 to �8bn in 2012 and a reduction in employ-ment from 350,000 to under 100,000. This had an enormous impact on thestate’s income which had been heavily reliant on the development sector.In 2011, the annual budget deficit rose to �21.3bn, representing 12 per centof GDP. Guided by the heavy hand of the ‘troika’, operating under the sameneoliberal orthodoxy which had been imposed previously on Mexico andother developing world nations, the government’s introduction of severeausterity policies involved increased personal taxation, additional taxes andcharges, public-sector pay cuts and reductions in public-sector expenditure,leading to a forced deterioration in the quality of public services. Meanwhile,the low rate of company taxation remained unchanged, the contribution ofCorporation Tax to total exchequer revenue declining from 14.1 per centin 2001 to 11.4 per cent in 2010. Questions were raised in the Dáil byTDs (elected representatives) representing the People Before Profits Allianceregarding the disparity between the notional or ‘headline’ Corporation Taxrate of 12.5 per cent on international companies’ profits and their real ratesof tax, estimated at 6 per cent or less, their having paid less than �4bn intax on some �66bn in profits (Allen and O’Boyle, 2013).

The results of the neoliberal project and of the trade unions’ participationtherein were made all too evident as Irish government actions demonstratedever more clearly to the wider citizenry the true colours of the capitalist stateand of the hazardous nature of a ‘social-partnership’ model of economicdevelopment in which increases in pay and improvements in public servicesbecame liable to sudden cancellation.


References

Allen, K. and O’Boyle, B. (2013) Austerity Ireland: The Failure of Irish Capitalism.London: Pluto Press.

Brawn, D. (2009) Ireland’s House Party: What the Estate Agents Don’t Want You to Know.Dublin: Gill and Macmillan.

Casey, J. (2003) An analysis of economic and marketing influences on the constructionindustry, Building Industry Bulletin, July, 1–18. Dublin: Jerome Casey and Co.

Department of the Environment, Heritage and Local Government (DoEHLG) (2009)Housing Statistics Bulletin, Q2 1999. Dublin: Stationery Office.

Downey, D. (2003) Affordability and access to Irish housing: Trends, policy andprospects, Journal of Irish Urban Studies, 2 (1), 1–24.

Drudy, P. J. and Collins, M. L. (2011) Ireland: From boom to austerity, CambridgeJournal of Regions, Economy and Society, 4, 339–54.

Eurostat. (2013) General Government Gross Debt – Annual Data, accessed1 October 2013, http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=teina225&language=en

Harvey, D. (2005) A Brief History of Neoliberalism. Oxford: Oxford University Press.Honohan, P. (2010) The Irish Banking Crisis. Regulatory and Financial Stability Pol-

icy, 2003–2008. A Report to the Minister for Finance by the Governor of theCentral Bank.

Irish Independent. (2007) Future Shock – Property Crash – the reaction. IrishIndependent, 20 April 2007.

Irish Times. (2010) Nama completes transfer of first tranche of loans, Irish Times, 11thMay 2010.

Kitchin, R., Gleeson, J. and O’Callaghan, C. (2012) Unfinished Estates in Post-Celtic TigerIreland, Working Paper 67. Maynooth: National Institute for Regional and SpatialAnalysis, NUI Maynooth.

McNulty, P. (2003) The emergence of the housing affordability gap, Journal of IrishUrban Studies, 2 (1), 83–90.

Neary, P. (2008) Interview, RTE News, 15 September 2008.Soden, M. (2010) Freefall, Interview extract, RTE television, broadcast 6th September

2010.

6Ready Money: Over-Developmentin the Offices SectorAndrew MacLaran

Office development and financial incentives

The office development sector in Dublin has undergone five distinct cyclessince 1960.1 During the early to middle years of the 1980s, office develop-ment was in a period of relative quiescence, Figure 6.1 showing that the scaleof completions, which had reached a historic peak of 85,100 sq m in 1982,declined thereafter until 1986 when just 14,425 sq m were developed. Thetiming of the Urban Renewal Act (1986) and Finance Act (1987), responsiblefor the introduction of fiscal incentives for property-related development incertain designated areas in Dublin, was fortuitous (MacLaran, 1993; see alsoChapter 2). They occurred just as the office-development sector was aboutto enter a boom following six years of depressed economic conditions. Thedearth of completions had resulted in the vacancy rate within the mod-ern (post-1960) stock of office space falling to just 5 per cent. Acceleratingeconomic growth in 1988 created increasing demand for offices and rentalsstarted to increase for the few available buildings and, within a year, thevacancy rate had fallen to just 3.6 per cent. Rents, which had been staticat Ir£107 (�135) per sq m, surpassed Ir£160 (�203) per sq m for primenewly completed space, providing a sharp impetus to office-developmentactivity. Development in the late 1980s was further fuelled by an influx ofproperty-investment funds, amounting to Ir£115M (�146M) in 1989 alone,as investment managers sought to participate in the rising returns available.As prospective investors competed for the limited supply of newly completedproperties, initial yields strengthened from 6.5 per cent to below 6 per centduring the year. Developers reacted swiftly to the changed circumstances inthe accommodation and property-investment markets, construction startingat over half the sites where planning permissions had not expired.

It was noted in Chapter 2 that the national government had requiredDublin Corporation to release for private-sector development much ofthe land which it had assembled for purposes such as social housing.In central Dublin, private-sector site assembly was problematic as land was

93


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often subject to 999-year leases, granted in the late seventeenth or eigh-teenth centuries. Obtaining clear legal title could therefore prove highlytime-consuming. Immediate access to development sites from a proactivelocal authority working through the inner-city development team (ICDT)facilitated a swift response from developers.

The resultant increase in the amount of office space reaching completionwas considerable. The first few developments within the designated areaswere completed in 1988 and 1989, comprising barely 5 per cent of newdevelopment. Thereafter, completion rates leapt from an annual norm of lessthan 25,000 sq m to over 80,000 sq m in 1990, a further 120,000 sq m beingcompleted during 1991. Within just two years, the stock of modern officespace had expanded by 20 per cent. The impact of the tax incentives was evi-dent from the significant quantity of new development in areas where therehad been little private-sector development of any type during the twenti-eth century. Over 30 per cent of this development, amounting to 60,000sq m, was located in the areas designated for such incentives. Much of thisspace, especially outside the International Financial Services Centre (IFSC)(see Chapter 2), was speculative, undertaken neither by owner occupiers norwith the benefit of pre-letting or pre-sale arrangements.

However, by the early 1990s, the uplift in demand had largely been met.Completions began to outstrip user demand and the city-wide vacancy ratereached 11 per cent by late 1991, when 120,770 sq m lay empty, some60 per cent of which had been recently completed. Developers quicklywithdrew from further speculative developments and, by 1992 output haddropped to just 17,000 sq m. Moreover, apart from the special case of the

Andrew MacLaran 95

IFSC where additional fiscal incentives were available (see Chapter 2), office-based businesses proved reluctant to move to non-traditional locations inthe designated areas. As a result, in the designated areas outside the IFSC,over 40 per cent of newly developed space lay vacant by mid-1992. Inner-city sites in such locations therefore increasingly became considered foralternative functions, primarily residential development. However, officedevelopment proceeded apace in the IFSC throughout the 1990s.

Ireland’s GDP grew strongly through the 1990s, at an average annual rateof over 5 per cent, compared to an EU average of 1.5 per cent. While theinner city had been the major focus for urban renewal under tax-incentivisedproperty-development initiatives, burgeoning economic growth continuedto create an increasing demand for office buildings, particularly in suburbia.Additionally, the designated renewal areas were not simply confined to theinner city. A green-field site in one of the western new towns, Tallaght, wasalso so designated in order to hasten the development of a shopping centreand offices. Between 1993 and 1997, 16,280 sq m of office space were devel-oped there, a location in which virtually no modern purpose-built officespace had previously existed.

In 1994, the government created two enterprise areas (EA) adjacent tothe docklands on either side of the river Liffey, where fiscal incentives wereavailable to promote industrial operations (see Chapter 5). The IndustrialDevelopment Authority (IDA), charged with the task of securing appropriatecompanies to locate there adopted a broad interpretation of ‘industrial’ toinclude operations in the software and high-technology sectors. Commenc-ing in 1996, 100,900 sq m of office space were developed over a period ofseven years in the northern EA and by late 2000, 25,900 sq m had also beenbuilt in the southern EA, including a development of 13,655 sq m at GrandCanal Plaza.

Developers, including the owners of redevelopment sites, prospectiveowner occupiers and commercial developers, responded quickly to the taxincentives. Institutional developers, because of their more cautious attitudetowards development generally and for which the incentives meant littledue to existing favourable taxation arrangements for life-assurance compa-nies, played a less significant role. However, the reluctance of office users toventure into certain firmly secondary locations also demonstrated the limitsto such intervention. Nevertheless, the incentivisation of certain locationssignificantly influenced the geography of office development. By late 2000,370,000 sq m of new office space had been developed in the city’s incentiveareas, accounting for almost 20 per cent of the city-wide stock (1,827,000sq m) and over 40 per cent of the space (904,000 sq m) developed since1988. Of the floorspace which had been developed under tax incentivisa-tion, 143,250 sq m were in the Custom House Docks, a further 164,400 sqm were located in other inner-city designated areas and the two EAs, while59,200 sq m were in suburbia. The proactive entrepreneurial agenda pursued


by the state, together with tax incentives had demonstrated the capacity toinfluence the geographical operations of the development sector.

The developers

Even for a single property sector, the range of developers involved inDublin’s offices sector has been heterogeneous. These include developmentsundertaken by a diversity of prospective owner occupiers, ranging fromsmall accountancy and legal firms to the corporate headquarters buildingsof banks and insurance companies. Development for owner occupation wasalso undertaken by the public sector, including semi-state industries suchas the Electricity Supply Board, by local authorities and by the Office ofPublic Works developing for state operations. Development was also under-taken by the owners of sites who decided to redevelop them for a profitbut for whom development was not a normal element of their operations.Commercial developers, for whom property development is central to theirbusiness, have ranged from individual operators and privately owned busi-nesses (Hardwicke, John Byrne Group, Clancourt, Duke House and TreasuryHoldings) to companies quoted on the stock exchanges either in Ireland orabroad. Sometimes, development partnerships were created between Irish-and UK-based commercial developers, such as Hardwicke and British Landfor the development of the Setanta Centre, a mixed retail and office schemedating from the 1970s. A decade later, these two, together with the Irishconstruction firm McInerney, entered into a consortium, jointly winningthe competition to redevelop the Custom House Docks (see Chapter 2).Finally, investment institutions such as insurance and life assurance com-panies (New Ireland, Irish Life, Hibernian and Norwich Union) historicallyplayed a significant role in the development of Dublin’s office stock. How-ever, the activities of their property-development departments were oftenscaled back in the 1990s and, as in the case of Irish Life which had beenan active developer during the 1970s and 1980s, were sometimes closedentirely. Thus, during the office boom of the late 1990s and early 2000s,development became dominated by commercial developers.

The Celtic boom

From the mid-1990s, the rate of completion of new office space increasedrapidly in response to the expansion of business operations in Dublin (seeFigure 6.1). Rising user demand was paralleled by increasing investmentdemand for offices as an asset, to capture rental income and secure capitalgrowth. From 1960 to 1995, 1.26M sq m of office space had been developedin Dublin. However, in the following 15 years during the so-called CelticTiger boom, over 1.97M sq m were built. Accounting for the intensity of thetwo booms after 1995 is important as the significant over-development of

Andrew MacLaran 97

space contributed to the financial crisis of the Irish banking sector and to itsinsolvency.

There had been a sustained user demand for office space during the boomyears, take-up faltering significantly only after 2007. Rising rents had alsoencouraged strong investor demand. Investors were willing to pay increasingmultipliers of the initial rent in order to own property to gain access to theflow of rental income. Tenancies were of 35 years duration with upward-onlyrent reviews and full repair and maintenance provisions, highly favouringthe investor. For prime offices, initial yields dropped to 3.85 per cent, equiv-alent to a purchase price 26 times the first-year rent roll. Rising prices madedevelopment appear potentially highly profitable, fuelling a developmentboom which became increasingly focused on meeting a perceived invest-ment demand. However, as returns to long-term investors depend on gaininga flow of rental income from tenants occupying the premises, any falter-ing in user demand would inevitably create serious problems for developersof speculative office developments which had yet to secure an occupier, asinvestors could react by immediately ceasing further acquisitions.

Commercial property development, which is normally undertaken on thebasis of borrowed funding, is particularly susceptible to any increases ininterest rates, which can undermine profitability. Until May 2007, negligi-ble real rates of interest encouraged developers to borrow heavily. Moreover,long-term nominal interest rates were also generally below short-term rates,generating additional optimism. That optimism became reflected in theenormous prices paid for redevelopment sites in the city. In the prestigiousinner (embassy-belt) suburb of Ballsbridge (Dublin 4), the 0.83ha VeterinaryCollege site was sold for �171.5M, while the Faculty Buildings there fetched�35.9M for a 0.16ha site. The adjacent 2.83ha site of Jury’s Hotel and theBerkeley Court Hotel fetched �380M.

As noted in Chapter 3, the Irish banking sector had easy access to enor-mous funding on global money markets and was eager to lend large sums todevelopers. The inherent danger lay in the fact that the Irish banks were bor-rowing short term on global money markets but lending long term. As banks’liabilities regularly fell due, they had to refinance or seek new funds fromthe markets. If a fear should ever arise among lenders that certain borrow-ing institutions might be unable to repay those loans and default on theirliabilities, their access to these money markets would inevitably diminish.As discussed in Chapter 3, the pioneering bank in this respect was AngloIrish Bank. In the late 1990s, its management decided to focus most of thebank’s lending on the thriving property market. Staff had targets for lend-ing, which amounted to �60M per day. Assets grew at over 30 per cent perannum for over a decade and profits rose to over �1bn in 2007, its shareprice increasing eight-fold. With a balance sheet of almost �100bn, some80 per cent was property related. Other banks followed suit and, by the endof 2007, property-related lending by the banking sector had risen from less


than 40 per cent of total loans in 1999 to 60 per cent by 2006 – a dangerouslyrisky situation, as pointed out in Chapter 3.

Development scale

The impact of the Celtic Tiger boom was dramatically depicted in termsof the increasing scale of development schemes (see Figure 6.2). Althoughthere had been a few large developments (greater than 10,000 sq m insize) prior to the 1990s, primarily for the public sector, the developmentscale increased through the early years of the twenty-first century. Thisreflected the confidence of the development sector and of its financial back-ers in the office-property market, together with their willingness to engagein the development of very large speculative projects which could absorban increasing quantity of their readily available funds. By 2010, the smallnumber of developments which reached completion had an average size of9,800 sq m.

Changing development locations

The confidence of office developers also became reflected in their willingnessto engage in schemes in riskier off-prime locations. Indeed, this is a commonfeature of the office-development sector. In periods of boom, developersundertake speculative schemes in off-prime locations and tend to restrict

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Andrew MacLaran 99

speculative development to the core during the downturn. Thus, the geog-raphy of development activity takes on a ‘pulsating’ effect, expanding intoriskier locations during times of boom and retrenching back into the coreduring slumps. However, during the Celtic Tiger boom, the scale of non-core development activity was of an unprecedented scale and transformedthe geography of office location in the metropolis (MacLaran and O’Connell,2007; MacLaran et al., 2010).

Some 70 per cent of the office space developed between 1960 and 1995was located in the prime office areas of Dublin 2 and Dublin 4. A further17 per cent was located in Dublin 1, 7 and 8, comprising an inner fringeof districts lying to the north and west of the core, where development hadbeen largely stimulated by the tax incentives (see Chapters 2 and 5). How-ever, a significant change in the geography of the office stock had taken placeby 2010, primarily resulting from the intensity of development in suburbia,which then accounted for over 35 per cent of the total stock. The impactwas to transform the geography of employment in the metropolis and, asemployment opportunities decentralised to suburban nodes, widened thecity’s commuting ‘footprint’ to a distance of 90 km, based primarily on caruse. Additionally, because the data for the inner city is grouped on the basisof postal districts, the figures fail to capture the degree to which micro-levelchanges had also occurred. Within Dublin 2 and Dublin 4, a shift of officedevelopment into docklands had occurred.

Suburban development

The abolition of domestic rates (residential property tax) in the late 1970shad eliminated a substantial proportion of the income of suburban localauthorities. The failure of the government subsequently to ensure thatthe direct subsidy from the central exchequer kept pace with inflationcreated serious difficulties for suburban authorities endowed with largeresidential populations and limited income from commercial rates (Bertz,2002a). Thus, suburban local authorities began to seek alternative income,vying with one another to attract valuable commercial developments, rem-iniscent of the ‘fiscal mercantilism’ found in US cities (Johnston, 1979).Planners in suburban local authorities, such as Dun Laoghaire-Rathdown,facilitated income-generating development by applying new land-use zon-ing categories, notably that permitting ‘office-based industry’, to certainareas previously zoned for industrial functions (MacLaran, 2005; MacLaranand Kelly, 2007). Simultaneously, suburbanisation was stimulated by thedeclining availability of inner-city sites, resulting from greater protectionof eighteenth-century buildings and the growing competition for sites fromthe hotel and residential development sectors.

From the late 1990s, suburban offices accommodated a highly heteroge-neous group of new types of function, notably associated with the influx


of foreign companies in the high-technology, computer-software and tele-services sector. Many had little need for central-city locations, requiringinstead large amounts of high-specification space, good telecommunicationsinfrastructure, capacity for expansion and cheap rents, especially in thecost-conscious tele-services sector (Bertz, 2002b). At that time, such crite-ria could generally only be met in suburbia. Prime office rents in the citycentre, unchanged at around Ir£160 (�203) per sq m from 1990 to 1995,reached Ir£400 (�507) per sq m in 2001. In contrast, space at the peripherywas available for Ir£150 (�190) per sq m. The newly developed periph-eral campus-style office parks availed of easy access by car from the newcircumferential M50 motorway and benefited from planning regulationspermitting ample parking. The scale of individual suburban developmentschemes reached levels previously unseen. With local access to the M50C-ring motorway and a Luas (light-rail) station linking it to the city centre,Central Park, at Leopardstown in the southern suburbs, was a phased officedevelopment by Treasury Holdings projected to comprise 160,000 sq m ofspace on completion.

Although, fiscal incentives for development had been mainly concen-trated in central Dublin, they had also been provided for a site in the westernouter suburbs at a location off the Nangor road, lying just within the M50C-ring motorway but lacking direct vehicular access to it. From 1999 to 2001,almost 70,000 sq m of office space was developed at Park West Business Park.However, by the end of 2003, around 40 per cent lay vacant. Indeed, subur-ban vacancy rates more generally rose to 29 per cent by the end of 2003,reaching a peak at 41 per cent in the western suburbs in the following year.Banks responded rapidly by withdrawing from further funding.

Docklands development

Nowhere has the transformation of Dublin’s inner city been so dramatic asin the docklands (Figure 6.3). The tax-incentivised regeneration of the Cus-tom House Docks acted as the initial impetus for office development, the firstdevelopment reaching completion there in 1990. The remit of the CustomHouse Dock Development Authority was extended from its original 11hato over 21ha and, in 1997, the newly established Dublin Docklands Devel-opment Authority (DDDA) was given responsibility for the regeneration of526ha of former docklands. By that time, a large proportion of the inner cityhad been included under a variety of schemes for tax-incentivised renewal(see Chapter 5, Figure 5.1).

Although the new authority lacked the sweeping planning powers of theCHDDA, the control of planning remaining vested in Dublin Corporation(renamed Dublin City Council from 2002), it was empowered to developspecial detailed planning schemes for areas in need of redevelopment assis-tance in order to facilitate their ‘fast-track’ development. In 1997, theDDDA devised a master plan for the area. Section 25 areas were largely

Andrew MacLaran 101

Figure 6.3 Dublin docklands development, 2013Source: Peter Barrow, 2013.

exempted from local-authority planning control, although the content ofthe schemes had to have regard to the development plan. However, if pro-posed developments were regarded by the DDDA as appropriate to themaster plan, detailed planning permission would not be required from thelocal authority in such areas. By 2004, Section 25 areas covered 92ha ofdocklands. A revised master plan published in 2003 projected �7bn of pub-lic and private investment to create 30,000–40,000 jobs in the area, some11,000 dwellings, 20 per cent of which would be social and/or affordable,with the residential population targeted to increase from 17,500 in 1997 to42,500 by 2012.

The opening up of the inner-basin area of the Grand Canal Dock for devel-opment was facilitated by the completion in 2001 of a new station at BarrowStreet on the DART (Dublin Area Rapid Transit) rail line. In contrast, theopening in 2007 of the north-side Docklands station for a commuter lineserving the western suburbs came too late to have much impact on thedemand for office development there, as did the extension of the light rail(Luas) Red Line to the Point Village.

The docklands proved attractive, especially for occupiers with require-ments for larger office space. Between 2000 and 2011, around 40 transactionstook place in docklands which each involved over 1,000 sq m of space.Although the larger deals exceeding 3,000 sq m of space were dominated


by legal and financial operations, the south docklands has become anincreasingly favoured location for the Information Technology and Commu-nications sector, particularly on Barrow Street. Here, Google initially (2004),took up 6,188 sq m in the Gasworks building, followed by a further 3,671sq m at Grand Mill Plaza and 1,951 sq m at Grand Mill Quay (both in 2010)and the purchase in 2011 of Montevetro (19,843 sq m), one of the ten largeststand-alone office buildings in Dublin.

The highly entrepreneurial DDDA engaged in profitable land dealing,notably within the Section 25 area at the Grand Canal Docks, where a 10hasite, contaminated from the manufacture of town gas from coal, had to befirst remediated at a cost of �50M. The authority maintained strong linksat Executive Board level with Anglo Irish Bank through Sean Fitzpatrick(DDDA Executive Board 1998–2007) who was also Chief Executive of AngloIrish Bank (1986–2005) and subsequently its Chairman (2005–08). Office-development activity in the area under the remit of the DDDA was intense.To the north of the river Liffey, 155,800 sq m of office space was developedafter 1997, with 217,780 sq m reaching completion on the south side, pre-dominantly in three main nodes. The transformation of the riverside alongSir John Rogerson’s Quay was particularly dramatic, over 68,550 sq m beingcompleted there between 2005 and 2009. Another 44,000 sq m were builton the outer Grand Canal dock, with a further 69,000 sq m being developedin the vicinity of the Barrow Street DART station.

In the north docklands, a proposal emerged in the late 1990s to redevelopa 20.8ha site at Spencer Dock, involving a mixture of uses totalling over557,000 sq m, an enormous scheme in Irish terms. It was delayed initiallyby the planning process as the Section 25 ‘fast-track’ planning available fromDDDA would have capped the development at 325,160 sq m. The develop-ers opted instead to apply for permission from DCC which, by then, wasconsidered to be even more facilitative of development than the highlyentrepreneurial DDDA. However, this option lay the scheme open to the nor-mal prospect of third-party objections and appeal to An Bord Pleanála which,in turn led to an oral hearing and a scaling back of the project (Moore, 2008).In view of the rapidly approaching property crash it is, perhaps, fortuitousfor Irish taxpayers, who have had to foot the bill for the over-exuberanceof developers and their financial backers, that such a delay occurred. Thefirst two buildings, totalling 28,800 sq m, reached completion in 2007 asthe property bubble burst, a further 21,300 sq m being completed in the fol-lowing year, representing only a small proportion of the originally intendedtotal.

Vacancy, the crash and its aftermath

The tendency towards the over-provision of space and the boom-slumpcycles which this creates are a common feature in property development.

Andrew MacLaran 103

In Dublin, a major factor which facilitated both the increase in developmentscale and the more adventurous inclination of developers to take ondevelopments in riskier off-prime and suburban locations, whether fiscallyincentivised or not, was undoubtedly the ready availability of funding fordevelopment. While the most recent boom, which lasted from 2005 to 2010,had been less attenuated than the fourth boom (1996–2003), the quantity ofspace reaching completion still comprised almost 75 per cent of that devel-oped in the previous boom and resulted in a 25 per cent expansion in thecity-wide stock.

The huge scale of development activity during the early years of thetwenty-first century endowed the city with a considerable stock of newspace. However, development had far outstripped demand and user demandfaltered significantly after 2007. This brought about a rapid increase in therate of vacancy in virtually all locations in the Dublin area and, by late2010, the overall office vacancy rate in Dublin topped 23 per cent. Over766,000 sq m of space lay vacant, amounting to six or seven years supplyat the scale of take-up achieved in that year (112,730 sq m) (Figure 6.4).Over 60 per cent of this had been vacant for more than a year. While halfof all the vacant space was newly completed (380,000 sq m), a substantialelement of older modern space, estimated at between 115,000 and 120,000sq m, lay in buildings constructed from 1960 to 1990 and which shouldprobably be regarded as un-lettable without major refurbishment or even

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

sq m

New spaceOlder space

Figure 6.4 Vacant newly completed and older modern office spaceSource: Database, Centre for Urban and Regional Studies, TCD.


redevelopment. The downturn in the property investment market followedrapidly the declining demand for accommodation, the increasing prospect ofvoids and the diminishing likelihood of any rental growth in the immediatefuture resulting in an almost complete elimination of investment demand.

The rise in vacancy was most pronounced in suburbia where vacancyranged from 23 per cent in the south to 45 per cent in the north suburbs bythe end of 2010. However, inner-city rates also rose substantially, amount-ing to 16 per cent in Dublin 2 where 68 per cent of the vacancy was in olderbuildings and 80 per cent of the vacant newly completed space being locatedin the docklands of Dublin 2, amounting to 41,000 sq m. With a vacancyrate of 32 per cent, a slight majority (53 per cent) of vacant space in Dublin4 also comprised older space. However, in the inner-city fringe adjacent tothe prime office core, in which the areas designated for property-related taxincentives had been available, a majority (57 per cent) of vacancy concernednewly completed space.

In response, asking prices for prime city-centre offices in 2012 becamenegotiable at between �300 and �344 per sq m compared to achievedrentals of �600 per sq m in 2007 for large blocks and �620 per sq m forfloors, representing a fall of about 45 per cent. Meanwhile, suburban rents,which had peaked at an average of �260 per sq m in 2007 had fallen some40 per cent to between �140 and �180 per sq m. Not only have rents in thecase of new agreements become highly negotiable but the stronger position

0

Dec 1

992

Dec 1

993

Dec 1

994

Dec 1

995

Dec 1

998

Dec 1

999

Dec 2

000

Dec 2

002

Dec 2

003

Dec 2

004

Dec 2

005

Dec 2

006

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007

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008

Dec 2

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Dec 1

996

Dec 1

997

5

10

15

20

25

Per

cen

t

Dec 2

009

Dec 2

001

Figure 6.5 City-wide vacancy rates, 1992–2010Source: Database, Centre for Urban and Regional Studies, TCD.

Andrew MacLaran 105

of tenants has seen the disappearance of upward-only rent reviews in newleases, the appearance of five- and ten-year leases with rent-free periods andbreak options. In turn, the rescued banking sector’s involvement with prop-erty is more likely to revert to its historic role of lender over three to fiveyears for development, rather than as financiers of long-term investment.

Considerations

It was noted in Chapter 3 that the traditionally conservative Irish bank-ing sector had pursued an expansionary lending strategy to the commer-cial property sector, its involvement with property rising from less than40 per cent of loans in 1999 to 60 per cent by 2006, resulting in exposure tomajor risk in the event of an Irish property crash and a subsequent bail-outof enormous proportions. Chapter 8 focuses more fully on the operations ofthe National Asset Management Agency (NAMA), the SPV put in place bythe government to take over and manage the ‘toxic’ debts of Irish banks.Unfortunately, the statistics provided by NAMA (2012) do not permit a geo-graphical breakdown of the assets securing the loans acquired by NAMA ona sectoral basis (such as offices, retail, hotels). Instead, data are presented inaggregate form only. Moreover, the statistics from NAMA do not record theimpact of commercial lending by foreign banks, notably Ulster Bank (RoyalBank of Scotland) and Bank of Scotland Ireland, which was considerable.2

However, they remain of some interest as they do not include residentialmortgage lending.

By the end of 2011, NAMA had paid �31.8bn to six insolvent Irish lendinginstitutions to acquire loans with a face value of �74.2bn. Offices, includ-ing those outside Ireland, accounted for 19 per cent of the overall securityfor loans acquired by NAMA, representing �14bn of the asset-backed loans.Some 54 per cent of the assets securing these loans were located in Irelandand around 78 per cent of the Irish properties securing NAMA loans wereeither in Dublin (67 per cent) or in its commuter belt (11 per cent). As notedabove, the data do not detail a precise geographical breakdown on a sec-toral basis, so it is not possible with confidence to assess the scale oflending to the Dublin office-development sector. However, if the overall geo-graphical spread and sectoral profiles of lending are adopted as a guide, arough estimate can be made that loans to Dublin-based offices might haveamounted to around �5bn, excluding funding relating to land acquisitionand development.

Near to Spencer Dock, lies the skeleton of a 20,000 sq m office build-ing under construction which had been destined as the headquarters of theAnglo Irish Bank (see front cover). Abandoned in the wake of the propertycrash and the demise of the bank itself, it became an iconic symbol of theIrish property boom, the hubris of the development and banking sectorsand their inevitable collapse. Ironically, the building was purchased from


NAMA and is destined to become the new headquarters of the Irish CentralBank which, together with the Irish Financial Regulator, had done so littleto control the activities of the banks, of which Anglo had been the driv-ing force for the transformation of the prevailing banking culture within asystem operating under neoliberal light-touch regulation.

Notes

1. The chapter is based on information drawn from the 1960–2012 database ofThe Centre for Urban and Regional Studies, Trinity College Dublin, and Savills(previously HOK), comprising data updated annually.

2. Ulster Bank doubled its assets in four years at the height of the boom to �65bnand consumed almost a third of Royal Bank of Scotland’s �53.6bn bailout by UKgovernment since 2009 to deal with the impact of the Irish property crash (IrishIndependent, 2013). Bank of Scotland Ireland, one of the most expansive lendersduring the boom, subsequently taken over by Lloyd’s Bank, in 2012 had a com-mercial loan book of St£17.8bn (�21bn) of which some 84 per cent were classedas impaired. In the St£4.9bn commercial development loan book, 98 per cent ofloans were impaired while impairment amounted to 85 per cent of its commercialinvestment loans (Irish Independent, 2012).

References

Bertz, S. (2002a) The peripheralisation of office development in the Dublin metropoli-tan area, Irish Geography, 35 (2), 197–212.

Bertz, S. (2002b) The growth in office take-up in Dublin’s suburbs: A product ofoccupiers’ changing locational criteria? Journal of Irish Urban Studies, 1 (2), 55–75.

Irish Independent. (2012) Lloyds says 98pc of BoSI development loans will be lost,Irish Independent, 25 February 2012.

Irish Independent. (2013) Ulster Bank ready to resume lending for commercial realestate deals, Irish Independent, 20 May 2013.

Johnston, R. J. (1979) Political, Electoral and Spatial Systems. Oxford: Oxford UniversityPress.

MacLaran, A. (1993) Dublin: The Shaping of a Capital. London: Belhaven/Wiley.MacLaran, A. (2005) Suburbanising Dublin, in Moore, N. and Scott, M. (Eds) Renewing

Urban Communities: Environment, Citizenship and Sustainability in Ireland. Aldershot:Ashgate Publishing.

MacLaran, A., Attuyer, K. and Williams, B. (2010) Changing office location patternsand their importance in the peripheral expansion of the Dublin region, 1960–08,Journal of Irish Urban Studies, 9, 53–77.

MacLaran, A. and Kelly, S. (2007) Urban property development, in Bartley, B. andKitchin, R. (Eds) Understanding Contemporary Ireland. London: Pluto Press.

MacLaran, A. and O’Connell, R. (2007) Dublin’s fifth office development boom,Journal of Irish Urban Studies, 6, 179–86.

Moore, N. (2008) Dublin Docklands Reinvented. Dublin: Four Courts Press.National Asset Management Agency. (2012) Annual Report 2012, Available at: http://

www.nama.ie/annualreport2012/acquiredassets.html

7Ready Money: ResidentialOver-Development andIts ConsequencesBrendan Williams and Declan Redmond

Introduction

In housing markets, cyclical patterns of growth and correction often occurdue to the imperfect knowledge of shifting supply and demand trendsrelated to changing economic conditions. Important factors in such patternsinclude the availability of finance, changing planning and policy parame-ters and the time lag between development initiation and completion. Foran owner-occupier dominated housing market such as in Ireland, the com-bination of housing space demand with investment attributes and marketsentiment creates a complex mixture of demand driven by housing needsand demographics, housing preferences and investment considerations. Thischapter reviews the factors which underlay the major expansion of the resi-dential development sector in Ireland from the mid-1990s and those factorswhich drove it into a situation of massive over-supply and subsequently acollapse in development activity from 2008 to 2013. This development pat-tern is examined in the context of the key drivers of the speculative propertybubble and the relationship of housing-market trends to economic and prop-erty cycles. It explores the Irish experience from the 1990s to 2006 wherea classic boom to bust cycle was greatly exacerbated by a largely unregu-lated banking sector injecting a vast amount of finance into the market. Theconsequences of the collapse include unfinished housing developments andfinancial stress for both the state and mortgage holders.

The drivers of the housing boom: Population, economyand finance

The demand for housing in Ireland derived from the changing demographic,economic and financial context which emerged over the period from thelate 1980s onwards. This growth followed a period (1981–87) when the Irish

107


Table 7.1 Annual change in housing supply, GDP and GNP

House completions(state)

Change incompletions(%)

GDPchange(%)

GNPchange(%)

1996 33,725 10.3 9.7 9.51998 42,349 9.0 15.5 15.32000 49,812 7.1 16.5 16.92002 57,695 9.7 11.2 8.62004 76,954 11.8 6.7 6.92006 93,419 15.4 9.0 11.32008 51,724 −33.7 −5.0 −5.02010 14,602 −44.7 −2.6 −1.62012 8,488 −19.0 0.8 1.5

Source: DoECLG, 2013a; CSO, 2013a.

economy was in recession and unemployment exceeded 17 per cent. Whileresidential property maintained its price in nominal terms during the 1980s,there was reduced development activity and real price decreases. However,from the 1990s, economic growth, ranging from 8 to 16 per cent per annum,provided employment for increasing numbers of Irish workers (Table 7.1).Years of enforced emigration gave way to increasing net immigration,swelling the Irish workforce. Rapid population growth occurred between1991 and 2011. The population in the Dublin Region (Dublin City Council,Fingal County Council, South Dublin County Council and Dun Laoghaire-Rathdown) grew at a slower pace than that of the state, increasing by24 per cent between 1991 and 2011 (from 1.025 to 1.270 million) comparedto the national figure of 30 per cent. However, Fingal, where large quanti-ties of agricultural land were rezoned for development, was the exception,recording an increase of 79 per cent, while growth in Dublin City amountedto 9.8 per cent (Redmond et al., 2012). Moreover, in the Mid-East region,comprising the counties surrounding Dublin, growth was remarkable, itspopulation increasing by 63 per cent over the period. Kildare, Wicklow andMeath registered increases of 71, 75 and 40 per cent, respectively, reflectingthe rapid outward expansion of residential development (CSO, 2012).

The growing workforce and increasing household formation among theyouthful indigenous population put pressure on the existing housing stockin Dublin. Rapid economic development and employment growth resultedin 150,000 additional jobs during the 1990s. However, the increasingdemand for accommodation was not reflected in the scale of housing devel-opment in Dublin. Supply levels remained relatively static at 10,000 unitsper annum until 2005–06. This resulted in rapidly rising prices for accom-modation during the late 1990s, creating a housing-affordability crisis (seeDowney, 2003; McNulty, 2003) and the deflection of housing demand to

Brendan Williams and Declan Redmond 109

a wide commuter belt (Williams and Shiels, 2002; Williams et al., 2007).Despite political concerns regarding the housing affordability problem, pol-icy attempts to address the issue were largely aspirational (DoELG, 1998,1999, 2000). The principal response was the encouragement of the construc-tion industry and support for owner-occupier demand by increasing levelsof support for the development process. Support included tax incentives fordevelopers and investors and income-tax breaks for purchasers and mortgageholders.

In time, developers responded to higher prices by increasing their scale ofactivity nationally, while local-authority and voluntary-housing provisionwas static or increased only marginally. This eventually led to a rising scaleof housing completions to unprecedented levels, in line with or in excessof general economic growth rates, as illustrated in Table 7.1. Conversely,when the crisis hit in 2007–08, development was rapidly curtailed. As a con-sequence, from 2008 to date, housing construction declined to below its40-year historical average. If this major downturn in supply continues inhigh population growth areas such as Dublin, the potential for repeatingthose housing problems are relatively high (Williams et al., 2010).

The rapid rise in housing supply was facilitated by an extraordinary flowof both development finance and mortgage credit. Development financeplays a critical role in all stages of the residential property development pro-cess. Availability of finance is critical to site acquisition, project finance andpurchases by owner occupiers and investors (Dubben and Williams, 2009).Traditionally, central banks adjust interest rates to boost or calm propertylending. However, with EU monetary union, from 2001 European interestrates remained low by Irish historical standards and Irish banks could freelyaccess inter-bank markets rather than rely on their domestic deposit base forlending. Based on this new facility, Irish banks adopted aggressive growthstrategies (see Chapter 3). The increased level of finance for property devel-opment was particularly evident from 2002 to 2007, lending expanding atan explosive pace, as illustrated in Table 7.2. Speculative construction andproperty lending increased by over 800 per cent while other lending for

Table 7.2 Finance for property development

2002 (�bn) 2007 (�bn) Actual change(�bn)

Change (%)

Speculative constructionand property lending

3.8 35 31.2 821.1

Other construction andproperty lending

7.8 41 33.2 425.6

Total 46 168 122 265.2

Source: Nyberg, 2011, p. 16.


property increased by over 400 per cent. In effect, this credit bubble becamethe major factor driving property-price inflation from 2003. According to theNyberg (2011) report, Irish economic growth after 2006 was highly depen-dent on construction and property development funded by the bankingsector’s growing foreign debts.

Eager to expand the quantity of funding which the financial institutionswere handling and upon which the personal bonuses of finance executivesand senior management were calculated, prospective purchasers were oftenrecklessly encouraged by financial institutions into taking on large mort-gages (Nyberg, 2011). As the boom intensified, first-time buyers (FTBs) mightrequire no deposit as loans often amounted to more than 100 per cent ofthe property’s price, compared with previous loan-to-value ratios of 85–90per cent. Loans of 10 or 12 times a borrower’s gross income were oftenadvanced, compared to a traditional ratio of three to five. The calculationof household income might be extended to include the notional rent fromletting out extra bedrooms or the inclusion of once-off monetary gifts. More-over, certification of income was often not required from potential borrowers(see Chapter 8). As income growth failed to match house-price increases,larger loans were granted by extending the loan period from the standard20 years to 35 or 40 years to reduce the required monthly repayments. Theincrease in mortgage lending is shown in Table 7.3, rising from�3bn in 1996to �25.5bn in 2006. Thus, while the total number of mortgages increasedby almost 100 per cent, the value of mortgage lending increased by 761per cent.

Table 7.3 does not take account of mortgages issued for investment orbuy-to-let properties, nor for equity release. Thus they under-represent theamount of money flowing to property-related purposes. Data from theIrish Banking Federation (2013) shown in Table 7.4 records the breakdown

Table 7.3 Mortgage lending for new and second-hand dwellings

Year Newhouses(No.)

Value(�M)

Second-handhouses (No.)

Value(�M)

Totalhouses(No.)

Value(�M)

1996 25,628 1,291.6 30,381 1,668.1 56,009 2,959.61998 27,355 1,967.2 34,052 2,619.9 61,407 4,587.12000 31,533 3,093.6 42,725 4,504.6 74,258 7,598.22002 32,298 4,353.8 46,994 6,471.4 79,292 10,825.22004 44,231 7,416.0 54,478 9,517.2 98,709 16,933.22006 55,737 11,001.5 55,516 14,493.8 111,253 25,495.22008 24,467 6,454.5 29,224 8,053.8 53,691 14,508.32010 6,923 1,444.5 11,459 2,355.0 18,382 3,799.42012 3,229 590.9 11,080 1,892.8 14,309 2,483.7

Source: DoECLG, 2013a.


Table 7.4 Mortgage lending for residential purposes

First-timepurchaser

Moverpurchaser

Investmentletting

Re-mortgage Top-up Total

�M �M �M �M �M �M

2005 7,717 10,359 6,283 5,038 4,717 34,1142006 8,448 11,368 7,950 6,067 6,039 39,8722007 7,250 8,687 6,512 6,675 4,684 33,8082008 4,833 5,572 4,096 5,295 3,253 23,0492009 2,671 2,355 798 1,129 1,123 8,0762010 2,037 1,539 216 461 493 4,7462011 1,100 916 78 174 195 2,4632012 1,351 1,032 84 64 105 2,636

Source: Irish Banking Federation, 2013.

of mortgage finance for different purposes. Mortgage finance peaked at�39.8bn in 2006 but by 2012 had declined to �2.6bn. Mortgages for FTBsand for movers accounted on average for 50 per cent of mortgage financeduring the boom. Interestingly, the value of lending for re-mortgaging andtop-up loans peaked at 47 per cent of all mortgage finance in 2008, whilemortgages for investment purposes accounted for on average 20 per cent ofmortgage lending until the crash.

The expansion in credit together with tax incentives for investment inproperty pushed residential prices ever higher. In order to avail of lowerprices, Dublin-based demand was deflected to villages within commutingdistance, which became transformed by the addition of sizeable housingschemes and apartment developments (Williams et al., 2010).

Impacts on house prices and affordability

Table 7.5 shows that rising demand and increasing credit resulted in rapidhouse-price inflation, nationally but particularly in Dublin. During 1997–2000, prices of new housing in Dublin increased by an average of over20 per cent annually. Second-hand house prices rose at an even faster rate.The pause in economic growth prospects in 2001 saw housing prices leveloff, but the government strategy was immediately to reflate the propertymarket with significant amendments to capital gains taxation relating toproperty assets and the continuation and expansion of property-tax incen-tives boosting housing investment and demand. This resulted in furtherprice inflation from 2002. As housing prices rose rapidly with renewedeconomic growth, the affordability problem remained as price increasesoutstripped income growth. A rapid growth in housing-related borrowingresulted. However, supply levels in Dublin only reached 15,000–20,000,

112

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4,56

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4,89

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which corresponded with assessed annual levels of demand in 2006 and2007, just as the general economy was faltering and the problems in thebanking sector were emerging. The escalation in prices had been fuelled bythe frenzy of bank property-related lending, only to be followed by a majorcorrection with the collapse of the banks. Table 7.5 indicates that prices fellrapidly from 2007, stabilising in Dublin only during 2013.

The inelastic supply of housing in Dublin pushed potential purchasers touse all available capital resources to secure scarce housing. Marginal changesto stamp duty, tax rates and grants to assist first-time purchasers in the early2000s added to the escalating bid prices for a housing product of which therewas a critical shortage. The market correction demonstrates that the sensi-tivity of pricing mechanisms to excess demand is immediate and upwardwhile the operation of the downward price mechanisms in reaction to excesssupply is delayed and contested by market interests.

House prices rose more rapidly in Dublin than elsewhere and the ratios ofhousing price to income grew rapidly. In 2008, for example, the average newhouse price in Dublin was over ten times average annual earnings, while forsecond-hand housing it was greater than 12 times the average income. Theseratios compare with ratios of four to six times incomes in the 1990s. Forthose in lower-paid sectors of the economy, such as the wholesale and retailtrades, the average new house price in 2008 represented 13.9 times annualaverage earnings while for older housing the multiplier was 16.7 times (CSO,2013b).

Central Statistics Office (CSO, 2013c) indices of property prices since 2005demonstrate the rapid fall in prices since 2007. By mid-2013, house pricesin Dublin had declined by 51 per cent from their peak in early 2007, whileapartment prices had declined by 59 per cent. Such precipitous declines inhouse prices led to extensive negative equity. Duffy (2010) estimated thatnegative equity had risen from 9 per cent of households at the end of 2008 to30 per cent by late 2010. However, with further price falls, the extent of neg-ative equity has increased, Moody’s (2012) claiming that some 50 per cent ofoutstanding mortgages were in negative equity. Duffy and O’ Hanlon (2011)analysed the extent of negative equity among borrowers who took out amortgage between 2005 and 2010, estimating that 60 per cent of that sam-ple were likely to be in negative equity, with young FTBs being particularlyaffected.

More seriously, the economic collapse generated a major problem withmortgage arrears. The most recent figures from the Central Bank (2013) showthat in mid-2013 almost 20 per cent of all mortgage holders (of principalresidence) were in arrears. The arrears rate for buy-to-let mortgages was evenhigher at 27 per cent. Moves by the banks to repossess or force principalhome owners and the owners of buy-to-let properties to sell their propertiescould push house prices down further during ensuing years and it is unlikelythat house prices will return to levels previously seen.


Oversupply and its consequences

Inevitably, the acceleration of output fuelled by inflated prices and levels oflending led to oversupply and properties which proved impossible to sell.The peak output of housing occurred in 2006 with the number of housescompleted totalling over 90,000 units (Table 7.1). As the financial crisis accel-erated from 2007, the economy contracted and public finances, which hadbecome highly reliant on taxation income from property transaction taxesand value added tax on building materials came under strain. With the econ-omy and the banking sector so heavily linked to the construction sector, theimpact of the virtual cessation of construction activities nationally in 2009was severe. Falling prices for housing in 2007–13 created a stagnating effectwith purchasers reluctant to enter the market while major price correctionwas occurring. Housing vacancy in 2006 (including holiday homes) totalled266,331 units or 15 per cent of the stock (CSO, 2007). Recent CSO figuresindicate that the downward trend in prices nationally continued in 2013but that price inflation was occurring in selected Dublin districts, reportedin the media as mini bubbles (CSO, 2013b).

Wide contrasts exist between the Greater Dublin Area and the rest of thestate, major housing oversupply existing in many western counties. Lev-els of vacancy demonstrate that the management of urban developmenthad not been linked with realistic assessments of real market demand andwas, instead, largely speculative. Significant levels of oversupply became evi-dent from 2006 as supply and demand became disconnected. The Census2011 indicates the overall vacancy level as 294,202 units (14.7 per cent ofthe housing stock), whereas a more appropriate vacancy rate might be 3–5per cent (Williams et al., 2010).

Ghost estates

The impact of housing oversupply was reflected in falling prices, rents andreduced investor demand, leading to decreased profitability. New devel-opment proposals were suspended and major reductions in developmentactivity occurred. The uneven geographical distribution was of concern, highlevels occurring in rural or peripheral areas of weak demand and lower levelsin areas where demand recovery can be expected, such as Dublin.

The impact of oversupply, including abandoned or unfinished privatehousing developments, commonly called ‘ghost estates’, is significant foroccupiers, policy makers and all market participants. The property col-lapse resulted in unfinished housing estates which were abandoned asconstruction sites, often lacking basic amenities such as street lighting andpavements, located in areas lacking amenities and public transport.

Kitchin et al. (2010) defined a ‘ghost estate’ as a development of tenor more houses where 50 per cent of the properties were either vacant orunder-construction. Their study indicated that those local authorities which


had the highest level of vacant stock in 2006 maintained high levels ofhouse building and, consequently, now have even higher surpluses. In asubsequent study, Kitchin et al. (2012) estimated that 2,066 housing estatesnationally required additional building work to complete the development.As insurance bonds taken out to ensure that works were completed wereinadequate to address the extent of the building work required, the stateand local authorities have had to step in to address the problems in manycases. Remedial works have concentrated in recent years on health and safetyissues, such as sewage contamination, poor water quality, unsecured con-struction materials, open excavation pits, uncovered manholes and partiallycompleted buildings which could be unstable. With limited public resourcesavailable, recent activity in this area has also involved the evacuation andre-housing of inhabitants of an apartment development in north Dublinwhich was deemed unsafe due to the use of hazardous construction mate-rials and failure to meet basic fire-safety regulations. Intervention has alsoresulted in the demolition of some developments in rural areas.

According to the National Institute of Regional and Spatial Analysis, inOctober 2011 there were 2,876 documented unfinished estates in the state(Kitchin et al., 2012). Of these, 777 met the criteria applying to ‘ghostestates’. There were 122,048 units on unfinished estates of which 85,538were occupied (70.1 per cent). Completed but vacant dwellings totalled18,638, a reduction of 4,612 (20 per cent) from the 23,250 recorded in 2010.Some 17,800 dwellings were at various further stages of construction, 8,794being almost complete (9,976 in 2010) and 9,078 being under-construction(9,854 in 2010), a reduction of 1,958 from 2010 (9.9 per cent). No out-standing building work applied to 701 estates, though they had issues ofvacancy, while 109 developments had not substantially commenced. Thusthere remain 2,066 unfinished housing developments that still require fin-ishing of dwellings or the completion of services such as roads, footpaths,lighting and sewerage. In terms of activity levels, 1,822 of these 2,066 estateswere inactive at the time of the 2011 inspection, while of the 247 estates cat-egorised as the most problematic from a public-safety perspective in 2010,only 36 have been re-categorised to a less problematic status.

The official response to problem estates includes site resolution plans(SRPs) and the social housing leasing initiative (SHLI) (DoECLG, 2011). TheSRP is a measure specifically targeted at resolving problems or improvingissues relating to unfinished estates. First proposed in December 2010 andadopted as policy in October 2011, the SRPs consist of an integrated partner-ship approach to problem housing estate completion, whereby stakeholders,including developers, banks, local authorities, residents and other state agen-cies, negotiate a plan of action on an estate-by-estate basis. SHLI schemesinvolve properties being rented from the private sector, typically for 20years, and then, by agreement with the local authority, being used to caterfor demand on social-housing waiting lists. Such properties are tenanted,


managed and maintained by the local authority, the rent being guaranteedfor the whole lease period. After a 20-year period, the house will revert to thelandlord. Nevertheless, the most recent survey revealed that 1,770 develop-ments remain unfinished, that 1,100 of these are in a seriously problematiccondition and that within these unfinished estates while 16,881 housesremain vacant, 91,692 dwellings are occupied (DoECLG, 2013b).

Future policy issues and conclusions

There are many policy lessons to be learnt from past experience of theboom and bust in the Irish housing market. It is evident that the currentzoning/rezoning processes operating in the Irish planning and develop-ment process have failed. The combination of a largely unregulated financesector with a development-led planning process has contributed to an out-come that is unsustainable. In particular it is clear that land-use zoning andrezoning policies have badly failed and require replacement. Excessive andinappropriate rezoning, including in flood plains, has served to underminethe legitimacy and accountability of the development and planning processthroughout the country.

In spatial planning terms the current housing market has resulted in adevelopment-led urban growth pattern which contributed to a dispersedsettlement pattern with problems in oversupply. It is clear that alternativepolicy options exist to this approach and that evidence-based managementsystems in terms of planning, development and financial decisions will berequired to regulate the market and mitigate the severity of future propertymarket corrections. The current planning and development system remainshampered by inherent policy design flaws, including the ease with whichmajor alterations can be made to agreed development plans by rezoningwithout appropriate evidence or any justification based on end-use demand.Often boosted by tax incentives, major residential developments were builtboth in locations where demand was absent and at other locations whereoccupiers remain without adequate infrastructure, transport and social ser-vices. This conflicts with the core principle of the National Spatial Strategy(DoELG, 2002) and measures announced in the Planning and DevelopmentAct, 2010 which state that planning decisions should be grounded in anevidence-based core strategy.

In the Dublin area, in terms of its demographics, income, employmentand household-formation levels, housing could remain under-supplied.With the move from a vendor to purchaser-driven market, price pressureshave been downward to levels which may be more sustainable given theirratio to levels of income. Demand therefore for affordable housing andstarter homes in the Dublin area can be expected to rise, particularly atlocations with good transport infrastructure and facilities. Locational issueswill play a major part in varying intra-urban price differentials and price


movements. It is already clear that Dublin regional price structures are con-solidating with prices stabilising in market segments such as traditionalfamily housing stock in mature districts where there is an absence of sup-ply and continuing to move downwards at peripheral locations. It is likelythat overall levels of potential future demand for affordable housing, espe-cially in Dublin will remain high, following the current market correction.Future price growth can be expected to be moderate relative to recent trends,particularly for peripheral locations. For many regions in the rest of the statethe evidence is that a significant oversupply will overhang the market for aprolonged period.

Critical issues are those of finance availability and lending, includingbanking regulation, their future capacities and attitudes to mortgage arrears,lending and credit risk. While it seems that house prices have stabilised inparts of Dublin, the reality is that a large proportion of all households inthe state are in some level of negative equity and this will take many yearsto resolve, depending on levels of house-price inflation. Allied to this is thecrisis in mortgage arrears and their serious negative impacts on households(Waldron and Redmond, 2013). The large scale of mortgage indebtedness islikely negatively to impact the housing market and the economy for manyyears.

Measures dealing with ghost estates have moved slowly to address theproblem due to the liquidation of many of the development companies andthe lack of public finance to meet the costs of remedial work. Changes in the2012 National Housing Development Survey involve estates with seriouslyproblematic conditions remaining exempt from local property taxes whileothers, which have undergone improvements to make areas safe and secureincluding fencing and other site resolution works assisted by a budget of�5M, have been removed from exemption lists.

In 2013, high vacancy rates, far exceeding international norms, still pre-vailed in many parts of the state outside Dublin. For Dublin, a recovery indemand can be expected as a lagged response to economic recovery. Marketrecovery in areas of Dublin with vacancy levels of 10 per cent or less can beexpected within two or three years to eliminate oversupply, demand havingalready increased for family housing in mature suburbs where little devel-opment has taken place for several years. Badly located and poorly serviceddevelopments will, of course, remain a major problem and surplus supplyproblems in peripheral and rural areas with little demand and vacancy levelsof 20 per cent will be a long-lasting problem.

It is clear that boom-time prices were more a product of a dysfunctionalbanking system than of other market factors and that a potential returnto more prudential banking may bring about a period of lower and moresustainable house pricing levels. However, a lasting legacy of the boom willremain the problem of vacant and unfinished housing developments whichthe state now has to address.


References

Central Bank of Ireland. (2013) Residential Mortgage Arrears and Repossessions Statistics.Dublin: Central Bank of Ireland.

Central Statistics Office. (2007) Census 2006 Volume 6: Housing. Dublin: StationeryOffice.

Central Statistics Office. (2012) Census 2011: Profile 4: The Roof over Our Heads – Housingin Ireland. Dublin: CSO.

Central Statistics Office. (2013a) National Income and Expenditure 2012. Dublin: CSO.Central Statistics Office. (2013b) Earnings and Labour Costs. Dublin: CSO.Central Statistics Office. (2013c) Residential Property Price Index August 2013.

Dublin: CSO.Department of the Environment, Community and Local Government. (2011) Resolv-

ing Unfinished Housing Developments: Response to the Advisory Group on UnfinishedHousing Developments, www.environ.ie, accessed 20 October 2012.

Department of the Environment, Community and Local Government. (2013a)Housing Statistics, http://www.environ.ie/en/Publications/StatisticsandRegularPublications/HousingStatistics/, accessed 17 October 2013.

Department of the Environment, Community and Local Government. (2013b)National Housing Development Surveys, http://www.environ.ie/en/Publications/StatisticsandRegularPublications/HousingStatistics/, accessed 17 October 2013.

Department of the Environment and Local Government (DoELG). (1998) Action onHouse Prices. Dublin: DoELG.

Department of the Environment and Local Government (DoELG). (1999) Action on theHousing Market. Dublin: DoELG.

Department of the Environment and Local Government (DoELG). (2000) Action onHousing. Dublin: DoELG.

Department of the Environment and Local Government (DoELG). (2002) TheNational Spatial Strategy, 2002–2020. Dublin: Stationery Office.

Downey, D. (2003) Affordability and access to Irish housing, Journal of Irish UrbanStudies, 2 (1), 1–23.

Dubben, N. and Williams, B. (2009) Partnerships in Urban Property Development. Oxford:Wiley Blackwell.

Duffy, D. (2010) Negative equity in the Irish housing market, The Economic and SocialReview, 41 (1), 109–32.

Duffy, D. and O’ Hanlon, N. (2011) Who Has Negative Equity? Evidence from Loan LevelData, The Irish Mortgage Market in Context, Irish Central Bank Conference, 2011.Dublin: unpublished conference paper.

Irish Banking Federation. (2013) Data on Mortgage Loans, Available at: www.ibf.ie.Kitchin, R., Gleeson, J., Keaveney, K. and O’Callaghan, C. (2010) A Haunted Landscape:

Housing and Ghost Estates in Post-Celtic Tiger Ireland, Working Paper 59. Maynooth:National Institute for Regional and Spatial Analysis, NUI Maynooth.

Kitchin, R., Gleeson, J. and O’Callaghan, C. (2012) Unfinished Estates in Post-Celtic TigerIreland, Working Paper 67. Maynooth: National Institute for Regional and SpatialAnalysis, NUI Maynooth.

McNulty, P. (2003) The emergence of the housing affordability gap, Journal of IrishUrban Studies, 2 (1), 83–90.

Moody’s Investors Services. (2012) Key Drivers of Default in Irish RMBS Pools Will Persistin 2013. London: Moody’s Investors Service.


Nyberg, P. (2011) Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland.Report of the Commission of Investigation into the banking sector in Ireland, www.bankinginquiry.gov.ie, accessed 20 October 2013.

Redmond, D., Williams, B., Hughes, B. and Cudden, J. (2012) Demographic Trends inDublin, http://www.creativedublinalliance.ie/assets/2012/02/Dublin-Demography-Report-Jan-2012.pdf, accessed 20 October 2013.

Waldron, R. and Redmond, D. (2013) The extent of the mortgage crisis in Ireland andpolicy responses, Housing Studies, DOI: 10.1080/02673037.2013.825694

Williams, B., Hughes, B. and Redmond, D. (2010) Managing an Unstable Housing Mar-ket, Working Paper 10/02. http://www.uep.ie/pdfs/WP%201002%20W.pdf, accessed26 October 2013.

Williams, B. and Shiels, P. (2002) The expansion of Dublin and the policy implicationsof dispersal, Journal of Irish Urban Studies, 1 (1), 1–21.

Williams, B., Shiels, P. and Hughes, B. (2007) Urban Sprawl and Market Fragmenta-tion: Implications for the Housing Market in the Greater Dublin Area. Dublin: Societyof Chartered Surveyors.

8The Financialisation of IrishHomeownership and the Impactof the Global Financial CrisisDáithí D. Downey

Introduction

Key financial processes link global capital markets, credit systems, financialintermediaries, regulatory and other statutory institutions with the for-mation and assembly of individual households seeking to purchase andconsume housing as homeowners. Therefore, the ways in which capital oper-ates through the global financial system to connect with and determinewhere and how people assemble to live as homeowners is an importantpoint of departure in understanding the financialisation of housing. So too isthe pivotal issue of how private housing is financed and consumed by Irishhouseholds as homeowners. The financialisation of housing refers to themanner in which international capital flows have wrought huge changesto national property and housing systems. It can be quickly characterisedas credit in search of a home. Once established via mortgage finance, thefinancialisation of housing requires the expansion of mortgage marketsthrough primary and secondary market mechanisms such as refinancing andequity release. In turn, this supports the formation of asset price bubbles andproduces boom–bust cycles in housing systems.

From the late 1970s the deregulation of the operations of internationalfinance capital and the shift in state governmentalities towards the inter-ests of the world of finance have been at the vanguard of the establishmentof neoliberalisation and the financialisation of everyday life. As a keyfeature of the ‘roll-out’ of neoliberalism, the deregulation and liberalisa-tion of financial services has produced change in the ‘specialist circuitsof housing finance’ (Hamnett, 1994, p. 281). Consequently, the housingand mortgage markets of western economies have expanded and becomerestructured, highly segmented and more integrated into an increasinglyde-territorialised and global financial system.1 Established by a delinked, dis-intermediated, deregulated and increasingly destabilising global financial

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Dáithí D. Downey 121

system, the financialisation of everyday life in Ireland has led to theincorporation of spaces of social reproduction in the residential built envi-ronment into a secondary circuit of capital. New technologies and instru-ments of financialisation, in conjunction with neoliberal state housing andeconomic policy, have required assembly of financially self-disciplined sub-jects as homeowners at the residential level of locale, neighbourhood andhousehold. Accompanying this has been a ‘financial deepening’ of home-owners (Sassen, 2008) which transforms the real costs of homeownershipand can rapidly reduce the affordability and sustainability of mortgagerepayments due to a household’s income loss or interruption. Such Irishhomeowners are households in crisis today. Negative changes in their for-tunes are directly related to the crisis-related tendencies of global flowsof capital that are changing and sorting growing numbers of them from‘winners to losers’ in an increasingly savage way (Sassen, 2010).

Housing as crisis

Despite short periods of modest economic growth and recovery recordedintermittently over quarterly periods since 2012, Ireland remains in an over-all recessionary position in 2013 and is in its sixth consecutive year of crisissince the tumultuous events of the near meltdown of the global financialsystem in 2008. As such, Ireland remains a space and place of crisis underneoliberal capitalism in the early twenty-first century. The crisis is multidi-mensional, identified as occurring across at least five inter-related spheres,namely a banking crisis, a fiscal crisis, an economic crisis, a social crisis anda reputational crisis (National Economic and Social Council, 2009).

However, there is a need to go beyond the National Economic and SocialCouncil’s (NESC) specification of these five spheres of Ireland’s crisis and toidentify and locate an additional dimension. This dimension is a materialreality wherein the lived experience of Ireland’s crisis can be demonstratedat the level of the household as well as the macro scale. It is where a nexus ofinterests exist between the state, the market and civil society. These interestsare established by, and typically subject to, policy interventions seeking tomanage, regulate and control. The lived space and place wherein householdsreside, experience the material world, create and recreate their perceptionand conception of home and seek to reproduce themselves on a daily basisis this material reality par excellence (Lefebvre, 1991). Therefore, the addi-tional ‘sphere’ required to comprehend the nature of Ireland’s crisis is thatof housing and home as set and experienced within the domain of the Irishresidential built environment.

Ireland’s promotion of homeownership over other tenure options isnotable for its longevity and scale. Indeed, since its foundation in theearly 1920s, the Irish state pursued particular political tenure strategiesthat favoured home ownership and had the effect of constraining the


size, role and effectiveness of rental tenures as credible alternative housingopportunities (O’Connell, 2005).2 While the dominance of homeownershipin Ireland’s housing tenure pattern is often taken as demonstrating the suc-cess of market approaches to housing provision, in reality the Irish statehas been deeply involved in supporting homeownership through housingpolicy, tax reliefs and land-use planning (Drudy and Punch, 2005; McCabe,2011). Despite the rhetorical positioning of homeownership in consecutiveIrish housing-policy narratives as the ‘natural’ desired choice of housingtenure for all households, the actual determination of private housing underIrish housing and fiscal policy is as a marketised (i.e. a financialised) com-modity and a source of capital accumulation, more so than any otherattribute such as its being a dwelling place and a home set within a spaceof local community and identity.

It is from within this residential domain that the greatest transformationfor Irish households has occurred, from initial success in the 1990s, to themultidimensional crisis that began in the late 2000s and is continuing into2013 to produce an ‘era-defining impact on Irish society and space’ thatleaves in its wake ‘a topology of vacancy, unfinished estates, and empty officeand retail parks and a topography of broken lives, shattered dreams, terminalindebtedness, and, for some, chronic stress, anxiety, depression and evensuicide’ (Kitchen et al., 2012, p. 1322). In other words, the financialised Irishhousing and mortgage markets are the loci for the most acute aspects ofIreland’s crisis.

Prelude to the crash: Housing and Ireland’s economic cycleunder neoliberalism

It is with changes in the relationships between house prices, consumerexpenditure and the contribution of housing activity to economic cyclesthat the greatest influence of the Irish housing sector over macro-economycan be seen to have emerged over the period since the 1990s. The posi-tive correlation between changes in house prices and a boom in consumerexpenditure is well established (Muellbauer, 1990), even though causality isdisputed. This is due to the important role played by the international creditsystem under neoliberalism and how mortgage markets and finance operatewithin national monetary policy and regulatory frameworks.

Mortgage market growth in Ireland over the period from the early 1990swas accompanied by increased market segmentation among newly incorpo-rated first time buyers (FTBs) and established homeowner households. Forexample, the proportion of the Irish mortgage market accounted for by FTBsdeclined from a mid-1990s high of almost half the market for new-buildhousing to just under one third of the market by 2008. The socio-economiccharacteristics of borrowers also changed as homeowner households increas-ingly required dual incomes and higher incomes in order to access private


housing. As a deposit gap emerged between rapidly escalating house pricesand household incomes, the age range of borrowers shifted upwards nation-ally and markedly in Dublin. Despite deteriorating market affordability,house price inflation continued uninterrupted. This was due to the increasedsupply of cheaper and easier-to-access mortgage finance that resulted fromIreland’s entry into the Euro area in 2000 (see Chapter 3). The expansion ofEuro-area credit growth from 1999 is illustrated in Figure 8.1.

It demonstrates how overall credit growth accelerated under the Euro-area monetary regime of the 2000s and how an expansive credit cyclewas in place across the Euro area by the mid-2000s. By the time Ireland’shousing bubble was at its peak, between 2004 and 2007, the relationshipbetween house-price inflation and credit supply in the form of housingfinance had effectively become symbiotic. Large increases in house priceswere associated with (and indeed required) large increases in credit that, inturn, supported further house-price inflation. The extent of Ireland’s hugeproperty-related credit bubble can be understood in comparison with otheradvanced economies in the Euro area. Between 1999 and 2012, Ireland’scredit expansion was in excess of 400 per cent. In contrast, the expansion inGermany was 23 per cent for the same period (Gerlach, 2012).

Accompanying this was a significant loosening of credit controls and lend-ing criteria, so much so that during the peak of Ireland’s house price bubble

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between 2004 and 2007 the scale of financial deepening among homeown-ers who were borrowing more, at high and 100 per cent-plus loan-to-valueratios for longer maturity durations, quickly became unsustainable (Downey,2013). The liberalisation of credit markets increases the sensitivity of hous-ing markets and, indirectly, consumption, to changes in interest rates. Thisis especially acute when equity withdrawal – the propensity to borrow ona mortgage more than is required to finance the purchase of a home –becomes an established feature of household income (Meen, 2003). Thesegmentation of Ireland’s expanding mortgage market accompanied changein Irish household income that was driven by credit in the form of mort-gage finance. Irish homeowners were actively expanding their householdconsumption via refinancing in the secondary mortgage market to releaseequity.

At the peak of Ireland’s housing boom between 2005 and 2007, overone-third of all loans, accounting for 15 per cent of mortgage balancesdrawn-down, were housing equity withdrawal and represented some �5.5bnof credit per annum over the period. During this period, one in ten home-owners withdrew equity, with the vast bulk of so-called top-up loans beingin the �15,000 to �150,000 bracket. Nearly one-quarter of all equity-release loans exceeded �150,000 in 2007 and this raised the average loanto �113,000. By 2010, the average value had fallen back to �60,000. Signifi-cantly, approximately 15 per cent and 11 per cent of Irish equity release loansbetween 2005 and 2011 respectively accounted for investment by homeown-ers in buy-to-let and holiday homes (Lydon and O’Hanlon, 2012). Table 8.1shows the value and volume of equity withdrawal loans over the period2005–2011.

Irish households’ participation in and distribution of income frommortgage equity withdrawal deepened Irish social inequality between

Table 8.1 The volume and value of Ireland’s mortgage equity release‘top-up’ loans

Year Volume Percentage ofall loans

Value (�M) Percentage oftotal value

2005 64,821 32 4,717 142006 66,598 33 6,039 152007 47,967 30 4,684 142008 35,315 32 3,253 142009 14,947 33 1,123 142010 6,631 24 493 102011 2,005 14 195 8

Total 238,284 31 20,504 14

Source: Irish Banking Federation (IBF) Mortgage Market Profile, various years; seehttp://www.ibf.ie/gns/publications/research/researchlatest.aspx.


low-income renters (private and social) and all homeowners, as well asamong low- and higher-income homeowners. While debt rationalisationwas prudently applied among homeowners, a majority relied on equityrelease as income and adjusted consumption and expenditure accord-ingly. This financial deepening simultaneously increased the risks ofhomeownership and resulted in greater numbers of hugely over-indebtedhouseholds. It also ensured the character of Irish homeownership becamefurther fragmented and differentiated on the basis of changing credit-risk scores among homeowners that accompanied the segmentation ofhomeowners into prime and subprime borrowers.

Nonetheless, as nominal Irish house prices doubled between 1996 and2000 and doubled again between 2000 and 2007 to become deeply sym-bolic of overall Irish economic success (Drudy and Collins, 2011), domesticdemand continued to remain at an unsustainably high proportion of eco-nomic growth. This ensured the enormous influence of rising house pricesover the behaviour of market participants, commentators, statutory regu-lators, policy makers and government in Ireland. The redoubled housingwealth effect that accompanied house price inflation in the 2000s helpedsecure a zeitgeist that became established across private and public insti-tutions and agencies and in the Irish media that could only envisage, atworst, a gentle moderation in the high rate of house price inflation towardsa so-called soft landing for rates of growth. Despite evidence warning of theemergence and likely consequences of a price bubble in Irish housing (seeDowney, 2003; European Central Bank, 2003; Helbling and Terrones, 2003;Kelly, 2007), this sentiment went generally unchallenged domestically.

The global financial crisis (GFC) that was triggered in 2006/07 by ris-ing US default rates in the global securitised subprime mortgage marketssubsequently exacerbated Ireland’s crisis of over-development. The unsus-tainability of the Irish housing market became realised and the home-grownproperty boom rapidly unravelled. House prices started to fall in 2007 beforecrashing in 2008. They remained on a downward trajectory until 2012 bywhich date average house prices had declined nationally by 50 per cent tolock 240,000 households into a negative equity position totalling �25bn(Central Bank of Ireland, 2012a).

As the period of Ireland’s property crash ensued from 2008, the housing-wealth effect that had prevailed until then reversed. This led to a changein behaviour as Irish households sought to deleverage by paying down asmuch of their aggregate household debt as could be afforded. Consequently,the Irish household debt to disposable income ratio decreased from its peakof 223.9 per cent at Q4, 2009 to 211.3 per cent at Q3, 2011. Increased savingsrates among Irish households since then are reinforced by a poor outlook fordisposable incomes and uncertainty related to job prospects and insecurity.This has also contributed to the collapse in aggregate domestic demand inIreland.


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Figure 8.2 Ireland’s housing boom–bust cycle compared with other advancedeconomies, 2005–12Note: Data are indexed to 2005 = 100. Data are for property price per dwelling for all dwellings.Data for Spain is per square metre. Data for United States is for one-family new dwellings.Source: Data compiled from Bank of International Settlements (BIS) Property Price Statistics (datadownloaded from http://www.bis.org/statistics/pp.htm on 8 October 2012).

This experience is not especially unique to Ireland. Other advancedwestern economies had housing bubbles that collapsed with resulting finan-cial and banking crises occurring at the peak of the boom and immediatelysubsequent to the bust, for example, Iceland, Spain, the Netherlands,3 theUnited Kingdom and the United States. Figure 8.2 illustrates the housingboom–bust cycles which occurred in a selection of countries drawn fromwithin the developed world, including the United States, the Netherlands,Spain, the United Kingdom and Ireland over the period Q1, 2005 to Q1,2012. It shows that since the GFC in 2008, some moderation in the rate ofhouse price decline has been recorded in the Netherlands, while a stabilisa-tion in the velocity of decline is evident for the US and UK economies, withboth registering modest but short-lived periods of recovery. Only Spain hasan equivalent continuous downward trajectory to Ireland’s over the period,although its decline was not so steep. The data clearly shows how Ireland’shouse price crash has been the most severe among these economies.

It is worth noting that in their investigation into the sources of Ireland’sbanking crisis, Regling and Watson (2010, p. 5) confirmed how, at the time


of the mid-2000s, there was scope to mitigate the risks of a price bubble andboom/bust property cycle through prudent fiscal and supervisory policies aswell as strong bank governance, but that in the event ‘official policies andbanking practices in some cases added fuel to the fire. Fiscal policy, bankgovernance and financial supervision left the economy vulnerable to a deepcrisis, with costly and extended social fallout’. Consequently, Ireland hasemerged as one of the advanced western economies worst impacted by theGFC (Lane, 2011), and ‘faces severe problems of economic adjustment, per-ilous public finances and a glut of unsold homes and, so, is in particulardifficulty’ (Ball, 2010, p. 939).

The financialisation of Irish homeownership andthe shadow-banking sector

The creation of a homeownership crisis in Ireland today can be under-stood as resulting from the central dynamic of neoliberalisation in advancedeconomies, namely capital switching and financialisation. Since the 1970s,interest-bearing capital increasingly penetrated across economic and socialreproduction leading to the ‘capitalisation of almost everything’ (Leyshonand Thrift, 2007). This is consistent with the positioning of financialisationas constituting neoliberalism and vice versa (French et al., 2011), evenif the order of emergence and direction of causality remains disputed(Duménil and Lévy, 2005; Fine, 2010; Helleiner, 2010). In this sense,financialisation is considered to be a key defining moment of neoliberalism(Fine, 2010).

The financialisation of housing is driven by the primary processes of asset-backed and residential mortgage-backed securitisation, disintermediationand liquidification (see Engelen, 2008). These processes and their calcula-tive tools and mechanisms are embedded in the shadow-banking sectorcomprised of other financial intermediaries (OFIs), such as money mar-ket funds, financial-vehicle corporations (FVCs) and hedge funds, whoseactivities relate to credit intermediation and liquidity and maturity transfor-mation that take place outside the regulated banking system (Stewart, 2010).It is important to recognise that prior to the GFC in 2008, many banks hadOFIs that were not included in their balance sheets but made investmentdecisions for which their parent companies were liable. This increased theinterconnectedness of the regulated and non-bank-regulated segments of thefinancial sector and exposed the regulated banking sector to the speculativerisks of OFIs (see Chapter 3).

In 2011, the shadow-banking sector in the Euro area accounted for 28per cent of total financial institution assets in the Euro area and held anestimated �10.8 trillion in assets (Bakk-Simon et al., 2012).4 In relationto size of national economies, the European Central Bank (ECB) foundthe shadow-banking sector to be ‘very important in Luxembourg, Ireland


and the Netherlands’ and that the contribution of ‘the big players, Ireland,Luxembourg and the Netherlands alike’ drove the dynamics of credit cyclesin the Euro area before and during the credit boom which preceded the GFC(Bakk-Simon et al., 2012, p. 23). In addition, it found that OFI entities tendedtowards residency in Luxembourg and Ireland due to the relative size andvalue of retained securitisations that serve as collateral in ECB-refinancingoperations among financial institutions.

Due to its so-called facilitative business climate (i.e. low rates of corporatetaxation and light-touch, if not entirely absent financial regulation) Dublin’sInternational Financial Services Centre (IFSC) is considered a premium loca-tion for particular shadow-banking financial activities led by hedge funds,money-market funds (MMFs) and FVCs.5 Notably, in 2005 the New YorkTimes, in an article on insurance regulation and ‘suspect financial transac-tions’, referred to the IFSC as the ‘wild west of European finance’. By 2008,Dublin’s IFSC was host to over 8,000 hedge funds with �1,560bn of assets(Bailey et al., 2008), while over 4,000 investment funds quoted on the IrishStock Exchange and registered in the IFSC have assets consisting of subprimemortgage loans (Stewart, 2010). The size of this FVC activity in Ireland alonewas calculated at �469.2bn in Q2, 2012, with the largest proportion com-prising residential mortgage backed securities (RMBS) (Godfrey and Golden,2012).

As the market in RMBS derivatives grew in the shadow-banking systemit was ‘intermediated’ as collateral to finance the credit cycle. This led tothe emergence of reckless and predatory lending that relied upon contrac-tual agreements, currently termed ‘liar’ and ‘ninja’6 loans and mortgagesthat were in effect false, or knowingly fraudulent. Other factors contributedto the loosening of credit standards between 2003 and 2007, includingthe increasing role of securitisation in the funding of Euro-area banksand ‘a possible under-assessment of risks’ (European Central Bank, 2009,p. 8). Unsurprisingly therefore, connections between Dublin’s IFSC andthe OFIs involved in the global subprime mortgage crisis are significant.Even more so, the influence of shadow-banking activities on the domes-tic, regulated banking sector’s decision making was considerable, especiallyin relation to the provision of credit finance for property development andfor the financialisation of Irish housing via an expanded and restructuredmortgage market.

Capital switching and the Irish mortgage market

Capital switching occurs as a direct result of a dynamic process betweenproductive and fictitious capital circulation that combines within the creditsystem, in the context of property markets, to produce booms and buststhat generate, and become intertwined with, financial and banking crises(see Dymski and Veitch, 1996; Gotham, 2006; Harvey 2010, 2011, 2012;


Christophers, 2011). Under neoliberalism, capital switching has taken placeon a massive scale as less and less surplus goes into real production andmore and more into speculation on asset values, and especially on housing(Harvey, 2012). Changes in global capital flows switching into the residen-tial built environment and property in general and away from stock andequity markets was the noted reaction to the series of regional economic anddebt crises that began in the 1990s.7 The housing markets of many westerneconomies came to operate initially as a type of ‘grand economic stabiliser’through the absorption of over-accumulating capital as credit in the form ofmortgage capital. This capital switching helped mask the impacts of growingtrade imbalances emerging in parallel under the globalisation of productionin the 2000s (Turner, 2008).

Capital switching into this secondary circuit for accumulation increasedin the wake of the ‘dot-com’ or ‘tech’ equity market crash in 2000 andcombined with the calculative tools of financialisation to generate a newlyexpansive credit cycle. This began in the United States, but subsequentlyinfluenced global cycles of accumulation via the urbanisation of capitaland produced a global house-price boom that helped prop up the globaleconomy leading up to the GFC in 2008.

Prior to Ireland’s economic crash in 2008, the extent of capital switchinginto Irish urbanisation from the 1990s via an expansion in the primary andsecondary Irish mortgage market was dramatic. Bank lending on residentialproperty rose from 40 per cent of total loans in 1999 to 65 per cent of allloans by 2007. In effect, lending to the construction and real-estate sectorsof the Irish economy increased from around 10 per cent of GDP in 1999to about 60 per cent in 2009 (Central Bank of Ireland, 2012a). By 2006,capital formation in housing had increased annually from �6.4bn in 2000to �19.5bn (an increase of 205 per cent) before falling back again to �9bnin 2008 as Ireland’s financial and banking crisis impacted (see Figure 8.3).

For Aalbers (2008, p. 149), the growth in primary and secondary marketsin advanced economies and their increased segmentation is more than ‘justa finance-led regime of accumulation’ but is in fact ‘a new stage in the pro-cess of capital switching’ and ‘a central aspect of financialisation’ where the‘financialisation of home was never designed to enable homeownership:it was first and foremost designed to fuel the economy’ (Aalbers, 2008,pp. 160–61) and this required the expansion of the mortgage market throughwider access to mortgage loans, in turn resulting in higher house prices(Aalbers, 2007; Stephens, 2007). However, ‘access to mortgage finance doesnot equal affordability’ and the results of the expansion of mortgage finance‘is not improved access to homeownership but an increase in risk and uncer-tainty’ (Aalbers, 2008, p. 161). Under the confluence of events since 2008which plunged the Irish economy and housing system into crisis, these risksand uncertainties were made real for growing numbers of low- and middle-income households whose housing security became increasingly uncertain


0

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Capital formation in housing as a percentageof gross domestic fixed capital formationCapital formation in housing as a percentageof gross national product (GNP)

Figure 8.3 Capital switching into and out of Irish housing, 1994–2008Source: Data compiled from DoECLG Housing Statistics, various years; see http://www.environ.ie/en/Publications/StatisticsandRegularPublications/HousingStatistics/.

as a consequence of a deepening crisis of missed payments, default, rent andmortgage arrears due to unemployment and income inadequacy.

The global financial crisis and the crisis of Irish housing

The impact of the GFC on Ireland has been and remains severe. Arising fromits property crash and resulting banking crisis, the Irish economy has shrunkeach year since its boom-time peak in 2007. Between 2007 and 2011, totalincome generated by Ireland’s economy fell by 15 per cent in terms of GDP8

and 22 per cent for GNP. General consumption in the economy dropped13 per cent from �92.7bn to �81.3bn, while private and public investmentcombined had declined by a massive 66 per cent from �48.3bn to �16.1bn.Current spending by government declined from a peak of �30.4bn in 2008to �25.4bn in 2011, a downward adjustment of over 16 per cent.

It is striking how the collapse into recession of Ireland’s urban-growthmodel coincided with the GFC in 2008 when the Irish banking systembecame unstable due, it was believed at the time, to a loss of market liquid-ity. This led Ireland’s government to announce that it would guarantee Irishbanking’s total liabilities for two years; a guarantee that was, it turned out, fartoo broad (Honohan, 2010). It is also notable how the property-related lossesthat emerged in the Irish banking system accompanied the great global con-traction in credit (commonly referred to as the ‘credit crunch’) that followed


the GFC in 2008, and which continues to drive economic decline and reces-sion globally. Ireland’s fiscal and banking crisis originates with its propertymarket crash through the loss of asset-driven revenues but primarily throughthe costs of recapitalising – or ‘bailing out’ – the banking system by directcapital injections and the creation of a ‘bad bank’ to purchase – that istransfer – all development-related loans over �20M (see Chapter 8).

Ireland’s state banking recapitalisation effectively transferred property-related bank losses to the Irish state. When the two-year bank guaranteeconcluded in September 2010, capital flight ensued from the Irish bank-ing sector and the sovereign spread on Irish debt rose sharply (Lane, 2011).The cost of borrowing to fund the growing deficit between Irish govern-ment income and expenditure became prohibitive. These, among a numberof other triggers, resulted (in November 2010) in Ireland’s first ever requestfor official assistance from the European Union and the International Mone-tary Fund. The total financial rescue package (or ‘bailout’) agreed was �85bn(54 per cent of Irish GDP in 2010).

The impact of the GFC on Irish households remains severe and continuesto intensify. Between 2008 and 2010, average household disposable incomein Ireland declined 11.6 per cent, falling back to 2006 levels. Unemploymentrose from 4.6 per cent in 2007 to 14.9 per cent in July 2012 (considerablyhigher than EU15 or EU27 averages). Rates of long-term unemployment ofmore than six months have risen sharply over this period from 30 per cent in2007 to account for 65 per cent of those unemployed in 2012. The impact ofunemployment among homeowners is confirmed by the Irish Census 2011findings that one in 12 households (8.7 per cent) with a mortgage had a headof household not in employment (50,792 households). This is a significantrise on the Census 2006 findings of 2.4 per cent (14,757 households) (CSO,2012a). Another important feature of recessionary impacts is the change inIreland’s inequality and poverty rates, most notably from 2009 when pre-vious trends in income distribution were reversed. Between 2009 and 2010,there was a marked increase in income inequality in Ireland with the topincome quintile increasing from 4.3 to 5.5 times that of the bottom quin-tile, while the Gini coefficient increased from 29.3 to 33.9 (CSO, 2012b).Deprivation among Irish households had declined to 11.8 per cent by 2007but, as recession-impacted households forego basic material items, the rateof deprivation subsequently increased to 22.5 per cent of all householdsin 2010.

Missed mortgage payments, default rates and mortgage arrears for resi-dential property in Ireland have risen steadily since the onset of the GFCand Ireland’s financial and banking crisis and showed no signs of abatingin 2013. In September 2009, the number of Irish residential mortgages forprincipal private residences in arrears for over 90 consecutive days stoodat 26,271 accounts, or 3.3 per cent of all outstanding residential mortgagearrears loans. The value of accrued arrears was �354.4M and the balance


outstanding (or book value) for these mortgages stood at �4,827.6M. In lessthan three years, the number of accounts in arrears of more than 90 consec-utive days had more than trebled, rising to 83,251 accounts, or 11 per cent ofall mortgages by June 2012. The value of arrears accrued had also trebled to�1,439M while the balance outstanding for these mortgages increased overthree fold to �16,479.47M.

In addition to the rapid increase in mortgage arrears on principal privateresidences since 2009, by Q2, 2012 over 84,941 defaulting households havehad their mortgages restructured under forbearance arrangements with theirlender. These forbearance arrangements are a result of government-directedpolicy to introduce a formal Mortgage Arrears Resolution Process (MARP)under the terms of the current recapitalisation of the Irish banks. Notwith-standing policy and legislative change, Central Bank of Ireland data for June2012 on mortgage arrears and forbearance arrangements under the MARPconfirmed that over half (52 per cent) of the restructured mortgage accountsinvolving principal private residences remained in arrears (Central Bank ofIreland, 2012b).

Using data from the EU-wide Survey on Income and Living Conditions(SILC) on Irish household disposable income and mortgage repayments in2007, McCarthy and McQuinn (2010) calculated a ratio of monthly mort-gage repayments to gross household income and examined its distributionacross both household and mortgage characteristics for Irish homeowners.9

Their analysis of so-called mortgage affordability found that more highlyleveraged households tend to have heads of households who are younger,more often female and more highly educated than heads in householdswith lower mortgage burdens. More highly leveraged households also moreoften tend to be based in urban locations, have purchased their mortgagesince 2000 and face a longer mortgage maturity term than householdswith a lower mortgage burden (McCarthy and McQuinn, 2010). Elsewhere,Kelly (2011) examined default probabilities for Irish mortgages when condi-tioned on so-called loan vintage and found that mortgage loans originatingbetween 2004 and 2006 are most likely to default.

For households whose repayment ratios to total income are financiallyunsustainable, the likelihood of forbearance arrangements under the MARPbeing ineffective and of failing is high. This point is supported by previousanalysis of the drivers of Irish mortgage arrears in 2011. Based on a dataset of420,000 Irish mortgage loans,10 examined by the Central Bank of Ireland aspart of its 2011 bank stress-testing exercise (Central Bank of Ireland, 2011),Lydon and McCarthy (2011) concluded that negative equity had not been amajor driving factor in mortgage arrears to date and that it has been mort-gage affordability issues, along with changes in the general macroeconomicenvironment, which have driven mortgage arrears. Furthermore, Lydon andMcCarthy (2011, p. 15) note that ‘even with a more benign macroeconomicenvironment, it is quite clear that reducing the build-up in arrears to date


[2011] will take a significant amount of time, and resources’ and also that‘the significant income shocks Irish borrowers have faced in recent yearsmeans that there is likely to be a large group of borrowers amongst those indeep arrears that are in a long-term unsustainable debt position’.

Ireland’s mortgage arrears debacle is now a ‘structural benchmark’ for theEU-ECB-IMF economic programme. Commenting on Irish policy develop-ments that aim to shift away from short- to long-term forbearance andtoward so-called durable solutions ahead of the full enactment of new per-sonal insolvency legislation and a reform of legislation in relation to homerepossession,11 the IMF noted how ‘the personal insolvency reform beingadopted should facilitate out-of-court resolution of household debt distress,especially if complemented by a well functioning repossession process to helpmaintain debt service discipline and underpin banks’ willingness to lend’ (IMF,2012, own emphasis).

Given the large degree to which mortgage restructuring has to-date failedto produce sustainable forbearance arrangements that work to keep mort-gage loans out of arrears, it is highly doubtful that the mortgage arrears effectof Ireland’s economic crisis has worked its way through the loans books ofIrish banks. Indeed, as negative market sentiment and comments from inter-national credit ratings agencies make clear, it is unlikely that the peak ofresidential mortgage debt impairment has even been reached. For example,in June 2012, Moody’s Investors Services announced the performance of theIrish prime RMBS market had continued to deteriorate, according to its ownindices. Moody’s 2012 outlook for Irish RMBS is ‘negative’ and its stated fore-cast growth of 0.2 per cent for the Irish economy in 2012 means that ‘in thisweak economic recovery, it will be difficult for distressed borrowers to signif-icantly increase their debt servicing capabilities and so arrears are likely tocontinue increasing’.12

Irish state policy and legislation established in 2013 under theEU/ECB/IMF troika-backed overall mortgage arrears resolution strategy(MARS) means that the likelihood of increased rates of foreclosure arisingfrom unsustainable forbearance arrangements is increased. While the speedand scale of this remains uncertain, home repossession rates in Ireland willrise from 2014.

Conclusion

The financialisation of Irish housing and homeowners has been achievedunder an expansive Euro-area credit cycle and financed via a shadow bank-ing system that led the switch of interest-bearing capital into Ireland’sresidential built environment in pursuit of greater accumulation. This flowof capital has been disturbed by the GFC. In Ireland, the resulting economiccrisis and property market crash, accompanied by a banking crisis, has deliv-ered prolonged periods of recession interspersed with economic stagnation


or limited growth which has been mostly confined to Ireland’s export sector.Domestic demand is low as high unemployment and declines in standardsof living combine with unprecedented levels of household indebtedness.Ireland’s housing market, once celebrated as the great economic driver ofthe second era of the Celtic Tiger economy, has crashed and shows littlesign of recovery. Accompanying the crash, a crisis of extensive and grow-ing mortgage default and arrears has been added as an additional facet tothe general housing crisis faced by low-income, unemployed (and precar-iously employed) households in Ireland. They have been joined by largenumbers of previously employed, middle- and high-income homeownerswho have been made the latest subjects of neoliberal financialisation andwho are increasingly pauperised under the debt-discipline of unsustainablemortgage repayments that threaten a ruinous future.

As their situation continues to deteriorate, a new reality of near com-plete ‘omni-crisis’ is nascent for growing number of households across Irisheconomy and society. This is particularly so for low-income and sociallyexcluded groups in Irish society experiencing poverty and deprivation, butis also increasingly so for over-indebted homeowner households impactedby unemployment and austerity, experiencing housing stress and insecurity,who are living with a growing risk of exclusion and who face economicallyinduced incipient and actual homelessness as a result of foreclosure on theirhome. The net effect of the financialisation of Irish housing through theincorporation and assembly of households as owner-occupiers at any costwill indeed be at enormous cost for some.

Notes

1. Economic globalisation since the 1970s has been accompanied by a process ofde-territorialisation whereby social actors and activities become dis-embeddedfrom local- or national-based social conditions and restructured across time andspace (Giddens, 1990; Brenner, 1999). This is especially so regarding changes inthe operation of housing and mortgage markets and the velocity and magnitudeof housing-finance flows.

2. In 1971, 70.8 per cent of Irish households were homeowners, rising to 80 per centby 1991, declining thereafter to 70.1 per cent in 2011 (CSO, Census of Popula-tion of Ireland, various years). The shift reflects socio-economic and demographicchanges accompanying the expansion and increased segmentation of Ireland’smortgage market under financialisation. It produced an inter-tenurial transfer ofdemand towards renting by households choosing not to enter owner-occupation,to defer entry or for whom access was denied due to precarious employment,income inadequacy, poor credit ratings and financial exclusion (Downey, 2003,2005, 2013).

3. The exception is the Netherlands where, despite the impact of the GFC on itsfinancial sector and housing market, there was no banking crisis comparable tothat of Iceland, Ireland, Spain, the United States or the United Kingdom.


4. This can be considered to comprise an underestimate as the ECB has warned thatan important part of the Euro-area financial sector remains ‘unexplored by officialstatistics’ (Bakk-Simon et al., 2012).

5. See http://www.nytimes.com/2005/04/01/business/worldbusiness/01irish.html?_r=0 (accessed 8th October 2012).

6. An acronym for credit advanced to those with ‘no income, no job or assets’7. These include the Latin American debt crises that originated in the 1980s, deep-

ened in the late 1990s and culminated with the sovereign default of Argentina in2001 on US$132bn of public debt, the debt crisis that began in 1997 in Thailandbefore spreading to SE Asia and Japan and the Russian financial crisis and debtdefault of 1998 (see Reinhart and Rogoff, 2009).

8. The cumulative nominal decline in Ireland’s GDP from its peak in Q3 2007 to Q3in 2010 was 21 per cent, ranking as among the worst affected countries in termsof output performance during this period (Lane and Milesi-Ferritti, 2010).

9. There were 5,608 households (13,691 individuals) surveyed by the CSO forthe SILC in 2007. Approximately 80 per cent of these households are owner-occupiers, with mortgaged households representing over one quarter of thesample.

10. This was approximately 50 per cent of the stock of Irish mortgages outstandingat the end of 2010.

11. The Insolvency Service of Ireland was established by government on 1 March2013 and following an information campaign, the publication of regulationsgoverning the Authorisation of Personal Insolvency Practitioners and ApprovedIntermediaries and subsequently their authorisation, began to accept applicationsfor the new debt arrangements from the 9 September 2013. See: www.isi.gov.ie

12. See http://www.moodys.com/research/Moodys-Irish-Prime-RMBS-performance-continued-to-deteriorate-in-April–PR_248367 (accessed 24 November 2012).

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National Economic and Social Council. (2009) Ireland’s Five-Part Crisis: An IntegratedNational Response. Dublin: NESC.


O’Connell, C. (2005) The housing market and owner occupation in Ireland, inNorris, M. and Redmond, D. (Eds) Housing Contemporary Ireland: Policy, Society andShelter. Dublin: Institute of Public Administration, pp. 21–43.

Regling, K. and Watson, M. (2010) A Preliminary Report on the Sources of Ireland’s BankingCrisis. Dublin: Stationery Office.

Reinhart, C. M. and Rogoff, K. S. (2009) This Time Is Different: Eight Centuries ofFinancial Folly. Princeton: Princeton University Press.

Sassen, S. (2008) Mortgage capital and its particularities: A new frontier for globalfinance, Journal of International Affairs, 62 (1), 187–212.

Sassen, S. (2010) A savage sorting of winners and losers: Contemporary versions ofprimitive accumulation, Globalizations, 7 (1–2), 23–50.

Stephens, M. (2007) Mortgage market deregulation and its consequences, HousingStudies, 22 (2), 201–20.

Stewart, J. (2010) Financial Innovation and the Financial Crisis, Paper to the Inter-national Schumpeter Society Conference 2010 on Innovation, Organisation,Sustainability and Crises, Aalborg, Denmark, 21–24 June 2010, http://www.schumpeter2010.dk/index.php/schumpeter/schumpeter2010/paper/viewFile/374/185, accessed 8 October 2012.

Turner, G. (2008) The Credit Crunch: Housing Bubbles, Globalisation and the WorldwideEconomic Crisis. London: Pluto Press.

9Bailing Out the Banks: The Roleof the National Asset ManagementAgencyBrendan Williams

Introduction

This chapter describes the operations of the National Asset ManagementAgency (NAMA), established by the government to take over and manage the‘toxic’ debts of Irish banks and which became one of the largest owners andmanagers of property in the world. It outlines the context of the propertymarket and banking crisis which led to the government rescue of the Irishbanking system. The financial and market implications of the NAMA pro-cess as presently constructed are examined. This includes consideration asto whether the cost to the taxpayer can be contained and the individual sec-tor and spatial development impacts of ongoing decisions. After the primeoverseas investment assets are disposed of, the next stages of the NAMA pro-cess from 2013 onwards involves dealing with the core problem of the manymarginal development-land transactions in Ireland conducted during thefinal stages of the property market boom. The chapter examines whetherthis might involve increased costs and risk exposures for the taxpayer dueto pricing issues, the lack of transparency in operations and the absence ofpublic scrutiny of major decisions. The fact that many of the development-land deals have involved a relatively closed circle of related interest groupssuggests a high level of risk to the exchequer and that the potential for sig-nificant financial loss may arise. Financial and development interests maywish the state to subsidise and reflate the property market to previous levels.However, this may neither be a feasible outcome nor in the public interest.

Context: From property boom to bank rescue

The origin and causes of the banking collapse in Ireland have been thesubject of three key reports commissioned by the Irish Government. Theone undertaken by Regling and Watson (2010) examined the national

139


and international economic and policy contexts within which the prop-erty bubble and banking crisis in Ireland had occurred. Patrick Honohan(2010), Governor of the Central Bank of Ireland, reviewed the functionalperformance of the Central Bank and the Financial Regulator prior to thegovernment’s 2008 guarantee to underpin the debts of the banking sectorand Peter Nyberg’s (2011) report evaluated how the various institutions con-tributed to the crisis and noted the lessons to avoid repeating such bankingfailures.

These reports identified that the major cause of the banking crisis inIreland was the unhindered expansion of the property bubble financedby banks using wholesale market funding (see Chapter 3). Attendant riskseither went undetected or were seriously misjudged by the Authorities andRegulators, whose actions and warnings were modest and insufficient. ‘Bank-friendly’ regulation meant that any intrusive demands from staff at theFinancial Regulator could be and often were set aside after direct representa-tions were made to more senior regulators (Honohan, 2010, p. 9). The speedand severity of the crisis was made worse by world-wide economic eventsbut, notwithstanding these external factors, the problems causing the crisisas well as the scale of it were the result of domestic Irish decisions and actions(Nyberg, 2011, p. 4). Funding exposure was at heightened levels with bankloan to deposit ratios above 200 per cent (Regling and Watson, 2010, p. 33)leaving Irish banks heavily reliant on inter-bank borrowing. The wider inter-national crisis which triggered a credit squeeze, following the collapse in theUnited States of Lehman’s Bank and the subsequent freezing of inter-bankand money-market lending, had an immediate impact on Irish banks whichhad depended heavily on wholesale markets to fund their rapid expansion(see Chapter 3).

Nyberg (2011) particularly noted the importance of the ‘herd’ and ‘group-think’ instincts of participants in the banking and property boom, reinforcedby a widespread international belief in the efficiency of financial markets.This had resulted in an enormous scale of lending to individuals possess-ing little or no corporate infrastructure and little evidence of an appropriatecapacity to repay such loans. This report summarised the key problemscommon across the Irish banking sector as

the relaxation of formal lending policies into only guidelines; a lack ofoperational limits on loan size or on total exposure to connected partiesor sectors; the slow slide from lower-risk to higher-risk lending, from cashflow-lending to asset backed lending and from small to large to enormousloan amounts; an increasing amount of facilities provided on an interestroll-up or interest-only basis; higher loan-to-value ratios, equity releasesand increased loan complexity (particularly involving investor syndicateslater in the Period).

(Nyberg, 2011, p. 35)

Brendan Williams 141

The property-price bubble, especially in the residential and development-land sectors, was exacerbated by the lightly regulated Irish banking systemsand access to foreign capital markets following the 1999 introduction ofthe European single currency system (Chapter 3). This occurred following along boom from the 1990s to early 2000s which had seen strong economicexpansion underpinned by real growth in production, employment andexports (ESRI, 2013). Unemployment fell from over 17 per cent to near fullemployment and large-scale immigration took place to growth centres suchas Dublin (CSO, 2013). A pause in economic growth and the property mar-ket in 2001 resulted in government interventions boosting the property andconstruction sectors. This included continuation and expansion of generousproperty taxation incentive schemes (Williams and Boyle, 2011). Propertyprices escalated at rates well in advance of general inflation with a boom inproperty prices taking place over a 15-year period. This contributed to anover-concentration of economic activity in the construction sector and, by2006–07, the construction sector in Ireland represented 24 per cent of GrossDomestic Product (SCS, 2012).

With dependence on over-inflated property markets, banks had increasedtheir risks of becoming insolvent if the property bubble burst. By 2007–08,it was clear that the Irish banking system had engaged in reckless lending tothe property sector and reports of loan impairments rose substantially. Amidinternational pressure on the government and lobbying by the finance sec-tor, the government intervened in the banking system without recognisingthe extent of the crisis. Banking groups responsible for and involved in thecrisis lobbied government for state financial guarantees to enable their sur-vival, some later being accused of misleading the government as to theirtrue financial position (Irish Independent, 2013a). However, what was pre-sented by the banks as a liquidity crisis was underlain by a more fundamentalsituation of insolvency. The options for the state included the recapitalisa-tion, nationalisation or closing down failing banks, all involving substantialadditional exchequer costs. In September 2008, following an all-night crisismeeting, the Irish government cabinet and its advisers unilaterally decidedto provide a blanket guarantee to the Irish-owned elements of the bankingsystem to avoid a banking collapse. It exposed the state to potential lossesamounting to some �440bn.

As the overwhelming scale of the losses at Anglo Irish Bank, Allied IrishBank and other groups became evident, the sovereign state required an inter-national bailout which secured the banking and development finance rescueplan. Special initiatives to save existing banking operations and to man-age property-development loans and assets at the heart of the crisis weresubsequently introduced (including the establishment in late 2009 of theNAMA, discussed below). The cost of rescuing the financial and property-development sectors and the deteriorating public finances overwhelmed thestate by 2010, in turn requiring an �85bn bailout from the EU Commission,


European Central Bank (ECB) and International Monetary Fund (IMF) (the‘troika’) to support the sovereign state.

In employment terms, the impact of the property crash was profound.Ireland had nearly full employment in 2007. By 2012, this had deterioratedto an unemployment rate of 14.8 per cent (CSO, 2013). In property mar-kets, official price data indicates that general residential price levels droppedby 50 per cent from peak levels with significant oversupply in the sector(CSO, 2013). However, by 2013, with a virtual cessation of developmentsince 2008, the first residential price increases have occurred in specific keylocations in Dublin and for offices at key Dublin central business districtlocations. Nevertheless, the scale of the financial, mortgage and bankingproblems associated with the property crash are so extensive that contin-ued state intervention and assistance are likely to be required for severalyears more.

Establishing NAMA: A temporary solutionto a complex problem

NAMA was established in 2009 as a separate statutory body with its ownBoard and chief executive officer (CEO) appointed by the Minister forFinance. It operates under the aegis of the National Treasury ManagementAgency (NTMA) which provides it with staff and business support services.A special purpose vehicle (SPV) was established with capital of �100M whichis responsible for the purchase, management and disposal of loan assets iden-tified and valued by NAMA. The proposal to create a bad bank using publicresources to deal with distressed loans and assets has remained controver-sial from its inception. It was criticised both on equity grounds (in terms ofthe socialisation of banking and development industry losses) and efficiencygrounds (in terms of using limited public funding to prop up failing banksand development groups).

The specific purpose of the agency was to buy assets in the form of loansfrom Irish banks covered in the government bank guarantee. It essentiallyfunctions as a repository for the failed development-finance sector, trans-ferring major property development loans from Irish banks in return forgovernment bonds. The intention was to take the riskier loan classes awayfrom the balance sheets of the banks in order to safeguard depositors andinvestors, ensure stability in the financial system and free up the banks tolend again to businesses and households.

The proposals had originally been developed by an economic consultantPeter Bacon, appointed by the government to advise on solutions to thebanking crisis. The agency was modelled on the National Bank ResolutionTrust set up in the United States in the late 1980s and early 1990s to deal withthe Savings and Loans banking collapses. The proposals were for the newagency to acquire property-development loans from Irish banks in return


for government bonds, with a view to improving the availability of credit asa solution to the banking crisis and avoiding the option of nationalising thebanks (Fianna Fáil, 2013).

In his Budget Statement of April 2009, the Minister for Finance announcedthe proposed creation by the then Fianna Fáil-Green Party coalition govern-ment of an asset-management agency that would acquire from a number ofkey institutions loans linked to land and development with the intentionof cleaning up the banks’ balance sheets. Draft legislation was publishedin September 2009 and the National Asset Management Agency Act, 2009,passed into law in November 2009. NAMA was formally established on21 December 2009 and its board was appointed on the following day(NAMA, 2013). Five institutions (and their subsidiaries) initially applied tojoin the NAMA scheme and were designated as participating institutions inFebruary 2010: Allied Irish Banks; Bank of Ireland; Anglo Irish Bank; IrishNationwide Building Society; and Educational Building Society. At that time,these financial institutions were regarded as of systemic importance to theIrish economy, whose collapse would potentially destabilise the wider Irishand international economy. The stated rationale for the creation of a SPVacting as a bad or toxic bank was presented as involving a short-term trans-fer of assets to a bad bank to ensure the stability of the financial systemand to free up the banks to lend to businesses and households (Fianna Fáil,2013). Once established, NAMA paid �30.2bn for 11,500 loans belongingto 850 debtors of the covered banks. NAMA was empowered to manage,develop and dispose of these assets over a seven- to ten-year period until2020 to maximise return for the exchequer. The initial value of the loanstaken over by NAMA was �71.2bn. Its remit included continuing to col-lect interest which fell due and to pursue debts in the same manner as theoriginal banks. In turn, replacing the banks’ property-related loans with gov-ernment bonds was intended to remove uncertainty about the soundness ofbanks’ balance sheets.

In describing the group structure, NAMA (2013) notes a decision issuedin July 2009, in which Eurostat (the statistical office of the EuropeanUnion) ruled that SPVs which were majority-owned by private companieswould be regarded as falling outside the government sector if they meta number of criteria. Among the conditions were that the SPVs were oftemporary duration and were established for the sole purpose of address-ing the financial crisis. In order to avail of this accounting treatment,NAMA established an investment holding company with capital �100M,namely National Asset Management Agency Investment Ltd, which ismajority-owned by private investors. In 2013, 51 per cent of its shareswere owned in equal proportion by three private companies, a UK-basedinvestment firm (Walbrook Capital), New Ireland Assurance Co. plc andPercy Nominees Ltd., a nominee of Prescient Investment Managers, aSouth-African-based management company. The remaining 49 per cent are


owned by NAMA. Under the shareholders’ agreement between NAMA andthe private investors, NAMA exercises a veto over decisions taken by thecompany.

In order to carry out its functions, NAMA also formed a number of othergroup entities. The precise details of NAMA’s financial arrangements relatingto individual disposals and investments are confidential and informationon transactions is only partially available as the agency is not yet subjectto public access to information under Freedom-of-Information procedures.The limited information on any transactions from NAMA’s own websiteand publications is partially supplemented by a range of media investi-gations and independent blog sites such as namawinelake, irisheconomy,irelandafternama and wikileaks.

The original plan was that an estimated recovery in asset prices of10 per cent over ten years was required for NAMA to break even, whichwas regarded as achievable, and that NAMA cash-flow projections showedthat over the course of its lifetime, it was expected to generate a significantreturn for the taxpayer of �4.8bn in net present values (Fianna Fáil, 2013).In the event that NAMA were to make a loss over the long term, which wasnot expected, a surcharge would be introduced on the profits of the financialinstitutions.

The wide range of powers granted to NAMA include the sale or disposalof property, undertaking development, entering partnerships or joint ven-tures, borrowing and lending funds and purchasing other property. TheNAMA business plan allowed for payments of over �2bn to the variousprofessional advisers, consultants and others involved in the transfer andmanagement of the loans/assets. The price reduction on loans transferred toNAMA was approximately 58 per cent, as outlined below (NAMA, 2010).

• Allied Irish Banks loans: paid �8.5bn for �18.5bn of loans• Anglo loans: paid �13bn for �34bn of loans• Bank of Ireland loans: paid �5.4bn for �9.4bn of loans• Educational Building Society loans: paid �0.3bn for �0.8bn of loans• Irish Nationwide Building Society loans: paid �3bn for �8.5bn of loans

That annual report details that 135 debtors each had outstanding debts ofmore than �100M with NAMA institutions, of whom 12 had debts exceed-ing �1,000M. NAMA’s Annual Report (2012) notes that 34 per cent ofthe acquired loans were secured by land and development assets, while66 per cent comprised investment assets, including offices (19 per cent),retail (19 per cent), residential (12 per cent), hotel and leisure (8 per cent),industrial (3 per cent) and other properties (5 per cent). Around 54 per centof the properties were Irish based, 36 per cent were located in the UnitedKingdom and Northern Ireland, with the rest of the world accounting for


the balance. A majority (78 per cent) of the Irish property was located inDublin or its commuter belt. The first phase of NAMA’s operation involvedthe acquisition and transfer of loan assets involving 850 debtors and morethan 11,000 individual loans collateralised by 16,000 individual properties.All of the individual loan assets were individually valued as to their mar-ket value, an additional amount of approximately �7bn then being paid toreflect the new valuation approach which incorporated what was termed theconcept of ‘long-term economic value’.

NAMA was described by McKenna (2013) as having two primary andinter-related tasks. The first involves acquiring loans relating to land anddevelopment and other associated loans from five financial institutions toremove this systemic risk. The second involves obtaining the best achiev-able financial return to the state from these acquired loans, injecting nearly�32bn into the five Irish ‘participating institutions’. NAMA manages its loanportfolios with a team of over 200 people with specialist skills in prop-erty, banking, finance, law and related disciplines and also supports theemployment of 500 staff within the five institutions, who manage, on theagency’s behalf, the smaller debtor exposures comprising �13bn of the over-all �74bn of loans. Staff from many former development companies andformer banking interests have been contracted by NAMA to manage assetson consultancy-type arrangements.

The largest 100 borrowers represented 50 per cent of the NAMA portfolio.Major borrowers, primarily property developers, were required by NAMA toprepare a realistic business plan which set out their current assets and lia-bilities. NAMA could then agree short- and long-term strategies for loanrepayments, including asset disposals and capital requirements for devel-opment or completion of projects. If agreement was reached, NAMA thenworked with the borrower to achieve an ‘optimal’ outcome. In short, thishas often involved extensive agreed debt restructuring and effective write-offs as the borrower presented a request for support. If no agreement wasreached or co-operation was not forthcoming, the borrower was asked torepay the debt in full or face enforcement proceedings, including callingin loans and making the debtor legally insolvent. Based on NAMA’s or theirappointees’ evaluation, some borrowers/companies have survived while oth-ers closed, generating major legal challenges and disputes. Other borrowers’loans representing 50 per cent of the portfolio, remained with the banksthemselves, though with credit decisions being made by NAMA and NAMA’sbeing represented in each of the banking units.

Bank recapitalisation following NAMA transfers

The government indicated that after the transfer of problem loan books toNAMA it expected institutions in the first instance to seek private-sector cap-ital but, to the extent that sufficient capital could not be raised internally, it


Table 9.1 Increasing recapitalisation requirements for Irish banks, 2009–11

BOI AIB Anglo INBS EBS ILP Reason for(�bn) (�bn) (�bn) (�bn) (�bn) (�bn) recapitalisation

Phase 1: Early 2009 3.5 3.5 4.0 (1) see notesPhase 2A: March

2010 (PCAR)∗2.7 7.4 18.0 2.6 0.9 (2) see notes

Phase 2B: September2010

0.0 3.0 7.3 2.8 0.1 (3) see notes

Phase 3: March 2011(PCAR)

5.2 13.3 1.5 4.0 (4) see notes

Cumulative total 11.4 27.2 29.3∗∗ 5.4 2.4 4.1 79.8

Notes: ∗PCAR Prudential Capital Assessment Review.∗∗This figure does not include potential additional losses of �5bn revealed in stress tests.(1) Initial estimate.(2) First NAMA tranche haircuts applied; top-down PCAR (non-NAMA) estimates for three banks(BOI, AIB, EBS).(3) Later NAMA haircuts applied; non-NAMA base case losses projected on wind-down basis forAnglo, INBS.(4) Higher capital ratio target; deleveraging costs; bottom-up PCAR (non-NAMA) loan-loss esti-mates using BlackRock methodology.Source: After Honohan, 2012.

committed to providing institutions with an appropriate level of capital tocontinue to meet their requirements.

The increasing capitalization requirement of the Irish-guaranteed banks isillustrated in Table 9.1 and is directly linked to the NAMA transfer process astheir insolvency became evident. The institutions involved required majorinjections by the state of additional capital in order to absorb the sequenceof consequential write-downs on the book value of their assets as each phaseof the asset transfer worked through.

The scale of the series of bank-rescue costs to the state, peaking at anannual total of almost �31bn in additional capital in 2010, is illustratedby comparing these amounts with the annual total tax receipts of the Irishstate from all sources over the period 2009–12, which ranged from �31bn to�36bn (Department of Finance, 2013). Major efforts to save the guaranteedbanks from 2009 to 2011 meant that the banking sector’s needs were beingsupported by both Irish government injections and support from the ECB.In April 2011, however, the six banks’ credit ratings were reduced to junkstatus by Moody’s ratings agency.

NAMA official reporting arrangements

The Board of NAMA must carry out its functions independently, guided byits obligations under the NAMA Act and the CEO and Chairman must attend


and give evidence whenever required to do so by the Committee of PublicAccounts or by other committees of the Oireachtas (NAMA, 2013). In addi-tion to publishing a detailed set of annual accounts, NAMA must also submitquarterly reports to the minister on its activities, including information inaggregate form about its loans, its financing arrangements and its incomeand expenditure, which are subsequently published and available on theagency’s website. A review of NAMA operations in the 2012 Comptrollerand Auditor General’s report identified that:

(1) Part of loan repayment money is used to fund new advances to devel-opers to complete projects and that NAMA plans eventually to advancesome �3.5bn to developers, including �2.6bn from 2012–15.

(2) NAMA faces considerable challenges in achieving its goal of recoveringthe more than �30bn paid for developer loans.

(3) When discount rates for distressed loans are applied, it is estimated that,even after a write-down of 57 per cent at acquisition, the acquisitionprice incorporates state aid of over one-fifth to the financial institutions.

The impacts of NAMA

Examination of NAMA activities reveals both systemic problems in the pric-ing approaches to assets and a lack of transparency in the NAMA transactionsas announced to date. Public anger at what was seen as a financial coup d’étatled to the election defeat in 2011 of the Fianna Fáil-led coalition governmentregarded as bearing responsibility for the crisis. At that stage, the true scale oflosses in the major loans/commercial deals was crystallised with write-offs ofup to 60–90 per cent on individual development finance transactions whichwere to be absorbed by the tax payer. The state continued to absorb losses asthe incoming Fine Gael–Labour Government stated that it was bound by theinternational agreements entered into by its predecessor. The aspiration forpolicy change was stated to be limited by the binding nature of the bailoutpackage, tying the government to a policy favouring banking and propertyinterests, with NAMA in many cases pursuing debtors only to the extent ofrecouping the highly discounted price which it originally paid to the banksfor their toxic loan assets. Only limited progress on prosecutions for fraud orbreaches of company legislation has been achieved, despite astonishing rev-elations emerging from tape-recorded exchanges between senior managers atAnglo Irish Bank in the period before the financial crisis (Irish Independent,2013a).

Among the immediate difficulties encountered by NAMA were that somedevelopers transferred assets to relatives while considerable difficulties werealso experienced in gaining recourse to properties/assets due to inadequatepaper work and administrative procedures by the banks relating to col-lateral issues and personal guarantees given at the time when loans were


agreed. Expensive and lengthy litigation by parties whose loans NAMA calledin often occurred. In particular, this has occurred where NAMA, insteadof engaging in direct market sales, has entered into complex loan-transferarrangements involving both equity sharing and providing vendor financeto purchasers of loans. In addition, in selected housing sales, the agency hasoffered price guarantees to prospective purchasers protecting them againstfuture price reductions. The narrow agenda of achieving a profit based onproperty-market growth also often precludes discussion of alternative usesfor what are effectively public land holdings.

Pricing policy and operations of the NAMA

NAMA was created as an asset management agency to take the distressedproperty development loans off the balance sheet of Irish owned banks atprices determined as the ‘long-term economic value’ of such assets. Thisprice, although comprising a discount (or ‘haircut’) on the inflated loanvalue of the assets, is nevertheless above the market value of such assets,its having allowed for the potential payment of a future market recoveryprice for assets. In this respect, this intention departs from accepted inter-national market-value standards with the introduction of a new concept ofLong Term Economic Value. The marking up of NAMA valuations to thenewly created long-term economic value in a declining property market pre-sented an obvious risk for the taxpayer. Among the many concerns aboutthese proposals, the critical issue of price paid raises questions as to whetherthis approach is either appropriate or equitable.

This initiative and the pricing policy adopted were based on argumentsthat a non-existent or distressed market existed at the time. The market wasgoing through a significant downward shift which many interests were reluc-tant to accept. Such corrections have occurred periodically through previouscycles with upward and downward shifts being features of any analysis ofproperty markets and, indeed, may be expected to occur again in the future(Dubben and Williams, 2009). Being willing to take the profits or acceptthe market consequences when a trade decision is proved mistimed by latertrends should be a normal expectation of market participation based uponthe often-quoted Moral Hazard principle. This principle maintains that sup-porting weak development businesses/banks and under-performing seniormanagement by state subsidies often wastes tax payers’ money on prolong-ing the life of failing businesses. In addition, this support provides unfairsubsidised competition for the remaining better businesses and manage-ment teams. Clearly, even from a liberal economics perspective, this is notin the interest of the national economy as it maintains surplus or excesscapacity which provides difficulties for new entrants or existing business toemerge. This penalises business competitors (in this case rival banks) whichcan operate more successful business models with better management and


more effective risk taking and decision making. In turn, the banking groupsinvolved in the property bubble and NAMA itself have been reluctant to sellon the open market their distressed assets at lower current prices. Instead aconfidential and non-transparent process exists by which interested partiescan negotiate purchases.

Public scrutiny and transparency

NAMA has a commercial mandate under the NAMA Act to obtain thebest achievable financial return for the Irish State in the management anddisposal of its acquired assets. It seeks to achieve a phased and orderly dis-posal of assets, either through direct sale of property assets by its debtorsor through loan sales, depending on whichever is the more advantageousoption in commercial terms (NAMA, 2013). Many early and successful directsales of NAMA assets have been in higher-value and more mature propertymarkets which are highly liquid, such as in London and the United States.Further complexities arise in trying to establish the potential values of assetsin more distant markets, such as in Eastern Europe and the Middle East,where complex legal and other issues may arise.

A more transparent process is essential, including publication of detailsrelating to the precise assets involved, valuations and the transactions orevidence base upon which such assessments were made. For example, themediated settlement announced on 26 November 2011 regarding the con-troversial Irish Glass Bottle redevelopment site in the docklands involvedtransfers of a piece of contaminated development land involving state agen-cies and private interests. This had resulted in the eventual sale at the heightof the boom to a consortium including the Dublin Docklands DevelopmentAuthority (DDDA) for �412M for a site valued in 2011 at less than �40M.The DDDA was a government agency with responsibility for the planningand development of the docklands area with statutory powers to grant plan-ning approvals (see Chapters 2 and 5). This transaction was one of the largestproperty deals in the state. The Dublin Port Company owned the freeholdinterest in the contaminated site of 10ha. The property was leased to aprivate company which, by taking advantage of the provisions of landlord-and-tenant legislation through creating a subsidiary, sought to gain the fullfreehold interest. Protracted negotiations led to an agreement jointly to sellthe site, the proceeds being divided one third to Dublin Port and two thirdsto the private company. The DDDA became party to a joint venture, namedBecbay Limited, which paid �412M for the site. Stamp duty and other costsbrought the final acquisition costs to �431M and further costs to the con-sortium of approximately �40M arose out of the need to carry out extensiveremediation works on the site.

A report by the Comptroller and Auditor General (2012) established thatBecbay borrowed from two banks to fund the acquisition and remediation


work. The DDDA guaranteed the repayment of loans to Becbay up to a levelof �29.1M, plus interest. The loans of Becbay were taken over by NAMA andthe guarantee provided by the authority was called in by NAMA in January2011. A mediated settlement was agreed with the agency in July 2011 underwhich the authority’s obligations under the guarantee were extinguished inreturn for the transfer to NAMA of sites/assets which had been acquired bythe DDDA with an accounting net book value of �7.8M, in full and finalsettlement of all sums due under the guarantees. The total outlay of theauthority on the Irish Glass Bottle site transaction was estimated in thisreport as �52.1M, including the value of assets transferred as part of a settle-ment with NAMA. In addition, the report found that the authority had notobtained its own independent valuation of the site when it was deciding onthe bid which Becbay would make for the site. The information submittedto the Department of the Environment, Community and Local Government(DoECLG) requesting the approval for increased borrowing did not reflectthe planned scale of the project. The authority had, in fact, informed theDoECLG that the value of the site was approximately�220M while an outlayof over �400M was being discussed.

The absorption of this loss by tax payers through the NAMA-based dealsresults not alone in the major losses on this single transactions but the addi-tional transfer of nine other pieces of DDDA publicly owned developmentland located in the Dublin docklands in compensation for cross-guaranteesby the state agency involved. This deal, among many, remains confidentialand secretive with no entitlement of public access to the essential financialdetails. Analysis of the mediated settlement and the nine additional sitestransferred shows no individual valuation figures or costs published for eachof the nine sites. Examination of the annual accounts of Readymix Limited,previous owners of one of those sites, indicates that it was sold for �23M(excluding costs) to the DDDA in 2006 resulting in a profit for the companyof �20M (Readymix, 2007, p. 10). This indicates that the transfer of thesenine sites at what are nominal valuation levels greatly increases the truelosses to the state in this settlement.

Ongoing questions and inquiries surround this transaction, with theDDDA being wound up as a result of the losses incurred and questions aris-ing with regard to possible conflicts of interest in the Board’s decision toenter these arrangements. Controversially, the Board of the DDDA at thattime also included banking interests who funded the parties involved in thetransaction (Sunday Times, 2010).

This lack of transparency is evident in many major transactions. Againthe commercial sensitivity of each transaction and the absence of freedomof information processes (until 2013) have added to the difficulties in estab-lishing reliable information on major public financial commitments. Theproblems regarding lack of transparency are illustrated by an analysis of the


sale by NAMA of Project Aspen, a portfolio of Dublin commercial propertyloans with a book value of �810M, announced on 2 May 2013, which wasreported to involve a deep discount on loan value. In addition, in this trans-action, NAMA provided finance and negotiated an equity share, potentiallyadding further complex layers of risk involvement for the taxpayer, with verylimited initial return. The sale price was not revealed. However, independentmedia sources including the Irish Times (31 October 2013) claimed the pur-chase price was 25 per cent of the loan’s original value. Other features of thesale included the buyer’s receiving staple finance from NAMA to purchasethe loans, with NAMA entering into a joint venture with the consortiumto manage the portfolio. The transaction also prompts additional questionsregarding potential conflicts of interest concerning the original developer’sinvolvement with the purchasing consortium.

The potential for complex legal disputes in NAMA transactions is consid-erable. The case of Treasury Holdings (Irish Times, 2012) involved a call bythe borrower for a judicial review of a decision by NAMA to call in loansamounting to �732M, transferred to NAMA in 2010. In the legal case, Trea-sury argued that a phased pay down of the debt starting in 2011 to 2017had been agreed. This was based on proposals by third parties to acquire theTreasury loan book with vendor financing available from NAMA. Havingnegotiated over an extended period of time, Treasury sought without suc-cess to stop NAMA moving to call in the loan book. Both the cost and stafftime/input involved for NAMA in such disputes have been considerable.

Expansion of NAMA: The IBRC loan book

The role of NAMA potentially will expand in 2014 with the transfer of loansto NAMA following the sale of tranches of the Irish Bank Resolution Trust(IBRC) loan book. The IBRC was formed in 2011 by merging the state-ownedAnglo Irish Bank and Irish Nationwide Building Society, which had been sep-arately nationalised as the two most toxic banks. The Nyberg report (2011)reviewed the nationalisation of Anglo, some three months after the intro-duction of the guarantee, which followed a series of announcements by theauthorities outlining alternative plans that had to be abandoned. Combinedwith the emergence of governance scandals at Anglo, it created a sense thatthe authorities did not understand the extent of the problems and that fur-ther issues could emerge. Continued scandals and losses at IBRC (Anglo andNationwide) impacted on the government’s plans for the merged entity and,in February 2013, the government introduced legislation overnight to liqui-date the IBRC. A phased sale of the loan book by tender, with recommendedminimum pricing levels, was decided upon. A first tranche of �3.5bn busi-ness loans for sale to mainly private equity groups took place on 31 October2013. Later tranches of �7.8bn in UK commercial property loans, �1.8bn


in residential mortgages and a further �9.3bn real-estate book are to follow.The purchasers are expected to comprise private equity groups, with anyremaining or unsold loans (presumably the least potentially profitable) to betransferred to NAMA (Irish Independent, 2013b).

Conclusions

The original aim of NAMA to restore liquidity to the Irish banking sectorwas lost at its inception as the scale of losses and the toxic nature of the loanbooks overwhelmed the resources of the state. The subsequent recapitalisa-tion of the banks and the economic collapse resulted in the state’s seeking aninternational programme of emergency aid. It can be argued that NAMA hascontained the crisis to the benefit of the Irish economy or the major financialand development interests but at a substantial cost to taxpayers. In payingover-market value amounting to approximately �7bn, the financial risk forthe exchequer was heightened.

The role of property finance and development interests in both promotingthe property bubble in Ireland and, following the property market collapse,in managing the state rescue to maximise loss transfer to the state providesa significant example of regulatory capture.

The lack of transparency in NAMA’s transactions and operations means,quite simply, that it is not possible to evaluate the transactions occurringwith any degree of reliability. Two opposite views have emerged regard-ing NAMA. First, development interests are commonly supportive of theNAMA process as they see the agency as providing support for the con-struction and property sector. However, general taxpayers funding the statebailout of the banking and development sectors are often highly critical.This is due to the high levels of subsidies to failed banks and developmentgroups and the enormous scale of taxpayers’ aid. Public concern is often alsocaused by the engagement of finance and development interests to managethe assets, including paying the same management teams responsible for thecatastrophic financial decisions.

Large-scale financial deregulation after European Monetary Union accen-tuated existing pronounced cyclical patterns of speculative development,with significant booms and busts being experienced in Ireland and otherperipheral European economies. The failure to regulate or control banklending during the boom was a major factor in subsequent economic col-lapses. In addition key banking management office holders in Ireland andother Eurozone states are currently accused of fraud, share-price fixingand falsifying accounts although legal progress has been subject to majordelays.

This experience illustrates the symbiotic relationship which can evolvebetween the financial industry, real-estate development interests and gov-ernments in states such as Ireland (see Chapter 17; Fraser et al., 2013). As this


interdependence becomes near complete, the traditional role of prudentialbanking and regulation in managing risk became lost in the confusion ofclient/relationship-based lending.

Many development-finance participants have achieved the transfer of lia-bilities and losses generally to taxpayers of Ireland and Europe. Furtherto such debt write-downs, cooperating loan-holding groups can engage inmanaged discussions on the treatment of the remaining loan liabilities,including availing of further NAMA supports and loans. This can be criti-cised as a suspended market process with the costs mainly being absorbedby many non-participants – the taxpayers – having little input in theprocess.

References

Central Statistics Office. (various dates) Census, Employment and Housing Data. Dublin:Stationery Office.

Comptroller and Auditor General. (2012) Special Report 77 – Dublin Docklands Develop-ment Authority, www.audgen.gov.ie, accessed 30 October 2013.

Department of Finance. (2013) Exchequer Statements, www.finance.gov.ie, accessed26 October 2013.

Dubben, N. and Williams, B. (2009) Partnerships in Urban Property Development. Oxford:Wiley Blackwell.

Economic and Social Research Institute (ESRI). (various dates to 2013) QuarterlyEconomic Commentary. Dublin: ESRI.

Fianna Fáil. (2013) National Asset Management Agency Questions and Answers, www.fiannafail.ie, accessed 31 October 2013.

Fraser, A., Murphy, E. and Kelly, S. (2013) Deepening neoliberalism via austerity and‘reform’: The case of Ireland, Human Geography, 6, 38–53.

Honohan, P. (2010) The Irish Banking Crisis. Regulatory and Financial Stability Policy,2003–2008. A Report to the Minister for Finance by the Governor of the CentralBank, www.bankinginquiry.gov.ie, accessed 26 October 2013.

Honohan, P. (2012) Recapitalisation of Failed Banks. Some Lessons from the Irish Expe-rience. Address by Governor Patrick Honohan, 44th Annual Money, Macro andFinance Conference, Trinity College Dublin, 7 September 2012, www.centralbank.ie, accessed 31 October 2013.

Irish Independent. (2013a) Anglo Tapes: Forget Reality, It’s Not Working, 16September 2013.

Irish Independent. (2013b) Deadline for IRBC Loans, 11 October 2013.Irish Times. (2012) Treasury Case against NAMA Is Hot Property, 22 February 2012.Irish Times. (2013) Commercial Supplement, 31 October 2013.McKenna, F. (2013) A Targeted Response – Ireland: National Asset Management Agency,

www.isurv.com/site/scripts/documents, accessed 30 October 2013.National Asset Management Agency. (various dates) Annual Reports, News, Governance,

Publications and Legislation, nama.ie, accessed 31 October 2013.Nyberg, P. (2011) Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland.

Report of the Commission of Investigation into the banking sector in Ireland, www.bankinginquiry.gov.ie, accessed 20 October 2013.

Readymix. (2007) Readymix plc, Annual Report and Accounts, 2006. Dublin: Readymix.


Regling, K. and Watson, M. (2010) A Preliminary Report on the Sources of Ireland’s BankingCrisis. Dublin: Government Publications Office.

Society of Chartered Surveyors (SCS). (2012) The Irish Construction Industry in 2012.Dublin: SCS.

Sunday Times. (2010) How Dublin Docklands Drowned in Debt, 28 February 2010.Williams, B. and Boyle, I. (2011) The role of property tax incentives in urban regener-

ation and property market failure in Dublin, Journal of Property Tax Assessment andAdministration, 9 (2), 5–21.

Part III

Reshaping Urban Policy andReshaping the City

Part III comprises five chapters which examine the way in which the newurban policies pursued under neoliberalism impacted on Dublin. The firstexamines the role of public–private partnerships (PPPs) in social-housingrenewal, a process in which local authorities had previously been directlyengaged. The second focuses on the manner in which urban-regenerationpolicies have been used to ‘make safe the city’ by using gentrification overtlyas a tool of urban renewal, while the impact of the ‘creative-city’ thesis onurban development strategy is the focus of the third chapter in this part. Thefourth chapter focuses on neoliberal ideas of ‘regeneration’ in the context ofnew institutional arrangements to ensure ‘community participation’ in area-based renewal, examining the manner in which these, in some instances,became undermined by the state. This is followed by a chapter which reviewsthe collapse of PPP-based social-housing regeneration in the wake of theprice collapse in the private-sector residential-development market, uponwhich the success of PPPs had depended, examining strategies of rights-based community-led activism to secure decent residential environments.The final chapter in Part III reviews the role of urban consultancies in urbanregeneration and their function in effectively de-politicising a highly politi-cal neoliberal land-use and development agenda which was being forced ona vulnerable poor working-class inner-city community.

10Actually Existing Neoliberalism:Public–Private Partnerships in PublicService and Infrastructure Provisionin IrelandRory Hearne

Introduction

Three decades of neoliberal policies of privatisation, marketisation andcommercialisation in public services and infrastructure have had a profoundinfluence on the role of government and the state in our economies andsociety. They have had a severe impact on public service users and on lower-income populations and workers in particular (Bourdieu, 1998; Brenner andTheodore, 2002; Harvey, 2005; Whitfield, 2006; Hearne, 2011). Understand-ing this changing geo-political economy of the state under neoliberalism isan essential task if we are to provide alternative, equality-based pathways forgovernment and governance policy and practice. Indeed, developments inthis area will have a significant influence on how Dublin and Ireland’s soci-ety and economy progresses (or not) over the coming decades. This chapterexplores the particular geography of the implementation of neoliberalism inthe transformation of the state in Ireland. It does this through an analysis ofevidence gathered from research into public–private partnerships (PPPs) inthe delivery in public services and infrastructure at central government andlocal-authority level (see Hearne, 2011).

Neoliberalism and PPPs

In the early years of the twenty-first century, urban geographers, sociologistsand political economists critically analysed the outcomes of neoliberalismincluding the dramatic rise in income inequality and the orientation ofstates towards the requirements of multinational corporations and finan-cial capital (Bourdieu, 1998; Brenner and Theodore, 2002; Peck and Tickell,2002; Harvey, 2005). From a geo-political-economy theoretical perspective,

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158 Reshaping Urban Policy and Reshaping the City

neoliberalism was identified as less a coherently bounded ‘-ism’ or ‘end-state’and more a process of neoliberalisation where each state was experienc-ing its own nationally and locally specific pathways of political-economicrestructuring which revealed a distinct geography of ‘actually existingneoliberalism’. This included diverse institutional forms, developmental ten-dencies, socio-political effects and multiple contradictions (Brenner andTheodore, 2002; Peck and Tickell, 2002). One such contradiction arose in theproject of neoliberalism as a result of significant opposition among workersand the general public to the direct privatisation of Keynesian welfare-state institutional forms during the 1990s. Neoliberal governments faced thedilemma of how to continue and deepen the neoliberal project within corepublic services, infrastructure and governance in the face of broad publicsupport for public services and the ‘public realm’. New policy mechanismssuch as PPPs (termed private finance initiatives in the United Kingdom andP3s in Canada) were therefore developed in this period as a form in whicha process of neoliberalisation could continue to be implemented within thekey institutions of the welfare state (Murray, 2006; Whitfield, 2006).

In PPPs, a private company (usually a consortium comprising a financialinstitution, building and operating companies formed specifically for thepurpose of bidding on a PPP project) is contracted by the state (usually for25 years) to design, build, finance and maintain/operate a new public serviceor infrastructure project, that would otherwise have been provided throughthe traditional public-sector model. Their use was expanded considerably inthe 1990s and 2000s in Ireland, Germany, Latin America and Canada in theprovision of public housing, hospitals, motorways, schools, rail and waterand waste infrastructure (Whitfield, 2010).

In order to avoid the public opposition to privatisation, PPPs were explic-itly defined not as privatisation but, instead, branded as ‘partnerships’within the paradigm of a modern ‘mixed’ economy that sought to introducethe purported ‘benefits’ of the private sector and markets into the publicsphere. These included access to additional finance, value for money, higherquality services and private-sector efficiencies and innovation (Farrell GrantSparks, 1998; Government of Ireland, 2001; PricewaterhouseCoopers, 2001).

Evidence emerged, however, that many of these PPP projects involvedthe introduction or increase of public service user charges (waste charges,water charges, road tolls etc.), a downward pressure on public-sector wages,decreasing levels of unionisation, a reduction in the quality and accessibilityof public services and the increased corporate involvement in governance.Therefore, PPPs involved neoliberalisation through processes of ‘marketisa-tion’ (also known as commericalisation and commodification) centred onthe greater involvement of private capital and market mechanisms withinpublic services and infrastructure which had traditionally been planned,delivered and financed by the state. It entailed an increase in private-sectorinvolvement in public governance such as government decision making,

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legislation and policy formation. Intensified competition between the publicand private sectors, commercialisation of public services and the creation ofmarkets within public services were part of this process. PPPs, thus, markeda radical departure from such traditional delivery in the extent to which theprivate sector was involved and the sectors of the state in which it becameinvolved (Grubnic and Hodges, 2003; Monbiot, 2003; Pollock and Price,2004; Murray, 2006; Whitfield, 2006).

Using the case of PPPs, this chapter explores the implementation ofneoliberalism in Ireland and, specifically, its roll-out and implementation inDublin. It draws on the author’s research into the socio-spatial outcomes ofneoliberalism in Ireland through the lens of PPPs at the scales of the centralstate, local authority and individual PPP projects. The particular PPPs underinvestigation here include the Dublin Light Rail System (Luas), the CriminalCourts of Justice complex, the M50 motorway circumferential route aroundDublin, the Poolbeg waste-water treatment plant commissioned by DublinCity Council and inner-city social-housing regeneration. It also draws onevidence from PPPs completed elsewhere in Ireland.

The politics of neoliberalism and PPPs in Ireland

Since achieving independence in 1921, each Irish government has beendominated by one of the two right-wing political parties of Fianna Fáil andFine Gael. The Irish state has therefore pursued in various forms conserva-tive economic and social policies and developed a welfare state that mostclosely resembles the ‘Anglo Saxon’ ‘liberal’ or ‘residual’ welfare state model.Within this the Catholic Church played a central role in providing manypublic services and infrastructure, particularly schools and hospitals (Kirby,2002; Allen, 2007). However, the newly elected Fianna Fáil-led governmentin 1997 began to pursue, in a more vigorous fashion than previous gov-ernments, the neoliberalistion of the Irish welfare state. Providing strongideological support for this approach was its minority coalition partners,the right-wing political party of the Progressive Democrats (see Chapter 2).In its second year of office, the government investigated the potential ofprivate-orientated mechanisms such as PPPs to address an emerging publicservice and infrastructure deficit resulting from historical under investmentand rapid economic and population growth (Allen, 2007; Hearne, 2011).

The government gave private firms involved in the promotion anddevelopment of PPPs internationally, such as Farrell Grant Sparks (FGS),PricewaterhouseCoopers, KPMG and Deloitte and Touche, the opportunityto highlight the positive experiences of PPPs from the United Kingdom andelsewhere in private information sessions held with Irish local authoritysenior management and government departments. In 1998, the govern-ment commissioned FGS to undertake a report into the benefits of PPP,their potential application to Ireland and the necessary steps required by


the Irish government to start implementing them. In the following year apilot PPP programme to design, finance, build and operate/maintain schools,motorways, light rail, and water treatment, was introduced by the govern-ment in line with the recommendations made by FGS. Shortly afterwards,the Department of the Environment also implemented the findings froma report they commissioned from PricewaterhouseCoopers (2001) whichstrongly recommended PPPs in the local-authority sector.

The private sector also played a significant role in the genesis of indi-vidual PPP projects by approaching the public sector with proposals inrelation to social-housing regeneration, the Dublin Metro and the Luaslight railway. The origins and development of major public infrastructurewas being undertaken, not necessarily in accordance with identified pub-lic requirements but rather according to the investment strategies of privatecapital:

It was something the private sector would put money on the table andfinance. This along-side the guidelines and reported success of PPP in theUK led in 2000 to the Metro becoming a project. It was almost a given itwould be a PPP and there was never any real debate given the sheer scalewith such a significant capital cost and its origins.

(State Rail Agency official, 2006)

Thus the sizable public infrastructure and service deficit became redefined asa potential market opportunity to promote new avenues for private capitalaccumulation. The intense promotion of PPPs by private PPP companies andconsultants to the Irish state, as outlined above, revealed the importance ofthis potential market to capital itself.

Government PPP rationale

PPPs, the government stated, would provide public services and infrastruc-ture at a more rapid pace and with greater efficiency and value for money(VFM) than traditional, direct, state-provision methods (Government ofIreland, 2001). State officials asserted that PPPs would achieve this by access-ing additional finance and introducing private-sector management expertiseand skills to deliver and operate public projects more efficiently – skills inwhich the public sector was judged to be deficient. An interview in 2006with a senior officer of the PPP Unit of the Department of Environment,Heritage and Local Government (DoEHLG) outlined five such benefits:

1. Better VFM and cost effectiveness through (a) risk transfer, which wouldharnesses private-sector efficiencies and (b) the ability to exploit public-sector assets and services through user charges and asset transfer;

2. Greater levels of delivery of services and infrastructure through access toprivate finance;

Rory Hearne 161

3. Greater speed of delivery of individual projects through private-sectorefficiency;

4. Innovation;5. Improved quality of services.

The private financing mechanism meant that investment in PPP capitalprojects could be paid for through annual payments over a much longertimeframe than what was required in traditional up-front capital borrowing.Furthermore, EU budgetary rules meant that the annual service payments ina PPP could be recorded as off ‘government balance sheet’, once certain risktransfer arrangements were met.

However, in relation to accessing additional private finance, due to theavailability of EU funding and a rapid growth in GDP, the fiscal restraintsthat provided a strong impetus to introduce PPPs in other countries didnot obtain when PPPs were introduced initially in Ireland. The exchequer’sposition was such that it could well have funded infrastructural projectsitself at the time (Farrell Grant Sparks, 1998). Even when pressures onpublic expenditure did re-emerge through 2001 to 2003 as a result ofslower economic growth, the state could have raised the required financewithout difficulty. Government policy, however, was focused on restrict-ing borrowing to within the 3 per cent EU Maastricht guidelines but,more importantly, did not believe that it was ‘appropriate’ for the stateto undertake the required large-scale investment in, and management of,public infrastructure and services. The budget surpluses that existed werenot to be directed toward public service and infrastructure provision butinstead to permit income and corporate tax rate reductions in line withthe government’s fiscally conservative economic policies. In addition, stateofficials argued that, in some sectors such as education, PPPs were simplycontinuing the situation in which the state did not own or maintain theinfrastructure, this having traditionally been owned and provided by theChurch.

The PPP Unit in the DoEHLG provided the most clear cut evidence thatPPPs were introduced in order to facilitate the neoliberal transformation ofthe role of the Irish State from one of direct provider of infrastructure andservices to a mere regulator and monitor:

By transferring responsibility for providing public services to the privatesector, government officials will act as regulators and will focus upon ser-vice planning and performance monitoring instead of the managementof the day-to-day delivery of public services.

(PPP Unit, DoEHLG, 2006)

Irish state officials also explained that part of their rationale to introducePPPs was in order to facilitate the insertion of market-based principlesof competition and ‘incentivised performance’ in the delivery process,


which would not have been permitted in traditional public service andinfrastructure provision:

The private sector skills and management expertise (that PPP brings in)are those which would be associated with managing business activitiesthat survive or fall by reference to financial returns in the market-place.Public servants do not typically work in such a commercial environmentand would not therefore be practitioners of commercial business activity.Employing private enterprise to deliver some types of services at a partic-ular cost, which cost is subject to a competitive process, has an incentivestructure which is linked to the business entity’s own private financialposition; this incentive structure cannot be replicated for obvious reasonswithin the public sector.

(PPP Unit, Department of Finance, 2006)

For example, the Luas light rail PPP contract facilitated the introductionof performance management systems and performance-based measures intothe Dublin public-transport sector.

Clearly, the political aim of classifying PPPs as a less severe form of pri-vatisation, or as merely entailing the continuation of the religious-stateprovision model in another form, effectively minimised opposition amonggroups such as trade unions and the wider public, rather than actually min-imising the neoliberal aspects to PPP policy and practice. These argumentsput forward by the state were about influencing the perception of PPPs,disguising the policy and practical reality. This approach was successful inco-opting the trade union leadership, a potential source of opposition toPPPs, into consenting to their introduction as they accepted PPPs were not‘Thatcherite’ privatisation but rather a more benign mechanism of privatereform of public services that entailed a ‘partnership’ approach.

Implementing PPPs in Ireland

Considerable institutional infrastructure at central and local state level wasconstructed speedily to enhance the public sector’s capacity to use PPPs,such as PPP ‘Centres of Expertise’ in government departments, the NationalDevelopment Finance Agency (NDFA) and even new legislation in the IrishState Authorities (PPP) Act 2002 (Hearne, 2011). This Act defined PPPs as an

arrangement between a state authority and a private ‘partner’ for theperformance of functions of a state authority in relation to the designand construction of an asset, together with the operation of servicesrelating to it and the provision of finance, if required, for such design,construction and operation.

(Government of Ireland, 2002)

Rory Hearne 163

Significantly, the Act states that the PPP ‘shall operate to confer on the pri-vate partner the functions of the State Authority’ and includes the possibilityof the transfer of a state asset to a private partner (Government of Ireland,2002). The government’s budget in 2004 aimed to increase PPP investmentfrom 3 per cent of total capital investment to 15 per cent by 2008 and theiruse expanded quickly into other areas such as social housing, courts, prisonsand health centres (Hearne, 2011).

As a result of the government decision to pursue the PPP approach, des-ignated sectors within local authorities and government departments wereinformed that proposed public infrastructure and service projects with aninitial capital expenditure exceeding �20M, would have to undergo a PPPfeasibility assessment before commencement. While this was, in theory,to assess whether or not a project was suitable for the adoption of a PPPapproach, the reality was that the proposed project would receive fundingonly if it were undertaken through the PPP route. Dublin City Council’s(DCC’s) PPPs in social-housing estate regeneration, the local-authorities’waste-water treatment plant PPPs and the Luas and Metro PPP projects pro-vide examples of the practical implementation of this policy. PPP projectmanagers and community representatives involved in negotiations sur-rounding the regeneration of DCC social-housing estates via PPP explainedthat they were informed by the Department of the Environment that statefinance was not available to fund their regeneration projects. Therefore, theirprojects would not be undertaken if they did not adopt the PPP method.They were left with little option but to pursue the PPP method despite thefact that this model required the reorientation of the regeneration plansaway from the wishes and needs of residents toward the requirements ofprivate developers and financial capital.

The following sections analyse in greater detail the outcomes of five case-study PPPs in Dublin with regard to their delivery of value for money, globalcapital involvement, quality of service, social impacts and their particularform of ‘actually existing’ neoliberalisation.

Case study 1: PPPs in social housing regenerationin Dublin’s inner city

Dublin City Council (DCC), the largest social-housing landlord in Ireland,has approximately 25,000 social-rented dwellings, of which about 6,000comprise flats complexes in the inner city (Hearne, 2011). Mainly built dur-ing the 1950s and 1960s, the communities initially enjoyed a decade or twoof stability. This ended during the 1970s and 1980s as deindustrialisationled to high rates of unemployment and poverty in these areas. The commu-nities became further disadvantaged and destabilised by the heroin crisis ofthe 1980s. The estates also deteriorated due to inadequate estate manage-ment by the local-authority landlord, Dublin City Council (see O’Connell,1999). This situation was compounded by ill-conceived housing policies


such as the ‘surrender grant’ that provided a financial incentive to social-housing tenants to relinquish their tenancy, which occasioned an exodusof those in employment able to access mortgage finance to purchase else-where. Allocation practices, which concentrated the most ‘at-risk’ peoplefrom the housing waiting list into already disadvantaged estates, furtherexacerbated their problems. Attempts were made in the late 1980s and early1990s to refurbish some of the estates through the exchequer-funded Reme-dial Works Scheme and, by 1995, over 12,000 units had been refurbishednationally. However, the schemes failed to have a significant effect on theoverall regeneration of the estates as the policies were restricted to exter-nal physical renewal, neglecting problems within the housing units and, inparticular, the deep social and economic deprivation which affected the resi-dents. There nevertheless remained very strong vibrant communities withinthese areas despite the conditions. This was evident in the significant num-ber of residents who wished to remain living there. They highlighted theirstrong historical family ties to the areas, commitment to their communitiesand local solidarity and support which proved to be vital in the daily struggleagainst social isolation and poverty (see Hearne, 2011).

In the late 1990s, therefore, local authorities and communities began toexplore the possibility of the complete demolition of the estates and therebuilding of new housing with community facilities and additional sup-port services as part of large-scale ‘regeneration’ plans. The plans were to bemajority-financed by public investment, with funding for community facil-ities and other services to be supplemented by the sale of a small numberof private housing units developed on the estates (Drudy and Punch, 2005).However, on 2 August 2001, the DoEHLG issued a circular (HS 13/01) toall local authorities in relation to regeneration plans for these areas whichstated:

Local authorities should consider the extent to which additional housingsupply can be brought on stream through PPPs between local authori-ties and private developers utilising suitable local authority lands. Theselands would primarily be lands in areas where there is already a signifi-cant concentration of social housing and where the total development ofavailable sites for social housing would not be appropriate having regardto the need to secure a suitable social mix in the area or due to the sizeof the site. In deciding on whether to use some of their land bank on thistype of initiative, the local authority should ensure that sufficient landsare reserved for their multi-annual LA housing programme.

(Department of the Environment, Circular HS 13/01, 2001)

DCC was then informed by the DoEHLG that it would have to consider deliv-ering the master plans for projects of a value greater than �20M through thePPP mechanism.

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These social-housing regeneration PPPs were based on a speculative landtransfer to private developers that leveraged the high value of the publicland upon which the estates were located. The local authority developeda regeneration master plan with the private developer which prioritisedprivate residential and commercial units that would attract higher-incomeoccupiers. In return, the developer provided social housing on site, gener-ally much reduced from the original number of social-housing units. Thisresulted in the required displacement (through ‘de-tenanting’) of many ofthe original working-class residents (Bissett, 2008; Hearne, 2011).

While regeneration projects using a similar PPP model were being plannedby local authorities across the country in places such as Limerick, Sligoand Kildare it was Dublin, more than any other local authority in Ireland,which enthusiastically embraced PPPs and took the lead in initiating PPPprojects. This reflected a deepening realignment by DCC towards moreneoliberal planning and housing policies (McGuirk and MacLaran, 2001;Drudy and Punch, 2005). By 2008, this ‘new future’ through regenera-tion was being planned for at least 12 local-authority flats complexes inDublin’s inner city. Construction had commenced on the Fatima Man-sions PPP project and the contract had been signed with the preferredbidder (Bernard McNamara and Co.) in the O’Devaney Gardens project.In the St. Michael’s estate and Dominick Street projects the contract hadalso been awarded to Bernard McNamara and Co., while other estates,including Croke Villas, St Theresa’s Gardens, Charlemont Street and Dol-phin House were preparing for commencement of the PPP process. Theseprojects were supported at the highest level within government. TheTaoiseach explained how the PPPs would bring about ‘a bright new future’for the residents of these areas, at a much quicker pace than direct stateinvestment:

In order to make a reality of better social housing, the government willensure that new housing is designed and planned on quality principles,includes an appropriate housing mix and provides necessary social infras-tructure . . . PPP’s have the potential to deliver housing in a faster periodwithout compromising on quality and we will continue to encourage thisapproach where appropriate.

(Former Taoiseach, Bertie Ahern, speaking at the launch of theDominick Street flats complex regeneration PPP, 2006)

However, the PPPs failed disastrously to deliver on such claimed benefits.In the first instance, the process by which the PPP regeneration plans weredeveloped generated significant conflict between the disadvantaged commu-nities, on the one hand, and local authorities and the developer on the other.The local authority, in the main, prioritised the private developers’ profit-maximisation requirements over the needs of the community. Issues arose


over access to and power over decision making in relation to the contentof the master plans, including the quantity of social and private units, thedensity of development and community gain (see Chapter 15).

Most significantly, the entire PPP process collapsed as a result of thefinancial and property crash in 2008. Private developers withdrew from theprojects as they were no longer deemed profitable. Policy makers had placedtheir neoliberal belief in the continuous growth of the property market andignored its inherent cycles and crises. Only one PPP, Fatima Mansions, wascompleted and, as a result, thousands of local-authority tenants were left liv-ing in substandard conditions, with many hundreds permanently displacedfrom their communities. Only 21 per cent of the original population liv-ing in these ten communities remained in situ in 2013. In this instancethe state, on behalf of developer capital, through the mechanism of PPPs,destroyed inner-city and indigenous working-class communities throughstate-enforced land clearance.

These PPPs facilitated the implementation of a central neoliberal pol-icy objective of creating market opportunities for the private sector withinpublic governance, services and infrastructure. It provides strong evidencein support of Harvey’s (2005, p. 178) assertion that neoliberalism facili-tates capital ‘accumulation through dispossession’ from public service users,employees and taxpayers. For example, these PPPs were planned to facili-tate the commercial realisation of the market value of public land by andfor private developers, who would, in return, finance the provision of socialand community aspects of regeneration of former local authority housingestates:

PPPs can capitalise in a cost-effective and socially-progressive manner onthe escalation in the value of urban lands in public ownership . . . theseprojects are financially neutral for the Exchequer, as the private sectoris providing public housing in return for development rights on theremainder of the sites.

(PPP Unit DoEHLG, 2006)

Of course the outcomes of the projects demonstrate the fallacy of theseneoliberal claims of ‘value for money’ and ‘zero cost’ to the state. There wasin fact a huge ‘cost’ to the public purse in the form of the transfer of publicland to the private developer. The developers had only to provide a relativelysmall element of social housing and community gain, the cost of which wasonly a fraction of the value of the public land they obtained. Based on analy-sis of just six of the planned PPP regeneration projects, the state was going totransfer public land worth approximately �545M to private developers. Thedevelopers, in return were to provide social housing and community facil-ities worth just �214M. This left developers with a potential �331M gainfrom the value of this public land (Hearne, 2011).

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Achieving the transfer of risk to the private sector in PPPs is also sup-posed to provide greater VFM and save resources for the state. However,in this case, where the risk materialised, it was the state, rather than theprivate partner which had to pay for the cost of addressing problems andfailures that arose. This is because, ultimately, it is the state which has theresponsibility to ensure that public services and infrastructure are providedin accordance with the required standard and remain in operation. Indeed,it was the communities which bore the most devastating cost of the riskmaterialising.

Case study 2: Criminal courts of justice

The new, 11-storey, Criminal Courts of Justice Complex is located at ParkgateStreet at the entrance to Dublin’s Phoenix Park. Opened in November 2009,it contains 22 courtrooms. It was designed, built, financed and is operatedthrough a PPP between the Irish State Courts Services and a private consor-tium led by Australian multinational Babcock and Brown. The outcome ofthe courts project reveals the manner in which PPPs convert public infras-tructure into global capital commodities. When Babcock and Brown wentinto liquidation in 2009 the Courts PPP was transferred to Amber FundManagement Ltd, which administers the PPP through a company listed onthe London Stock Exchange called International Public Partnerships which,itself, has over �2bn of global PPP assets. In fact, a significant proportion,62 per cent, or 29 projects, of PPP contracts awarded in Ireland between1999 and 2008 were awarded either directly to major European and globalfinancial, infrastructure and service multinational companies or to their Irishsubsidiaries (Hearne, 2011).

Analysis of the courts project clearly demonstrates that it did not achieveVFM for the Irish taxpayer. Rather than paying for the project up front oncommencement of the process at a cost of �140M, the Irish state insteadis contracted to pay for it through annual payments (of approximately�19M) to the private operator over the 25-year duration of the contractat a total cost of �475M. The state’s accountancy auditor, the Comptrollerand Auditor General (C&AG), criticised the government’s mechanism forevaluating the value for money of a PPP project, the Public Sector Bench-mark (PSB), in this case, for not exploring the sensitivity of the analysisto different assumptions (C&AG, 2008). The PSB projected that it wouldcost �436M to develop and operate the criminal courts over 25 yearsusing a traditional, public, procurement approach. The C&AG found thatthis was significantly greater than the cost projected in the original busi-ness case and, if some of the assumptions underlying the PSB were alteredto accommodate more realistic circumstances, the results changed signifi-cantly. For example, if the recurrent costs were assumed to increase at thesame rate as inflation (that is 2 per cent a year rather than the 4 per centused in the PSB), the projected cost of conventional procurement would


be �377M, some �59M (14 per cent) below the benchmark figure of�436M. This corresponded to the international PPP experience, where gov-ernment departments adjusted PSB calculations, particularly the underlyingassumptions, to favour adoption of the PPP option (Pollock and Price, 2004).

PPPs are also more expensive because of charges associated with risk trans-fer, facility management, provisions for private-operator income generationand the increased professional, consultation, legal and financial fees associ-ated with the complex PPP bidding and tendering process (C&AG, 2008).The involvement of the private sector necessitates the additional cost ofprivate-sector returns, that is the profit element, with estimates of the rateof return from PPPs varying from 15 to 20 per cent (Whitfield, 2010).

The use of private finance further added to the cost of PPPs because it ismore expensive than exchequer-borrowed finance. Moreover, while privatefinance can provide access to large amounts of funding ‘up-front’ and can beplaced ‘off the balance sheet’, the annual payments required to pay for thismore expensive form of finance are, essentially an accountancy trick whichobscures the true, full, cost of PPPs. Ultimately, over the long term, they willrequire additional public expenditure over and above that which would berequired had public funding been provided up front.

Case study 3: The M50 toll bridge

The significant profits made by the private sector from PPPs are shown bythe case of the M50 West-Link toll bridge PPP in Dublin. Growing trafficgridlock on the M50 motorway had reached crisis point in 2008 and the tollbridge was being blamed for adding significantly to the delays experiencedby the users of the 100,000 vehicles passing daily. Dublin’s daily newspaper,the Evening Herald launched a campaign to ‘Stop the M50 Toll Madness’. Theintroduction of ‘barrier free’ tolling was proposed as a mechanism to reducethe traffic jams on the motorway, however, the private operator (NationalToll Roads) was reluctant to make the necessary changes because of costimplications. The PPP contract meant that it would be another 12 yearsbefore ownership of the bridge could be transferred to the state. As a result,the Irish government had to pay approximately �600M (�50M per annumto National Toll Roads between August 2008 and March 2020) to purchasethe complete ownership of the project so that it could implement barrier-freetolling.

Case study 4: Dublin waste-water treatment plant

The Dublin (Ringsend) waste-water treatment plant is a PPP commissionedin 2003 by Dublin City Council at an estimated cost of �400M. It was thefirst, and remains the largest, of such PPP plants in Ireland and is oper-ated by Ireland’s largest private provider of water PPPs in Ireland, CelticAnglian Water (CAW). However, local residents in Ringsend, Sandymountand Irishtown have suffered since the plant was built in 2003 from its

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persistent foul odour. In 2008, the Minister for the Environment commis-sioned an investigation into the cause, which found that the problemswere created by inadequate design and equipment failure in the plant. Italso noted that there was constant conflict between DCC and the privateoperator, Celtic Anglian Water (CAW), in trying to deal with the problems.

Again, as in other PPPs, it was the state rather than the private operatorwhich had to pay for the changes required to address the problems. Of the�24.5M allocated to the plant in 2006, �5M was spent on odour-alleviationmeasures, which DCC asserted would be paid for by CAW. Nevertheless, DCCended up paying �35.6M to CAW to address the problem, despite DCC’sstatement that it would not ‘sign-off’ on the project until the private opera-tors had eliminated the problem and that the exchequer would not pay forthe plant’s inadequacies (Hearne, 2011).

This demonstrated that private-sector involvement did not automaticallyguarantee a better-quality service and additionally, in this instance, pro-vided a service which had negative impacts on the local population andenvironment.

Case study 5: Luas

Dublin’s light rail system, the Luas PPP, was completed in 2005 and is oper-ated by Veolia Transport Ireland, a subsidiary of Veolia Environment, aglobal service provider, with over 336,000 employees and recorded revenueof �34.6bn in 2009 (Transdev, 2013). This example provides an insight intoanother aspect associated with the neoliberal restructuring of the state whichis the change in the nature of the wage relation. This is aimed to increase thescale of the returns going to capital while reducing the share which goes tolabour, through the reform of, and reduction in, workers’ conditions and theinfluence of trade unions within the public sector. In this case, part of therationale for developing the light-rail system through a PPP was to reducethe conditions of those public-sector workers and to reduce the control ofthe trade unions within the Irish public transport system, particularly DublinBus and train services which were considered to be subject to ‘militant’ tradeunionism. A state representative explained:

It was breaking the hold of the unions. It was to overcome the perceptionthat Dublin’s public transport is often interrupted by industrial action.With a PPP, a union member’s job is on the line if they disrupt as thecompany is penalized for an interrupted service under the contract, andcould even lose the contract.

(State Rail Agency official, 2006)

The impact was to reduce the rights and conditions of the new private-sectoremployed rail drivers in the Luas compared to the public-sector drivers inDublin Bus and rail services. For example, the Luas tram drivers were obliged


to sign a ‘no-strike’ contract on their employment, whereas no such contractexists within the Irish public sector. According to the trade union repre-sentatives interviewed, this measure and other conditions contained in theLuas drivers’ contracts were intended to send a signal to the militant public-transport workers that if they took industrial action too often then their ownservices would also be privatised. Furthermore, in October 2012, 93 per centof Luas drivers who were members of the trade union, SIPTU, voted in favourof industrial action indicating the serious level of dissatisfaction with theirworking conditions (Herald, 2012).

Actually existing neoliberalism in Ireland

From these case studies it is clear that PPPs have been a form of privatisationand neoliberalisation of key aspects of traditional public-sector operations.Evidence has been provided of marketisation, asset transfer, multinationalinvolvement and diminution of labour conditions lending support toBrenner and Theodore’s (2002) assertion, that under neoliberalism the wel-fare state is transformed by actors within the state itself, into a form thatcreates new markets for capital. Furthermore, the reliance on private financewithin PPPs means that the provision of, and therefore access to, some publicservices and infrastructure was being made dependent by the Irish govern-ment, to a greater level than hitherto, on the ‘bankability’ (Farrell GrantSparks, 1998) or ‘commercial viability’ of that infrastructure or service asa PPP project. This move cemented the requirements of private capital asthe over-riding determining factor in public service and infrastructure to thedetriment of social requirements. This is a problem with privatisation andmarketisation as the private sector only invests in public projects whichhave the potential to generate profit, with less profitable services beingneglected and with investment being withdrawn at times of crisis (Harvey,2005).

A notably unique aspect to actually existing neoliberalism in Ireland hasbeen the fact that PPPs were introduced at time of budget surplus. Further-more, the budget surpluses of the period of the Celtic Tiger, which providedan opportunity significantly to improve the welfare state, were used insteadto reduce taxation on wealth and capital. Rather than entailing the dis-mantling of a welfare state, in Ireland, therefore, neoliberalism involvedcontinued fiscal conservatism and the involvement of the private ‘for-profit’sector intimately in state governance and public service and infrastructureprovision.

Another aspect has been the low level of opposition to neoliberal market-led reforms such as PPPs. The political hegemony of neoliberal policiesduring the Celtic Tiger boom was, in part, achieved through the Social Part-nership model where the Irish state successfully co-opted trade unions and

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community and voluntary organisations (see Chapter 2). The success of thisco-option is revealed in the agreement by the Irish Congress of Trade Unions(ICTU) to the introduction of PPPs as part of the Social Partnership agree-ments (Kirby, 2002; Allen, 2007). ICTU accepted the government’s claimthat PPPs were not a form of privatisation and comprised merely a reformedmechanism of public-sector delivery (ICTU, 2005). As a result, oppositionto PPPs emerged at a local case-specific scale, such as from workers andtheir trade-union representatives in the PPPs in the Luas light rail project inDublin and at the waste-water plant in Dun Laoghaire and, at a communitylevel, in Dublin’s inner-city social-housing estates.

Despite the critical national and international evidence, PPPs continue tobe promoted and implemented in Ireland by the new government electedin 2011. The two new parties forming the coalition government, Fine Gaeland Labour, had both been critical of PPPs prior to the election and hadgained public support from their opposition to the failed neoliberal policiesof the previous regime. The Labour Party had proposed the establishment ofa National Development Bank to fund and deliver infrastructure projects inorder ‘to remove uncertainty relating to the funding of critical PPP projects,and to retain profit from public infrastructure delivery within the publicsphere’ (Burton, 2009). However, in July 2012, the new Labour Party Minis-ter for Public Expenditure and Reform, Brendan Howlin, outlined that PPPswould be central to the government’s �2.25bn Infrastructure Stimulus Plan.It included the aim of raising �1.4bn of private-sector funding through PPPsto deliver roads, eight new schools, education facilities (the development ofa new campus for the Dublin Institute of Technology), 20 primary healthcare centres and some court buildings. Funding for the programme is alsoplanned to come from the sale of state assets (Howlin, 2013). Roads comprisethe majority (59 per cent) of the programme and education an additional20 per cent. Environmentally sustainable projects such as regional urbanlight-rail projects or socially necessary regeneration of disadvantaged urbancommunities were not included, these being less likely to attract privatefinance.

PPPs remain attractive because of their profitability. By June 2013 supporthad been obtained from the European Investment Bank for the PPP pro-gramme and a large Dutch Pension Fund was providing the investment forthe Irish-education PPPs, the first such agreement with Pension Funds in theEuropean PPP market. The extent of the institutionalisation of neoliberalismwithin the Irish state is revealed by the minister’s statement that, despiteevidence to the contrary, these PPPs would secure ‘value for money for theExchequer while delivering private sector innovation and commercial andmanagement expertise to the benefit of the State . . . They also allow the allo-cation of risk to the party that can manage it best and at least cost’ (Howlin,2013).


Conclusion

Using a geo-political economy approach, PPPs in Ireland can therefore beanalysed as having facilitated, supported and implemented the process ofneoliberalisation of the Irish State institutional infrastructure. This has takenplace at the scale of central and local urban government in public service andinfrastructure delivery and in the wage relation, and, thus, constituted animportant moment in the development of actually existing neoliberalism inIreland. This research shows that neoliberalism, as outlined elsewhere (seeBrenner and Theodore, 2002), does not represent as much a reduction instate intervention in society but rather a political, institutional and geo-graphical reorganisation of the manner and methods by which the stateintervenes. PPPs have led to privatisation by stealth of public services andgrowth in the power and influence of global capital over local and nationalgovernment, thereby playing a strategic role in capturing public services andassets for capital accumulation.

The research into PPPs and the changing form of the state underneoliberalism demonstrates that the local and central state, and the pub-lic services and infrastructure which they provide, have played, are playingand will continue to play, a central role in determining the nature and char-acteristics of our societies and economies in terms of stability, development,equality, sustainability and standards of living. The debate in which aca-demics and practitioners must engage is what this role will be. Will theinterests of global multinationals, financial investors, stock markets, theaccumulation of wealth of private investors and banks be prioritised bythe state? Or will the interests of the majority, particularly lower-incomepopulations and the marginalised become the primary concern? Dependingon the outcome of this struggle, the state will have very different roles, char-acteristics, services and infrastructure. The emerging opposition to the sale ofstate assets in Ireland, such as national forestry and the action by bus work-ers defending their rights, are a positive sign that the neoliberal juggernautis not inevitable and alternatives are possible.

References

Allen, K. (2007) The Corporate Takeover of Ireland. Dublin: Irish Academic Press.Bissett, J. (2008) Regeneration, Public Good or Private Profit? Dublin: Tasc at New Island.Bourdieu, P. (1998) Acts of Resistance: Against the New Myths of Our Time. Cambridge:

Polity Press.Brenner, N. and Theodore, N. (2002) Cities and the geographies of actually existing

neoliberalism, Antipode, 34 (3), 349–79Burton, J. (2009) Labour Proposes National Development Bank, 28 April 2009, Available

at: www.labour.ie.Comptroller and Auditor General (C&AG). (2008) Annual Report of the Comptroller and

Auditor General, Available at: www.audgen.gov.ie.

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Drudy, P. J. and Punch, M. (2005) Out of Reach, Inequalities in the Irish Housing System.Dublin: Tasc at New Island.

Farrell Grant Sparks. (1998) A Report Submitted to the Inter-departmental Group in Relationto Public Private Partnerships. Dublin: Farrell Grant Sparks.

Government of Ireland. (2001) Policy Framework for Public Private Partnerships: WorkingTogether for Quality Public Services. Dublin: Department of Finance.

Government of Ireland. (2002) Irish State Authorities (Public Private Partnerships) Act2002. Dublin: Department of Finance.

Grubnic, S. and Hodges, R. (2003) Information, trust and the private finance initiativein social housing, Public Money and Management, 23 (3), 177–84.

Harvey, D. (2005) A Brief History of Neo-liberalism. London: Oxford.Hearne, R. (2011) Public Private Partnerships in Ireland: Failed Experiment or the Way

Forward for the State? Manchester: Manchester University Press.Herald. (2012) Commuter Chaos Averted as Luas Strike on Hold for Now, 31 October 2012,

Available at: http://www.herald.ie/news/commuter-chaos-averted-as-luas-strike-on-hold-for-now28851429.html.

Howlin, B. (2013) Investing in Infrastructure and Jobs. Dublin: Department of PublicExpenditure and Reform.

Irish Congress of Trade Unions (ICTU). (2005) Guidelines for Unions on Consultationswith State Agencies and Public Authorities in the Republic of Ireland Concerning PublicPrivate Partnerships. Dublin: ICTU.

Kirby, P. (2002) The Celtic Tiger in Distress. Basingstoke: Palgrave.McGuirk, P. and MacLaran, A. (2001) Changing approaches to urban planning in an

‘Entrepreneurial City’: The case of Dublin, European Planning Studies, 9 (4), 437–57.Monbiot, G. (2003) The Age of Consent: A Manifesto for a New World Order. London:

Flamingo.Murray, S. (2006) Value for Money? Cautionary Lessons about P3s from British Columbia.

Ontario: Canadian Centre for Policy Alternatives.O’Connell, C. (1999) Local authorities as landlords, in Fahey, T. (Ed.) Social Housing

in Ireland: A Study of Success, Failure and Lessons Learned. Dublin: Oak Tree Press,pp. 57–79.

Peck, J. and Tickell, A. (2002) Neoliberalizing space, Antipode, 34 (3), 380–404.Pollock, A. and Price, D. (2004) We are left footing the PFI bill: The public pays the

price when contractors pull out of projects, The Guardian, 27 July 2004.PricewaterhouseCoopers. (2001) A Policy Framework for Public Private Partnerships for the

Department of Environment Heritage and Local Government. Dublin: Stationery Office.Transdev. (2013) The LUAS, Available at: www.transdevireland.ie.Whitfield, D. (2006) New Labour’s Attack on Public Services. London: Russell Press.Whitfield, D. (2010) Global Auction of Public Assets; Public Sector Alternatives to the

Infrastructure Market and Public Private Partnerships. Nottingham: Russell Press.

11Taking Liberties: Gentrification asNeoliberal Urban Policy in DublinSinéad Kelly

Introduction

There is little doubt that many city downtowns are currently witnessinga significant revival. On entering the typical city centre, one is invariablydazzled by an imposing array of gleaming towers, which overlook a kalei-doscopic geography of corporate glamour, conspicuous consumerism,café culture and street-life chic, all in close proximity to some elegantlyrestored town houses and gentrified terraces. In effect, and as Neil Smithsurmised several years back, ‘the terrain of the inner city is suddenlyvaluable again, perversely profitable’ (Smith, 1996, p. 6).

(MacLeod et al., 2003, p. 1660)

Recent literature on neoliberal urbanism has emphasised the increasinglyimportant role of cities as key sites of accumulation, a central aspect ofwhich has been the accelerating volume and turnover of capital in the builtenvironment and a more rapid transformation of urban space (Brenner andTheodore, 2005; Harvey, 2006; MacLeod and Jones, 2011). At the city scale,the production of gentrification is intrinsic to processes of accumulationand, for many urban authorities, gentrification has become a core goal ofurban policy. Behind the architecture of capital investment in inner-cityareas described by MacLeod et al. (2003) above, lies a deeper transformationof the social profile of areas, whereby traditional working-class populationscan no longer afford to access housing locally, due largely to the increases inland and housing prices that result from influxes in capital investment andthe recreation of locales for higher-class consumption. Gentrification and itspursuit is thus a highly conflictual process.

Since 1990, Dublin’s inner city has been dramatically transformed, markedespecially by the creation of new financial and cultural quarters, the large-scale construction of private apartments and gated enclaves for middle- andupper-income groups, a population influx of over 50,000 and a deepening

174

Sinéad Kelly 175

housing-affordability crisis for traditional working-class communities. Whilecentral government acted as a catalyst for processes of gentrification in theearly 1990s (see Chapter 2) largely through the introduction of property-based tax incentives and large-scale urban development corporations, thelocal state has played a major role in the recent transformation of thecity, introducing its own brand of entrepreneurial planning and governancestructures and becoming heavily involved in preparing and ‘selling’ thecity for capital. Drawing on empirical research into the residential trans-formation of inner Dublin, this chapter seeks to illuminate processes andoutcomes of state-engendered gentrification and argues that policies pro-moting gentrification are spearheading a broader neoliberal strategy forthe city.

Gentrification and neoliberal urban policy

At a general level of analysis, gentrification can be viewed as a process ofbroad socio-spatial change which centres on the transformation of working-class neighbourhoods into middle-class residential and/or new commercialspaces. This process involves both functional upgrading and the move-ment of a middle-class population to former working-class areas. Functionalupgrading occurs when an influx of capital to areas that have histori-cally commanded low land prices serves to drive up land prices, which inturn requires that land uses upgrade to more profitable and higher rent-yielding uses, for example, from low-income to higher-income residentialuses or from industrial to commercial functions. This process of functionalupgrading and the inward movement of a middle-class population to for-mer working-class areas eventually leads to the displacement of the originalpopulation which is unable to afford the increased costs of housing thataccompany redevelopment and upgrading (Smith, 1996; Atkinson, 2000;Lees et al., 2008).

While debates in the literature from the 1970s focused on the extent towhich forces of consumption or production were the key drivers of the pro-cess, recent research has coalesced around the emergence of gentrification,not simply as having become more prevalent during the past 30 years but,as a key strategy for cities, where ‘a “gentrification blueprint” is being mass-produced, mass-marketed, and mass-consumed around the world’ (Davidsonand Lees, 2005, p. 1167). Indeed Smith (2002) posited gentrification as aglobal urban strategy which formed part of broader neoliberal approachesto cities. He argued that gentrification is promoted (politically and econom-ically) in order to ‘fill the vacuum left by the abandonment of twentiethcentury liberal urban policy’ and because ‘it serves up the central- andinner-city real-estate markets as burgeoning sectors of productive capitalinvestment: the globalisation of productive capital embraces gentrification’(Smith, 2002, p. 446).


In the aggressive climate of inter-city competition, city marketers regardthe revalorisation of central areas as key to attracting capital and, in manycities, the state has been at the vanguard of initiating and promotingproperty-led urban regeneration, often being heavily involved in prepar-ing, privatising and marketing areas for redevelopment (Rodriguez et al.,2003). While the rapid reshaping of cities is a highly disruptive process forlow-income groups, the politics of gentrification become subsumed and pla-cated by discourses of ‘re-imagineering’, ‘revitalisating’ and ‘regenerating’(see Slater, 2006) redundant industrial areas and low-income neighbour-hoods, accomplished through the mobilisation of entrepreneurial planningmechanisms and governance approaches which initiate, promote and coor-dinate the creation of new office, retail, cultural and residential spaces in thecity (McGuirk and MacLaran, 2001; Swyngedouw, 2005; see also Chapters 2and 5). Turning to the case of Dublin, this chapter focuses attention onthe state-led gentrification of the city and illustrates the scale of residentialtransformation that has taken place since 1990.

Urban policy in Dublin

As discussed in Chapter 2, the state has played a crucial role in initiat-ing and bolstering property-led renewal and in promoting gentrificationin Dublin. In the 1980s and 1990s, it was central government whichplayed a major role, first, by devising tax-incentives for property-basedredevelopment under the Urban Renewal and Finance Acts of 1986; sec-ond, by delimiting certain ‘designated areas’ of the inner city (see Figure 5.1)within which tax incentives would apply and; third by establishing new gov-ernance structures and special-purpose authorities (in the redevelopment ofthe Custom House Docks and Temple Bar, for example) to speed up andimplement urban redevelopment (MacLaran, 1993; MacLaran and Williams,2003). Effectively, these measures introduced significant financial gains andrisk reduction for private-sector development interests, ensured that plan-ning processes would be fast-tracked and bureaucratic procedures by-passedand ultimately, provided a clear signal for capital to return to run-downinner-city areas, effecting a massive revalorisation of land (Smith, 1996).Moreover, this new approach to the city instigated the realignment of plan-ning operations of the local state towards more business-friendly formsand, in line with trends internationally, signalled the adoption of moreentrepreneurial and neoliberal forms of urban governance whereby localgovernment policies reoriented away from traditional welfare-service pro-vision to policies aimed at attracting global financial capital, promotinglocal economic development strategies and redeveloping former-industrialinner-city districts (Cox, 1995; McGuirk and MacLaran, 2001; Ward, 2003;MacLeod and Jones, 2011). By 1996, the new financial-services district, the

Sinéad Kelly 177

International Financial Services Centre (IFSC) in the Custom House Docks,had been heralded a success and the residential redevelopment of the innercity’s designated areas was well under way with over 7,700 new residentialunits constructed (Murphy, 1998; MacLaran, 1999).

More recently, the local state has been at the forefront of the transforma-tion of the city, devising new governance structures, implementing a muchmore entrepreneurial modus operandi and becoming much more proactivein marketing and preparing the city for capital (see Chapter 5). Having beenlargely marginalised by central government in the first phase of neoliberalurban governance (McGuirk and MacLaran, 2001), the adoption and appli-cation by Dublin City Council (DCC) of micro-area planning techniques(through the development of integrated area plans (IAPs) from 1998) sig-nalled a greater commitment to partnership with the private sector and moregenerally to a market-led approach to urban policy. Notably, DCC’s devel-opment of IAPs for five inner-city areas coincided with the creation of theDublin Docklands Development Authority (DDDA) which was tasked withimplementing urban development in 526ha of docklands in the east of thecity (see Figure 11.1). Thus by 1999, micro-area plans covered over 1,130haof the inner city, the implementation of the plans being explicitly depen-dent on levering private-sector funding based on close co-operation withdevelopers.

The IAPs represented collaborative or integrated approaches to urbanregeneration (Gleeson, 1999). These localised planning mechanisms aimedto ‘embrace the complexity of contemporary urban systems, through

DART

DAR

T

1 0.5 0 1 Km

N

River Liffey

Royal Canal

NEIC IAP

DUBLINDOCKLANDS

DEVELOPMENTAUTHORITY

(DDDA)

HARP IAP

O'ConnellStreetIAP

Kilmainham/InchicoreIAP

Liberties/Coombe IAP

Portobello

Ballsbridge

Sandymount

ClontarfPhibsborough

Islandbridge

Docklands developmentareaIntegrated Area Plans

Fairview

Grand Canal

Figure 11.1 Location of IAPs and remit of the DDDA master plan, 1999


developing a holistic approach towards the achievement of social, economicand environmental goals while encouraging the necessary inter-sectoralco-ordination to achieve such aims’ (McGuirk and MacLaran, 2001, p. 450).Under the IAPs, tax incentives were site-specific and more strategically tar-geted than in previous urban renewal schemes and formed one componentof wider urban-regeneration strategies. As part of the plans, more detailedUrban Design Frameworks were devised at street and neighbourhood lev-els, setting out (among other things) land-use zonings and developmentscales for individual sites. In a similar fashion, the DDDA (1997, 2008)devised a master plan for docklands, developing more detailed plans forvarious sub-areas such as IFSC II, Spencer Dock, the Grand Canal Docksand North Lotts, setting out appropriate land uses, functional mix, devel-opment scales and district themes (for example office, cultural, residentialor mixed-use districts) at street scale. While the details for each IAP and theDocklands’ master plan differed, each possessing quite distinct local prop-erty markets, a key implementation mechanism was the development of astrong marketing strategy to promote the area and essentially to competewith other area-based urban regeneration projects for investment capital(Kelly, 2007; Punch et al., 2007; Moore, 2008). This competitive micro-areaplanning approach in conjunction with a buoyant property market servedto sustain the pace of physical renewal in inner-city areas into the 2000s.In the case of the Liberties/Coombe IAP, for example, the project implemen-tation team was proactive in promoting the development of tax-designatedsites by identifying sites ‘ripe for redevelopment’ and by contacting ownersdirectly to encourage them to develop their vacant or derelict sites and prop-erties (Dublin Corporation, 2001, p. 6). Importantly, an overarching impactof such detailed micro-area planning was the signalling by the state of along-term commitment to the physical renewal of the city and, in doing so,ensured risk reduction for property development in locales which until thenhad been considered too risky. Like their predecessors, the designated areasof the mid-1980s, IAPs essentially altered the development profitability sur-face of the city, resulting in an influx of capital to devalorised inner-city areaslargely in the form of residential apartment construction. To use Smith’s(2002) term, the implementation of micro-area planning made large tractsof the city ‘safe’ for gentrification.

Micro-area planning, in conjunction with the continuation of policies tosell and privatise publicly owned land and local-authority housing, togetherwith the adoption of PPP approaches to the redevelopment of local-authorityhousing estates, have been important factors in intensifying processes ofgentrification. Moreover, urban policies aiming to increase the ‘social mix’of inner city areas and, more recently, the adoption of ‘creative city’principles in urban-regeneration policy have inherently favoured middle-and upper-income populations while reinforcing displacement pressures onlower-income groups.

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Gentrifying Dublin

A major outcome of an increasingly neoliberal central state and anentrepreneurial local state, which has become a more-than-willing ‘agent’ ofcapital (Smith, 2002), has been the widespread gentrification of inner Dublin(see Kelly and MacLaran, 2004; Punch et al., 2007). From 1990, Dublin’sinner city underwent a dramatic transformation. The recreation of formerindustrial and working-class areas into new financial, residential, tourist andcultural spaces resulted in significant population increase.

The pace of change in inner Dublin has been remarkable and its initia-tion set against a backdrop of widespread inner-city decay and dereliction,high levels of unemployment and poverty, together with a prolonged periodof depopulation and disinvestment. Having experienced negligible levels ofprivate-sector residential development during the twentieth century, evenprior to the peak years of the development boom, by the end of 2003 over19,400 new private residential units had either been developed since 1989 orwere under construction in Dublin’s inner city (Kelly and MacLaran, 2004;Kelly, 2007). Former industrial areas such as Docklands and the Liberties(south-west inner city) have been rapidly re-imagineered into new residen-tial spaces for an incoming, professional, middle-income population. Newprivate apartment complexes reflected changing household size and pre-dominantly (around 90 per cent) consisted of either one- or two-bedroomedunits (Kelly and MacLaran, 2004).

The influx of capital to inner Dublin was accompanied by an influx ofpopulation. Having experienced significant depopulation for most of thetwentieth century, partly resulting from a series of slum-clearance pro-grammes, the inner area experienced a population increase of over 53,000or 63 per cent in the 20-year period to 2011, increasing from 84,055 in 1991to 112,076 persons in 2002, totalling 137,142 in 2011.

Surveys of the occupiers of the first phase of residential developments(1989–96) clearly showed the emergence of a gentrifying population, dis-playing socio-economic characteristics quite distinct from those of theindigenous population which was typically elderly, poorly skilled and suffer-ing from a high incidence of unemployment (MacLaran et al., 1994, 1995;MacLaran and Floyd, 1996). The new population was predominantly youth-ful, 94 per cent of residents being aged between 18 and 44 years, having anaverage age of 27 years. Households were small in size, averaging 1.9 per-sons with 80 per cent comprising 1 or 2 people. Professionals accounted for48 per cent of the new residents, clerical workers and students accountingfor 14 per cent and 9 per cent respectively. A majority (77 per cent) held,or had then been pursuing, a degree or professional qualification. The newpopulation had few links historically with the locality.

Census results from 2002 confirmed that the process of gentrification hadgathered momentum and, by 2011, the social profile of Dublin’s inner city


had been profoundly transformed (CSO, 2002, 2011). This was dramaticallyillustrated by changes in the age structure of the population, its social classcomposition, levels of achieved education, employment rates and housingtenure. The 33 per cent increase in population in the first decade of transfor-mation can be attributed almost entirely to the net in-migration of youngprofessionals. Between 1991 and 2002, there was a 90 per cent increase inthe number of adults aged between 25 and 44 years, totalling 45,107 persons.This cohort accounted for 40 per cent of the population in 2002, up from30 per cent in 1991. The influx of a young working population subsequentlycontinued and, by 2011, 65,907 adults or 48 per cent of the population werein this age group, amounting to a 180 per cent increase in 20 years. Simulta-neously, the number of children and elderly persons diminished (Kelly andMacLaran, 2004) (Table 11.1).

Concentrating on changes in Social-Class composition, by 2002 a substan-tial (137 per cent) rise in the number of persons in upper Social Classes 1and 2 (comprising professional workers and managerial and technical work-ers) had occurred, increasing to 28,475 persons. In contrast, a 24 per centdrop in the number of persons in the lower Social Classes 4–6 was registered,down to 29,177 persons. Furthermore, 39 per cent of those aged between 25and 44 years belonged to Social Classes 1 and 2, representing a proportion-ate increase of 18 per cent since 1991. In the more recent period 2002–11,the number of persons in the Social Classes 1 and 2 increased by a further12,150 or 43 per cent to 40,625.

Other changes which clearly support an interpretation of inner-citygentrification relate to changes to levels of post-secondary education.In 2011, 37,511 persons had received third-level education, up from27,090 in 2002. The corresponding figure for 1991 had been a mere 6,581persons. Recent surveys by Howley (2009; Howley and Clifford, 2009) of theinner-city’s new population confirm its high socio-economic status: half ofthose surveyed in 2006 reported annual incomes in excess of �40,000 while

Table 11.1 Age structure of the inner 40 wards, 1991, 2002, 2011

Age groups 1991 2002 2011

Persons Per cent Persons Per cent Persons Per cent

0–14 15,185 18.1 14,296 12.8 14,565 10.615–24 16,158 19.2 23,935 21.4 23,607 17.225–44 23,621 28.1 45,107 40.3 65,907 48.145–64 15,541 18.5 17,485 15.6 22,525 16.465+ 13,550 16.1 11,230 10.0 10,538 7.7

Total 84,055 100.0 112,053 100.0 137,142 100.0

Source: CSO Census of Population, 1991, 2002 and 2011.

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16 per cent had incomes exceeding �80,000, standing in stark contrast tothe low-income status of the indigenous population.

The changing tenure structure of the city’s dwelling stock also providesstrong evidence of an inner city undergoing gentrification. Between 1991and 2002, there were two notable changes to the tenure structure: a largeincrease in the number of households in privately rented accommoda-tion, which more than doubled from 5,611 to 13,272 households1 and a20 per cent reduction in the number of households in social housing to8,111 units, resulting from the sale or privatisation of existing stock and thedecline in the number of new social-housing units being constructed. Since2002, the change in tenure has been even more dramatic with the number ofhouseholds in privately rented accommodation again more than doublingto 28,286, representing 51 per cent of all households. In 2011, householdsin owner occupation and privately rented accommodation accounted for77 per cent of the total, up from 53 per cent in 1991 and 63 per cent in 2002.Meanwhile, the proportion of households renting from the local author-ity fell from 33 per cent to 17 per cent over the 20 years. The decline inthe provision of social housing has had serious implications for indigenousinner-city residents, leading to an intensified housing-affordability crisis andthe displacement of that population.

By 2005, more than a decade of economic boom and a declining num-ber of available inner-city development sites resulted in significant increasesin land prices, the cheapest inner-city sites selling at �24M per ha andthose in prestigious Ballsbridge reputed to have sold for over �220M perha. Disconcertingly for the tenants of social housing, the rapidly escalatingvalue of inner-city land undermined the very ‘viability’ of social housing asan inner-city land use.

Affordability and displacement

A significant decline in housing affordability was a key feature and driver ofthe changing social profile of the inner city. House prices in inner Dublinescalated after 1990, pre-dating national trends of rising prices from 1994.They continued to increase until 2008. Although the price of accommo-dation in inner Dublin had already risen considerably, new house pricesin 1995–96 were still remarkably affordable when expressed in terms ofmultipliers of prevailing incomes. At the lower end of the market, one-bedroomed apartments could be purchased for less than twice the level ofaverage annual industrial earnings (which amounted to �20,342 in Mayof that year), while the cost of higher-end one-bedroomed apartments wasjust over five times the average industrial wage (Kelly and MacLaran, 2004).For white-collar workers, three-bedroomed units could be purchased for lessthan four times average earnings (�25,584) in the Banking, Insurance andBuilding Society sector of the economy. By 2003, however, a different picture


had emerged. While general price inflation, average earnings, building costsand new house prices nationally all rose significantly between 1995 and2002 (by 25 per cent, 43 per cent, 52 per cent and 181 per cent respec-tively), the changes in the housing market in inner Dublin were far moredramatic. By November 2003, the income multipliers2 required to purchasea dwelling in central Dublin suggest strongly that prices were far less afford-able than eight years previously. One-bedroomed units cost around ninetimes the level of average annual industrial earnings, typically priced at�265,000 (Kelly and MacLaran, 2004). Three-bedroomed units typically costaround �415,000, some 14 times average annual industrial earnings. Evenfor the white-collar sector, one-bedroomed apartments cost six times aver-age annual incomes while three-bedroomed units ranged from 11 to over19 times (�405,000–�725,000) average white-collar annual incomes. Theupward trend in house prices continued and by 2006, new one- and two-bedroomed apartments in the Liberties area commanded prices of �385,000and �420,000 respectively.

Rising residential prices were also apparent in the second-hand apartmentmarket. In 1995, one-bedroomed apartments in The Maltings in the Libertieshad a euro-equivalent launch price of �38,100. By 2004, apartments in thesame development were being resold at �187,000. Furthermore, increasingprices also impacted on the older, nineteenth-century stock. For example,a one-bedroomed, 45 sq m cottage in Daniel Street in the Liberties sold for�475,000 in July 2006. Such prices indicate the scale of the affordability cri-sis faced by indigenous residents. Indeed, there is evidence (above) to suggestthat the first phase of residential developments (1989–96) were themselvesbecoming gentrified in the period 1997–2006. While it can be argued thatsome of the indigenous residents gain from rising residential values, oth-ers cannot because of their inability to access property capital. For thisgroup, escalating prices present an insuperable obstacle to gaining accessto accommodation, either through purchasing or by renting, as escalatingprices become reflected in rising rents. In addition to issues of affordability,the housing crisis in inner Dublin was also marked by lower levels of accessto social housing. In the pursuit of a more neoliberal market-based urbanagenda, recent policies adopted by the local state hampered access to hous-ing for the indigenous population and it is to these policies that attentionnow turns.

The state as agent of gentrification

In addition to promoting property renewal through tax incentives and thesale of publicly owned sites, the local state has embraced the role of ‘enabler’and ‘facilitator’ in the redevelopment of the inner city (Harvey, 1989; Punchet al., 2007). Indeed, it seems that the production of gentrification hasbecome a key goal of urban policy in Dublin with the local state actively

Sinéad Kelly 183

promoting the creation of new residential, commercial and cultural spacesoften at the expense of former lower-grade residential, commercial and cul-tural spaces (see also Chapter 12). This ‘active agent’ role was most clearlyexemplified through micro-area planning via IAPs and in the adoption in2001 of a PPP-based approach to social-housing regeneration, where thecommodification, privatisation and redevelopment of land, primarily for pri-vate apartments, required the displacement of in-situ working-class residents(see Chapters 2, 10 and 14).

Additionally, the justification for the sale of public land by the localauthority evolved to reflect principles of short-term accounting, an ideol-ogy of ‘social mixing’ and an unwillingness by DCC to provide and manageadditional social-housing units (Kelly and MacLaran, 2004; Kelly, 2007). Theoverwhelming result of these policies3 has been a relative and absolute reduc-tion in the social-housing stock in inner Dublin over the past 20 years, withlimited prospect for any future additional net provision of public-rentedunits.

From the late 1990s and early 2000s, the promotion of ‘social mix’, ‘tenuremix’, the avoidance of ‘undue social segregation’ and, more recently, thepromotion of ‘housing choice’ became key features underpinning a vari-ety of policy and planning documents that were to have a major impacton the inner city. These included Dublin City Development Plans (1999,2005), Part V of the Planning and Development Act (2000), integratedarea plans (1998) and more recently, local area plans (2008). Underpin-ning these policies is an inherent belief that the introduction of privateresidential development and their middle-income occupants to areas withpreviously high concentrations of social housing will prove beneficial to therecipient working-class community, thereby ignoring the displacement pres-sures, social costs and housing crises inherent to processes of gentrification.In effect, policies promoting ‘housing choice’, ‘social mix’ and social engi-neering have been employed as a tool for legitimising the privatisationof publicly owned land and housing in the inner city. Up to 2004, alocal-authority policy of not developing social housing in areas of highsocial-housing concentration had effectively excluded 15 of the 40 wardsof the inner city from receiving any addition to their social housing stock,with Part V4 social-housing exemption certificates (SHECs) being awarded todevelopments in those localities (see Kelly and MacLaran, 2004). As one ofthe strongest indicators of social deprivation is the incidence of social hous-ing in an area, this failure to provide additional social-housing represents thewithdrawal of a key element of welfare-state support from areas in which theneed for assistance is most acute. Meanwhile, the local state seems uncon-cerned with introducing greater ‘social-mix’ in middle-class or upper-incomeresidential areas of the city.

Moreover, as ‘creative city’ ideas have permeated more recent urban pol-icy, there has been a clear shift in policy discourse, where objectives to create


a ‘powerhouse for creative industries and cultural tourism’ (DCC, 2008,p. 12) align much more closely with the needs and wants of gentrifiers (andnotably property-development interests), rendering largely invisible the dis-placement of local working-class communities and locally relevant functionsand services (see Chapter 15).

Conclusions: Gentrification as strategy

Gentrification has been adopted by the state as a more general urban strat-egy. In preparing and selling the city for capital, the state has actively soughtto attract a middle-income professional population to live in the inner city.A major consequence has been a deepening housing crisis for inner-citycommunities and their increasing displacement. More specifically, the adop-tion of policies seeking to reduce the stock of local-authority housing in thecity displaces low-income families from the inner city to more peripheralareas. One of the ways in which processes of gentrification (or more broadlythe uneven movement of capital) can be mitigated is through the provi-sion of social housing in the inner city. However, the local state has insteadengaged in freeing up public land for private-sector development (includingsites previously earmarked for social-housing provision), withdrawing fromhousing provision through the sale of local-authority dwellings, reducingthe stock through PPP-based redevelopment and relying more heavily onprivately rented and voluntary-housing sectors to provide accommodationfor low-income households (Drudy and Punch, 2005).

Dublin’s inner city has become symbolic of the broader underlying socialtransformation that has taken place under neoliberalism. Through policiesof gentrification, ‘sugar-coated’ as regeneration, locales and streets have beenphysically recast and ‘re-imagineered’ as spaces for middle-class consump-tion (Smith, 2002). The re-focusing of priorities of the neoliberal local statehas been reflected in a redistribution and channelling of wealth through thebuilt environment. It is in this way that it could be argued that neoliberalismis embodied in new urban redevelopment projects and that Dublin, in itsphysical form, is increasingly a reflection of a neoliberal agenda (Brennerand Theodore, 2002; Swyngedouw, 2005).

The overall impact of land-use change, house-price increases and the lossof low-cost housing has been the social transformation and changing termsof who can use and live in the city. It is perhaps in this context that Dublincould be viewed as becoming increasingly ‘revanchist’ or vengeful (Smith,1996). Working-class areas are being repackaged for middle-class consump-tion and, in the longer term, an accompanying middle-class politics is likelyto emerge in recolonised locales, with the local grassroots agenda being setno longer by indigenous community activists and residents but by incom-ing middle-income residents who are more likely to act politically in away which increases the capital value of property rather than lobby forappropriate services and land uses to be provided for their lower-income

Sinéad Kelly 185

neighbours. Indeed, the work of Lawton (2008) provides strong evidenceof growing resentment by new residents of the use by neighbouring lower-income groups of a newly created public square (Mayor Square), formerlythe site of a local-authority housing complex, in Dublin’s north docks. Herethe use of and access to space is being contested but the site itself has beenreproduced and gentrified.

In the mid-2000s, policies and developments sought to intensify theprocess of gentrification. These included initiatives to hasten the sale oflocal-authority owned flats and the adoption of creative-city-infused poli-cies such as the promotion of a new cultural quarter in Dublin’s Libertiesarea (DCC, 2008) and in the desire to reposition docklands as a new high-technology hub as part of a recently delineated strategic development zone(DoECLG, 2012). Research by Lawton (2008) on proposed regeneration plansfor the Liberties area revealed the local state’s ambition to gentrify the city,a senior DCC official expressing a

need to get the leaders of fashion into the city core to make it fashion-able/desirable for the middle classes; if they come, the others will followand suburban mind-sets will be transformed . . . Only then will we get thefull and final revaluing of core city and all the practical results of that(better policing for example).

(DCC, 2006, quoted in Lawton, 2008, p. 8)

Research by MacLaran et al. (2007, p. 206) on barriers to participation inurban planning facing deprived working-class communities found a similarview shared by a DCC Senior Planner, who believed that ‘if you live in amarginalised area, one of the aspects of making it a better place to live isbringing in richer people’.

The policies and practices outlined above have underpinned and legit-imated the process of gentrification and working-class displacement inDublin. The post-2008 property crash caused residential prices to fall dra-matically, estimated at over 50 per cent for Dublin between 2008 andJune 2013, while for apartments this exceeded 60 per cent (CSO, 2013),resulting in a halt to large-scale redevelopment. Nevertheless, a crisis ofhousing accessibility remains. In addition to the declining stock of socialhousing, lower-income groups will struggle to access mortgage credit forowner-occupied housing while reductions in rental levels in the immedi-ate aftermath of the crash have been limited in extent in inner Dublin andare likely to prove short-lived.

Notes

1. The increase in privately rented accommodation over owner-occupied accommo-dation may be attributed to the high incidence of tax incentive take-up by investorsand developers rather than home-owners, and runs contrary to what may have been


expected considering the high levels nationally of owner-occupied housing (almost80 per cent of households compared to 32 per cent in inner Dublin in 2002).It is estimated that investors bought 80 per cent of the residential developmentsthat qualified for tax incentives under the urban renewal schemes (Goodbody,2006).

2. By June 2003, average annual industrial earnings had risen by 46 per cent as com-pared to May 1995 to reach �29,671 per annum, while earnings in the Banking,Insurance and Building Society sector increased by 44 per cent to �36,806. Whilethese increases were well above the rate of general price inflation, they laggedsubstantially behind house price increases.

3. While Dublin City Council claimed it was unable to provide social housing becauseof a lack of sites in its ownership for such development, in the 2000s, it pursueda policy of de facto transfer of land to private-sector developers, notably throughcontinuing land sales and public–private partnerships.

4. Part V of the Planning and Development Act, 2000, imposed conditions on privateresidential development, developers being required to transfer up to 20 per centof their sites for the provision of social and affordable housing or, in the amendedAct in December 2001, to offer the local authority land elsewhere or the financialequivalent of the value of the land transfer. Part V aimed to use the private sectorand the planning system to provide social housing and to reduce social segregationas the Act proposed the development of mixed-tenure residential developments.

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12Neoliberalising the City‘Creative-Class’ StylePhilip Lawton, Enda Murphy and Declan Redmond

Introduction

Notions surrounding ‘creativity’ have become key elements of Dublin’spolicy formation over the last decade. Predominantly, this policy focus hasbeen influenced by Richard Florida’s ‘creative-class’ thesis. For Florida (2002),the future of urban economies revolves around the attraction and retentionof the ‘creative class’. Loosely speaking, the ‘creative class’ comprises workersin fields such as the arts, academia, the sciences as well as the legal pro-fession and business management. Florida suggests that in order to remaincompetitive, cities must promote the type of environment to which the ‘cre-ative class’ is attracted because companies (and highly mobile investmentcapital) are attracted to where these individuals are located. This environ-ment comprises city centre locations with high-quality amenities, such asbars, restaurants and good quality public space. Given the attraction of thecity image projected by the ‘creative-class’ thesis, it has proved popular withcity authorities on a global scale, and particularly in North America andEurope (Peck, 2005; Houston et al., 2008; Zimmerman, 2008). While the‘creative-class’ concept emerged during a period of relative economic pros-perity, it has proved a particularly resilient form of policy in the context ofthe global financial crisis. Indeed, in the example of Dublin, the influenceof the ‘creative class’ has, if anything, taken on a greater significance duringthe economic downturn.

The broader Irish economic context is important. The change in the eco-nomic fortunes of the nation has, indeed, been dramatic. Based on currentprices, the gross national product (GNP) fell by 20 per cent between 2007and 2011 (Central Statistics Office, 2013a). The economy stabilised to someextent in 2012 but there remain serious problems, not least the level of gen-eral government debt, which is one of the highest in the European Union.The collapse in the economy is also reflected in employment data. Duringthe years of economic growth, joblessness averaged below 4 per cent both

189


nationally and in Dublin. It increased rapidly during the great recession of2008, peaking at 15 per cent in mid 2012, and currently (late 2013) standsat 13.2 per cent. Thus, the manner in which Dublin City Council, alongwith other bodies such as the Dublin Regional Authority, have embracedthe ideal of the ‘creative city’ needs to be examined in the context of anextensive period of high unemployment and the implementation of harshausterity measures.

This chapter outlines the evolution of Dublin as a ‘creative city’ overthe last few years. It begins with an overview of literature examining the‘creative-class’ concept and focuses particularly on how it fits neatly withinthe framework of broader processes of neoliberalism (Peck, 2005). It is arguedthat both the ‘creative-class’ and ‘creative-city’ concepts have been used as‘vehicular ideas’ (see Peck, 2012) where hegemonic ideas are transferredacross national boundaries and subsumed into policy in other nations.It then briefly outlines the historical context for the emergence of the‘creative-city’ discourse in Dublin and how it has evolved. Here, the chapteroutlines how ‘creativity’ has become a dominant means of promotingDublin as a competitive city. Thereafter, it is argued that the promotion of‘creative-city’ policies can be seen as a form of legitimisation tool for the con-tinued promotion of a city image that is oriented towards the ‘creative class’above all other social groups. When taken together, the chapter argues thatthe dominance of creative-city policies, with their focus on competitivenessabove all else, can be seen as a reinforcement and extension of neoliberalpolicies in Dublin since the economic downturn (Fraser et al., 2013).

The creative class/city and neoliberalism

The ‘creative class’ is a term used by Richard Florida when referring to peo-ple working in the ‘creative economy’. Within the ‘creative class’, Floridadistinguishes between the ‘super creative core’ and ‘creative profession-als’. Constituting the ‘super creative core’ is ‘a new class of scientists andengineers, university professors, poets, actors, novelists, entertainers, artists,designers and architects as well as the thought leadership of modern society:non-fiction writers, editors, cultural figures, think-tank researchers, analystsand other opinion makers’ (Florida, 2005, p. 34). Beyond this core groupare ‘creative professionals’ who encompass an eclectic mix of skilled indi-viduals such as those working in business management, financial sectors,healthcare professions, high-technology sectors and legal-related activities(Pratt, 2008). Florida (2002) claimed that this group made up approximatelyone-third of the total US workforce at that time. His more recent work hasbeen more specific suggesting that of those who possess a four-year collegedegree, two-thirds of them belong to the ‘creative class’ while 20 per centof the workforce that do not possess a college education are also members(Gabe et al., 2013).

Philip Lawton et al. 191

In The Rise of the Creative Class, Florida’s argument centres on whathe refers to as the ‘three Ts’ of economic growth: Technology, Talentand Tolerance. He posits a causal relationship between the three Ts andregional economic growth, succinctly explained by Murphy and Redmond(2009, p. 72):

[A] ‘bohemian’ presence (Tolerance) in an area helps establish an envi-ronment that attracts talented individuals (Talent) and that this inturn attracts and generates innovative high-technological industries(Technology).

At the core of Florida’s thesis is the creative worker rather than the creativeindustries, the latter being associated with more traditional theories of indus-trial location. As such, Florida argues that regional economic growth is nolonger driven by the establishment of new economic activities and indus-try (that is, by productive forces) but rather by the locational behaviour ofthe ‘creative class’ (Zimmerman, 2008). As Peck (2010, p. 195) has asserted,this ‘is a celebratory account of a new, new economy, in which human cre-ativity has become the defining feature of economic life’. Accordingly, thenew urban imperative is for urban centres to attract the creative class if theywant to prosper economically; those that lose their creative population willultimately become economic losers (Florida, 2008).

The core distinction that can be made between the ‘creative-class theory’and more traditional theories of economic growth is Florida’s response tothe question of why ‘some places are able to develop, attract, and retainhuman capital/skills/creative capabilities’ (Florida, 2004, p. 3). Traditionally,individuals have tended to be attracted towards cities that are successfuleconomically. However, Florida suggests that this traditional framework oflabour following companies has been ‘turned on its head’ (Baris, 2003,p. 42) and companies now follow labour to ‘cool cities’ where ‘creatives’can flourish regardless of the economic opportunities available (Storper andScott, 2009). This is a key cause of concern for many academics as Floridareverses the causality of economic growth by contesting that jobs followpeople and, in doing so, disregards the importance of people followingjobs. He links the presence of ‘the creative class’ with the tolerance lev-els and other ‘soft’ consumption-related conditions of a place. Murphy andRedmond (2009) highlight the difficulties involved in determining preciselywhat constitutes a ‘soft’ factor given their largely intangible nature. Indeed,recent work by Lawton et al. (2013) has disproved the implicit residen-tial location choices espoused by Florida’s thesis for the case of Dublin,Ireland. For his thesis, Florida (2002) focuses on the tolerance levels of a cityusing indicators such as ‘bohemianness’ and ‘gayness’, as well as the phys-ical consumption-orientated conditions such as bars, restaurants, galleries,museums, cafés and other semi-public spaces that are considered to create


attractive ‘people climates’ (Glaeser, 2005). Florida (2002) argues that ‘cre-ative people’ are attracted on the basis of the presence of bohemian, ‘funkysocial downtowns’, while more traditional theories of economic growthhighlight the importance of employment opportunities and other classic‘hard’ location factors in the locational decisions of skilled individuals andfirms.

Florida’s theory has been criticised as being fundamentally flawed as itfocuses on consumption-based growth and, in doing so, disregards theimportance of production to the economic performance of a place (Peck,2005). Indeed, Stam et al. (2008, p. 119) argue that ‘consumption followsnot causes economic growth’ while Peck (2005, p. 755) has pointed outthat ‘street level cultural innovation and conspicuous consumption mayjust as easily be consequences of economic growth, rather than causes ofit’. Furthermore, Scott (2006, p. 11) argues that ‘any city that lacks a sys-tem of employment able to provide these individuals with appropriate anddurable means of earning a living is scarcely in a position to induce sig-nificant numbers of them to take up permanent residence there, no matterwhat other encouragements policy makers may offer’. Thus, Florida acts asif the sphere of consumption can act independently to that of productionand, in so doing, oversimplifies what is an extremely complex and dynamicprocess that involves ‘cumulative causation and system wide interdepen-dencies’ (Scott, 2006, p. 12). Storper and Scott (2009, p. 153) reiterate suchsentiments by arguing that theories based on the location preferences ofindividuals that assume the pre-existence of urban centres are thereby defi-cient as they neglect ‘the basic logic of genesis and early growth’ of urbancentres. Indeed they also outline that ‘it strains credulity to suppose thatmembers of the creative class move about the economic landscape as thoughthey were principally in search of amenity based gratification’ (Storper andScott, 2009, p. 156).

Research produced by Murphy and Redmond (2009), Martin-Brelot et al.(2010) and Lawton et al. (2013) provides evidence to support the afore-mentioned criticisms. Empirical research carried out on Dublin’s creativeknowledge workers demonstrates that classic ‘hard’ location factors continueto be key determinants in influencing creative knowledge workers’ decisionsto live in the Dublin region in the first instance. Similarly, Martin-Brelot et al.(2010) present data from 11 European cities and conclude that ‘hard’ factors(mainly job opportunities) are the key determinants in the initial locationdecision-making process of creative workers. Consequently, discarding thetraditional framework of labour following jobs in lieu of Florida’s creative-class thesis is unfounded based on the empirical evidence currently available,especially in a European context.

Perhaps even more worrying are the urban policy directions in whichthe thesis takes us. As Florida identifies the ‘creative class’ as a ‘mechanism


for urban development’ (Krueger and Buckingham, 2009, p. vi), his pre-scriptions for economic growth essentially relate to the establishment ofthe kind of ‘people climate’ that creative types want, and of course, this iswhere his work has had wide-ranging impacts on urban policy. Put anotherway, the city has to be re-imagined along lines that play lip-service to theconsumption-led whims and desires of ‘creative types’. The by-product ofthis ultimatum is urban policy recommendations that include investingheavily in the provision of high-quality urban environments that are eth-nically diverse, tolerant and rich in social and cultural amenities becausethese conditions will attract talented individuals to the area and ultimatelyenhance the economic performance of the region. More concrete cluesof this urban policy imperative are ‘ “authentic” historical buildings, con-verted lofts, walkable streets, plenty of coffee shops, art and live-musicspaces, “organic and indigenous street culture”, and a range of other typi-cal gentrifying mixed-use inner urban neighbourhoods’ (Peck, 2010, p. 198).Moreover, as Marcuse (2003, p. 41) explains, Florida’s policy directions‘succumb to consumption habits of the creative class’ which essentially con-stitute the ‘lifestyle preferences of yuppies’. Broadly speaking then, the taskfor urban policy makers is to recast urban areas through the eyes of membersof the creative class.

It seems that the simple causal relationship that Florida establishesbetween the creative class and regional economic growth is precisely whatmakes his work so attractive to policy makers around the world. Long (2009,p. 212) notes that his thesis is extremely ‘palpable to city leaders who see thecreative class attraction as an inexpensive, easily implemented, and seem-ingly benign strategy’. But it also amounts to ‘a process of public validationof favoured forms of consumption and for a privileged class of consumers’(Peck, 2010, p. 219). Lawton et al. (2010) reiterate a similar rhetoric withinthe context of Dublin. Conversely however, it is the same causal relation-ship that Florida has constructed between the mere presence of the creativeclass and economic growth that has subjected him to widespread criticismfrom the academic community. Such criticisms largely relate to the unique-ness, as well as the validity of Florida’s arguments (see Glaeser, 2005; Peck,2005; Markusen, 2006; Scott, 2006; Pratt, 2008; Hoyman and Faricy, 2009).More specifically, many academics are questioning whether Florida’s ideasare actually new in the first instance (Glaeser, 2005; Markusen, 2006), whileothers are raising concerns regarding the evidence base (or lack thereof)of such strategies and the élite prescriptions that it implies for urban pol-icy (Hoyman and Faricy, 2009; Murphy and Redmond, 2009; Lawton et al.,2010; Martin-Brelot et al., 2010).

So how does this ‘new’ urban agenda relate to neoliberalism? The answeris that it does so by virtue of not being new at all but, rather, by fit-ting nicely within the goals of neoliberal urban policy. The cult of creative


urbanism (Peck, 2010) is simply another in a long list of ultra-competitivegrowth-focused urban entrepreneurial agendas that have been going on invarious guises since the onset of deindustrialisation in the 1980s. Thus, thepolicy prescriptions of the creative city not only fit neatly within the gen-eral neoliberal framework of privatisation, deregulation and openness tomobile flows of investment capital, they are also exemplars of the perva-siveness of neoliberal ideas and practice in urban policy. The creative-cityagenda strongly adheres to the neoliberal ethos of reshaping the urban land-scape for inter-urban global competition and the creation of new markets toabsorb surplus capital. In this respect, Florida’s ideas are perfectly primed forthe competition-based élite consumption-oriented landscape of neoliberalurbanism. As Peck (2010, p. 219) notes,

Creative-city strategies are predicated on, and designed for, this neolib-eralised terrain. They repackage urban cultural artefacts as competitiveassets, valuing them (literally) not for their own sake, but in termsof their (supposed) economic utility. They presume and work withgentrification, conceived as a positive urban process, while making avirtue of selective and variable outcomes, unique neighbourhood byunique neighbourhood.

Thus, the reshaping of urban socio-cultural relations in commodified formis very attractive to investors in the built environment who see the city notas a living space but as a landscape for profit maximisation.

The fact that creative-city policies go hand-in-hand with the neoliberalagenda also explains its pervasiveness as an (almost) hegemonic influenceon urban policy. While its overall impact in this regard is more evident in theUnited States, it has nevertheless been widely adopted by European policymakers (see Peck, 2012; Lawton et al., 2013). Indeed, that it has been adoptedwith an ‘unmistakable zeal of its many converts’ (Peck, 2010, p. 222) gives usa fairly clear indication that the prescriptions are not remotely threateningto the holders of economic power; rather, it is supportive of their agenda.Indeed, the urban creativity narrative actively supports the normalisationof ‘disturbing, shaking, agitating, and unsettling workers and their existingsocial conditions’ (Fraser et al., 2013, p. 49), and particularly in a post-crisiscontext. Put another way, it normalises key neoliberal ideas such as flexibleworking conditions by championing the role of individualism within a par-ticular class of workers as well as inter-individual competition within andbetween different classes of worker. Indeed, the ethos of the creative agendais ‘an anti-entitlement one; it is about nurturing and rewarding creativity,not compensating the creative have-nots’ (Peck, 2010, p. 217). Thus, it verymuch supports and indeed glorifies the persistent and intense insecurity ofworkers and the associated atomised competition in a hyper-competitiveneoliberal age.


Dublin’s ‘Creative-City’ agenda

The ‘creative-city’ agenda, as it has emerged in Dublin, needs to be anal-ysed in the context of broader processes of global economic restructuring.Over the last number of decades, Dublin’s labour market has changed con-siderably. Industrial employment declined from 21 to 11 per cent of overallemployment between 1999 and 2013. By way of contrast, the services sectorincreased from 78 to 88 per cent of overall employment. Within the ser-vices sector, employment in finance, professional and technical industriesincreased from 15 to 18 per cent, while the health sector increased from 8to 14 per cent over the same period (Central Statistics Office, 2013b). Withparticular reference to the creative sector, Curran and van Egeraat (2010) esti-mated that 10 per cent of workers in the Greater Dublin Area can be classifiedas working in creative industries as compared with 7 per cent nationally.Despite these low numbers relative to other sectors of the economy, there hasbeen sustained policy attention towards the ‘creative industries’ in Dublin,and, indeed, towards notions of ‘creativity’ more generally. Understandingthis attention to ‘creativity’ requires an analysis of the manner in whichurban policy in Dublin has become influenced by Florida’s (2002) ‘creative-class’ thesis, and how it fits within wider approaches towards entrepreneurialplanning in Dublin more generally.

To a certain degree, given its focus upon culture and the arts, the notionsof ‘creativity’ within Dublin’s policy making can be traced to the develop-ment of Temple Bar as a cultural quarter in the early 1990s (Lawton andPunch, forthcoming). This was followed by the establishment of the Dig-ital Hub as a focal point of the fledgling technology sector in the early2000’s (Bontje and Lawton, 2013). However, the current focus on ‘creativity’in Dublin’s policy formation can be traced to Richard Florida’s appearanceat the ‘Dublin: Creative City Region’ conference in 2007. The interven-ing period has been marked by the dominance of ‘creative-class’ idealsin Dublin’s urban policies and wider development strategies (Murphy andRedmond, 2009; Lawton et al., 2010). Indeed, the policy direction beingpursued in the Dublin region is epitomised in the recently adopted DublinCity Development Plan, 2011–2017. The central element underpinning theeconomic strategy of the plan is the further development of creative indus-tries and the knowledge economy. Many of the ingredients in the council’s‘strategic approach’ which has been devised in response to the challengesfacing the economy of the city are akin to Florida’s prescriptions for urbangrowth. One statement stresses that the council wishes to improve ‘thegeneral attractiveness of a city for people and investors as a key part of main-taining competitiveness and creating a vibrant place that attracts and retainscreative people within the city’ (DCC, 2011, p. 132, emphasis added). Thedevelopment plan further states that it is the policy of Dublin City Coun-cil ‘to promote and facilitate Dublin as a creative and innovative city that is


globally competitive, internationally linked, attractive and open’ (DCC, 2011,p. 134, emphasis added). Furthermore, policy REI6 seeks ‘to promote andfacilitate the development and growth of Dublin’s existing and emergingcreative industries, including cultural enterprises and tourism, the film indus-try, green/clean technologies and other potential high growth sectors’ (DCC,2011, p. 134, emphasis added). The inherent bias of such policies towardsthe creative sector is reflective of the lack of balance in the region’s eco-nomic strategy. There is an overt reliance on the creative sector as the routeto regional economic success, despite the lack of any robust evidence whichdemonstrates the contribution that the creative economy can make to theregional economy.

Generally, the focus on the creative city is an appropriate fit for Ireland’score economic policy: touting for foreign inward investment through a seriesof generous corporate and income tax policies favouring the élite (Fraseret al., 2013). And in this area Dublin has had relative success in recent years.This includes the establishment of European headquarters by such high-profile companies as Facebook and Google. The evidence though is that thepredominant factors in the establishment of such companies has been influ-enced by ‘hard factors’ such as the retention of a 12.5 per cent corporationtax rate and the promotion of a ‘smart economy’ agenda at a national level(see Lawton et al., 2010; Murphy et al., 2014) and not by the developmentof Florida’s specific ‘people climate’. However, due to their association withinnovation and creativity, the establishment of such companies has beenutilised as a key factor in promoting the ‘creative-city’ agenda in Dublin.Indeed, a striking feature of recent approaches towards urban transforma-tion in Dublin is the manner in which various attributes associated withcreativity and culture are seen as necessary drivers of competitiveness. Here,the development of the city is seen purely through an overtly neoliberal lensrather than through a lens where issues such as social and environmentaljustice take precedence.

Another striking example of the creative-city rhetoric can be seen in thedevelopment of the Economic Development Action Plan by the DublinRegional Authority (DRA) in 2009. As is argued by Lawton et al. (2010),the influence of Florida’s ‘creative-class’ hypothesis in the Action Plan isexplicit insofar as the built environment and ‘place making’ are seen as keyelements in the attraction and retention of creative workers. As further evi-dence of Florida’s ‘creative-class’ thesis, such factors are presented as beingessential in attracting increasingly footloose industries and therefore pro-moting Dublin as an internationally competitive city. Another key elementof the Action Plan is the desire to initiate a ‘targeted campaign to bid formajor events’ (DRA, 2009, p. 16). Indeed, the desire for specific internationalcity designations, which are in keeping with the promotion of the desiredcreative-city image, has become a hallmark of urban policy and strategy in


Dublin. This includes the designation of Dublin as a Unesco City of Liter-ature in 2010, Dublin City of Science 2012 and the bid for World DesignCapital (2014), which was ultimately won by Cape Town. The successful bidfor European City of Science in 2012 is further evidence of the importanceof various designations in promoting investment in Dublin. The focus onsuch factors is also indicative of the manner in which a loosely based notionof ‘creativity’ has, in the last few years, been expanded to include the sci-ences (see Bontje and Lawton, 2013). While, on one level, this may seem tobe in keeping with Florida’s original ‘creative-class’ script, the original for-mula in Dublin was focused more on the notion of a ‘creative-city’ image.Instead, the flexible nature of the concept of ‘creativity’ has opened it up toa wide range of activities, which ultimately serve the promotion of Dublinas a competitive city.

This overall competitiveness agenda has emerged through a wide-rangeof activities and initiatives, including the formation of the Creative DublinAlliance (CDA), which was the outcome of the aforementioned EconomicDevelopment Action Plan (DRA, 2009). The CDA is identified as one of themechanisms of implementing the economic action plan. It facilitates col-laboration between the Dublin local authorities, universities, state agencies,business and the not-for-profit sector and is testament to the infiltrationof creative-city ideals in local governance structures. The purpose of theCDA is to build a network of diverse urban leaders that can ‘identifysolutions in response to the challenges that Dublin faces as an interna-tionally competitive region’ (DRA, 2009, p. 15). However, by definition,the CDA is only concerned with generating solutions which are rooted inthe creative economy and thereby overlooks other viable alternatives thatcould ameliorate the region’s economic problems. Objective RE08 of theDublin City Development Plan 2011–2017 demonstrates the City Coun-cil’s continuing support for the CDA where it is the stated objective of thecouncil

to work with the Creative Dublin Alliance to identify the challenges andopportunities that enhance the innovation potential of the city and todraw up a programme of work for the delivery of projects that will meetthose challenges and develop opportunities, with the aim of positioningDublin as an innovation hub for Europe.

(DCC, 2011, p. 135)

The over-reliance on the CDA as a mechanism for identifying economicpolicy options for the Dublin region is strategic in that it drowns out andexcludes critical voices in civil society that might place checks on power andforce investors and officials to place social and environmental issues at thecentre of decision making rather than profit maximisation alone.


With a direct connection to the bid for World Design Capital and, underthe umbrella of ‘Pivot Dublin’, much of the recent focus of Dublin’s pol-icy has been on how to get citizens to engage with the city in ‘playful’ andinteractive ways, such as through the use of social media. Many of the ini-tiatives associated with these goals draw upon ideals of design in promotingthe city as a place of consumption and as a means of attracting the middleclasses back to the city centre.1 One example of such is the presentationof a ‘design map’, outlining various amenities promoted by designers inDublin.2 Another is the Dublin City Beta project, which endeavours to pro-mote ideas such as the painting of traffic-light boxes by artists.3 When takenat face value, the recent emergence of a wide variety of interests and initia-tives under the umbrella of ‘creativity’ or ‘innovation’ might well be seenas an illustration of the commitment towards more open and democraticapproaches to urban planning. However, they also illustrate the constraintsof current structures of governance in promoting more democratic forms ofdecision making. This is reflective of Purcell’s (2009, p. 141) statement thatwhat ‘the neoliberal project requires are decision-making practices that arewidely accepted as “democratic” but that do not (or cannot) fundamentallychallenge existing relations of power’.

The overlap between design, urban competitiveness and the attractionof the middle classes back to the city centre is in keeping with Dublin’strajectory over the last two decades. Here, gentrification is presented as ameans of solving severe social problems, such as street begging, ‘anti-socialbehaviour’ and on-street drug abuse. This perspective was summarised byKearns and Ruimy (2010, p. 56) who, in terming the notion of ‘gentriv-ilification’, dismiss the critique of Dublin’s continuing transformation asfollows:

There is actually little or no evidence of housing ‘displacement’ inDublin’s inner city. Young couples and families who ‘choose’ to moveto far-flung suburbs were more likely to do so because of a lack of localhousing choice. This lack of housing choice is primarily the result of a fail-ure to meaningfully increase the supply of newly built, spacious, quality,high-density homes in the heart of the city.

Here, design is presented as a solution to wider structural problems in thecity. Moreover, to a large extent, the espousal of such rhetoric naturalisesthe city centre as the ideal home of a particular cohort of the middle classes.In so doing, it reinforces a perspective that such an approach is the onlypossible solution to very real social problems experienced in the city, while atthe same time excluding the potential for other more progressive approachesto emerge. In reality, such a perspective does little to tackle the manner inwhich such challenging issues are produced and reinforced. If anything, itserves to perpetuate them.


Conclusion

What then does this tell us about the ‘creative-class’ hypothesis? To a largeextent, Dublin has embraced the ideals of Florida’s (2002) ‘creative class’.This is espoused by the focus on ‘soft’ amenity-based factors in promotingDublin as a competitive city. This includes the promotion of events and theoverwhelming focus upon the promotion of ‘hip’ notions of urban livingas a means of attracting the ‘creative class’. While during the last num-ber of years there has been less explicit reference to Florida’s ‘creative-class’thesis in Dublin, the influence of his work is still directly evident withinvarious endeavours and strategies. Indeed, the more recent emergence ofa focus upon design and science dovetails neatly with Florida’s ideas. To alarge extent, the current period illustrates the degree to which the ‘creative-city’ ideal has moved towards the mainstream to such an extent that it hasbeen normalised in representing the ideal type of city, with ‘creatives’ as theideal type of citizen. This is reinforced through the interrelated emergenceof social media and their use by those engaged in ‘creative’ endeavours. Thatthese endeavours are so highly visible in social media perhaps gives them adisproportionate representation within debates about the future of Dublin,thus reinforcing the power of the creative-city image in Dublin.

The Dublin case is illustrative of the degree to which the ideals of ‘cre-ativity’ can be seen as flexible and adaptable to particular circumstancesas they evolve. Indeed, as discussed by Oakley (2009), the reality is thatFlorida’s ‘creative-class’ thesis focuses specifically on economic output andcares little for the role of ‘culture’ and ‘creativity’ beyond their role in suchmeasurements. Thus, while different elements of Florida’s ‘creative-class’thesis have been cherry-picked and mixed with other related notions, thefocus in Dublin remains on implementing ‘soft’ approaches towards urbangovernance with the explicit aim of promoting competitiveness above allelse. Yet, as discussed in this chapter, the focus on ‘soft factors’ remainsquestionable. Improvement in the public realm, attracting events, network-ing and so on can quite easily be justified as beneficial in their own right.After all, what is objectionable about improving the overall quality of life inthe city? The problem remains though that the creative agenda is a narrowone and ignores a whole range of other policy issues and reflects, in essence,the relative powerlessness of local authorities in Ireland. Given the natureand depth of the economic crisis in Ireland, and its structural causes, theexpectations of the creative agenda are fanciful to say the least. The recentcontroversy regarding Ireland’s low corporation-tax rate demonstrates thatthe tax arrangements obtainable in Ireland are critical in the decision ofmany firms to locate in Ireland. A skilled workforce and an attractive envi-ronment in Dublin are certainly additional factors in attracting these firmsbut this is not the same as arguing that creative-class workers generate sucheconomic activity. These firms have made their locational decisions based


on a complex array of factors, many of them comprising classic or hard fac-tors of location (Murphy et al., 2014). Nonetheless, despite this, local urbanpolicy has fixated on the enhancement of soft factors.

The focus on ‘creativity’, ‘innovation’ and related activities in Dublin,while on one level promoting a greater level of engagement and new formsof activities, is illustrative of the degree to which power structures in Dublinare reliant on the implementation of ‘soft’ mechanisms of policy delivery.Yet, behind these ‘soft’ approaches lie some severe inconsistencies and ten-sions. While notions of ‘tolerance’ and ‘diversity’ might be mentioned, thereis little evidence that notions of justice or rights take on any role. If anythingthey become sidelined in the search for a marketable city image. As such, the‘creative-city’ agenda does little to tackle the very real political economic fac-tors that serve to produce such a starkly unequal urban reality in Dublin.If anything, it serves to contribute further to and reinforce significantlyinequitable approaches to urban transformation.

Notes

1. While this is often implicit, at a TEDx (Technology Entertainment Design) talk inDublin in September 2012, the Dublin City Architect espoused the virtues of designto attract middle-class families ‘back’ to the centre. See: http://www.youtube.com/watch?v=mB5TyWzxSuM (accessed, 27 September 2013).

2. See: http://map.pivotdublin.com/.3. See: http://dubcitybeta.wordpress.com/2012/01/19/traffic-light-box-artworks/

(accessed, 27 September 2013).

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13Neoliberal ‘Regeneration’ and theMyth of Community ParticipationPaula Brudell and Katia Attuyer

Introduction

In the wake of the property crash in Ireland, one of the more intriguingquestions pertaining to the property-development policies pursued inDublin city from the late 1990s through to the mid-2000s concerns themanner in which the Irish state managed to proceed with a highly politicalneoliberal urban-development agenda resulting in significant negative con-sequences for working-class residents in Dublin’s inner city. It is a questionwith which those communities targeted by successive neoliberal interven-tions in the urban realm attempted to grapple throughout the propertydevelopment boom as they observed the growing discrepancy between thestated objectives of the Irish state’s urban-regeneration policies and the wayin which the policies in question were subsequently implemented. Thisquestion attains an added significance in light of the fact that the implemen-tation of these regeneration projects was mediated through new governancestructures within which inner-city communities were invited to participatewith a flourish of elaborate commitments about the role and standing thatthey could expect to exercise therein.

The urban-renewal policies with which this chapter is concerned haveconstituted ‘a major component of urban development policies’ in Irelandsince 1986 (Williams, 2006, p. 2) but have been subject to a number of sig-nificant modifications in the intervening period. This chapter is specificallyconcerned with the second decade of urban renewal which was heralded as‘a radical departure’ from the earlier property-led phase of renewal (DoELG,1999). Most significantly in the present context, it was the phase of urbanrenewal which was to be distinguished by policy moves to incorporateworking-class communities within the local state’s consultative and par-ticipative structures. The key question which this chapter explores is theends to which the new participatory structures functioned. In so doing, thischapter will also attempt to illustrate the ends to which one of the defining

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aspects of Irish neoliberalism, the much-vaunted social-partnership modelwhich expanded to incorporate virtually every facet of Irish public life dur-ing these years (Meade and O’Donovan, 2002), functioned within inner-citycommunities.

Community participation in a neoliberal era

If urban regeneration in its current guise is a creature of neoliberalism,the participatory turn in regeneration is the creature of a particular phaseof neoliberalism, that is ‘roll-out neoliberalism’ which distinguishes itselffrom the earlier and cruder ‘roll-back’ phase of neoliberalism in whichthe proponents of neoliberalism sought to roll back the frontiers of theKeynesian welfare state in the interests of enlarging ‘the space for pri-vate enterprise, competition and individual liberty’ (Peck and Tickell, 2007,p. 28). Subsequent attempts to deal with the political limits and ‘perverseeconomic [and social] consequences’ of ‘narrowly marketcentric forms ofneoliberalism’ (Peck and Tickell, 2002, p. 388) ushered in a new ‘roll-out’phase of neoliberalism. Thus, neoliberal regimes began to expand their hori-zons beyond the narrow logic and parameters of the market to establish ‘newforms of institution-building and governmental intervention’ which wouldallow proponents to reregulate, discipline, contain and manage the contra-dictions, casualties and critics of the earlier and blunter ‘roll-back’ phaseof neoliberalism (Peck and Tickell, 2002, p. 389). This conceptualisation ofthe roll-out phase of neoliberalism provides an important framework withinwhich to explore the increasingly close engagements into which the statesought to draw those ‘marginalized or dispossessed by the neoliberalizationof the 1980s’ (Peck and Tickell, 2002, p. 389).

The state’s moves during this phase of neoliberalism to mobilise diverseand potentially antagonistic actors in ‘the service of neoliberal goals’through ‘extramarket forms of governance and regulation’ are of particu-lar interest in this respect, not least for the manner in which the state beganto embed the implementation of its urban-regeneration policies within newgovernance and partnership-type structures (Peck and Tickell, 2002, p. 390).Such structures may be cited as a ready example of the ‘new flanking mech-anisms’ identified as being necessary if neoliberal hegemony was not tobe threatened by any public crystallisation of the crises and contradictionsinherent to neoliberalism (Brenner and Theodore, 2002, p. 374). As the bodycharged with the management of the site at which many of ‘the accumulat-ing economic and social tensions associated with neoliberal projects’ becomemanifest (Jessop, 2002, p. 455) it is not surprising that it is the local statewhich has come to the fore. As it sets about this task, Jessop notes the wayin which the central state withdraws so that the local state ‘can do well whatit alone can do’ – the forging of ‘good governance’ structures within which

Paula Brudell and Katia Attuyer 205

the interests of ‘local government, civil society and the private sector’ can bereconciled without threat to the neoliberal order (Jessop, 2002, p. 455).

In the urban arena, these new governance structures found immediateexpression in a proliferation of new collaborative planning structures, whichmay be considered as a manifestation par excellence of the new governancearrangements which came to characterise the roll-out stage of neoliberalism.For Healey (1997, p. 34), these new forms of planning governance affordeda means of redressing the aspatial economics underpinning neoliberalismby reasserting the importance of space, ‘co-ordinating through “thinkingtogether” and focusing on long-term impacts on places and people’. Whilemany aspects of this concept are of interest, its core significance in thepresent context lies in the way in which it attempted to reconfigure anadversarial planning arena into a collaborative one. It is an attempt whichhas attracted the attention of critics who question the degree to which acollaborative planning concept can find ‘affinity with the uncollaborativeworld within which it has to operate’ (Brand and Gaffikin, 2007, p. 282).Other important criticisms pertain to the manner in which its ‘prioritizationof consensus’ militates against a more candid discussion of the unequal spa-tial and distributive consequences which follow from contentious planningpolicies (Brand and Gaffikin, 2007, pp. 305–06) and that it thus appears toaccord with ‘the increasing hegemony of neoliberalism’ (Brand and Gaffikin,2007, p. 283).

Within a significantly altered governance environment, new avenues forworking-class participation in the state’s urban-regeneration programmeswere created. However, the precise standing, authority and role of thosestructures appeared to belie their stated intent. The existence of signifi-cantly greater opportunities for working-class communities to participate inthe state’s urban-regeneration programmes was not at issue. However, theprecise standing, authority and function of these new structures certainlywere at issue. As participatory initiatives became pervasive and the bound-aries between previously distinct interests and agendas became blurred,typologies of participation have afforded a useful analytical tool to exam-ine the increasingly elaborate rhetoric in which the state’s participatoryinitiatives are couched to establish their precise significance. Significantly,it is a typology formulated over four decades ago in an earlier and moreovertly confrontational era that continues to resonate most clearly withcommunities in the contemporary and ostensibly more conciliatory erain which all such contentious deliberations were supposed to have beenrendered redundant. To establish the significance of these participatory ini-tiatives, Arnstein’s (1969) landmark critique of public participation remainssignificant both for its distinction between eight different gradations of par-ticipation (ranging from ‘manipulation’ to ‘citizen control’) and its directionto a number of issues that remain central to contemporary considerations of


working-class engagement with the state, most notably a fundamental andintractable imbalance in power and resources.

While participation and partnership became the new orthodoxy duringthe roll-out phase of neoliberalism, they do not represent the totality of thecommunity’s experience of engagement with the state’s regeneration pro-grammes. In a number of instances, a growing antagonism between theinterests of inner-city communities and the private-development interestsbeing pursued within the state’s renewal programmes has seen communi-ties adopt a more overtly oppositional stance both alongside and outsidethe state’s participatory structures. This discussion looks beyond typolo-gies of participation to the analytical insights afforded by trajectories ofcontestation which have attempted to capture the political and analyticalsignificance of modes of opposition and contestation in a number of differ-ent realms within an increasingly contested neoliberal city (Leitner et al.,2007). These include direct action, lobbying and legislative action, alterna-tive or non-neoliberal knowledge production and alternative economic andsocial practices.

This chapter adverted earlier to the significance with which critical the-orists have invested the state’s participatory structures, namely as ‘newflanking mechanisms’ to contain emerging crises and contradictions in theinterests of maintaining the hegemony of the neoliberal agenda. The ensu-ing exploration of the ends to which the Irish state’s flanking mechanismsfunctioned in the implementation of its urban-renewal programmes willendeavour to establish the degree of success or failure with which the statemet in such an endeavour.

Policy context

In 1986, the Irish government introduced its first major piece of urban-regeneration policy in the form of the 1986 Urban Renewal Act. Its coreobjective was to promote urban redevelopment by providing generous taxincentives to stimulate private investment in areas that, in the absence ofpublic-sector intervention, were likely to remain undeveloped. The empha-sis during the first decade of renewal was placed firmly on the physicalelement of regeneration, while a broader approach which would have incor-porated a range of socio-economic objectives such as job creation and publicinvestment, was rejected because of the poor state of public finances at thetime (Williams, 2006). By the mid-1990s, both academic and government-commissioned research had illustrated the shortcomings of such property-based renewal policies in Ireland. As early as 1993, MacLaran stressed thatthe reliance of the government’s urban-renewal policies on tax incentivesfor the private sector was unlikely to address the problems of local commu-nities. Tax incentives had proved to be a useful tool for the government ona number of grounds, including their highly visible effects on the physical


landscape and their relatively low cost in the short term, at least in compari-son to grants or direct public-sector involvement. However, the findings of areport subsequently commissioned by the Department of the Environmentconfirmed that they ‘had not addressed issues . . . central to the regenerationand sustainable redevelopment’ of designated areas (KPMG, 1996, p. x).

The KPMG study concluded that the tax-led approach had succeeded instimulating private investment and in renewing physically the inner-cityareas of Irish cities and towns by addressing dereliction and dilapidation.While the physical benefits of the schemes were undeniable, the study criti-cised this type of property-led approach to regeneration for its lack of socialconcern and local input, resulting in ‘a high level of dissatisfaction amongstthe representative community organisations with the consultation processto date’ (KPMG, 1996, p. 117). It was apparent that the state’s urban-renewalprogrammes had not succeeded in establishing their democratic legitimacyamong those communities living in or adjacent to designated areas. Mean-while, the benefits of the commercial and residential developments hadfailed to trickle down to the local indigenous population (KPMG, 1996).

Following the publication of the consultant’s report, the Department ofthe Environment and Local Government (DoELG)1 published guidelines fora new urban-renewal scheme. The new policy called for a move away from anexclusive reliance on property-related tax incentivisation to solve the prob-lems of declining areas and, as recommended by the consultants, the newcentral tool for regeneration was to be a strategic area plan, renamed anintegrated area plan (IAP). The guidelines stated that tax incentives wouldbe available at certain specific sites for a limited time and that complemen-tary measures, such as grants and the provision of community facilities,should be considered in order to ensure that all the objectives of an IAPwould be met in time. Ultimately, the objective was to move away froma narrow conception of urban renewal which had placed a disproportion-ate emphasis on physical renewal to adopt a new holistic and integratedconcept of renewal that would seek to bring about ‘the physical, economic,social/employment and environmental regeneration of . . . declining urbanarea[s]’ (DoELG, 1997, p. 7).

The IAP policy differed from previous approaches to urban regenerationin terms of the issues which it addressed and the people whom it involved.In response to the consultants’ criticisms regarding the inadequacy of theconsultation process undertaken within previous urban-renewal schemes,the new guidelines placed a major emphasis on the need to consult andinvolve all relevant stakeholders, including the local community, fromthe preparatory stage through to the implementation of the regenerationscheme. The process was expected ‘to bring together a wide range of “actors”involved in implementing or affected by the IAP, in meaningful partner-ships’ (DoELG, 1997, p. 12). A full sub-section of the guidelines (Section 7.0Consultation, Participation and Partnerships) was devoted to the integration


of local knowledge and local needs within the plan, through collabora-tion with local groups at the plan making stage. The involvement of localinterests was clearly expected to continue after the agreement of the plan’sobjectives. The guidelines requested a range of stakeholders to be involvedin the implementation of an IAP. The specific suggestion was to establish ‘awide, cross-sectoral steering group, including representatives from local com-mercial, community and conservation/environment groups, which wouldhave an active and on-going role throughout the period of the plan’ (DoELG,1997, p. 24).

The new urban-renewal policy explicitly sought to develop a more inclu-sive approach to urban regeneration. The following section will examine theextent to which, in practice, this new policy arena managed to be inclusiveof interests representing socially disadvantaged groups and will analyse theextent to which their needs were addressed by the new scheme.

Insights from Dublin’s inner city

Significance of the inner-city quarters considered

The central question at issue in this chapter is explored with reference to twoinner-city districts which were approved for IAPs and their component taxincentives under the 1998 urban renewal scheme (URS). The north-west andsouth-west quadrants of Dublin’s inner city (hereafter referred to respectivelyas the Historic Area Rejuvenation Project (HARP) and the Liberties areas) aresituated immediately adjacent to the central business and retail districts ofthe city (see Chapter 11, Figure 11.1). However, while geographically central,both had seen a significant reduction in their economic fortunes followingthe marked industrial decline of inner-city areas in the latter half of thetwentieth century. The withdrawal of industrial capital was compoundedby a long period of government inaction which allowed inner-city areas todescend into ‘a state of dangerous physical dereliction, disadvantage andblight’ (Brudell et al., 2004, p. 74). As a consequence, both came to occupy arather peripheral status within the city over ensuing decades. That situationwas to change with the advent of the state’s urban-renewal policies. Follow-ing decades of disinvestment and inaction, it became apparent in the 1990sthat inner-city areas were again appearing on capital’s radar, albeit a differenttype of capital (property capital) which had long understood that the area’smost valuable asset was no longer its labour force but its land. In seekingto realise the value of this asset, the property-development sector was to begreatly assisted by the state’s urban-renewal programmes. Both areas becamekey sites for property development, notably for apartments. Between 1989and 2003, some 3,090 apartments were developed in the north-west innercity (Dublin 7) while over 4,320 were completed in the Liberties (Kelly andMacLaran, 2004).


The districts in question thus constitute quintessential inner-city are-nas in which to observe the unfolding of a new and distinctive neoliberalurban-policy agenda. In addition to their broadly shared socio-economic andphysical environmental conditions, the manner in which relations betweenthe state and the host communities in each of these areas unfolded alsogave rise to a number of important insights into the rationale underlyingthe participatory component of the state’s urban-renewal programmes.

Experience of participating within state participatory structures

The HARP area was where Dublin City Council (DCC) undertook its first ven-ture into a holistic, integrated and participatory concept of urban renewal inwhich it sought to forge partnerships outside of the traditional nexus ofthe state and the property-development sector. This followed the DoELG’sacceptance of Dublin Corporation’s2 rejuvenation proposals for the HARParea as the ‘Major Initiative’ for Dublin under the Department’s Local Urbanand Rural Development Operational Programme (Dublin Corporation, 1996,p. 1).3 HARP was distinguished by the progressive provisions which it madefor community participation, notably an extensive process of consultationwith community groups, national statutory bodies and business representa-tives, providing them with the opportunity to share their knowledge of thearea and participate in the identification of local needs prior to the plan’sbeing drawn up.

It was also marked by the creation of a ‘Steering Committee/Group’ inwhich community representatives were invited to participate alongside anumber of other ‘social partners’ in a structure which was to adhere to theEU-promoted ideal of community empowerment. Russell (2002) acknowl-edged that the consultation process during the elaboration of the plan wasgenuinely inclusive, due in part to the influence of EU thinking regard-ing the plan and the involvement of EU funding. One chapter within theplan was dedicated to the process of community consultation. The roleenvisaged for community groups extended to their participation in the def-inition of strategies to respond to these needs and to their taking part inthe implementation of schemes. Community participation within the HARPSteering Committee was not without its difficulties. Nevertheless, partici-pation was notable for the manner in which the entry of community andindependent third-sector personnel introduced a radically different dynamicinto local-government structures and the position of strength into whichcommunity representatives managed to manoeuvre themselves (see Attuyer,2010).

The holistic nature of the HARP was to prove an important precursor forthe integrated renewal concept subsequently generalised within the IAPsunder the 1998 URS. Documentation issued by both the DoELG (1997) andDublin Corporation (1998, p. 125) at that time indicated that the govern-ment was also planning under the 1998 URS to replicate the participatory


structures pioneered under HARP. More specifically, there appeared to bea commitment to replicating the ‘Steering Committee’ structures withinwhich community members had come to enjoy a position of some influence.Notwithstanding, or perhaps because of, the very positive assessments of thecommunity-participatory structures within HARP, the DoELG subsequentlytook a decision to jettison the steering-committee structures originally pro-posed as the appropriate forum for community participation in the IAPsin favour of monitoring committees (DoELG, 1999). This decision ‘tookback’ from the community the control which had perhaps been uninten-tionally devolved (Attuyer, 2010, pp. 108–09; see also Russell, 2003) andconsigned communities to an ex post facto rubber-stamping role instead ofthe agenda-setting steering role originally proposed.

The impact of this decision was felt most acutely in the HARP area. Itsreconstitution as an IAP under the 1998 URS resulted in both the disman-tling of existing community-participation structures and the subsequentexclusion from the new monitoring structures of a number of commu-nity parties who had been particularly critical of the state’s facilitation ofproperty-development interests. The larger significance of the decision was,however, also keenly understood across the wider inner city by those com-munity organisations which had closely watched developments in the HARParea (Brudell, 2000, 2002). Attempts to challenge this important diminutionin the standing of indigenous communities within the state’s structures wererebuffed in both areas by central and local government which at no stageconceded the larger and decidedly political nature of this decision. The sin-gle most important feature of the community’s experience of participatingin the implementation of the 1998 URS was therefore determined by a deci-sion taken by the DoELG at the outset; a stricture whose significance wouldbecome fully apparent as events transpired.

While HARP occupies a particularly important position in the unfoldingof the state’s new participatory overtures, the Liberties have also come toassume a particular significance within this new participatory policy envi-ronment, albeit for a different reason. The engagement of its communityrepresentatives within the Liberties-Coombe IAP Monitoring Committee wasunderwritten by carefully researched and documented position papers. This‘on-the-record’ engagement was instrumental in exposing both the essentialnature of the state’s interest in urban renewal and the rationale under-lying the local authority’s newly found modus operandi of conciliatorypartnership. Notwithstanding the significant disquiet which communityrepresentatives in the Liberties shared with those in the HARP area aboutthis diminution in the role and standing of inner-city communities, theLiberties’ documentation shows that the community accepted the state’sparticipatory overtures at the outset of the IAPs as an invitation to set asidethe adversarial role that the community had hitherto been obliged to adoptin relation to the local state (Brudell et al., 2004, p. 75). In common with


those who joined the newly convened HARP IAP Monitoring Committee,community representatives in the Liberties appear to have adopted a sup-portive stance on entering into the IAP’s structures. However, by the timethat the IAPs were drawing to a close, most community representatives hadcome to occupy a highly critical position on proceedings. Nevertheless, thisshared critical position did not lead all community representatives to pursuethe same course of engagement. It was instead possible to distinguish a num-ber of different analyses and distinct trajectories in the lengthy engagementthat ensued between the state and inner-city communities within the IAPs.As such, that engagement provided an important insight into the standingwhich communities could expect to enjoy within a neoliberal policy agendain which significantly more powerful interests were at stake. Eventually, anumber of the community’s representatives would be obliged to set aside aninitially supportive and conciliatory position to adopt an increasingly mili-tant and confrontational stance in the face of a local and central state whichremained resolutely impervious to their growing concerns.

In the opening stages of the IAP, the community’s engagements withthe IAP were contained within the ambit of the local state. DCC was theparty to whom it addressed its concerns during the first year of the IAP.In the Liberties, these concerns centred around the adequacy of the IAP’smonitoring mechanisms, the severe resource inequality impeding commu-nity participation and the ability of the IAPs to deliver quantifiable andconcrete community gains (Brudell, 2000), concerns which were also, ofcourse, entirely familiar in the HARP area (see Attuyer, 2010). All attemptsto engage the local authority in discussions about the way in which theseconcerns might be resolved were dismissed by DCC (Brudell, 2002). In addi-tion to those core concerns, which were exacerbated as the IAPs gatheredmomentum, communities were also increasingly obliged to confront grow-ing anomalies in relation to the nature of the planning decisions beingtaken within the IAPs. These included the overriding of community andlocal councillors’ concerns in relation to contested planning applicationson the west side of Smithfield Square in the HARP IAP (Attuyer, 2010) and,in the face of trenchant community opposition, successive contraventionsof design specifications relating to maximum building heights and den-sities allowable on tax-designated sites along Cork Street in the LibertiesIAP (Brudell, 2011). Despite the fact that the DoELG’s 1999 MonitoringGuidelines had placed a particular emphasis on the Monitoring Commit-tees’ role in relation to the development of designated sites, DCC refused toengage with the community’s planning concerns in either area. This refusalobliged community representatives to acknowledge the essentially perfunc-tory nature of the role afforded them in relation to the substantive planningand development issues at stake in the IAP. It also obliged them to confrontthe different and entirely contradictory conceptions of participation whichboth had brought to the table, DCC’s actions seeming at best to be akin to


tokenism or, at worst, to ‘cynical consultation’ or a form of ‘civic hype’ (seeArnstein, 1969).

Before considering the manner in which communities proceeded to dealwith planning and development matters outside of the state’s participatorystructures, it is interesting to note the other channels through which com-munities also sought resolution of their concerns. The experience withinthe Liberties is particularly instructive in this respect. While communitieshad initially attempted to resolve their different concerns directly with thelocal authority, a refusal on the part of either the City Manager or the Plan-ning Department to engage with the community’s core concerns obligedcommunity representatives to seek redress elsewhere. That course of actionincluded a refusal to endorse the IAP’s Annual Report; the submission ofa ‘Minority Report’ to the Minister for the Environment; a formal presen-tation of the community’s concerns to the area’s elected councillors; thesubmission of a formal complaint to the European Commission and thetabling of parliamentary questions within the Dáil (Brudell, 2011). The lat-ter succeeded in eliciting a response from the DoELG which finally clarifiedthe real standing of communities within the state’s IAP structures. Whilemonitoring committees were clearly welcome to ‘advise and assist the rele-vant local authority’ in monitoring progress, the actual authority concerningthe manner in which IAPs should be interpreted and implemented restedas a matter of law with the local authority (Dáil Éireann, 2002). Thus, theDoELG declined to engage with the community’s concerns. Communityrepresentatives within the Liberties were thereafter forced to assess the mer-its of remaining within participatory structures which, it had become clear,enjoyed no standing or authority, or withdrawing from those same structuresand opposing the state’s actions from outside.

Modes of engagement alongside/outside stateparticipatory structures

While individual community representatives in the Liberties reached differ-ent conclusions on the question of withdrawal (see Brudell, 2011), all whohad engaged with the IAP’s substantive planning and development mat-ters in the Liberties and HARP were in agreement on the need to embarkon an adversarial planning-appeals route to An Bord Pleanála (the Plan-ning Appeals Board). It was a process in which communities came to aclear understanding of the profound resource inequality confronting thosewho attempted to challenge the planning and development status quo. Theonly independent planning resource available to inner-city communitiescomprised a sole community planner whose working brief covered all fourquarters of the inner city. The nature of the engagements which followedbetween communities and developers in their respective areas thereafterafforded a number of important insights into the nature of the private-sectordevelopment interests underlying the state’s urban-renewal programmes and


the different conclusions reached about the optimum stance to be adoptedvis-à-vis private developers.

In the case of HARP, the community evaluated its experience of the appealsprocess in a positive manner. In the first instance, the community appellantssucceeded in effecting a reduction in the height and bulk of the contesteddevelopment in question, an outcome which led the community to con-clude that An Bord Pleanála comprised the only forum in which it waspossible for communities to exert any influence over the planning pro-cess. The experience of engaging with the planning-appeals process alsoprovided the impetus for the attainment of important planning knowledgeand the mobilisation of a network of community activists and workers whowould be deployed by the community in subsequent conflicts. Meanwhile,the community’s show of planning strength within the planning-appealsprocess attracted the attention of significant private-development interestswho, thereafter, exhibited a willingness to engage with communities directly(Attuyer, 2010). Communities, in turn, concluded that greater communitygains could be obtained by appealing their cases to An Bord Pleanála and/ordealing directly with private developers rather than engaging with the localstate.

In the Liberties, the planning-appeals process was appraised negatively.As the community’s engagement with the IAP’s planning decisions movedto An Bord Pleanála, it was drawn into increasingly intricate planning detailswhich placed severe pressure on its depleting resources. Meanwhile, it alsofound itself under pressure from an entirely new source. On lodgement ofeach successive appeal to An Bord Pleanála, a familiar pattern began toestablish itself whereby intense pressure to withdraw these planning appealswas exerted from all sides, principally from the property-development sec-tor but also from a range of other interests (see Brudell et al., 2004). Fromthe perspective of one community appellant, a former community repre-sentative whose resignation from the IAP monitoring committee had beenoccasioned by repeated contraventions of the IAP and who was not inter-ested in such overtures, this course of action led to more antagonistic, iffranker, engagements with private-sector development interests. Divested ofthe IAP’s rhetoric of ‘holism’ and ‘integration’, the community came to afuller understanding of the nexus of relations between powerful public andprivate interests in which development interests were enmeshed (Brudellet al., 2004). Meanwhile, it would transpire that property developers had fewgrounds for concern in the Liberties as An Bord Pleanála repeatedly upheldplanning decisions in contravention of the IAP.

Opposition was not, of course, confined to the statutory planning pro-cess in either area. It also manifested itself in a number of different wayswhich would find an immediate resonance with the different trajectoriesof contestation outlined by Leitner et al. (2007). Alongside the adversarialthird-party planning-appeals system and ensuing engagements (of varying


degrees of conciliation and conflict) with private developers, individualcommunity representatives also found themselves engaged in a range ofother actions. These included site protests, attempts to seek redress for site-specific planning concerns through the courts, street protests, the provisionof solidarity and assistance to others grappling with similar land use anddevelopment pressures and struggles in neighbouring working-class areas,the presentation of alternative development plans, public addresses at pub-lic, community and academic fora and research publications about the realends to which the state’s new participatory structures and holistic renewalprogrammes had functioned. For those who had been obliged to adopt aprogressively more critical and confrontational stance, there was clarity onone key point: the speed with which the integrated, holistic and collabora-tive rhetoric in which the state’s urban-renewal plans had been couched hadcollapsed in the face of a sustained challenge to the nature of the decisionsbeing taken therein and the benefits which such decisions were conferringon private-development interests.

Conclusion

In closing, this discussion returns to the question posed at the outset, namelythe ends to which the new participatory structures which accompaniedthe state’s urban-regeneration programmes from the late 1990s had func-tioned. This question was considered with reference to the particular phaseof the neoliberal project in which the participatory turn in urban governancecame to the fore, the roll-out phase of neoliberalism which has been char-acterised as demanding ‘both analytical and political attention’ (Peck andTickell, 2002, p. 384). The nature of the neoliberal policy agendas whichhave been progressed through these governance structures indicates thatsuch attention is clearly warranted.

While the 1998 URS was heralded as a radical departure from the property-led renewal policies that preceded it, a review subsequently commissionedby the Department of Finance did not reveal any substantive change inthe orientation or impact of the urban-renewal programme pursued therein(Goodbody et al,. 2006). The scheme had been ‘successfully implemented’in development terms but had been ‘less successful in delivering socialand community benefits’ (Goodbody et al., 2006, p. iii). Its tax bene-fits meanwhile had accrued to ‘relatively few higher income individuals’and the significant inflation of property prices which ensued had ben-efited a small number of landowners and developers (Goodbody et al.,2006, p. iii). It is important to acknowledge that the IAP’s community-gain provisions did deliver some returns to communities, principally in theform of community-gain finance. However, the significance of such gainsshould be compared with the IAP’s failure to deliver on other core objec-tives outlined in the plans, including ‘generally very poor outcomes’ in


securing local employment in the construction phase of the IAPs and ‘noinstances of . . . private support for social housing’ (Goodbody et al., 2006,p. 78) at a time when increasing levels of gentrification were generatingan intensified housing affordability crisis. Communities were also obligedto bear the additional pressures resulting from the many negative exter-nalities accompanying urban development and land-use intensification.Moreover, significantly greater benefits accrued to the property-developmentsector in an urban-renewal scheme which had a very regressive redistribu-tional impact. Each apartment constructed on a tax-designated site yielded acommunity-gain contribution of �4,400 (DCC, 2004, pp. 15–16) as com-pared with the �40,917 tax revenue foregone per apartment (Goodbodyet al., 2006, p. 84). Thus, while it was anticipated that the final community-gain figure for the Liberties IAP would be between �3.25M and �3.5M in2008 and the community-gain figure for the HARP IAP stood at almost�5.5M in 2009, it was clear that both figures would be dwarfed by the cost tothe exchequer in terms of tax foregone in each of these areas. ‘It is difficult’,as Goodbody et al. (2006, p. 84) stated, ‘to escape the conclusion that theScheme has had very negative equity impacts’.

Harvey (1973) has written about the greater difficulty which the statewould encounter in the implementation of its redistributional decisions inthe urban environment if the gains and losses resulting from those deci-sions were to become explicit. In light of the considerable political sensitivitysurrounding the Irish state’s interventions in the urban realm and the signif-icant social tensions and disquiet which might have been anticipated hadthis differential distribution of costs and benefits crystallised in the publicrealm, it is not surprising that the state should have sought to contain theemergence of such tensions through a new form of participatory urban gov-ernance. In many ways, urban regeneration was an obvious candidate for theintroduction of a new and more nuanced policy implementation regime.It comprised a suite of policies in which each intervention by the state tocreate a more favourable investment climate for the property-developmentsector engendered a potential legitimacy crisis among those obliged to incurthe ensuing costs.

While the state may have been obliged to devolve more power to thecommunity than intended in its first foray into community participationin the first incarnation of the HARP plan because of the involvement ofthe EU, it took the earliest opportunity to return that small amount ofpower to the state in the ensuing 1998 URS. The participatory structureswhich accompanied the IAPs self-evidently did not function to ensure thatthe serious social, economic and development interests and concerns ofinner-city communities would be given proper expression and due recog-nition in the regeneration of the designated inner-city areas (see MacLaranet al., 2007). Instead, they attempted to preclude and negate the emer-gence of any criticism of the nature of the property-development agenda


proceeding through the IAPs and the failure of the IAPs to deliver on theircore socio-economic objectives. As such, the local state’s participatory struc-tures appear to have functioned in a manner remarkably similar to the largersocial-partnership model which remained hegemonic throughout Irish pub-lic life during this period. They embodied noble ideals and ‘a distinctlypleasing’ rhetoric while engineering a governance model that functionedto advance a neoliberal agenda (Allen, 2003) which has imposed signifi-cant costs on urban working-class communities in both the immediate andlong term.

The final question pertains to the degree to which these ‘new flankingmechanisms’ have succeeded in the quest to contain rising tensions and con-tradictions in the interests of maintaining the hegemony of this neoliberalurban-development agenda. The state’s participatory structures did not pre-vent the emergence of trenchant criticisms and sustained challenges to thenature of the planning and development decisions being taken within itsurban-renewal programmes and, as such, the neoliberal urban-developmentagenda did not remain hegemonic among those obliged to bear the bruntof its policies. However, during a decade when the state’s urban-renewalagenda was the subject of a powerful official consensus which held theinterests of the property-development agenda to be synonymous with thepublic good, the state did enjoy a considerable degree of success in obscuringand eclipsing from the larger public and political domains the existence ofhighly articulate and animated critiques about the nature of the property-development agenda unfolding across working-class quarters of Dublin’sinner city. It remains to be seen whether it would enjoy a similar victory inany future interventions which it might make in the urban property marketin the wake of the property crash.

Notes

1. While the Department of the Environment and Local Government has changed itsname a number of times over recent decades, it is here referred to throughout asthe DoELG for clarity.

2. Dublin Corporation formally changed its name to Dublin City Council in 2002.3. HARP was one of five major urban-regeneration flagship projects co-financed by

the EU under the auspices of the Operational Programme for Local Urban andRural Development (Russell, 2003).

References

Allen, K. (2003) Neither Boston nor Berlin: Class polarisation and neo-liberalismin the Irish Republic, in Coulter, C. and Coleman, S. (Eds) The End of Irish His-tory? Critical Reflections on the Celtic Tiger. Manchester: Manchester University Press,pp. 56–73.

Arnstein, S. R. (1969) A ladder of citizen participation, Journal of the American Instituteof Planners, 35 (4), 216–24.


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14The Collapse of PPPs: Prospectsfor Social Housing Regenerationafter the CrashRory Hearne and Declan Redmond

Introduction

The spectacular property boom and the subsequent bust provide the keycontexts for the rise and fall of public–private partnerships (PPPs) as a vehicleto regenerate social housing estates. Over the course of the property boom,essentially the period from 1996 to 2007, new house prices increased by 270per cent nationally and by 329 per cent in Dublin in nominal terms. In thesecond-hand market, prices increased to a greater extent, by 341 per centnationally and by 375 per cent in Dublin (DoECLG,1 2013). However, since2007 prices have fallen by over 50 per cent, making this one of the most pro-nounced booms and busts in Europe (Central Statistics Office, 2013). One ofthe many effects of a rapidly rising housing market was that land pricesalso rose quickly and, more importantly, land values in areas not previouslyconsidered appropriate for development, also increased. As part of a gen-eral shift in urban and housing policy towards entrepreneurial approaches(McGuirk and MacLaran, 2001; MacLaran and Williams, 2003), Dublin CityCouncil (DCC) decided to regenerate a number of inner city flats (apart-ment) complexes in Dublin using the leverage of these increasing landvalues.

These social housing estates were to be demolished and regenerated asmixed tenure developments with a land for social housing exchange beingundertaken (see Chapter 10). Under the rubric of PPPs, a developer wouldreceive part of a site for free to develop and sell private market housing and,in return, the municipality would receive new social housing developed onthe remainder of the site. For the government, this exchange accomplishedtwo goals. First, a problematic estate would be redeveloped as a modern,high-density, mixed-tenure development. Second, in theory, the new socialhousing was developed at no cost to government on the basis of the landswap. This is not to say, however, that the land swap represented good value

219


for the taxpayer. Developers entered these deals on the presumption of acontinued buoyant housing market and high house prices. Of course, in theevent of a fall in property prices the initial calculations would underminethe prospects of regeneration. Since 2007, however, there has been a catas-trophic collapse of the property market, which in turn has led to the failureof the Irish banking system and emergency funding to the state from theTroika of the European Union, the European Central Bank and the Interna-tional Monetary Fund (Donovan and Murphy, 2013). All the assumptionsof developers who had made successful bids to regenerate these estates werenow void and, as a result, they withdrew from the process. With no statefunding available to provide regeneration, social-housing communities wereleft stranded.

This chapter examines the rise and fall of PPPs in social-housing regener-ation in Ireland and the challenges facing such communities in a period ofdeep recession. It focuses in particular on the experience of the tenants ofDolphin House estate, an inner-city complex of 436 flats. It is based on con-tinuing research by the authors on social-housing regeneration (Redmondand Russell, 2008; Hearne, 2009, 2011, 2013; Russell and Redmond, 2009;Redmond and Hearne, 2013). The work is based on multiple methods includ-ing documentary and plan analysis, interviews with key stakeholders, tenantsurveys, participant observation and direct work with the communitiesthemselves.

Market-led regeneration of social housing: The riseand fall of PPPs

As detailed in Chapter 10, as the property market boomed, Dublin CityCouncil (DCC) was planning, or actively engaged in the regeneration of atleast 12 large local-authority residential estates in the inner city throughPPPs. Construction commenced in 2004 on Ireland’s first PPP in the hous-ing sector, the Fatima Mansions project, while other estates were at variousstages of the PPP procurement process. Table 14.1 shows some key estatesearmarked for regeneration via PPP.

This radical change in housing policy reflected the government’s strongsupport and rationale for PPPs in the delivery of public infrastructure moregenerally (Hearne, 2011). As detailed in Chapter 10, the stated advantage ofthese projects was that they would provide regeneration at ‘zero cost’ to thestate. Apart from the supposed financial benefits to the state, the PPP modelwas also claimed to address social exclusion and poverty by providing devel-opment gain to fund social regeneration and community facilities whichtraditional, state-funded, regeneration had not provided to any significantdegree. Furthermore, it would achieve the government policy of a social mixof housing tenure (social, affordable, private) in areas of high concentrationof local-authority housing.

Rory Hearne and Declan Redmond 221

Table 14.1 Selected local-authority estates in Dublin’s inner cityplanned for PPP regeneration

Estate Year built Number of original units

Dolphin House 1956 436Fatima Mansions 1949 394St Michael’s Estate 1970s 346St Theresa’s Gardens 1952 346Charlemont St 1960s 181Bridgefoot St 1964 143Chamber St/Weaver Court 1950s 60O’Devaney Gardens 1950s 278Dominick St 1961/70 198Croke Villas 1961 87

Source: Hearne, 2009, 2011.

Table 14.2 compares the original social housing numbers with the regen-eration proposals. Clearly, overall residential densities would be doubledfollowing the privatisation of public land and the quantity of social hous-ing would diminish. These proposals were also in tune with other elementsof central-government housing policy which favoured higher residentialdensities, integrated neighbourhoods of responsible citizens and ‘modern’urban design (DoEHLG,2 2007a, 2007b, 2008a, 2008b). Elsewhere it has beenargued that mixed tenure has been chosen as the means of achieving manyof the social aims of this policy (Redmond and Russell, 2008). Policy mak-ers assume that mixed tenure will in some automatic way deliver sociallyvirtuous outcomes, despite a considerable critical literature with respect to

Table 14.2 Planned private and social units in selected PPP projects, 2008

Estate Originalsocial-rentedunits

PPP estate proposals

New mixed-tenure unitsEstate total

New privateunits

New socialunits

Fatima Mansions 394 615 465 (75%) 150 (25%)St Michael’s Estate 346 885 720 (81%) 165 (19%)St Theresa’s Gardens 346 600 450 (75%) 150 (25%)O’Devaney Gardens 278 823 542 (66%) 281 (34%)Dominick Street 198 360 240 (66%) 120 (34%)

Totals 1,562 3,283 2,417 (73%) 866 (27%)



mixed tenure which casts serious doubts on these assumptions (Allen et al.,2005; Raco, 2005, 2007; Kearns and Mason, 2007). The underlying assump-tion is that a significant presence of social-rented housing is not conduciveto sustainable communities.

PPP regeneration collapse

During 2007 and into 2008, Irish property prices fell significantly as the over-heated property market crashed due to domestic and international marketfactors. Between 2007 and 2013 residential property prices fell by approxi-mately 50 per cent (Central Statistics Office, 2013; see also Chapter 9). As aresult, the estimated profit margins for developers, from the future sale ofthe private residential and commercial units, upon which the economic via-bility of the PPP regeneration projects was based, narrowed dramatically. Theregeneration projects that had reached contract award and signing stage in2007 and early 2008 had, therefore, become very high-risk schemes for theprivate development consortia. The reality facing the affected communities,suffering some of the deepest social and economic deprivation in relation toincome, health, education and well-being in Irish society, was that they wereno longer living on high-value sites that had been the basis of the PPP model.In the first few months of 2008, residents became extremely anxious aboutthe future of their estates as they realised that the fate of their estate’s regen-eration had become intricately bound to conditions in the Irish propertymarket and the global financial situation. It was very apparent that they werecompletely reliant on the developer for the survival of the project. In May2008, despite attempts to achieve progress, DCC announced that negotia-tions with the developer in relation to the PPP regeneration projects of St.Michael’s Estate and O’Devaney Gardens had collapsed. As a first reaction bycommunities, protests were held by the residents from the affected estatesoutside an emergency meeting of DCC on 26 May 2008. At a subsequentmeeting on 9 June 2008, the residents walked from their estates into CityHall in a protest march led by a black coffin to symbolise the death of their‘hopes and dreams’. In September 2008, it was finally agreed that DCC andthe developer would mutually disengage from three regeneration projects(St. Michael’s, O’Devaney Gardens and Dominick Street) and that the devel-oper would release the sites back to DCC (Kelly, 2008). On 1 December 2008,DCC announced that ‘the regeneration projects are no longer viable underthe Public–Private Partnership process that had been envisaged’ because ofthe economic downturn and that the communities would have to wait forregeneration until there was an ‘upturn’ in the market and PPP again becameviable (Dublin City Council, 2009). Of the ten estates originally identified forregeneration, only Fatima Mansions was completed while the others havebeen left with an array of challenges to the task of maintaining communitystability.


PPP case study: Fatima outcomes

The Fatima Mansions PPP project commenced in 2004 and, by 2012, haddelivered most of the initial master plan which included the demolition ofthe estate of 280 social housing units and the construction of 150 social-housing units for existing tenants, 70 affordable dwellings, 394 privateresidential apartments, together with retail units.

A number of aspects of this project are particularly interesting. First, it isclear that the most important aspect to the success of Fatima was its timing,as the project was close to completion when the property crash occurred.Significantly, the original number of public units was reduced by half in thenew estate and there are now over twice as many private as public housingunits. Furthermore, because of the dramatic increase of density of develop-ment on the site, there was a battle between the community and developerand local authority over how much space the various aspects would occupy,such as social housing, the community centre, community versus privateretail space etc. The strong action, vision and participation by tenants, sup-ported by the local community and voluntary projects resulted in theirachieving a state-of-the-art community centre, crèche, all-weather pitch andcommunity retail units. The community also developed a ground-breakingsocial regeneration plan, for which �6.5M was provided from the PPP andsupplemented by various government departments, for work in relation tocommunity development, family support, education support, training, com-munity health, marginalised youth arts and culture and estate management(Hearne, 2011). This achieved real improvements in the quality of life for thesocial housing tenants. Interestingly, in contradiction to the case made thatPPPs would be ‘zero cost’ to the exchequer, the City Council had to investa number of millions (it will not reveal exactly how much) and very signif-icant staff support partly to fund, develop and manage the social-housingaspect of the project, including the community centre.

Another issue arose in relation to the new ‘social mix’ as investors boughtmany of the private units and rented them out in the private-rented market,which tends to be a transient, and in some cases, lower-income population.There is also a high vacancy rate of newly constructed retail units built aspart of the economic enterprise development strategies within the regenera-tion projects. The economic sustainability of aspects of the social-enterpriseplans is also in difficulty, given their dependence on rental revenue, whichhas proved difficult to achieve in the economic crisis. Notably, while thePPP regeneration achieved the dramatic transformation of the area and themajority of tenants are satisfied with the change, the post regenerationsustainability is at risk from issues between the developer and local author-ity over project completion and estate management, reduced state fundingfor community projects and the persistence of social issues which existedprior to regeneration, such as anti-social behaviour, intimidation and illegaldrug-related issues.


De-tenanting estates and community cohesion

Once an estate became designated as an official regeneration project, DCCcommenced actively de-tenanting it. This involved encouraging existingtenants to transfer by offering them better-quality dwellings elsewhere whilenot reallocating the vacant flat. This process of de-tenanting has been oneof the key obstacles to sustaining communities. While de-tenanting is nec-essary in order for regeneration to occur, temporary relocation is a preferredoption or else building on site first to enable direct transfer. The collapseof the PPP process has meant that several estates were left with signifi-cant vacancy rates as the process of de-tenanting had commenced beforeit became clear that there would be no regeneration. Once high vacancyrates are established, estates become more difficult to live on. This canlead to a downward spiral effect where the remaining tenants become dis-illusioned and want to leave. Through 2007, 2008 and 2009, there wasan intensification of the process of community break-up and dispersal onmany estates as conditions further deteriorated and flats were de-tenantedby DCC. Once de-tenanting commenced, tenants claimed that DCC signifi-cantly reduced levels of management and maintenance. Increasing numbersof residents actively sought to transfer as a consequence of deterioratingconditions and the ever-lengthening time-scale for regeneration. Table 14.3shows that in St Michael’s estate, for example, there was a reduction from270 occupied units in 1998 to 40 in 2004 and, by August 2008, there wereonly 14 occupied, a mere 4 per cent of the original number.

DCC seems to have followed a strategy of promoting the greatestde-tenanting possible to increase the likelihood of attracting a developer toundertake the project. The process resulted in the removal and dispersal oflong-standing working-class communities from public land.

Table 14.3 Occupancy rates on PPP regeneration estates in Dublin city, 2008 and2013

Estate Original units Units occupied(July 2008)

Units occupied(March 2013)

Croke Villas 87 38 17St Michael’s Estate 346 14 0St Theresa’s Gardens 346 300 108Charlemont Street 181 141 70Bridgefoot Street 143 0 0Chamber Street/Weaver Court 60 2 0O’Devaney Gardens 278 178 50Dominick Street 198 108 62



Austerity and retrenchment in regeneration

In September 2008, DCC set up a task force to explore how regenerationcould be progressed on the PPP estates. New plans were developed involvinga significant downsizing of the original plans and, while attempts would bemade to continue the PPP model where possible, any development wouldbe dependent on funding from the central state. However, at the same time,the government commenced its austerity policies. This resulted in exchequerfunding for the National Regeneration Programme, which provides fundingfor the former PPP regeneration plans, being reduced from �121M in 2008to �80M in 2013, a 34 per cent reduction (Redmond and Hearne, 2013). As,detailed in Table 14.4, there has been very little new regeneration activity asa result.

These disadvantaged areas have also been affected by the dramatic reduc-tion in government funding for voluntary community organisations includ-ing community development projects, youth services and community drugsprojects. It is estimated that by the end of 2013, the voluntary and com-munity sector will have contracted by 35 per cent on its 2008 level, leadingto a loss of 11,150 jobs in the sector (Harvey, 2012). This has underminedthe capacity of community development as central to the promotion of

Table 14.4 Status of regeneration plans for selected Dublin PPP estates, September2013

Estate Status Ongoing issues

Fatima Complete Sustainability issues

St Michael’s Construction phase 1 due to becompleted October 2013

De-tenanted

O’Devaney Demolition planned,regeneration plans scrapped

De-tenanting going on

St Theresa’sGardens

Plans to commencerefurbishment & construction of60 new units in 2014


Dominick St Plans ‘on hold’, demolition ofone part completed


Dolphin House Refurbishment of 30 unitscompleted in 2013. Master plansubmitted for planning andcommunity consultation

Plans include demolitionand new construction –state-funded, replacement ofall 436 housing units on siteand community centre

Charlemont St PPP plans submitted to planningauthority, awaiting decision


Source: Hearne, 2013.


social inclusion, capacity building and empowerment of such marginalisedcommunities (Community Worker’s Co-op, 2012).

However, there has been localised community resistance to the abandon-ment of regeneration and to austerity. Notably, communities in St. Michael’sEstate and Dolphin House strongly resisted the PPP regeneration and, afterthe collapse, campaigned for community-led, state-funded, regeneration.In a departure from the previous two decades of dominance of corporatistpartnership approaches between the state, local housing and communitydevelopment organisations which had left little room for critical engage-ment, the communities undertook critical public action. The remainingSt. Michael’s Estate community campaigned through media action and pub-lic protests. As a result, 76 new housing units (32 social and 44 affordable)plus a community crèche and local-authority estate office have been built,through state funding, on 1.6ha (of the total 5.7ha) section of the estate.As can be seen in Table 14.4, other PPP estates have not been so success-ful, principally because they did not have the same level of communityorganisation and public and political campaign as had St Michael’s. AnotherPPP estate which has achieved significant progress is Dolphin House, locatednear to Fatima Mansions in the south inner city. The experience of this estateprovides a useful case study for examining the impact on communities ofthe collapse of regeneration and the potential for local working-class com-munities to maintain community solidarity and cohesion in the context ofentrepreneurial planning and austerity regimes.

Resistance and resilience: The human rights approachin Dolphin House

The Dolphin community (residents association, local community-development project and youth workers) had learned from what was hap-pening in other PPP estates and opposed the PPP proposed by DCC in 2006because of the potential negative effects (Dolphin House Community Devel-opment Association, 2006). It was a struggle for the community to asserttheir perspectives within the negotiations process. While DCC did providesome resources to aid participation, it persistently made the case for the min-imisation of community gain (e.g. the number of social-housing units, thesocial regeneration fund and community facilities) in order to ensure theregeneration projects would be sufficiently economically viable for a devel-oper to undertake them. A regeneration board was set up in November 2007to oversee a process of consultation with the residents and then plan theregeneration. The consultation process in 2008 and 2009 involved DCC’sfunding independent architectural expertise to work with the community.It was thus, uniquely, community-led and organised and, as a result of theinnovative methods of resident participation and design of regenerationoptions, it won the Participatory Planning Award from the Irish PlanningInstitute in 2010. The consultation developed a plan based on maintaining


the existing community through the demolition of the existing housingand its replacement with new social housing and a much reduced privatecomponent in comparison to the original PPP (Sheridan Woods, 2009).

However, as with other PPPs, collapse of Dolphin’s regeneration plans in2009 left the community devastated. The hope and determination that drovethe participation in the consultation process evaporated and the conditionsdeteriorated, with drug dealing and anti-social behaviour worsening consid-erably. The estate suffered from serious maintenance issues such as sewageclogging up baths, sinks and causing foul odours inside the homes. DublinCity Council’s area maintenance department revealed that in 2009 therewere almost 1,000 maintenance repair requests logged for Dolphin Houseand that they had had to respond to a serious sewerage problem on 115 occa-sions in that year alone (DCC, 2010). De-tenanting was not an issue as thecommunity had secured a commitment from DCC to continue with full ten-ancy until regeneration was progressing. This meant that there was, unlikethe other PPP estates, a full community living in Dolphin that required aresponse. Furthermore, the sense of community, local connections, solidar-ity and mutual support among residents remained strong in Dolphin. Theywere proud of their community and wanted to remain living on the estatewith their neighbours and family. Therefore, those who were committed tothe community decided they were not going to give in to hopelessness.

The most significant response from the community to the PPP collapsewas the adoption of a human-rights-based approach (HRBA) to address thesubstandard conditions (i.e. sewage and damp), poverty, health and the col-lapse of the regeneration plans in Dolphin. The Rialto Rights InAction Group(RRIAG) was established in May 2009, involving a small group of local ten-ants, community workers,3 and a Dublin-based NGO, Community ActionNetwork (CAN), to use the HRBA.

The application of the HRBA to Dolphin House aimed to effect lastingchange in the relationships between DCC and the Department of the Envi-ronment (the ‘duty bearers’, that is state bodies responsible for housing) onthe one hand and the tenants (‘rights holders’) on the other. The RRIAGidentified the duty bearers, gathered evidence, set indicators and organiseda unique and ground-breaking human rights hearing on the housing con-ditions in Dolphin House in May 2010. The process of defining the dutybearers led to the development of a ‘ladder of power’ that identified thestate institutions that actually had the power and resources to change thehousing conditions. This led the residents to focus on the ultimate dutybearer responsible for housing provision and conditions, the Minister forthe Environment. Up to that point they had been focused on working with,and trying to exert influence on, locally based DCC officials who, on anal-ysis, were attempting to find solutions but, in reality, had little power orresourcing to provide fundamental change. It also revealed the extent towhich DCC was underfunded and disempowered by central government.


Residents also were made aware that there were minimum standards forrental accommodation prescribed in Irish law in the Irish Housing (Stan-dards for Rented Houses) Regulations, 2008 and 2009 (DoEHLG, 2009). Theseapply to local authority and voluntary housing units, as well as to private-rented accommodation. The Housing Acts state that all landlords have alegal obligation to ensure that their rented properties comply with the reg-ulations, notably that the property should have proper drainage, that thehouse will be kept by the landlord during the tenancy in all respects rea-sonably fit for human habitation (DoEHLG, 2009). At the Housing Hearing,the Irish Human Rights Commission (a government body) condemned thesubstandard living conditions as deplorable and asserted that these condi-tions clearly contravened the rights of residents under the United NationsConvention on Economic Social and Cultural Rights, to which Ireland is asignatory (Irish Times, 2010). This approach received significant attention inthe media.

The RRIAG met regularly with DCC through formal meetings to progressthe issues and organised three public ‘monitoring’ human rights hearingsin 2010, 2011, and 2012. The RRIAG found that the housing conditionshad a detrimental impact on the health and education of children living onthe estate. Some 42 per cent of residents reported respiratory issues amongchildren, while 92 per cent of those in poor conditions reported that theirchild or children had missed school as a result of these illnesses in the pastyear (Hearne, 2012).

RRIAG findings on the health and education impacts of damp, mould orsewage in Dolphin House:

• 57 per cent of tenants reported either an adult and/or children living inthe flat affected by illnesses related to or aggravated by the conditionsof damp, mould and sewage;

• 52 per cent of adults reported suffering respiratory disorders or stom-ach upsets/nausea related to or aggravated by the conditions in thepast year;

• 40 per cent reported children living in the flat affected by illnessesrelated to or aggravated by the conditions of damp, mould and sewage;

• 45 per cent reported respiratory issues for adults living in the flat;• 92 per cent of those in poor conditions reported their child or children

had missed school as a result of these illnesses in the last year;• 65 per cent reported that a medical practitioner had stated that poor

conditions contributed to their ill health.(Source: Hearne, 2012)

The RRIAG also engaged with UN human rights monitoring systems andmade a submission to the UN Universal Periodic Review (UPR) of Irelandin October 2011 (Hearne, 2012). It also lobbied political representatives


which resulted in private meetings with the Minister for Equality and withopposition members of parliament.

Dolphin human rights outcomes

In response to the initial Human Rights Hearing, DCC officials met tenantsand community workers and proposed a number of initiatives, includ-ing cleaning waste water pipes and installing dehumidifying equipmentin the worst affected flats. However, the subsequent Human Rights mon-itoring hearings provided evidence that these measures were inadequate.Progress did commence following the second monitoring hearing of April2011, which coincided with a change of national government. In May2011, the national television station (RTE) broadcast a special documen-tary about the estates where PPP regeneration had collapsed, and specificallyexamined the case of Dolphin House as a result of the Hearings (RTE, 2011).Afterwards, the new Minister for Housing and Planning was questionedon national television about the issues. Through the actions of the HRBA,incontrovertible evidence of poor housing standards in state housing wasaddressed in the media, thus putting pressure on the governmental andpolitical system at the highest level.

Subsequently, DCC’s senior officials regularly met the tenants, DCCaccepted its responsibility to address the substandard housing conditionsand undertook a conditions survey of each apartment between June andDecember 2011 in order to apply for funding to the Department of Environ-ment to refurbish, as a short-term measure, the worst affected apartments.This was a radical departure from previous practice. DCC’s own survey foundthat 56 per cent of all flats were affected by dampness (with 114 flats, or30 per cent, rating a high dampness level ‘red’), 25 per cent (95 flats) identi-fying mould and 67 per cent (252 flats) with drainage odours. DCC’s figuresrevealed that a high proportion of units in Dolphin House were substandard,in stark contrast to DCC’s previous denials of the existence and scale of theproblem. DCC eventually agreed to refurbish, to a new higher standard, theworst affected units.

By April 2013, approximately 40 units had been refurbished by DCC,the tenants in the worst affected housing units being relocated into theseunits. Significantly, the residents had incorporated demands for regenera-tion within the human rights campaign. Success was also achieved hereas, in July 2013, planning permission for the first phase of a state-fundedregeneration of the estate was agreed by DCC. This involves the refurbish-ment of 50 units and construction of 50 new units. The new plan representsa complete change from the PPP and is based on sustaining the existingcommunity.

The human rights framework enabled tenants to connect their substan-dard housing conditions to the Irish state’s obligations under internationalhuman rights treaties. This empowered tenants to regard themselves aslegitimate human rights-holders. The feelings of inadequacy and failure


that are so often associated with the individualised, isolated experienceof deprivation in housing conditions were replaced with a sharp focus onaccountability for rights abuses. The RRIAG used community developmentorganising principles to educate and train tenants in human rights and sup-port, organise and empower them to lead a public campaign centred onhighlighting how the Irish state had breached its human rights obligationsto this disadvantaged community. It was the publicly critical nature of thisHRBA campaign which created the political pressure that, ultimately, forcedthe state to act.

It will prove interesting to see whether this localised human rights-based approach extends to other areas and deepens its campaign to achievecommunity rights in urban redevelopment in line with the growing inter-national ‘right to the city’ movement. This is being explored by theDublin-based community alliance, Tenant’s First, in relation to the poten-tial privatisation of currently vacant public land where regeneration estateswere located, which communities argue should be used to provide for lower-income housing, parks, community gardens and facilities and the move touse private, voluntary housing associations to manage and deliver new socialhousing.

Conclusions

Given that these projects were pioneer test sites for what is a radical depar-ture in public housing policy and urban development, close attention anddetailed analysis from a community and public interest perspective is needed(Dillon, 2004; Tenants First, 2005; Bissett, 2008). Some of the literature haspointed to the experience of the Fatima Mansions estate and identified anumber of positive changes for communities brought about by PPP-basedregeneration (Fatima Groups United, 2006). There has been, however, agrowing body of literature that details from a community perspective theimpacts and outcomes of PPP regeneration. The Real Guide to Regeneration forCommunities (Tenants First, 2005), a community-produced document (seeChapter 16), identified significant conflict, stress, disruption and fear, withmany aspects of ‘community’ being lost in the process of de-tenanting,demolition and redevelopment that was being experienced as part of otherregeneration projects. Work by Hearne (2009, 2011) and Redmond andRussell (2008) has added further critical voice to this debate.

With regard to the future, the prospects for comprehensive and inte-grated regeneration of the estates which had been scheduled to receive itappear, in the short to medium term, slim to non-existent. Left behindby the Celtic Tiger and now the victims of a property-market inducedrecession, these communities face very difficult times. The combination oflow incomes, high unemployment, poor housing and environmental con-ditions, alongside anti-social behaviour, make the task of sustaining the


community arduous. Nonetheless, in the case of the Dolphin House estate,the community has not succumbed and has driven a process of challengingthe local municipality through a human-rights agenda and an insistence onpreparing a master plan for the future. The fate of the community remainsin the balance, dependent on the strength of community resistance anddevelopment and the extent to which central government, the municipality,the police and other state agencies can fulfil their most recent regenerationpromises.

Notes

1. Department of the Environment, Community and Local Government.2. Department of the Environment, Heritage and Local Government.3. Rory Hearne was employed as a community worker and adviser on regeneration

and PPPs by the local Dolphin community development project from 2007 untilAugust 2013.

References

Allen, C., Carmina, M., Casey, R., Coward, S. and Wood, M. (2005) Mixed Tenure,Twenty Years on – Nothing Out of the Ordinary. Coventry: Chartered Institute ofHousing and Joseph Rowntree Foundation.

Bissett, J. (2008) Regeneration, Public Good or Private Profit? Dublin: Tasc at New Island.Central Statistics Office. (2013) Residential Property Price Index August 2013.

Dublin: CSO.Community Worker’s Co-op. (2012) Putting People First, Available at: www.cwc.ie.Department of the Environment, Community and Local Government.

(2013) Housing, Available at: http://www.environ.ie/en/Publications/StatisticsandRegularPublications/HousingStatistics/, accessed on 7 October 2013.

Department of the Environment, Heritage and Local Government (DoEHLG). (2007a)Delivering Homes Sustaining Communities: Statement of Housing Policy. Dublin: Sta-tionery Office.

Department of the Environment, Heritage and Local Government (DoEHLG). (2007b)Quality Housing for Sustainable Communities: Best Practice Guidelines for DeliveringHomes Sustaining Communities. Dublin: Stationery Office.

Department of the Environment, Heritage and Local Government (DoEHLG). (2008a)Sustainable Residential Development in Urban Areas: Consultation Draft Guidelines forPlanning. Dublin: DoEHLG.

Department of the Environment, Heritage and Local Government (DoEHLG). (2008b)Urban Design Manual: A Best Practice Guide. Dublin: DoEHLG.

Department of the Environment, Heritage and Local Government (DoEHLG). (2009)Irish Housing (Standards for Rented Houses) Regulations, 2009. Dublin: DoEHLG.

Dillon, B. (2004) Changing Partners; How PPP Has Replaced Community Partnership inUrban Regeneration. Dublin: Combat Poverty Agency.

Dolphin House Community Development Association. (2006) Future Development ofDolphin House, Draft Position Paper. Dublin: DHCDA.

Donovan, D. and Murphy, A. E. (2013) The Fall of the Celtic Tiger: Ireland and the EuroDebt Crisis. Oxford: Oxford University Press.


Dublin City Council. (2009) DCC Housing Official Speaking at Dolphin HouseRegeneration Meeting, February 2009.

Dublin City Council. (2010) Dublin City Council 2010 Budget. Dublin: DCC.Fatima Groups United. (2006) 8 Great Expectations: A Landmark and Unique Social

Regeneration Plan for Fatima Mansions. Dublin: Fatima Regeneration Board.Harvey, B. (2012) Changes in Employment and Services in the Voluntary and Community

Sector in Ireland, 2008–2012. Dublin: IMPACT.Hearne, R. (2009) Origins, Development and Outcomes of Public Private Partnerships in

Ireland: The Case of PPPs in Social Housing Regeneration, Working Paper, 09/07. Dublin:Combat Poverty Agency.

Hearne, R. (2011) Public Private Partnerships in Ireland: Failed Experiment or the WayForward for the State? Manchester: Manchester University Press.

Hearne, R. (2012) Rialto Rights in Action Group Submission to Ireland’s UPR. Dublin:unpublished manuscript.

Hearne, R. (2013) Geographies of Resistance, Reform and Transformation; The Evidence ofa Successful Human-Rights Approach to Community Development in Dublin’s Inner City,Paper to Conference of Irish Geographers, NUI Galway, 16–18 May 2013.

Irish Times. (2010) Rights Hearing on Flats Complex. 5 May 2010.Kearns, A. and Mason, P. (2007) Mixed tenure communities and neighbourhood

quality, Housing Studies, 22 (5), 661–91.Kelly, O. (2008) Partnership projects not viable, builders claim, Irish Times, 27 Decem-

ber 2008.MacLaran, A. and Williams, B. (2003) Dublin: Property development and planning in

an entrepreneurial city, in MacLaran, A. (Ed.) Making Space: Property Development andUrban Planning. London: Arnold, pp. 148–71.

McGuirk, P. and MacLaran, A. (2001) Changing approaches to urban planning in an‘Entrepreneurial City’: The case of Dublin, European Planning Studies, 9 (4), 437–57.

Raco, M. (2005) Sustainable development, rolled out neoliberalism and sustainablecommunities, Antipode, 37 (2), 324–46.

Raco, M. (2007) Securing sustainable communities: Citizenship, safety andsustainability in the new urban planning, European Urban and Regional Studies, 14(4), 305–20.

Redmond, D. and Hearne, R. (2013) Starting Afresh: Housing Associations, Stock Transferand Regeneration. Dublin: Cluid Housing Association, Available at: http://www.cluid.ie/_fileupload/Starting%20Afresh%20Full%20Report.pdf.

Redmond, D. and Russell, P. (2008) Social housing regeneration and the creation ofsustainable communities in Dublin, Local Economy, 23 (3), 168–79.

RTE. (2011) Prime Time Special on Regeneration, 3 May 2011, Available at: http://www.rte.ie/news/2011/0503/blog-3may2011_primetime.html, accessed 12 May 2011.

Russell, P. and Redmond, D. (2009) Social housing regeneration in Dublin: Market-based regeneration and the creation of sustainable communities, Local Environment,14 (7), 635–50.

Sheridan Woods. (2009) Dolphin House Regeneration Community Masterplan. Dublin:Sheridan Woods.

Tenants First. (2005) The Real Guide to Regeneration for Communities: Making the RightDecision about Urban Regeneration. Dublin: Tenants First.

15The Role of Private Consultanciesin Neoliberal Urban RegenerationPaula Brudell

Introduction

The politically sensitive nature of the role that the local state plays inexecuting the planning authority with which it has been entrusted haslong been recognised by urban geographers. Urban planning, as Dear (1981,p. 196) has stated, ‘experiences the same crisis of legitimation that hauntsthe state as a whole in capitalist society’. It is thus that the local statehas come to play a key role in crisis avoidance through a ‘pre-politicsprocessing of political information’ (Dear, 1981, p. 193), which is under-taken in the interests of forestalling political disputes and facilitating andlegitimating the state’s decisions. Recognition of the political sensitivityattaching to all such state interventions in the urban-planning realm con-tinues to command significant attention. If anything, this concern hasintensified in the neoliberal era as the local state has begun to intervenein the urban environment in a manner more overtly facilitative of capi-tal. Urban planning remains very much ‘a crucial site of political struggle’(McCann, 2001, p. 2007). However, the complexion of that political strug-gle and the extent to which underlying struggles and fundamental politicalantagonisms crystallise and become manifest in the public realm has beensignificantly impacted by the evolution of new modes of urban governance(see Chapter 13) and the insinuation of a number of key intermediariesbetween the state and those most disadvantaged by the implementationof its neoliberal urban-regeneration policies. This chapter addresses theincreasingly important role which one such private-sector intermediary,international private consultants, has played in the transmission, media-tion and depoliticisation of highly political urban-development agendas inworking-class areas of the city.

It is specifically interested in the ends to which private consultants havefunctioned in the urban-regeneration arena in Dublin, where the processwhereby local authorities in Ireland have adopted ‘an increasingly flexiblerole as an enabler of market forces . . . is perhaps at its most advanced’ (Drudy

233


and Punch, 2005, p. 148). As such, it is suggested that the significant recon-figuration of the urban-regeneration arena effected by Dublin City Council’sdecision to outsource two critically important functions to an internationalfirm of private consultants has an important contribution to make to thelarger discussion on the significantly greater role which private players haveassumed in the promotion and governance of neoliberal urban-developmentagendas.

Role of private consultancies within neoliberalism

The increasing prominence which urban consultants have assumed in theaffairs of government has attracted considerable critical attention for sometime. One fundamental concern pertains to the manner in which the publicinterest is defined in the transfer to the private sector of such an ‘inalienablepublic’ function as planning (Fordham, 1990). The integrity of that publicinterest is called into question by the nature of the particular services thatconsultants perform for municipalities in ‘extracting value from the city’ ingeneral and, more particularly, in making the case for urban regenerationin a discourse that is frequently couched in ‘the language of obsolescence’(Weber, 2002, p. 532). Once installed, urban consultants assist in insulating‘the development process from sceptical public review’ in a system whichMolotch (1993, p. 36) says ‘keeps real intelligence on a short leash’. He usesthe term ‘urban possibilism’ to describe the way in which consultants seekto make ‘large and impressive projects appear possible’ as they travel fromcity to city sowing ‘policy conformity’ across urban areas (Molotch, 1993,pp. 36–37). McCann (2001) similarly points to the influence that privateplanning consultants and their collaborative planning practices are exertingon the development of cities, particularly through the use of urban-visioningexercises to generate consent for the visions of élite social groupings, whilesimultaneously tightly controlling and circumscribing the alternative anddissenting voices of those disadvantaged and dispossessed by such visions.

The role that private consultants have played in the transmission, media-tion and normalisation of one such élite vision warrants particular attentionin this respect. This discussion is concerned with the suite of neoliberalurban-policy agendas which have made progressively more intrusive for-ays into the urban environment. Urban geographers have attended closelyto the role that urban consultants have played in the production andpropagation of neoliberal policy paradigms (Theodore and Peck, 2012) asneoliberalism has attained a ‘growing dominance . . . in the governance ofcities’ (Ward, 2006, p. 57) and ‘market-oriented policies are communicatedas “best practice” orthodoxy’ (Prince, 2012, p. 191). Peck’s (2005) explo-ration of the heightened role that urban consultants have played in thetransmission and management of one of the more recent manifestations ofthe neoliberal urban-development agenda, Richard Florida’s (2002) ‘creative

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city’, is particularly interesting in this respect. Creative-city strategies, whichare described by critics as merely the prevailing and increasingly perva-sive expression of an established repertoire of neoliberal urban-developmentpolicies, are characterised as the epitome of ‘fast policy’ (Peck, 2009). Theirspeed of transmission is attributed in large part to ‘the now-extensive cir-cuitry of the fast-policy regime that has been constructed around cities’(Peck, 2005, p. 767). The operation of that fast-policy circuit is facilitated,in turn, by the urban-consultancy industry which has burgeoned aroundthe creative-city thesis and now constitutes an important component ofthe ‘interlocal policy networks’ through which creative-city strategies ‘travelwith great speed’ (Peck, 2005, p. 767).

Critical attention has also centred on the governance issues arising fromthe increasing insinuation of private consultants within the structures ofthe state. Understood as part of ‘the broad shift to managerialist govern-ment’ and pursuit of private-sector efficiency and expertise which followedon the ascendancy of neoliberalism from the 1970s, this has led to ‘theimporting of private-sector logics, practices and personnel’ (Beveridge, 2012,p. 50). Indeed, while governments have often stressed the importance of‘involving residents, the voluntary sector and “communities” in urban gov-ernance’, Cook (2009, p. 931) points out that ‘the private sector and itsbusiness élites . . . have been the most actively welcomed “outsiders” to thenew governance structures’. Private consultants are numbered as one of ‘fivefrequently-used strategies’ (alongside the outsourcing of services; privatisa-tion of services and assets; private financing for public and public–privateservices and buildings; public–private partnerships (PPPs)) through whichlocal-government has sought to involve the private sector within its urban-governance structures (Cook, 2009, p. 931). Some argue that ‘consultants arewell on the way to becoming as crucial to the conduct of government as theyhave long been to . . . business’ (Beveridge, 2012, p. 51).

Once installed within policy making and governance structures, consul-tants have been characterised as ‘agents of depoliticisation’ (Beveridge, 2012,p. 48) operating within a new governance environment in which previ-ously distinct boundaries between sectors, institutions and actors have beenblurred significantly. The erosion of distinct demarcation lines and respon-sibilities in the public policy arena has resulted in the emergence of ‘institu-tional voids’ in which policy making and politics may be conducted withoutreference to the rules and regulations which have traditionally governedsuch spheres (Hajer, 2003). These are the ‘points at which public and private(logics, norms and personnel) mix’ with all of the accompanying concernsfor the ‘democratic legitimacy of policy-making’ (Beveridge, 2012, p. 48).Clearly, depoliticisation in this context is not to be understood as a processwhich succeeds in evacuating or neutralising ineradicable antagonisms orcontradictions from patently political decision-making processes but ratheras a process through which inherently political decision-making processes


can be shifted to an arena at a distinct remove from the political. Thus, thestate retains the power to define the larger policy boundaries and objectiveswhile delegating responsibility for the progression and realisation of thesebroad policy objectives to non-state agents, such as private consultants, whowork at a discrete distance from the political arena and its attendant politicalconsiderations, responsibilities and sensitivities. Accordingly, Flinders andBuller (2006, p. 296) state that ‘depoliticisation might . . . more accurately bedescribed as “arena-shifting” ’.

Thus, it is evident that ‘the implications of appointing unelected actorsfrom the business world to positions at the heart of contemporary gover-nance systems’ (Beveridge, 2012, p. 48) requires greater critical attention.In those instances where consultancies are being entrusted with the pro-gression of highly sensitive urban-regeneration proposals relating to thefuture of public housing and publicly owned land in inner-city areas, thattask acquires an added urgency. This discussion therefore examines theends to which an international private consultancy firm functioned in theprogression of one such plan in the Liberties area of inner Dublin.

Urban-regeneration context

The Liberties Regeneration Project (LRP) was launched by Dublin City Coun-cil (DCC) in the year immediately preceding the property crash. The Libertieshad become an area of key strategic interest for both central and local gov-ernment. It was the site of the Irish state’s flagship Digital Hub project and anarea invested with ‘a major role in the success and global competitiveness ofDublin as a whole’ (DCC, 2008a, p. 84). However, while the area had under-gone extensive development throughout the era of tax-incentivised renewal,it was still judged to occupy a peripheral status as an investment locationbecause of the perceived risk to developers, financiers and investors. Theneed to instil investor confidence appears to have been a major motivatingfactor in the introduction of the LRP.

The Goodbody Economic Consultants (2006) review signalled the cessa-tion of area-based tax-incentive renewal schemes. However, the local statehad other forms of state intervention at its disposal in areas which hadproved resistant to the state’s regeneration agenda. In the case of the Liber-ties, the principal forms of state intervention proposed consisted of furthersales of public lands to ‘kick start’ development, interventions in the publicrealm to foster greater investor confidence and policy interventions to createa development environment of greater certainty. The LRP also differed fromits predecessors in being a self-financing city project, which owed its impetusdirectly to DCC, as opposed to its emerging from any overarching nationalregeneration policy context.

The LRP was distinctive for the manner in which it was couched in thelanguage and constructs of the ‘creative city’, a thesis in which Florida

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(2004, p. 21) had heralded ‘the rise of human creativity as the definingfeature of economic life’ and one which would power ‘the great ongoingchanges of our time’. While that thesis had found a welcoming audienceamong city administrations internationally (Peck, 2005), it had equallyattracted trenchant criticisms from critics of neoliberalism for the manner inwhich, behind the hyperbole, it continued to ‘work quietly with the grainof extant “neoliberal” development agendas, framed around interurbancompetition, gentrification, middle-class consumption and place-marketing’(Peck, 2005, pp. 740–41). The aspect of the creative-city thesis of particularinterest in the present context pertains to its urban-policy implications forworking-class communities in those areas of the city in which the state iscontinually intervening to refashion, remake and reconfigure into a morefavourable investment environment for property capital. It is beyond thescope of the present discussion to attend to the intricacies of the creative-city thesis. Nevertheless, it is important to note the currency which ithad attained among senior officials and planners within DCC and theconcerted efforts made to promote Dublin as a creative-city region (seeChapter 12). It is interesting also to note the nature of the obstacleswhich some anticipated to the realisation of this creative-city vision, that‘Dublin could be a “creative city” if we get rid of limiting mindsets’ (Rose,2008).

Notwithstanding the problems encountered in engagements betweenstate and community in the implementation of the 1998 urban renewalscheme (see Chapter 13), it became apparent that the new regenerationplan was also to be characterised by the same imperative that had seencommunity participation become firmly entrenched, in theory at least, asa cornerstone of the state’s regeneration policies by the late 2000s. Thisphase of urban regeneration was, however, to be further distinguished intwo respects: first, by DCC’s decision to move from a community ‘repre-sentative democracy’ mode of participation to a ‘direct democracy’ mode ofparticipation (DCC, 2008b); second, by its decision to appoint an interna-tional private-consultancy firm to take responsibility for the preparation ofthe LRP and the conduct of the accompanying public-consultation process.The website of the consultants in question described the manner in which ithad over the preceding decade ‘pioneered a consensus led approach to plan-ning that can add value for local authorities, private developers and existingcommunities alike’ (Lead Consultant, 2010). The frequency with which theterm ‘consensus’ was invoked throughout each of the consultancy’s col-laborative and community-planning web pages could have left prospectiveclients in no doubt about the principal product on sale. The ensuing analy-sis explores the ends to which private-sector consultants functioned in themediation of the most politically sensitive aspects of the LRP’s agenda andthe degree to which it succeeded in constructing and maintaining such aconsensus.


Mediating highly political agendas in inner-city areas

The urban-development agenda in question

The significance of the role that private consultants played in the mediationof the LRP requires attending briefly to that plan’s proposals. Unlike earlierregeneration projects, the LRP was to be driven by a new, more assertive andarguably more aggressive form of state intervention designed to unlock thedevelopment potential of its public-land holdings. This would involve thesale of DCC-owned land (O’Brien, 2007) in a project in which DCC wouldbe considering the future of some of its public-housing schemes (DCC Man-ager, LRP Launch, 2007) and seeking to establish ‘which are the ones thatwork for people and which are the ones that don’t’ (Lead Consultant, LRPLaunch, 2007). This would impart considerable power to the local authoritywhere land earmarked for redevelopment was in its ownership. The urban-regeneration agenda formulated for the Liberties area came to resemble anarchetypal ‘creative-city’ regeneration project. It was heavily infused withthe language of creative cities, as was apparent both in its stated core aim‘to find a place for the Liberties in the city identity of the C21st’ that wasas much about ‘tapping into and supporting the nascent creative econ-omy and digital industries . . . as dealing with the spatial and urban formissues of a post industrial urban landscape’ (DCC, 2008a, p. 79) and in theseries of regeneration objectives subsequently articulated therein. In years tocome, it was envisaged that the area would have achieved ‘an internationalreputation as a powerhouse for creative industries’ (DCC, 2008a, p. 12).

It was apparent that the local state was again, though in a differentguise, remaking the area around a number of distinct conceptual blocksand motifs in a regeneration plan clearly weighted towards the interestsof a more affluent resident body (see Chapter 11). This was apparent fromthose aspects of the regeneration agenda deemed important enough to meritformal focus groups and/or action plans and studies. In the wake of theopening community-consultation process, the LRP proceeded to establishsix focus groups on the following issues: Arts and Culture; Biodiversity andOpen Space: Built Heritage; Communication; Environmental Sustainability;Sports Leisure and Recreation. Additional consultants were appointed tofacilitate meetings and prepare action plans in respect of each issue (withthe exception of the Communications Group which was facilitated by thelead consultancy firm). DCC also retained the services of other profession-als/consultant groupings to advance both core (Urban Design) and relativelyperipheral components (the area’s Horse and Carriage Tradition) of its regen-eration strategy. Midway through the process, it also appointed a consultantto undertake a ‘Well-being’ survey among households in the area. Mean-while, the list of focus groups, action plans and studies was notable for theomission of any which dealt with critically important issues for low-incomeworking-class communities: public housing, public land and planning.

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Although none of the latter issues was deemed worthy of focus groups, theimplementation of this creative-city regeneration agenda was neverthelesspredicated on the agreement of a number of politically sensitive proposalsregarding public housing and public land. The proposals of key importanceto this discussion were those made in respect of three public-housing areas,1

referred to variously as ‘opportunity sites’, ‘opportunity areas’, and ‘catalystsites’ before subsequently assuming the status of ‘significant redevelopmentsites’. The ensuing Liberties Draft local area plan (LAP) proposed to demol-ish 432 public-housing units across these areas, to re-house displaced tenantsnearby and increase the number of local-authority units by 20 per cent in aphased demolition and construction programme (DCC, 2008a). The statedrationale for this demolition and re-housing programme was outlined withreference to a number of physical and structural deficiencies in the flats com-plexes and surrounding environment. It was difficult, however, to escape arather different unstated rationale which appeared to underlie the suddenimperative attaching to this demolition and re-housing programme, namelythe strategic and catalytic importance of these sites for the realisation ofthe LRP’s vision. The nature of the engagements which ensued in respectof one particular block of flats, which the LRP proposed to demolish in theinterests of making way for a new public park, allowed an important insightinto the familiar antagonism between competing land uses which inheresin market-driven urban-regeneration plans. DCC remained sanguine in theface of vociferous criticism from those residents who opposed its propos-als. While recognising that ‘the experience in other housing regenerationprojects shows that there is always some initial and very understandableconcern at the prospect of change’, it noted that ‘with few exceptions oncethe new units are developed people are happy to move’ and that ‘the lawcan be used’ in the event that a minority were not agreeable to such amove (DCC, 2008c, p. 38). Meanwhile, the Draft LAP gave clear indica-tions about the precise nature of the ‘opportunity’ vested in these sites.The proposals abounded with visions and objectives for landmark develop-ments that would be iconic of a new and transformed Liberties, with eachsite being linked to different artistic, creative-industry and cultural-tourismdrivers.

The principal point of analytic interest thereafter rested in the wayin which this inherently political urban-development agenda would bemediated by the consultants appointed to the process.

The proliferation of private consultants

The community- and public-consultative and information processes com-prised a number of components and stages.2 However, it was the series ofpublic forums which took place between January 2008 and March 2009,whose scale and sophistication dwarfed the earlier stages of the consulta-tion process, which afforded the most prolonged exposure to the manner


in which the regeneration agenda was being managed and mediated bythe state’s consultants. The defining feature of the public forums was thenumber of consultants involved. Alongside the lead consultancy, DCC alsocontracted a range of other consultants and professionals to facilitate focusgroups and/or prepare the series of action plans/studies referenced above.The way in which this secondary body of ancillary consultants, ostensi-bly seeking to facilitate greater public engagement, functioned to insinuateand embed the core tenets and objectives of the LRP within the consulta-tion process was remarkable. Dublin City Council’s (2010) response to aFreedom of Information request (FOI/2929/10) revealed that it had spentin excess on �1.5M on private-consultancy services. The proliferation ofconsultants meanwhile stood in sharp contrast to the dearth of senior gov-ernment officials within the process, raising concerns about the governance,accountability and transparency of the process.

Nature of consultative process instigated by consultants

Following DCC’s jettisoning of the earlier ‘representative’ mode of com-munity engagement created under integrated area plans, DCC introduceda new ‘direct-democracy’ mode of participation which would give author-ity to ‘an open public gathering of everybody who chooses to participate’and develop ‘open governance where any interested person can add to thecreation of policy’, while guarding against the emergence of unnamed ‘spe-cial interests groups’ that might seek to ‘hijack’ or dominate the process(DCC, 2008b, pp. 1–2). Within the newly instituted ‘public-forum’ struc-tures, consultants proceeded to conduct an elaborate, sophisticated buttightly controlled participative process which sought to delimit strictly theopportunities for public contributions. Although earlier ‘NeighbourhoodMeetings’ had revealed that public housing and public land constitutedcritically important issues for the resident working-class community, con-sultants strove at all times to curtail public discussion of the regenerationproject’s most contentious public-housing and public-land proposals. TheLRP’s public-housing proposals were characterised as comprising a confiden-tial matter between landlord and tenant (DCC, 2008b) and, accordingly,not deemed an appropriate topic for public discussion. Meanwhile, thecritical omission of focus groups on the key issues of public housing,public-land holdings and planning was evidence of a determination tolimit public discussion of the LRP’s highly political proposals. The censorialnature of the regeneration agenda was further compounded by diversion-ary public-forum agendas which repeatedly allotted considerable space andprominence to issues of relative insignificance (such as arts and cultureand biodiversity), entirely disproportionate to their importance, while stead-fastly denying access to the community-defined substantive issues at stakein the LRP.

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Evidence of the partial and ideological nature of the process

In delegating these critical public functions to private consultants, DCChad been adamant that the consultants would be documenting the viewsof all parties in an even-handed, forthright manner and that they would notbe acting for their paymaster. Contrary to this insistence, there were sev-eral indications that this was often not the case. Partiality was evident ina number of ways: in the unapologetic defence of their client and its diffi-cult decision-making role and in the reiteration of statements such as ‘weare where we are’ and exhortations to the assembled audience to move onfrom past negative experiences (of planning, development and regenerationprogrammes) in the interests of looking to a more positive future. Whilethe LRP’s newsletters did acknowledge the existence of varying degrees ofsupport and opposition among tenants to the project’s demolition and re-housing proposals, the most important public document to be produced inadvance of the formal statutory consultation and political decision-makingprocesses, the Draft LAP (DCC, 2008a), did not contain any reference tothe serious concerns of those public-housing tenants who maintained theiropposition to the LRP’s public-housing proposals.

Close attention to proceedings was necessary to discern the repeated insin-uation of key ideas and ideological premises into the presentation of theregeneration agenda. The process was distinguished from the outset by thereiteration of certain ideas in such a manner as to establish them as keymotifs in the process. Most notably, the idea that the area was ‘at tippingpoint’ served to imbue the process with an unstoppable momentum, whichwas clearly to be understood as a positive force. The designation of indi-vidual public-housing areas as ‘catalyst sites’ or ‘opportunity areas’, whichwere then presented as being integral to a positive catalytic transformationthat the LRP was seeking to trigger across the area, was also significant. Simi-larly, the insinuation of key ideological premises was evident throughout theprocess. These included the idea that further change and development repre-sented an unquestioned benefit for area, that the subordination of ‘use value’to ‘market value’ was part of the normal order of things, the inevitability ofland-use upgrading, the treatment of contentious draft planning policy doc-uments as de facto policy and the normalisation of PPPs as a policy tool.Despite the ideologically charged political nature of many of the public-housing and land proposals, neither consultants nor local-authority officialsappeared to have undertaken the research necessary to underwrite these pro-posals or address their likely impact on the public-housing communitiesin question. Instead, elaborate, expensive but essentially unsubstantiatedconsultation processes were used as a substitute for the empirical researchwhich might reasonably have been expected to inform such far-reachingregeneration proposals.


Successful mediation of key public-housing and land proposals

This discussion has concerned the ends to which consultants functioned inthe mediation of the LRP’s contentious public-housing proposals. There isan important caveat to be entered in this analysis. The LRP’s demolition andre-housing proposals affected nine flats complexes in three public-housingareas. Of the three public-housing communities, only one maintained avocal presence throughout the public-forums. A second public-housing com-munity made representations in the early meetings of the public forumsindicating its preference to engage with DCC outside of the public forums,while the third public-housing community did not appear to assume a vis-ible presence within any of these public-forum meetings. This discussion istherefore unable to relay either the nature of the engagements that ensuedbetween DCC or its consultants and tenants in the other two areas or theposition taken by the latter in relation to these proposals. Instead, the dis-cussion is based on the exchanges that ensued between DCC, its consultantsand those public-housing tenants from the Pimlico area3 who sought toengage with the LRP’s housing proposals within the public forums.4 Theends to which private consultants functioned in the mediation of this con-tentious aspect of the local authority’s regeneration agenda was illustratedby a consultative process in which it was possible to observe an emergingantagonism between the public good and public-housing tenants in thosecases where tenants opposed the demolition of their homes to make way fora park. The elaborate ‘consultation’ process functioned to marginalise andexclude all but the most peripheral public discussion of the plan’s public-housing proposals. It withstood all critical interrogation, vocal opposition,disruptive resistance and public protests, bringing to successful conclusionthe proposals for demolition and re-housing. Thus, the LRP’s original public-housing proposals made their way into the Draft LAP which was then placedbefore the general public and elected city councillors with only minor con-cessions to critics. While the proposed park would now be relocated to adifferent site within Pimlico, DCC was clearly intent on proceeding with thedemolition and re-housing proposals outlined in respect of each of the threepublic-housing areas.

Reverberations in the statutory and politicaldecision-making process

The LRP, peopled and orchestrated by an array of private consultancies,found a receptive audience in the plethora of private urban-consultanciesand professionals working in the service of the property-development sector.Urban-design, development, architectural and planning professionals andconsultancies (together with a lone developer) accounted for 24 per centof all public submissions made to the statutory consultation process whichwas required during the closing political and statutorily required consulta-tion process. Their websites often provided a clear indication of their core

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interests and expertise, which appeared to be remarkably in tune with theideological complexion of the LRP. That expertise included ‘market leader-ship in managing urban-regeneration PPP projects’, expertise in ‘unlockingsignificant value from state-owned land and infrastructure’, the formationof ‘cultural bridges’ between the public and private sectors, support for‘consensus-led’ approaches or the simple provision of advice on ‘the devel-opment of land, property and infrastructure’ (see Brudell, 2011). In thisrespect, the LRP emerges as a regeneration project by consultants forconsultants.

Similarly, while the final authority on whether the Draft LAP would beadopted rested as a matter of law with elected councillors – a fact uponwhich the consultants had been insistent when challenged on contentiousproposals – it appears that the repeated direction to the authority vested inthe formal political decision-making process had functioned as somethingof a smokescreen behind which officials and consultants could continue toformulate far-reaching urban-regeneration proposals. In reality, the demoli-tion and re-housing proposals had gained such momentum by the time thatthey were placed before elected councillors that they appeared to be a vir-tual fait accompli. Local councillors submitted a large number of motions(140) to DCC as part of the political decision-making process and a num-ber of ‘key changes’, including ‘revisions to housing and height strategies’,were subsequently made to the Draft LAP (DCC, 2009a, p. 3). ‘Revisions’ tothe Draft LAP’s housing strategy included several additional and conciliatorystatements and objectives indicating DCC’s intention to seek to ‘support andretain existing communities’ by re-housing them in ‘close proximity to theirexisting location’, to ‘liaise closely’ with the tenants in question, to establish‘a Regeneration Committee as part of the demolition and redevelopmentprocess’ and to ‘seek to ensure that social housing will be maintained ata level of 29 per cent of the total housing units within the Liberties area’(DCC, 2009b, pp. 96–97). However, this did not alter the core public-housingdemolition and re-housing proposals outlined in the Draft LAP, which weresubsequently enshrined in the formally adopted Liberties LAP. In a politi-cal decision-making process which had all the appearances of having beenrendered largely perfunctory by the sophisticated nature of the consulta-tion process which had preceded it, the Draft Liberties LAP passed throughthe chambers of DCC without major comment or incident in less than 30minutes.

Conclusion

Private consultants have played a significant role in ‘the management of theglobal economy over the last 40 years’ but have become increasingly ‘moreimportant to governments since the 1960s, with huge growth apparent fromthe 1980s onwards’ (Beveridge, 2012, p. 48). While various rationales have


been advanced for their increasing salience within the affairs of government,consultants have since the 1990s increasingly been construed as governancepartners. This chapter has explored the role which private consultants haveplayed in the preparation and governance of the opening stages of a large-scale urban-regeneration project in inner Dublin, with particular attention tothe ends to which they functioned in the mediation of highly political com-ponents of that agenda. It closes by attending to some of the more salientfindings.

The entry of private consultants into the urban-regeneration arena repre-sented a new addition to the powerful public–private nexus confronted inurban regeneration and effected a significant reconfiguration of that arena.The decision to appoint private consultants to mediate this new urban-regeneration agenda positioned private-sector players at the heart of localgovernment’s policy-making and governance structures with two importantconsequences. The public regeneration arena was largely evacuated by theone statutory body to whom the public could direct its concerns, the localauthority being largely replaced by private-sector actors who functioned toinsulate the state in large measure from direct challenges to the contentiousnature of the regeneration proposals. Thereafter, private consultancies werearguably in a position to function indirectly as agencies for private-sectordevelopment interests which had underwritten the state’s interventions inthe urban realm from the outset.

In the mediation of this new, assertive and arguably more aggressive regen-eration agenda, there are several aspects of the consultant’s role that warrantparticular attention. First, it is clear that the lead consultants functioned ascarriers and normalisers of the core tenets of a broader neoliberal urban-development agenda which had been gaining momentum across Americanand European cities. While it would be mistaken to attribute too muchagency to private consultants who were evidently acting in accordance withthe directions of their client, it is apparent that they functioned as a skilledbody of urban-regeneration professionals who were in a position to articulatethe urban-development strategies to which DCC had been gravitating for anumber of years. In addition to the role that they played in the transmis-sion of these regeneration agendas through the ‘fast-policy’ circuits referredto by Peck (2005), they also performed an additional and critically impor-tant role in the public mediation of the more politically sensitive aspectsof that regeneration agenda. Specifically, they functioned to orchestrate andchoreograph a public-consultation process which, if it did not succeed inengineering a genuine public consensus, did function to marginalise andobscure the views of dissenters. Had these gained traction, they might wellhave impeded the passage of the draft-regeneration plan through the polit-ical decision-making process. Thus, they assisted the state in constructingthe perfunctory lineaments of a public consensus sufficient to the state’slegitimation requirements.

Paula Brudell 245

The engagement of consultants effectively depoliticised a highly politicalland-use and development agenda, particularly as it pertained to the publichousing and public land components of that agenda. This was an achieve-ment of some significance in the case of a development agenda which wasdistinguished more by its neoliberal ideological complexion than by anycompelling evidential base. The manner in which the state succeeded inensuring that this agenda would be progressed at a distinct remove fromthe conventional political arena – in which the full implications of thesepublic-housing and land proposals might have been exposed to critical pub-lic and political scrutiny – finds an immediate resonance with the manner inwhich depoliticisation is conceptualised in the work of Flinders and Buller(2006). Their focus on the political control lying behind the new governancespheres, to which particular functions have been delegated, is apposite.In the Dublin context, it directs attention towards identifying which of thepolitical actors (whether politicians or senior officials) actually set the broadpolicy parameters within which private consultants were contracted to oper-ate. The LRP had been presented as a ‘city project’ but the question remainsas to which ‘city actors’ should be credited with the initiation of this project.However, one point is clear. Scarce public funds have again underwrittenthe preparation of a highly political regeneration plan which, if it were toprogress to implementation stage at some point in the future, looks set tocompound those costs which the state’s previous renewal policies imposedon inner-city communities. At a figure in excess of �1.5M, the public haseffectively paid for the privatisation of a very questionable policy agenda.

Notes

1. Three public-housing areas within the Pimlico, Vicar Street and Grand CanalHarbour/Basin Street areas of the Liberties.

2. (i) Public launch; (ii) Neighbourhood meetings; (iii) Community-planning week-end; (iv) Public forums; (v) Statutory LAP consultation process.

3. The LRP’s demolition and re-housing proposals for the Pimlico area divided opin-ion among local-authority tenants in the area with some remaining resolutelyopposed to the proposals while others welcomed them (see DCC, 2008b). The exis-tence of divided positions across the different flats complexes was acknowledgedby a DCC official who conceded that the final outcome was ‘to be played for’.

4. See Brudell (2011) for a detailed chronology of state–community engagements onpublic-housing proposals within the LRP’s public forums.

References

Beveridge, R. (2012) Consultants, depoliticization and arena-shifting in the policyprocess: Privatizing water in Berlin, Policy Sciences, 45 (1), 47–68.

Brudell, P. (2011) Incorporating Dissent in the Renewal of Dublin’s Inner City: Engagementsbetween the Local State and Inner-city Communities in Dublin’s Liberties, unpublishedPhD thesis, Department of Geography. Dublin: Trinity College.


Cook, I. R. (2009) Private sector involvement in urban governance: The case of Busi-ness Improvement Districts and Town Centre Management partnerships in England,Geoforum, 40 (5), 930–40.

Dear, M. (1981) A theory of the local state, in Burnett, A. D. and Taylor, P. J. (Eds)Political Studies form Spatial Perspectives. Chichester: Wiley, pp. 183–200.


Dublin City Council. (2008a) Liberties Draft Local Area Plan. Dublin: DCC.Dublin City Council. (2008b) Liberties Regeneration Newsletter, No. 3. Dublin: DCC.Dublin City Council. (2008c) Liberties Draft Local Area Plan: Manager’s Report on

Submissions from Public Display of Draft LAP. Dublin: DCC.Dublin City Council. (2009a) Liberties Regeneration Newsletter, No. 5. Dublin: DCC.Dublin City Council. (2009b) Liberties Local Area Plan. Dublin: DCC.Dublin City Council. (2010) Schedule of records released: Freedom of Information

Request No. FOI/2929/10.Flinders, M. and Buller, J. (2006) Depoliticisation: Principles, tactics and tools, British

Politics, 1 (3), 293–318.Florida, R. (2002, 2004) The Rise of the Creative Class. New York: Basic Books.Fordham, R. (1990) Planning consultancy: Can it serve the public interest? Public

Administration, 68, 243–48.Goodbody Economic Consultants. (2006) Review of Area-Based Tax Incentive Renewal

Schemes. Dublin: Department of Finance.Hajer, M. (2003) Policy without polity? Policy analysis and the institutional void,

Policy Sciences, 36 (2), 175–95.Lead Consultant. (2010) Consultant’s Website Pages. Accessed 10 March 2010 – name

withheld.McCann, E. (2001) Collaborative visioning or urban planning as therapy? The politics

of public private policy making, The Professional Geographer, 53 (2), 207–18.Molotch, H. (1993) The political economy of growth machines, Journal of Urban

Affairs, 15 (1), 29–53.O’Brien, T. (2007) Council land to kick start Liberties redevelopment, Irish Times,

9 October 2007.Peck, J. (2005) Struggling with the creative class, International Journal of Urban and

Regional Research, 29 (4), 740–70.Peck, J. (2009) Creative urbanism as fast policy. Paper to Creative Cities: Panacea or

Placebo for Urban Policy-Making? Paper to the Forum for Irish Urban Studies, TrinityCollege Dublin, 9 March 2009.

Prince, R. (2012) Policy transfer, consultants and the geographies of governance,Progress in Human Geography, 36 (2), 188–203.

Rose, K. (2008) Dublin could be a ‘creative city’ if we get rid of limiting mindsets, TheIrish Times, 17 June 2008, Available at: http://www.irishtimes.com/debate/dublin-could-be-a-creative-city-if-we-get-rid-of-limiting-mindsets-1.1268330

Theodore, N. and Peck, J. (2012) Framing neoliberal urbanism: Translating ‘common-sense’ urban policy across the OECD zone, European Urban and Regional Studies,19 (1), 20–41.

Ward, K. (2006) ‘Policies in motion’, urban management and state restructuring:The trans-local expansion of business improvement districts, International Journalof Urban and Regional Research, 30 (1), 54–75.

Weber, R. (2002) Extracting value from the city: Neoliberalism and urbanredevelopment, Antipode, 34 (23), 519–40.

Part IV

Considerations and Conclusions

Introduction

The research presented in earlier chapters has demonstrated how pol-icy at the urban scale has frequently tended to create new difficulties orexacerbate the very problems with which they had been intended to deal.

In the context of the housing-affordability crisis, where a major compo-nent of un-affordability comprised the price of the building plot, rather thandealing with land price issues through direct control or heavy tax on ‘bet-terment’, a market-based solution was favoured. However, in the contextof deregulated finance markets and relaxed borrowing guidelines, an enor-mous increase occurred in the scale of residential mortgage lending from�47.2bn in 2002 to over �139.8bn in 2006 (see Chapters 3, 7 and 8). Thisdrove housing prices to unsustainable levels. Meantime, price rises increasedlevels of development profitability, encouraging activity to rise to levels farexceeding demand. Residential prices fell to below 50 per cent of their peak,creating negative equity among recent purchasers. An inevitable slump inoutput occurred, resulting in unsold newly completed apartment blocks, par-tially occupied housing estates and the abandonment of developments (seeChapter 7). Moreover, the ensuing economic slump, exacerbated by govern-ment austerity policies, had the impact of deepening the recession throughreducing levels of disposable income, creating further unemployment inthe domestic economy and forcing large numbers of mortgagors into pay-ment arrears and, for a growing number, into the margins of prospectiverepossession of their homes as a result of mortgage default (Chapter 8).The impact on the financial sector was shown in Chapter 9 also to becatastrophic, occasioning a bailout to rescue the insolvent Irish financialinstitutions, and setting in place special arrangements for dealing with theirtoxic debts.

Regarding urban regeneration, the chapters detailed how a new urbanpolicy of tax-incentivised property-based regeneration focused large-scaledevelopment activity on Dublin’s inner city. This engendered initially anoffice-development boom (Chapter 6), followed by private-sector residentialconstruction on a scale unseen in the inner city during the twentieth cen-tury, resulting in the completion of some 19,500 residential units, primarilyapartments (Chapter 11). The apartments, priced at levels unaffordable tomost indigenous inner-city residents, were generally occupied by residents

248 Considerations and Conclusions

with greater means and few ties to the locality. Ideas underpinning the‘creative city’ thesis (Chapter 12) validated inner-city gentrification as a pol-icy tool for urban renewal. Even where ‘holistic’ regeneration had specificallybeen sought through integrated area plans (IAPs), their operations oftenbecame regarded by indigenous inner-city residents as tools of the private-sector developers and of a public-policy agenda promoting gentrification(Chapter 13). Thus, the problems of social and economic deprivation werelargely ignored, those communities being obliged for many years to bearthe real cost of the negative consequences of living in proximity to large-scale development projects where 24-hour construction was often permitted,or where regulations agreed with the construction sector regarding workinghours were openly flouted. More recently, the engagement of private consul-tants to choreograph a public consultation process surrounding regenerationwas shown (Chapter 15) to have served effectively to marginalise the viewsof dissenting residents and to depoliticise a highly political agenda. Finally,in a period of rising property prices, the market-based approach of using theincreased value of land to regenerate obsolescent social housing in the innercity through public–private partnerships (PPPs; see Chapter 10) was also tofall foul of the very market upon which it was based because of the inher-ently cyclical nature of property markets and land prices. The collapse of thePPP-based social-housing regeneration agenda in 2008 revealed the state’sreliance on this approach to social-housing renewal and its almost blindfaith that housing prices would never fall. Once the prospect of private-sector profitability evaporated, communities were left in limbo, obligingthem to fight vigorously for an alternative to life in substandard conditions(Chapter 14).

The final part of the book now turns towards an examination of aspects ofpublic resistance to the operation of unfolding neoliberal urban policy andto the crisis which neoliberalism generated. Chapter 16 looks at community-based struggle while Chapter 17 sets down some salient points which mightbe drawn from the continuing experience of Irish neoliberalism followingthe collapse of the property market and banking system, the limited opposi-tion to such neoliberal policies and why they still remain in large part to beconfronted.

16Contested Urban Environments:Community Engagement andStruggle in Central DublinMichael Punch

At 6.30 p.m. on 26 May 2008, Dublin’s City Hall, located at the traffic-chokedjunction of Dame Street, Parliament Street and Lord Edward Street, becamethe focus for a grassroots street protest, fuelled by a level of anger anddistress unseen since the anti-drugs movements of the mid-1990s. Tenantsgroups, community organisations and cross-city networks arrived from dif-ferent points in the south and north inner city, noisily and colourfullydrawing attention to the human costs of the latest urban crisis followingthe collapse of five public–private partnership (PPP) regeneration deals forlocal-authority residential estates and public lands. One week had passedsince Dublin City Council’s unexpected announcement that the agreementswith McNamara/Castlethorn Construction would no longer proceed in thelight of changed economic circumstances. It was a week of unexpected rever-sals that revealed more clearly the conflicting interests and values of capital,state and community.

For a while, PPP arrangements had become flavour of the month withcity and central state officials. Up until the collapse, adopted policies meantthat all major regeneration projects with costs greater than �20M were tobe pursued using PPP agreements. The ability to achieve improved livingenvironments for several working-class communities in the city – who hadlong suffered from the neglect and rundown of their estates – had thus beenmade dependent on market forces. The turn to the engine of private capitalfor deliverance was heavily ideological but also swept along in the blinkeredenthusiasm over the Irish property boom of 1996–2007. However, with thesudden crash since 2008, boom turned to bust and the developer pulled out,dramatically illustrating the vulnerabilities and limits to such market-drivenapproaches to social regeneration.

The protest was important for another reason. It was a collective outpour-ing of anger at recent injustices and demands for a better future – for the‘right to the city’, to live and to flourish and just to be in this place – behind

249


which lay long years of struggles, achievements and losses. Accordingly, theprotest and everything that led up to it is a story that deserves careful listen-ing. It says something about the dreams and despairs of local communities,the skills available to and the strategies pursued by different forms of urbansocial movement and community development initiative, the machinationsof public policy at central and local levels, global neoliberal ideologies trick-ling down through Irish political economy, and cycles of investment anddisinvestment in the city. There was a further significance to these eventswith regard to the nature of community mobilisation in the city: this sig-nalled a back-to-the-streets turn in strategic action after several years ofengagement with participatory and partnership structures.

This chapter draws from a long period of research into and involvementwith tenants and community organisations in local-authority residentialestates in Dublin. It explores the evolution of community action in the innercity focused on issues around housing and the urban environment. The aimof this work is to develop some strategic insights on the achievements ofand limits to different forms of community action within a changing policyenvironment in a city undergoing rapid transformation.

Approaching the space of community action in the city

Urban social movements have at various times received considerable atten-tion in social and political analyses of the city. Perhaps the best knownrecent body of work began with Manuel Castells’ turn from an earlier struc-tural Marxist account (Castells, 1977) to a research project that gave a morecentral explanatory role to a diverse and chaotic pattern of social move-ments focused on environmental, cultural and political demands in the city(Castells, 1983). These battles for the right to the city and the production ofurban meaning were important forces in shaping historical patterns of urbanchange, alongside top-down processes driven by the state and capital, whichtended to receive more attention in much critical social theory.

Subsequent research in this vein has explored how global restructuringand community politics are interlinked in order better to understand thehistorical and socio-spatial dimensions of urban transformation (Smith andTardanico, 1987). This suggests a research agenda that explores the linkagesbetween issues such as everyday life in the household or community, socialnetworks, work-based and community-based political action, global capitalflows and the organisation and control of production and trade. In a similarvein, Fisher and Kling (1993) assembled a diverse set of studies of com-munity mobilisation in the context of globalised and neoliberalised urbansystems. In an examination of grassroots responses to global pressures inUS cities, Fainstein (1987) highlighted the local implications of integrationinto a world economy. In the face of the twin threats of economic restructur-ing and spatial reorganisation in cities (including pressures linked to fierce

Michael Punch 251

competition for previously devalued land in the urban core), communityactivists have mobilised around public-service provision, community gainagreements from urban regeneration and community-based local economicinitiatives.

A frequent theme running through this work relates to grassroots oppo-sition to urban renewal. In Castells’ (1983) work, for example, a case studyin San Francisco explored how minority neighbourhoods managed to sur-vive under urban-renewal pressures. Renewal schemes were proposed firstin the 1950s under the aegis of a pro-growth coalition in the city gov-ernment ‘as an adequate instrument to provide a favourable setting forthe new service economy, to renovate blighted areas, to displace the poorand minorities, to improve the urban environment, to keep middle-classresidents, and to reduce the flight of high-income taxpayers to the sub-urbs’ (Castells, 1983, p. 102). This programme led to mobilisation on alarge scale between 1967 and 1973 in the Mission Coalition Organization(MCO), which involved up to 12,000 people (from a total population of50,000) and 100 grassroots committees at its peak. The MCO was a citi-zen participation project which aimed to represent residents’ interests in theFederal urban programmes and, potentially, build into a multi-issue, multi-ethnic community alliance representative of the entire neighbourhood. Theorganisation was set up essentially along ‘Alinsky’ lines,1 recalling the Back-of-the-Yards Council built upon 1930s labour militancy in Chicago. Thisemphasised two principles, the importance of the neighbourhood scale asa social base for political action and participatory democracy (Marston andTowers, 1993).

The MCO exhibited complex articulations between community organisa-tions and public programmes of social reform, neighbourhood self-relianceand local politics. Its operators (community leaders, local priests, etc.), adver-saries and place in the urban social structure were reflected in a focus onclass issues (poverty), race issues (minority culture, discrimination, etc.) andcity issues (quality of life in the neighbourhood affected by service provisionand economic value). The organisation had a number of positive effects,most notably in successfully protecting the neighbourhood from extinctionin the face of renewal, improving the environmental quality of the pub-lic spaces, and winning some public funding for local community services.However, the MCO’s effectiveness was limited by internal divisions over themain priority for action (neighbourhood, class or minority issues) and the‘absorption of most of the leadership into the management of the Feder-ally funded social programmes and the subsequent in-fighting within thecommunity over the control of public resources’ (Castells, 1983, p. 137).

Several researchers have focused on this complex question ofincorporation – the tendency for the state or other powerful institutionsto absorb and co-opt bottom-up movements within the complex machi-nations of policy-making and funding mechanisms. In many instances


internationally, the state has cultivated direct linkages with local activists inthe process achieving some control over potentially disruptive or dissentingorganisations. A broad trend towards partnership between public and thirdsectors has to a varying degree reconstrued community and voluntary actionas social policy delivery vehicles (Kramer, 1981; Acheson and Williamson,1995).

In a wide-ranging review of grassroots organisation in US cities,Mollenkopf (1983) also highlighted some common limitations, particularlythe fact that the inherently local nature of such movements has preventedthem from addressing the structural sources of conflict over urban develop-ment or from achieving a national political presence. Furthermore, a generalreliance on state grants raises the danger of manipulation from above ratherthan accountability from below. One important consideration at this point isthe distinction between community-defined organisations, where the inter-ests remain purely local and competition between places is promoted, andcommunity-based organisations, which emerge and evolve in a particularlocale but contribute to the advancement of broader social demands andgoals.

Arising from difficulties of this kind, the critical importance of transcend-ing localism and overcoming geographically fragmented activism has beendiscussed as the problem of ‘militant particularism’ (Williams, 1989). Thechallenges of properly bringing together localised interest groups to advancethe general interest and common good is fraught with difficulties, butexperience has shown it is a challenge that must be met:

[I]t was hard bitter learning: that you would lose or only partly win partic-ular struggles unless you could generalize and broaden them, and changetheir underlying conditions.

(Williams, 1989, p. 249)

There is, then, a considerable international literature on grassroots mobil-isation in urban settings, particularly where the basis or impetus relatesto the lived experience of inequality or exclusion. The work demonstratesthe mutual interconnections between general processes of change and localexperiences and responses, variously exploring the dynamic engagementbetween consciousness and action, theory and practice. This internationalresearch offers some guidance for the work on Dublin, providing insightsinto the complex links between urban contradictions and struggles and theinterplay between capital, the state and the grassroots at the level of the city.The cumulative international evidence provides some critical insights as tothe place and meaning of grassroots organisation in the urban third sector,highlighting some important achievements and limits, notably with regardto localism, particularism and incorporation.

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Contestation in Dublin

The discussion now turns to an exploration of some recent trends in organ-isation and action emerging from working-class communities in contestedinner-city spaces in Dublin since the 1970s, culminating in the May 2008protests. It derives from a lengthy involvement with tenants and com-munity organisations in inner Dublin, particularly with those located inlocal-authority residential complexes, including programmes of consultancyand observational research relating to the efforts of local activists attemptingto negotiate the PPP consultation process.

The most striking elements of community-voluntary organisation inDublin were primarily top-down in nature until the late 1960s, consistingmainly of action inspired by charitable or philanthropic impulses. This tradi-tion of charitable action with a service orientation flourished in the contextof a relatively weak welfare state and the presence of considerable economicinequality and social disadvantage, starkly evident in the poor and over-crowded living quarters in the working-class locales that made up much ofthe city. The 1970s saw a different mode of local organisation and actionstarting to spring up at grassroots level, a turning encouraged by a conflu-ence of forces. These included the collapse of the older industries, top-downredevelopment and housing plans and social problems linked to inequality(Inner City Organisations Network, 1998). Such organisation was also pro-voked by a planning culture perceived to be unsympathetic to local needsand values.

It subsequently began to move from being a space for predominantlytop-down activity informed by a charitable ethos to one containing abusy micro-world of bottom-up community organisations responding tolocal needs and conflicts and, in many cases, informed by more radicalintent such as empowerment and equality agendas. The concerns of thesemovements have been diverse, including local economic development, com-munity culture and heritage, the anti-drugs movement and housing andurban environmental struggles.

Housing and the urban crisis

The major historical impetus for grassroots organisation was the urban cri-sis. In particular, the housing question re-emerged as a serious social issuefrom the late 1960s as a result of overcrowding, insufficient supply, poor liv-ing conditions, inadequate maintenance and aging stock in the inner city.This reached crisis point in the 1970s, as the first manifestations of an essen-tially anti-city planning process (Mumford, 1961) included the de-tenantingof flats complexes around the city centre and re-housing on the periph-ery, together with road-widening schemes which created urban blight and


dereliction. Housing action committees were set up to campaign on housingproblems around the city, notably the Dublin Housing Action Committee.There was a simultaneous emergence of tenants’ organisations, includingthe creation of a national coalition, the National Association of TenantsOrganisations (NATO). Much of the action at this time involved street-basedresistance and oppositional stances towards top-down processes of urbanchange.

One important early example was the state’s decision to remove 700 fami-lies from the city centre at Summerhill, Sean McDermott Street and GardinerStreet. It was clear to activists that the intention ‘was to create space foroffices, car-parks etc.’ (Rafferty, 1990, pp. 223–24). The most immediate localeffect of such paternalistic anti-city policies was the disruption of inner-citycommunities and, by implication, their complex informal networks of sup-port. This experience produced varying levels of critical awareness regardingthe operation of capital and, usually more clearly, the local state in the pro-duction of urban space. The contradictions of strategies that hastened urbandecline were keenly felt:

Around the 1970s, there was a lot of speculators would have moved inand seen this was prime land and they had great visions for it. But in themeantime all the flat complexes in around Sheriff Street and around theinner city, the likes of Seán MacDermott Street, Corporation Street andFoley Street were being allowed to run down . . . The plan that the Corpo-ration had for them then was to shift these people, the community, outof the area. Put them out in the suburbs where there was no infrastructurein place.

(Interview, Community Activist)

The decentralisation strategy was often implemented in the face of vigorouslocal opposition. A number of campaigns against the de-tenanting of theinner city sprang up during the 1970s and 1980s:

There was a coming together of the people to resist this, and that broughtabout the birth of different organisations, tenant organisations . . . whichstood up and stood their ground.


Resistance to neoliberal urban policy

The urban focus continued in later years, reinforced in particular by pres-sures related to property-based urban renewal of the 1980s. Contradictionsbetween planners’ and developers’ visions for the city and local needs andvalues fed into the emergent patterns of organisation and action. The Inter-national Financial Services Centre (IFSC) was a textbook case, one that

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illuminated the dislocation between the new functions apportioned to theinner city in the global space of capital and the economic deprivation thatwas rife in neighbouring working-class locales like Sheriff Street in the northdocklands.

This contested site in the north docklands, adjacent to some of thepoorest communities in the country which had been hit badly by the de-industrialisation and job losses during the 1970s and 1980s, now became acentral component of government strategies to connect the city and nationinto the global networks and flows of finance capital. A flagship project,it adopted many of the defining features of Thatcherite regeneration pro-grammes such as the London Docklands. It followed the broadly neoliberalpolicies of low corporate taxation, fiscal incentives for capital and dereg-ulation, in the process defining regeneration solely in terms of economicgrowth concerns.

This regeneration vision was at best irrelevant to local communities, atworst actually destructive. This became urgent in the case of Sheriff Street,a mid-rise flats complex adjacent to the renewal area. The governmentdecided to sell the site for private development, in effect displacing theexisting community. Community bulletins circulated to build conscious-ness capture the mood locally in the face of these urban pressures andan uncommunicative renewal authority. The renewal plans were ‘in effecta death sentence on the Sheriff Street community’, which would lead to‘the demolition and scattering of the people . . . There is now little doubtthat this was the real objective, the people and the community wereseen as expendable – as surplus to requirements’ (North Wall CommunityAssociation, 1990).

The plans prompted spirited opposition, including intense communitymobilisation, mass public meetings and street-level campaigns:

The locals held a three-month protest, a sit-in, to prevent that happeningbecause they were being put out . . . that caused huge tension because theyactually sat down in the streets, held things up for three months.


The fight against displacement was based on asserting a simple convictionover and against the logic of renewal:

The rights of a Community should never be regarded as subordinate tothose of commercial interest. A proper housing policy is central to thesuccess of Inner City renewal and regeneration.

(North Wall Community Association, 1993)

The campaign was successful in ensuring people were re-housed locally ina local-authority residential development north of the old site. However,


the neighbouring private-sector redevelopment was exclusive and heavilysegregated (walled and gated), a built expression of wider social inequalitiesand power relations in the city. And, for some, the loss of the older builtenvironment also generated mixed emotions:

A lot of the community got re-housed from the flats . . . and some havemissed that . . . they miss the whole social interaction of living in the flats.There’s no balcony . . . some people feel more isolated in the houses.


New urban pressures, new grassroots strategies

Whereas the early grassroots activism from the 1970s to the Sheriff Streetbattle tended to be independent and of an oppositional and mostly defen-sive nature, more recent periods witnessed important shifts in praxis andmore broadly contextualised. A raft of EU and state funding has been madeavailable for local development, supporting the construction of a complexnetwork of funded projects (youth, drug treatment, social economy, familyresource centres and so on). The state also shifted its strategic approach toplanning and renewal, creating a diversity of consultation structures whichhave, in various ways, brought some activists and tenants ‘inside the board-room’ within structures such as the Community Liaison Committee in thedocklands and the Monitoring Committees of the integrated area plans (seeBrudell et al., 2004; MacLaran et al., 2007; see also Chapter 13) and in variousforms of Regeneration Boards for the PPP programmes.

This constitutes part of a broader shift in governance in Ireland wherebya ‘social partnership’ model became a standard mechanism for develop-ing policies from national to local level on everything from national wageagreements to the management of local community development projects(see Chapter 2). The structures generally had representatives from all keystakeholders – government, business, trade unions and the community-voluntary sector. This cultural shift precipitated a profound change ingrassroots praxis as activists moved from learning the language and strategiesof street protest to those of participation and negotiation, while also becom-ing more involved in managing funded development projects. This posesan open question about the future of community action. The dilemma iswhether it belongs within such social partnership processes, arguably partof the architecture of neoliberal governance, or in an alternative space ofcitizen participation where the goal ‘is to “democratize democracy” in a gen-uinely inclusive form’ (Powell and Geoghegan, 2005, p. 140). A strong casecan be made that community organisations need to look beyond such state-led consultation structures in order to challenge neoliberal orthodoxy andfurther the interests of oppressed groups (Meade, 2005).

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Intensification of development pressures

A further set of challenges arrived with the economic boom (1995–2007),which engendered intense commercial and residential development pres-sures across the city. The city’s economy became increasingly dominatedby a number of key sectors, notably financial services, real estate and per-sonal services (retailing and tourism). Private capital flooded back intoredevelopment projects until the relatively sudden bust in 2008. This wasalso a period of further experimentation in urban planning, with DublinCity Council taking a highly entrepreneurial turn in its policies, intro-ducing considerable flexibility and experimentation in approaches to theregulation and regeneration of the city (McGuirk, 1994; McGuirk andMacLaran, 2001; see also Chapter 5). Over this period, relationships betweencapital, state and the grassroots had evolved variously through momentsof engagement and retreat, collaboration and conflict. The state placedconsiderable emphasis on encouraging investment in high-grade propertydevelopment for commercial and residential purposes and, at the sametime, a plentiful supply of finance was ensured by low interest rates andthe eagerness of the lending institutions to advance loans, sometimesof spectacular sums. This also resulted in occasional urban struggles, asrapid development often posed a threat to the survival of indigenouscommunities, local culture and the integrity of the urban fabric and thelocale.

In particular, the increasingly neoliberal bent of urban governance grad-ually provoked a level of disquiet as a range of schemes were devised tomarket and remake whole city quarters, enticing large-scale investors andreimagining the city as an attractive (and lucrative) site for European-style urban lifestyles and commercial, retail and cultural activities. Thisincluded the creation of the Dublin Docklands Development Authority in1997 and the Urban Renewal Act of 1998, which created five new IAPsacross the inner city (outside docklands) designed to encourage propertydevelopment but also wider outcomes in terms of cultural activity, imageenhancement and community gain. These schemes involved various degreesof community engagement, as local activists were invited to sit on moni-toring committees or otherwise make observations and recommendationson policy. Research into one of these, the Liberties-Coombe IAP (Brudellet al., 2004; Kelly and MacLaran, 2004), revealed the predominant effectto be the incentivisation of gentrification, while community gain wasminimal. The frustrations led to the resignation in protest of communityactivists from the Monitoring Committee. The story took a further twistwith the state’s engagement with urban regeneration via PPPs, the mostovert expression to date of the infection of urban policies by neoliberalideologies.


PPPs and local action

The first public notice of the strategic turn to regenerating inner-city localauthority estates via PPP models came with a 2001 circular emanatingfrom central government (Department of Environment and Local Govern-ment, HS 13/01), which required that local authorities consider the extentto which additional housing supply can be achieved using PPPs. In 2003,a further directive required that regeneration projects costing over �20Mwould have to be considered for PPP. Dublin City Council took up thebaton energetically, earmarking numerous flats complexes for demolitionand redevelopment.

The situation was of course complicated because these were essentiallyliving, historic social areas of the city: localities like Fatima Mansions,St. Michael’s Estate, O’Devaney Gardens, Dominick Street, Dolphins Barn,Croke Villas and others. These were urban places with strong identities andfelt attachments, where people had struggled and survived for generationsagainst the hardships of exploitative working conditions and low pay, redun-dancy and unemployment, poverty and degraded living conditions and themyriad social problems that go along with these conditions of inequalityand injustice, including the drugs crisis. These communities had mobilisedover many years and organised dense and complex grassroots networksand infrastructures to fight for local interests, achieve creative patterns oflocal development and publish community plans for people-centred, socialregeneration (Fatima Groups United, 2000; St. Michael’s Estate Regenera-tion Team, 2002). Then, after decades of decay and neglect, private capitaland the state were focusing attention on these publicly owned sites withambitious plans for clean-sweep redevelopment to produce much denser res-idential complexes dominated by private housing on the remains of whatonce had been entirely social-housing estates.

This was neoliberal planning writ large, entrepreneurial governance takento its limits. On the surface, it made perfect economic sense. It seemed tooffer a means to reconstruct rundown estates at zero public cost. The pri-vate sector partner would redevelop the whole site, providing an agreednumber of social housing units and amenities in return for the develop-ment rights on the rest of the site. In fact, only the earliest PPP, FatimaMansions, was actually constructed by this method. In this case, resource-ful local action and the ability of activists to ensure effective consultationstructures and to ‘keep ahead of the game’ succeeded in winning a high-quality development of social housing for local residents and significantprovision of community facilities and services. Elsewhere, through yearsof arduous and ultimately dispiriting negotiations, people learned the hardway about the limits to market-driven models of regeneration. The exam-ple of St. Michael’s Estate illustrates the process and the lessons (Bissett,2009).

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St. Michael’s Estate is less than 3 km south-west of the city centre justoutside the historic Liberties area and adjacent to a Luas (light-rail) stationcompleted in 2004. Constructed between 1969 and 1970, the original estateconsisted of 346 flats in a series of mid-rise system-built blocks isolated fromone another by mostly functionless open space. It suffered the hardshipsof job loss and unemployment consequent upon the de-industrialisation ofthe area in the 1970s and the recession of the 1980s. Largely neglected bypolicy makers, it became ‘ghettoised’, one of the ‘scary’ spaces of the city,abandoned to its internal problems by the state. It had the heart torn outof it by the drugs crisis, being used as a site for selling and using drugs andafforded little police protection. Many tenants moved out, leaving boarded-up units and an air of dereliction. The local authority did not maintain theestate adequately and its physical deterioration added to the sense of localcrisis over many years.

People duly organised and mobilised for change, setting up a family centre(1985) and a representative Blocks Committee (1986) and taking part in ajoint Task Force (1998) with city-council representatives. This establishedthat the residents favoured demolition as a radical solution (a hoped-fornew start) to the conditions of daily life. In 2001, a community-basedregeneration team think-tank was established, which published Past, Present,Future: A Community Vision for the Regeneration of St. Michael’s Estate. Therefollowed a long process of negotiation and resistance, progress and set-backs, beginning with a plan in 2000 for demolition and redevelopmentwhich was rejected as too costly by the Department of the Environmentin 2003, demanding instead a PPP-based regeneration. A 2004 plan, pro-duced unilaterally by the City Council, would have resulted in demolitionand replacement by 550 private units, 80 social units and 220 ‘affordable’owner-occupied units. This was resisted fiercely through a mainly street-levelprotest campaign focused on delivering the original agreed plan. This suc-ceeded insofar as the council’s own plan was voted down by councillorsand the long process of PPP negotiation commenced in 2005, involvinglocal representatives. In January 2008, an agreement was reached involving aprivate-sector consortium in a development to be financed by the sale of 480private apartments plus some commercial facilities. This was followed by yetanother twist on 19 May 2008 when Dublin City Council announced thecollapse of several PPP schemes (St. Michael’s Estate, O’Devaney Gardens,Dominick Street, Infirmary Road and Séan MacDermott Street), involvingthe same consortium. So began the latest series of street protests outsideCity Hall involving all the affected communities and supportive groups andnetworks.

The PPP strategy contained inherent weaknesses related to its relianceon market forces for completion. Indeed, the decisive criteria for develop-ment were neither the public good nor social regeneration but exchangevalues and profitability. Thus, the contradictory values of capital, state and


community became the central point of tension and conflict through all ofthe negotiations. The seminal account of the realpolitik of regeneration byJohn Bissett (2008, p. 79), a community worker and one of the two localrepresentatives on the assessment panel, reveals much of the central tensionand conflict around values:

Looking back over the negotiations, it is clear that there was more thanone ‘regeneration’ going on. There were two diametrically opposed viewsas to the best way forward . . . Such differences manifested themselvesmost lucidly around the provision and status of social housing. Withinthe negotiations social housing became something of a marginalised cat-egory. From a community perspective the necessity of providing socialhousing was defended fiercely. Against this, Dublin City Council built allof its negotiation strategies and tactics around privatising the Estate usingthe logic of ‘the market’.

What this meant in practice was that the delivery of social housing dependedon the sale of private apartments. This created the odd situation wherethe City Council was driving and attempting constantly to legitimise thisprocess of commercial exploitation. These inherent contradictions and ten-sions led ultimately to the unravelling of the entire exercise, leaving theplans dead in the water and the dreams of a new start in a good livingenvironment crushed. Devastated and angry, residents and activists set inmotion a back-to-the-streets protest movement, arguing for an alternativeto neoliberalism:

There are no safeguards built into the PPP model to protect the interests ofthe city council and residents against market change. It is a boom or buststrategy . . . We are talking about people’s homes and families here. PPP isnot a suitable process for developing social housing on public lands. It’sa long drawn out costly process, with too much emphasis on how muchmoney can be made from public land for the council and the developer.

(St Michael’s Estate Regeneration Team,Press Release, 22 May 2009)

Achievements and limits: Strategic considerations

It is clear that all of this grassroots work has made valuable and lasting con-tributions to the life of the city and its patterns of change, but also that thereare real and significant limitations. There have been quantifiable gains intapping into available EU and state funding streams. Some of the engage-ment with consultation structures secured real gains, such as in FatimaMansions (social-housing redevelopment and social-regeneration invest-ment). Much has been acquired (sometimes painfully) in applied learning

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and knowledge from engagement with economic and cultural developmentactivities and engaging in negotiations around complex planning and regen-eration processes. The production of knowledge independently throughaction creates a base of understanding that is owned by the commu-nity rather than created externally and (even with the best of intentions)‘parachuted in’ or made partially available in the shape of publications,workshops or other such resources designed and created by a top-downresearch institution. All of this has meant that communities have managedto build considerable capacity locally and that is a real gain.

There have also been more ineffable yet essential gains through self-organisation, notably the creation of complex networks of local groups withtheir own modes of decision making, collaboration and action. Progress hasbeen made in collaboration through independent networks such as ‘Ten-ants First’, which has had some innovative success on two fronts. As aforum bringing together local activists for some ten years, it has provided anindependent grassroots space for sharing knowledge and information andoffering mutual support and encouragement. Thus the knowledge producedlocally (for example, regarding technical or strategic issues involved in thePPP negotiations) can help to empower other communities at early stages ofnegotiation over regeneration. This organisation has also produced publica-tions (and offered related workshops locally) based on research and analysisinto regeneration and broader housing policy issues, and these have beeninformed by needs and experiences on the ground locally. And within thiswork, a key area of knowledge relates to the experiences with building localorganisations and structures that can more effectively engage with complextop-down planning processes, particularly under PPP-based regeneration.These are all real gains offering positive lessons for any grassroots move-ments emerging from and operating within working-class communities anddealing with the everyday oppressions of top-down neoliberal agendas (likePPP-based regeneration) in the city.

However, there are some evident concerns and these also provide impor-tant lessons for consideration. One essential concern is the risk of incor-poration. Available state funding for community development has meantthat activists have also by default become increasingly engaged as projectmanagers and energies become increasingly absorbed in endless rounds ofmeetings, form-filling exercises and the day-to-day demands of running thevarious schemes. Local development policies have also engendered varyingdegrees of dependency on what are ultimately vulnerable and short-termsources of income. This process of incorporation is a central problem in thepolitical economy of community action. Where alternative or oppositionalmovements or cultures emerge in any society, the dominant (hegemonic)forces will usually tend to marginalise, suppress or co-opt such activity. Thereis wide recognition locally of this problem. The challenge for activists is tofind organisational structures that can facilitate a balance between the value


of maintaining autonomy and a critical distance and the need to accessresources in order to support and diversify activity and achieve their goals.As an unfunded voluntary network, Tenants First has attempted to exploreone model of doing so by providing an independent space within whichpeople can collaborate to seek common ground, develop understanding andanalyses and campaign for alternative policies.

There are also complex problems in engaging with consultation structuresset up to implement urban-regeneration plans. Activists and communityworkers involved in independent organisations became, to varying degrees,increasingly embroiled at negotiating tables in boardrooms, learning fast adifferent language and culture of business, property investment, planningand city marketing. However, such engagement also carries inherent dangersof incorporation. It makes the maintenance of independence and a criticaldistance more difficult, as participants come under subtle or sometimes evendirect pressure not to comment or speak outside the boardroom but ratherto keep all such comment within formal negotiations. At the end of the day,any final agreed plans are in part the property of all of those who partici-pated and it is difficult then to resist or propose alternatives to any policies,regardless of how uneasy some activists might feel about the implicationsof these. Worse, if things go wrong, those involved in the negotiations canbecome the ‘flak-catchers’ for local anger and disillusionment.

Finally, we might consider the role of action research itself, togetherwith its own possibilities and limits. The key challenge here is to ensurethat it is owned by the relevant community; something that is not at allstraightforward. In the case of the research and publications produced byTenants First, the work carried out was informed by the questions and needsidentified through local public meetings, while the analysis was constantlyrewritten and reshaped through the work of a smaller sub-group consist-ing of activists plus one or two researchers. Recommendations were thendebated and agreed among the wider steering group of Tenants First itself(also comprising activists with some input from researchers). This latter pro-cess literally took years but it did produce work that was in a meaningfulsense owned by the organisation. The aim of such an approach is to supportthe emergence of a kind of counter expertise from below as against the offi-cially sanctioned knowledge of the city coming from above (Nilsen and Cox,2005). For example, this approach could counter the official narrative thatthe local authority estates were decayed spaces of little value for which PPPregeneration offered the ‘best medicine’. It proposed an alternative – thepossibility of imagining alternatives to demolition and regeneration basedon recognising the value of what exists and improving on it: the flats com-plex as home and a space of working-class traditions of community solidarity(Tenants First, 2006).

Research can help in identifying and articulating demands for policy andother changes in the external environment but it will be most effective if all

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stages of the research process are ‘locally owned’, something that takes time(even years) and a high level of voluntary commitment (at least as long asuniversities and research institutions remain unsupportive of such fluid anduncertain approaches which are unlikely to win major grants). All of theseapproaches bring their own considerable challenges, but each is relevant tothe bottom-up struggle for a living city for all people. The stakes could notbe higher.

Note

This chapter comprises an edited version of an article titled ‘Contested Urban Envi-ronments: Perspectives on the Place and Meaning of Community Action in CentralDublin, Ireland’, originally published in Interface, 2009, 1 (2), 83–107, which isincluded here by permission of the editor of that journal.

1. See Alinsky (1945) for a description of the theory and action employed by this localorganisation.

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17Neoliberal Urban Policy andChallenging the IdeologicalStraightjacketAndrew MacLaran and Sinéad Kelly

Paying for the crisis

Since the economic crash, the particular pathway and series of measuresadopted by successive governments in Ireland have amounted to a compre-hensive structural adjustment programme (Fraser et al., 2013). The social-isation of private debt, a process mobilised with the introduction by thegovernment of a sweeping bank guarantee in 2008 and formalised via theterms and conditions of the EU, ECB, IMF (the ‘troika’) bailout from late2010, set the material agenda within which policy measures would be imple-mented. Essentially, private banking debt, the financial and property bubbleswere to be paid for through austerity, the privatisation of state assets and aseries of wide-ranging labour ‘reforms’.

Set against a backdrop of rapidly falling tax revenues and the socialisa-tion of banking debt, seven austerity budgets were introduced in Irelandbetween 2009 and 2013. Over this period, fiscal adjustment measures includ-ing spending cuts and tax increases amounted to a colossal �28bn or17 per cent of GDP. Comprising sweeping spending cuts in social welfare,healthcare, education and capital expenditure, the adjustments clearly tar-geted the diminution of the welfare state as a way of paying for the economiccollapse. For example, Budget 2010 provided reductions in social welfarepayments of �760M and the following year a further �873M of spendingcuts in this sector were enforced, with the Disability Allowance, Child Ben-efit and Jobseeker’s Allowance first in line for spending reduction (Fraseret al., 2013). More recently, Budget 2013 which involved a total adjustmentof �3.5bn, included a �450M reduction in social welfare expenditure andover �1bn in health-care cuts.

Austerity budgets have also reconfigured the personal taxation system,the new measures premised on increasing tax revenue by ‘broadening thetax base’, essentially extracting additional tax from lower-income groups.

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While higher-earners have been affected by austerity, it has been severity ofmeasures imposed on low-income households that has been the most dis-turbing feature of post-crash neoliberalisation. Notable tax measures thatwere particularly regressive included a Universal Social Charge introducedin Budget 2011, which was additional to income tax and applied to any-one earning over �4,004 per annum. In line with the ‘troika’-supervisedbailout programme, Budget 2012 increased the standard rate of value addedtax (VAT) from 21 to 23 per cent and imposed a very crude �100 HouseholdCharge. This was succeeded by a much more comprehensive Local PropertyTax (residential property) in Budget 2013 (see Fraser et al., 2013).

Other major components of Ireland’s structural adjustment programmeinclude far-reaching changes in the levels, terms and conditions of employ-ment. The sharp contraction in the economy and subsequent crises ofunemployment (where numbers soared to over 320,000 in 2012) and out-migration, facilitated the introduction of a range of labour-market ‘reforms’,many of which have sought to reduce the cost of labour and ultimatelydrive down wages (see Allen and O’Boyle, 2013; Fraser et al., 2013). Notably,these measures have been promoted regardless of the high profitability lev-els which continued to be achieved in many MNC operations. Furthermore,the measures stand in stark contrast to an unusual labour-reform measurein Budget 2012, the Special Assignee Relief Programme, which secured taxrelief for élite ‘highly skilled’ foreign workers (Fraser et al., 2013).

Another key goal of the structural adjustment programme has been toshrink the size of the public sector, largely implemented via early-retirementschemes, employment-recruitment freezes and other control frameworks.Between 2008 and 2010, 15,000 public-sector jobs had been eliminated.Other moves included various rounds of public-sector pay cuts, the imple-mentation of a pension-deduction levy, significantly altered terms and con-ditions of employment and a public campaign seeking to divide public- andprivate-sector workers.

Likening the general attack on labour by Ireland’s economic and politicalélite to what Naomi Klein (2007) calls the ‘shock doctrine’, where eco-nomic crises are used by élites to push through deeper neoliberal reforms,Fraser et al. (2013, pp. 48–49) also draw on Marx and Engels’ notion of‘uninterrupted disturbance’ to describe the unfolding process:

Of fundamental importance here is that the adjustment in Ireland hasbeen about the gradual but constant shaking of workers’ confidence;chipping away at any gains they might have made, frightening and agi-tating them with apocalyptic warnings about economic collapse and thedire state of the country’s finances . . . Elsewhere, ‘innovations’ such asNAMA, the almost silent and invisible repayment of bondholders, anda host of other minor but important policy adjustments dump more debtonto workers and citizens, or disturb the property market in ways thatlock-in privileges and rights that will inevitably benefit only a wealthy


minority . . . The unavoidable conclusion to draw about the adjustment inIreland is that it entails a sustained but experimental effort at disturb-ing, shaking, agitating, and unsettling workers and their existing socialconditions with the outcome of increased, everlasting uncertainty andagitation.

Even US economist Joseph Stiglitz, a former Senior Vice President andChief Economist of the World Bank, speaking in Trinity College Dublin on7 October 2009 on the subject of NAMA, was led to state that

this bank bailout is a simple transfer from taxpayers to bondholders, andit will saddle generations to come. The only thing that might give yousolace is that, as Chief Economist of the World Bank, we see this typeof thing happening in banana republics all over the world. Whenever abanking crisis happens, the financial sector uses the turmoil as a mecha-nism to transfer wealth from the general population to themselves. I’vebeen very disappointed to see that it has happened, not only in bananarepublics, but in advanced industrialised countries.

Responding to the crisis

An important question that has to be addressed, albeit in only a tentativemanner here, is why the Irish reaction to neoliberalism and its consequenceshas been so muted. Specifically, in the context of the financial meltdowncaused by neoliberal deregulation of financial markets which resulted inunemployment rates rising from 6.5 per cent in 2008 to 14.8 per cent in2012 and the collapse of the financial system, it is apposite to consider whythere has not been greater opposition to the imposition of neoliberal auster-ity policies which protect the assets of the wealthy at the expense of thoseof the less well off.

Once the decision had been made during that fateful meeting in Septem-ber 2008 to underwrite fully the debts of the banking sector rather thanpermit them to fail, the consequences became almost inevitable given theprevailing ideology of the political élite. Further, despite domestic pres-sure on the government to oblige bondholders to absorb some losses ontheir investments in Irish banks, the European Central Bank, supported byUS Treasury Secretary Timothy Geithner (Kelly, 2011), resolutely opposed it.This proclaims to investors that ‘banking crises will be paid for by generalausterity and that private debts in the financial sector will become socialized’(Fraser et al., 2013, p. 50). Choices nevertheless still remained. If the Irishpublic were to be made to pay for underwriting banks, the burden mightbetter have been placed on the wealthy who were more able to fund such anabsurd enterprise. This, it seems, was unthinkable.

Although during the course of the subsequent five years Capital Gains Taxand Deposit Interest Retention Tax on un-earned income from bank-account


savings were increased from 20 per cent in 2008 to 33 per cent in 2013, therewas no introduction of a wealth tax, even of the most limited nature. Thelow rate of company taxation remained unchanged, the contribution of Cor-poration Tax to total exchequer revenue declining from 14 per cent in 2001to 11.4 per cent in 2010, with questions being raised in the Dáil by TDs rep-resenting the People Before Profits Alliance regarding the disparity betweenthe notional or ‘headline’ Corporation Tax rate of 12.5 per cent on interna-tional companies’ profits and their real tax rates, estimated at between 3 and5 per cent, with 75 financial vehicle corporations possessing assets of �41bnbut paying no tax at all in 2009 (Stewart, 2013).

Instead, guided by the heavy hand of the ‘troika’ (the EU Commission,ECB and IMF) operating under the same orthodox neoliberal principleswhich had been imposed previously on Mexico and other developing-worldnations, a policy of budgetary austerity was pursued. It involved increasedpersonal taxation, new taxes and charges, additional public-sector pension-related deductions, public-sector pay cuts of and reductions in public-sectorexpenditure leading to a forced deterioration in the quality of public services.The results of the neoliberal project and of the trade unions’ participa-tion therein became all too evident as government actions demonstratedever more clearly to the wider citizenry the hazardous nature of a ‘social-partnership’ model of economic development in which increases in payand promised improvements in public services became liable to suddencancellation.

Yet the response of the broad labour movement to the crash has beenremarkably limited compared to the violent reactions in Greece, Portugaland Spain. In spite of the radical pedigree of the Irish labour movement dur-ing the early twentieth century, which included leaders such as the Socialistpolitical activist and organiser James Connolly and trade-unionist JamesLarkin, after the defeat of the labour movement in Dublin during the ‘lock-out’ (August 1913 to January 1914) and the execution of Connolly after theEaster Rising in 1916, conflict between labour and capital remained mutedthrough the early years of the Free State. Following independence and thecivil war, Irish politics became dominated by two conservative political par-ties (Fine Gael and Fianna Fáil), divided principally by their stance regardingthe acceptance or rejection of an Irish 26-county state, excluding six of thenine Ulster counties. The Labour party, for long the third-largest party interms of Dáil representation, served in coalition governments with both FineGael and Fianna Fáil and cannot be considered to have comprised a radicalforce in recent Irish politics. Indeed, it serves currently (2013) in a coalitiongovernment together with Fine Gael and staunchly defends its pursuit ofneoliberal policies advocated by the EU, ECB and IMF ‘troika’ as necessaryfor ‘saving’ the Irish economy (for capitalism).

By the time of the recent financial meltdown, the labour movement had,for the most part, become an essentially conservative force. The trade unions


themselves were run by a highly paid leadership, unguided by any penetra-tive structural analysis of Irish society and seeming to possess a conceptionof the state as a benign institution, a perspective devoid of any recognitionof the fundamental structural role of the state in capitalism and in whoseinterests it functions. The leadership of the unions had for over 20 yearsbeen incorporated into social partnership and wedded for even longer intoan ideology of incremental improvement for union members, rather thantheir having any wider strategy for radical qualitative structural change.Thus, they have been broadly supportive of the status quo and remainedunquestioning of the legitimacy of the private ownership and control ofthe means of production and distribution. Any conception of broader soci-etal transformation was also limited by a divisive trades-union consciousnessthat sought the improvement of conditions for union members but keenlydefended the maintenance of differentials in remuneration between differ-ent levels of skill. Restrictive craft-based unions and professional associationsfitted well into a society in which a hierarchical division of social produc-tion was becoming increasingly unequal under neoliberalism. Indeed, to asignificant degree, they helped to legitimise such inequality and hinder thecreation of broader working-class solidarity.

The trade union leadership, marginalised by the government as a resultof the abandonment in 2009 of the ‘social-partnership’ model, reacted inFebruary 2009, not by calling for national strike action or civil disobedi-ence but by requesting a march to the Dáil, which attracted 100,000 people.However, this seemed intent more upon demonstrating to the governmentand to the union membership itself that, in spite of all evidence to the con-trary, the unions’ leadership might still have some role to play. A furtherdemonstration in November 2010, variously estimated to have attracted50,000–100,000 persons, was called in order to register opposition to the‘troika’-backed austerity programme. Significantly, both were called for a Sat-urday when the inconvenience so caused would be minimised. Only 3,695days were lost to industrial disputes in 2011, the lowest number since recordsbegan in 1985 (Fraser et al., 2013). Of course, it might be argued that the par-ticipation of the Labour party in coalition government with Fine Gael mayhave blunted the critical stance of the trade unions towards neoliberal aus-terity, had it not been for the fact that its complicity with the neoliberalagenda pursued in Ireland had been complete for over 20 years.

In their recent book, Allen and O’Boyle (2013) observe that, despite grow-ing inequality, the apparent success of the Irish economy in the period from1994 to 2007 created rising levels of living which effectively weakened theLeft in Irish politics.

Ireland’s radical left, by comparison, was historically insignificant and itsideas have barely penetrated the workers’ movement in any substantialway. The weakness of the left was further exacerbated by the apparent


success of the Irish economy between 1994 and 2007 when the ideologyof naive capitalism took hold among large sections of society. Althoughthe left could connect with workers on individual issues, it was not able tochallenge this pervasive ideology. The growth in living standards allowedworkers to seek privatized solutions to the failures of their society.

(Allen and O’Boyle, 2013, p. 127)

Allen and O’Boyle (2013) heap considerable and warranted blame on theleadership of the Irish trades unions for its lack of leadership in confrontingausterity policies that were highly injurious to union members. Social Part-nership had lured the leadership into an embrace with the Irish state whichleft it unprepared for any radical action. The authors maintain that the pol-itics of inclusion and incorporation pursued under Social Partnership hadresulted in a general absence of organisations prepared to engage in resis-tance despite union members having been most willing to demonstrate theiranger, thereby becoming demoralised by the capitulation of that leadership:

For the Irish have been protesting – and in very large numbers . . . Morethan 100,000 people marched in protest at the imposition of a pensionlevy on public sector workers in 2009. Later that year, 250,000 publicsector workers staged a one-day strike and were about to repeat it whentheir union leaders called it off. The demoralisation caused by that defeatgave the government considerable room for manoeuvre and the protestmovements dropped off.

(Allen and O’Boyle, 2013, p. 127)

However, their observation that Social Partnership had spawned a trade-union leadership which proved unfit for confrontation with a governmentbent on maintaining the class rule of the wealthy, must be more broadlycontextualised and tempered somewhat.

Ideology and Irish society

Until the later years of the twentieth century, Irish society remained largelyrurally based and a substantial proportion of contemporary urban dwellersare first-generation urbanites.1 Unlike countries such as France, which havein certain regions possessed a strong political legacy of rurally based commu-nism, Irish rural society was characterised by a strongly defined hierarchyand by deference, overtly at least, towards landlords, farmers who ownedlarger amounts of land, those with a higher educational status such as thedoctor and, of course, the priest, the church in rural Ireland constituting apowerful instrument of ideological and social control. Based primarily onthe ownership of land, social rank tended to be inherited and a high degreeof ideological conservatism marked a society which generally lacked social


mobility (see Breen et al., 1990). The role of the Roman Catholic church indirectly shaping Irish politics since 1922 was profound and became reflectedin key elements of the 1937 Constitution and Irish law which, among otherrestrictions, long precluded divorce and the sale of contraceptives. Moregenerally, the role of the church was important in instilling the virtues ofobedience and deference, facilitated by its control over the ‘ethos’ underwhich most Irish primary and secondary schools operated.

The recent growing secularisation of Irish society has been accelerated bypublic reaction to the scandalous behaviour of certain priests and the subse-quent covering up of such activities by the religious hierarchy to protect theauthority (and wealth) of the church, increasing the degree of disaffectionwith formalised religious ideology. Nevertheless, ideas imbued in schoolsoperating under an overtly religious ethos or an upbringing in families whereinstilling a particular religious ideology has often been regarded as essential(‘the family that prays together stays together’) meant that the ideologicalsoil for secularism was not particularly fertile. In such an atmosphere, sec-ularism emerged only slowly and a more radical structural analysis of Irishsociety was marked by its virtual non-existence. Ideas formed in childhoodare not easily discarded, even in the face of their evident shortcomings.

Beyond the more immediate transmitters of conservative ideology such asthe family, education and the church, the Irish media also largely reflectedthe underlying ethos of the Irish middle class from which its employeestend to be drawn. This can be characterised as being broadly ‘liberal’ interms of personal ‘rights’ and certain social issues, while remaining stronglyconservative in terms of economic issues, especially those pertaining toprivate-property rights. Unsurprisingly, it has remained largely uncriticalof the neoliberal experiment. This is not to imply that a specifically polit-ically partisan worldview was consciously promoted by the media. Rather, itsuggests that a particular view of ‘reality’ subconsciously dominates report-ing and analysis to the exclusion of alternative ideas which lie beyond the‘self-evident reality’ of the prevailing ideology in which reporters and com-mentators and analysts have been schooled. A belief that no fundamentalqualitative change in society is possible effectively marginalises more rad-ical analysis and consigns it to the waste-bin of ‘unreality’ itself (see alsoFisher, 2009). Not only does this restrict the character of what gets reported,the inclination being to focus overwhelmingly on national and local issues,but creates a tendency to become seduced by the cult of personality (‘greedyrogue’ bankers) and celebrity so that reporting becomes grounded in individ-uality, characterised by personalisation to the exclusion of more meaningfulstructural analysis. The vilification of Irish financial regulators who operatedunder a system of relaxed controls over the banking sector also offers little byway of explanation when attempts to control more closely the operations ofthe financial sector would undoubtedly have met with little support, if notoutright opposition, from their political masters.


In trying to comprehend the reaction to neoliberalism in Ireland, it isimperative to recognise the hegemony of neoliberal ideological orthodoxy,grounded in the belief in markets and lauding of the competitive individual.It took many decades of persuasion to put into place the idea that mar-kets are the best allocators of resources and that competitive individualismshould reign unhindered. Constant reiteration by politicians of virtually allpersuasions, by business people and entrepreneurs, by academic ‘experts’and by media personnel who sycophantically pander to the élite, renders itdifficult to think ‘outside the box’ and that there might actually be somealternative. The rubric that ‘There Is No Alternative’ (TINA) creates a falsebut dominating conception of reality against which any radical courses ofaction become evaluated and dismissed.

Such is the ideological dominance of the basic tenets of neoliberal ideol-ogy that although some critical confrontation with that hegemony has takenplace, this has largely failed to inform purposeful actions of a class-basedmovement for change. Ideological hegemony runs very deeply. It remainsfirmly implanted despite the enormity of the global crisis resulting from 30years of neoliberalism. The era generated massive over-accumulation of capi-tal facilitated by the deregulated activities of the financial system. It led to anunabated increase in the polarisation of wealth ownership and the immisera-tion of increasing numbers of people (see Harvey, 2005) and the diminutionin real levels of welfare-state support.

All this has happened with little fundamental critical insight other thanthe media’s placing of the blame on bankers and property developers.2 Suchshallow personalisation of the situation does little service to the cause ofradical change. It may be interesting from a voyeuristic perspective but itis the high-brow equivalent of the tittle-tattle of glossy magazines and is oflittle real value in deepening our comprehension of the fundamental keystructural elements which must instead occupy the focus of any analysis.If we fail to understand that the causes of our current situation are far moredeeply seated than merely the result of greedy individuals, then we missentirely the chance for more profound understanding and become divertedfrom the need for real qualitative change. Moreover, the crisis points notjust to one of neoliberal making. It is, in fact, a far more deeply seated crisisof capitalism itself, borne of more fundamental components than those ofneoliberal making. It is a crisis born of private ownership. When applied tothe control over the means of production and distribution, it means that thethings by which people gain their livelihoods lie under the control of others.Access to people’s means to life is therefore regulated by the terms set downby owners. For owners, the only criterion of significance is profit, the drivingforce of our economic system. It is a system which allocates greatest politicaland ideological power to those with economic power. Indeed, one might askwhether there can exist any true political democracy in the absence of eco-nomic democracy, involving the social control over the means of production


and the way in which social product is allocated. Only then could it be pos-sible to create an economic system which is subject to the strategic societalgoal of fulfilling human need, rather than doing so only insofar as ‘wants’might be fulfilled as a means of generating profit.

We get only what we fight for. As attacks on public spending mount acrossEurope and the welfare state becomes whittled away, we can perhaps expecta return to more normal conditions of capitalism in a far more exploitativeand rapacious form. In years to come, we may come to regard those years ofwelfare statism as something of an aberration in the capitalism’s historicaltrajectory. Indeed, it was against a background of imminent threat to the sta-tus quo that the welfare state and ‘post-war settlement’ in Britain had beendevised essentially to buy off the threat of a more radical transformation ofpost-war society.3 Neutral Ireland faced few of the undercurrents threateningthe élite in Britain at the end of the Second World War. However, neither didIreland gain a fully fledged welfare state. There was no pressing need to doso, instead sub-contracting key educational and health-care functions to thechurch. However, mere concessions tend to be liable to sudden cancellationand, by the late 1970s in the United Kingdom, those post-war threats haddisappeared and concessions were no longer required. Welfare state spendingwas regarded by those with economic power and their academic economistideologues as too costly and unnecessary. Meanwhile, demands-on-the-statereformism had blunted working-class self-assertion and combativity, leadingto a dimunition of any real threat of structural change.

As a postscript, it is interesting to note that, in 2013, another Enquiry wasannounced into the Irish banking sector’s activities during the boom years.However, under neoliberal light-touch regulation, bankers simply did whatthey do best; they make money for themselves by taking risks with otherpeople’s money. A far more appropriate investigation might address the wayin which the Irish political élite had so readily been seduced by neoliberalismand enthusiastically established a light-touch regulatory regime which pan-dered to those with wealth and economic power and which drove theIrish economy to disaster. However, this would require the political partieswhich embraced neoliberalism, Fianna Fáil, Fine Gael, Labour, the Progres-sive Democrats and the Green Party, to have the maturity and humility tobe critical of their own role in what occurred and of their support for pri-oritising, and indeed for continuing to support, the demands of capital overthose of its citizens. An enquiry of this type is therefore highly unlikely. AsFraser et al. (2013) cogently state:

The lesson here is a familiar one: financialisation of the economy hingeson states enforcing finance capital’s dominance over citizens. Locally,moreover, insofar as the Irish state has made efforts to restore the prop-erty market by actively reconfiguring the ownership of assets, it is themembers of the same class of financial élites with greatest access to liquid


capital that stand to gain the most from such moves . . . Clearly, therefore,the response to Ireland’s crisis reveals the essential nature of neoliberalideas and practice: not withdrawal of the state from the economy, butheavy intervention on the side exclusively of finance capital.

(Fraser et al., 2013, p. 50)

Indeed, from a Marxist political-economy perspective, it is inconceivablethat the capitalist state might have acted in a manner other than that whichreinforced the prevailing power structures and consolidated the class powerof the wealthy. The capitalist state’s fundamental historic role and the cata-lyst for its very genesis is the protection of those who own and the propertywhich they possess against the majority who do not. This it continues todo, in the first instance by legitimising through its ideological apparatus(schools, universities and state-run media) the ‘idea’ of private ownershipand concepts of personalised ‘rights’ as being in some way ‘natural’ and aninevitable feature of human society. Should this fail, it secures such ‘rights’through the state’s legal structures (the courts), ultimately guaranteeing suchprivileges through the state’s monopoly of legitimate violence (the policeand armed forces).

While it is possible to recognise that there exists a class whose position isaffirmed by the possession of ownership rights, it is important to understandthat capital is not an identifiable ‘thing’. Ultimately, ‘capital’ is grounded inthe institutionalisation of a social relationship (‘ownership’) between peopleand things. Physical objects do not possess an inherent or natural attributeof belonging to anyone – a ‘my-ness’, ‘your-ness’ ‘her-ness’ or ‘his-ness’. Theconcept of ‘ownership’ is simply an ‘idea’, one which encapsulates the rela-tionship between one person and another with regard to a physical object(or, in slave societies, to another person). ‘Ownership right’, like all concep-tualised social relationships, is simply an idea which has an ‘existence’ onlyin our heads – in cerebral space. Like all ideas, this can be changed if weso wish.

Re-conceptualised in this manner and shorn of the dominant rhetoricthat proclaims the imperatives of ‘capital’, ‘market-based solutions’, theinevitability of ‘winners and losers’ and of the private control over the meansof production, new trajectories for societal development become possible.It creates the possibility of qualitative structural change wherein the fulfill-ment of social need becomes the fundamental driving force, displacing theaggrandisement of personal economic wealth and power as the predominantgoal. Adopting a radical structuralist framework for the analysis of recentevents leads to a very different understanding of what has happened andof the state’s reaction. We might then better comprehend what has actuallybeen taking place under the guise of ‘economic imperatives’ and we maybegin to recognise that the courses of action which were taken were in factmerely options among many and that the real imperative is to construct abroad programme for radical structural change.


Notes

1. The census definition of ‘urban’ in Ireland includes towns with a population ofmore than 1,500 persons, which in many countries would normally be classed asvillages.

2. Indeed, the regime of austerity and attacks on workers’ solidarity had been stronglyaided by a duplicitous communications industry as the state strove to create afissure between private-sector workers and those in the public sector.

3. Beveridge’s Committee of Inquiry, which provided the foundation of the welfarestate was itself the outcome of conflict. The employers had walked away from thewartime Royal Commission charged with reviewing workers’ compensation at atime when the outcome of the war was far from certain. It was clearly recognisedby the government that trade unions had to be placated. The wartime economyprovided ample evidence of just what could be achieved under an efficient plannedsystem of production. State-controlled rationing, tailored to meet personal need,was widely accepted, especially by the working class. The value of a planned econ-omy was subsequently seen in the rapid economic development of post-war France,under a system of centralised planning, a state-run banking system and state own-ership of key industrial and infrastructural sectors. It created 30 years of almostuninterrupted growth and transformed France into a major European economicpower. The British wartime propaganda machine had, perhaps dangerously, createdbonds between the British working class and the United Kingdom’s Soviet-Unionally, which had been largely responsible for the defeat of Germany. In 1944, theCairo Forces Parliament, a meeting of British soldiers (effectively a workers’ coun-cil) voted for nationalisation without compensation of the banks, land, mines andtransport in the United Kingdom. Royal Air Force servicemen in India rallied fordemobilization and went on strike over working conditions and overcrowding. Thetime seemed ripe for more dramatic change. The British Broadcasting Corporation(BBC) reported a ‘strange new mood of orderly lawlessness’ spreading rapidly acrossBritain as a squatting movement, a tradition of direct action with a lengthy histor-ical pedigree, became widespread in reaction to accommodation shortages. Masssquatting began in 1946 and became a national phenomenon involving 46,000families, occupying former military bases luxury hotels and apartment blocks inwest London. Moreover, the demobilisation of 3.5M service personnel involvedthe return to civilian life of tens of thousands of working-class people who hadreceived professional miltary training including the use of arms. Placation wastherefore high on the agenda of the political élite.

References

Allen, K. and O’Boyle, B. (2013) Austerity Ireland. London: Pluto.Breen, R., Hannan, D. F., Rottman, D. B. and Whelan, C. T. (1990) Understanding Con-

temporary Ireland: State, Class and Development in the Republic of Ireland. Basingstoke:Macmillan.

Fisher, M. (2009) Capitalist Realism: Is There No Alternative? Winchester: Zero Books.Fraser, A., Murphy, E. and Kelly, S. (2013) Deepening neoliberalism via austerity and

‘reform’: The case of Ireland, Human Geography, 6, 38–53, Available at: http://www.hugeog.com/.

Harvey, D. (2005) A Brief History of Neoliberalism. Oxford: Oxford University Press.Kelly, M. (2011) Ireland’s future depends on breaking free from bailout, Irish Times,

5 May.


Klein, N. (2007) The Shock Doctrine: The Rise of Disaster Capitalism. Toronto: AlfredA. Knopf.

Stewart, J. (2013) Low Tax Financial Centres and the Financial Crisis: The Case of theIrish Financial Services Centre, IIIS Discussion Paper 420, Available at: www.tcd.ie/iiis/documents/discussion/pdfs/iiisdp420.pdf, accessed 8 October 2013.

Stiglitz, J. (2009) NAMA Is Highway Robbery, 7 October 2009, Available at: http://www.davidmcwilliams.ie/2009/10/12/nama-is-highway-robbery.

Index

Note: A table is shown by a page number in bold, figures are shown italics; letter ‘n’following locators refers to notes

Aalbers, M., 50, 129Acheson, N., 252Ahern, B., 88, 165Albrechts, L., 61Alinsky, S. D., 251, 263n.1Allen, C., 222Allen, K., 22, 25, 26, 90, 159, 171, 216,

222, 266, 269, 270Allied Irish Bank (AIB), 44, 46, 47, 48–9,

89, 141, 146Allmendinger, P., 61Ambrose, P., 13An Bord Pleanála

changing role of, 58–9community appeals process, 213fast-track planning applications, 57

Anglo-American model, 38–9Anglo Irish Bank

business model, 46–9, 47, 97–8, 105–6collapse of, 89, 141international expansion, 44recapitalisation of, 50, 143, 144,

146, 151Arnstein, S. R., 205, 212Arrighi, G., 10, 37, 40Atkinson, R., 175Attuyer, K., 30, 203–16

Bailey, M., 128Bakk-Simon, K., 40, 41, 127, 128, 135n.4Ball, J., 7, 15Ball, M., 11, 127Bank of Ireland (BoI), 47, 89, 146banking sector

capital controls, 24, 42commercial property lending, 87enquiries, post-financial crisis, 273financial liberalisation of, 42–3,

140–1, 152internationalisation of, 42, 43–5, 85–6,

127–8, 141, 152

mortgage lending, 45–6, 85–7, 110–11,110, 111, 113, 117

principles-based regulation framework(PBR), 43

property-based lending, 46–9, 47, 89,97–8, 105, 109–10, 109

recapitalisation, 145–6, 146state bank guarantees, 50, 89–90,

130–1, 141–2, 267and wholesale money markets, 41,

42, 140see also mortgages; National Asset

Management Agency (NAMA)Baris, M., 191Barrett, S. D., 22Bartley, B., 25, 27Bertz, S., 99, 100Better Local Government (DoELG, 1996),

27, 74–5Beveridge, R., 235, 236, 243, 275n.3Beveridge’s Committee of Inquiry,

275n.3Bissett, J., 165, 230, 258, 260Blackburn, R., 8, 10, 38, 40, 41, 45Bontje, M., 195, 197Bourdieu, P., 157Boyle, I., 141Boyle, M., 12Brand, R., 205Brawn, D., 25, 86Breathnach, P., 25Breen, R., 271Breitbach, C., 13Brenner, N., 3, 4, 11, 53, 54, 134n.1, 157,

158, 170, 172, 174, 184, 204Brownill, S., 13Brudell, P., 31, 203–16, 233–45, 256, 257Buckingham, S., 193Buller, J., 236, 245Burton, J., 171

277

278 Index

capital investmentattracting, urban centres, 13–14capital switching, 128–30, 130ideology of, 272–3public infrastructure projects

(PPPs), 160speculative, 9, 39–40, 120–1and urban regeneration, 22–3

capitalism, 272–4Carswell, S., 44, 47, 48Casey, J., 85Castells, M., 250, 251Central Bank of Ireland (CBI), 25,

132, 140Christophers, B., 10, 40, 41, 45, 51n.1,

51n.2, 129Clifford, B., 180Collins, M. L., 50, 89, 125commercial property development, 96–8

see also office development sectorcommunity action

Dublin, 253–4Sheriff Street, 255–6social partnership model, 26, 170–1,

256, 269–70St. Michael’s Estate, 259–60and urban regeneration, 260–3

community appeals process, 212–13community involvement

in development plans, 78–9Dolphin House estate, 226–30HARP IAP, 209–10, 211integrated area plans (IAPs), 207–8,

214–16Liberties-Coombe IAP, 210–12, 237,

239–40, 242planning appeals process, 212–14PPPs and social housing regeneration,

30–1, 165–6, 207regeneration, post PPP collapse, 225–6,

230–1Connolly, J., 61construction industry

government initiatives to boost, 22–3property collapse, economic impact,

90, 114Cook, I. R., 235Cox, K., 11, 176Cox, L., 262Creative Dublin Alliance (CDA), 197

creative-city thesisadoption in Dublin, 195–7, 199–200creative classes, 190–1critiques of, 192–3economic growth (three Ts), 191–2and gentrification, 178, 183–4, 185influence on urban policy, 14–15, 189,

192–4, 199–200Liberties Regeneration Project (LRP),

236–7, 238–9and neoliberalism, 193–4and private consultancies, 234–5

Criminal Courts of Justice, Dublin,167–8

Curran, D., 195Curran, R., 48Custom House Dock Development

Authority (CHDDA), 23–4, 69–70,100–2, 101

Davidson, M., 175Deakin, N., 12Dear, M., 233Department of the Environment

(DoELG), and regeneration, 164,209–10, 212

derivatives markets, 9, 38, 40, 41Dillon, B., 230docklands

Custom House Dock DevelopmentAuthority (CHDDA), 23–4, 69–70,100–2, 101

Dublin Docklands DevelopmentAuthority (DDDA), 100–2,149–50, 178

Dodd, S., 61, 62Dolphin House estate, 226–30Donovan, D., 204, 220Downey, D., 85, 108, 120–35Drudy, P. J., 50, 89, 122, 125, 164, 165,

184, 233–4Dubben, N., 109, 148Dublin

economic restructuring, late 20thcentury, 20–1

employment patterns, 195future housing demand, 116–17house prices, 112, 113inner-city property boom, 31–2inner-city regeneration, 30–1

Index 279

Dublin City Development Plan,2011–2017, 195, 197

Dublin Convention Centre, 33Dublin Corporation/Dublin City

Counciladoption of creative-city thesis, 195–7,

199–200City Manager, role of, 72–3, 76community involvement in IAPs,

207–8, 209–10, 211–12as ‘competitive’ city, 197, 199Economic Development Action Plan,

196–7and gentrification, 177–8, 177, 185inner-city development team

(ICDT), 71integrated area plans (IAPs),

177–8, 177planning system, 67, 70–2reorganisation of, 26–8social housing and PPPs, 163–7World Design Capital bid, 197, 198

Dublin Docklands DevelopmentAuthority (DDDA), 100–2,149–50, 178

Dublin waste-water treatment plant,168–9

Duffy, D., 113Duménil, G., 9, 37, 39, 127Dymski, G., 128

economyausterity budgets, 265–7, 268credit boom, 86, 123–4, 123, 247economic growth and creative-city

thesis, 191–2, 193impact of global financial crisis, 90,

121, 130–1, 189property boom and housing demand,

107–9troika (EU/ECB/IMF) bailout

programme, 90, 133, 142, 265,266, 268, 269

Edwards, J., 12Ellis, G., 61Engelen, E., 39, 127European Central Bank (ECB), 42, 43,

127–8Everett, M., 42

Fahey, T., 32Fainstein, S., 11, 13, 250Faricy, C., 193fast-track planning applications, 57Fatima Mansions PPP, 223, 258Feagin, J.R., 11Finance Act (1987), 22–3, 68–9, 93financial crisis, Ireland

causes, 140property market collapse, 49–50, 89public burden of, 266–8

financial systemderegulation of, 8–9financial liberalisation, 38–42, 123–4other financial intermediaries (OFIs),

127–8role, post financial crisis, 9–11see also banking sector; regulation,

financialfinancialisation

of homeownership, 127, 133–4and neoliberalism, 8, 120–1, 127

Fine, B., 127Fisher, M., 271Fisher, R., 250Flinders, M., 236, 245Florida, R., 14, 189, 190, 191, 192, 193,

195, 236–7Floyd, D., 179Flynn, T., 55Fordham, R., 234Fox-Rogers, L., 53–64Fraser, A., 5, 10, 50, 152, 190, 194, 196,

265, 266, 267, 269, 273, 274French, S., 57, 127Friedman, M., 4, 6

Gabe, T., 190Gaffikin, F., 205gentrification

and affordability, 181Dublin City Council policy, 177–8,

177, 185impact on social housing, 181, 183and neoliberal/global urban policies,

175–6, 184population redistribution, 179–80,

180, 183–5state role, 13–14, 175–7, 182–3, 184,

215–16

280 Index

gentrification – continuedtenure structure, 181and urban regeneration, 30, 174–5see also regeneration

Geoghegan, M., 256Gerlach, S., 123ghost estates, 114–15Giddens, A., 134n.1Glaeser, E. L., 192, 193Glass-Steagall Act, 38Gleeson, D., 30, 31, 79, 177global financial crisis (GFC), 9–11, 125,

130–1Godfrey, B., 128Golden, B., 128Goldsmith, M., 12Gotham, K. F., 128governance, local, see local authoritiesGowan, P., 9, 38, 39, 41Greenspan, A., 7Grist, B., 53–64Grubnic, S., 159

Hackworth, J., 11, 14Hajer, M., 235Hall, T., 11Hamnett, C., 120Harvey, B., 225Harvey, D., 4, 5, 6, 9, 10, 11, 13, 37, 39,

56, 60, 86, 128, 129, 157, 170, 174,182, 215, 225, 272

Healey, P., 12, 205Hearne, R., 22, 28, 157–72, 219–31Helbling, T., 125Helleiner, E., 127Historic Area Rejuvenation Project

(HARP)availability for redevelopment, 30,

208–9community appeals process, 212–13community involvement, 31, 79,

209–10, 211, 215location, 177

Hodges, R., 159homeownership

financialisation of, 127promotion of, 121–2

Honohan, P., 44, 49, 87, 130, 140

housing sectoreconomic growth and demand, 107–9ghost estates, 114–15house-price inflation, 111–13, 112housing supply, 108, 109, 114–15negative equity, 87, 113, 117property-related credit bubble,

123–4, 123site resolution plans (SRPs), 115wealth effect of, 124–5see also social housing

Houston, D., 189Howley, P., 180Howlin, B., 171Hoyman, M., 193Hubbard, P., 11Hughes, G., 12human rights based approach (HRBA),

227–30

Imrie, R., 13infrastructure projects

Dublin waste-water treatment plant,168–9

light rail system (Luas), 169–70M50 toll bridge, 168planning applications, 57–8PPP funding of, 7, 160–1, 163

inner-city development team (ICDT),71, 94

integrated area plans (IAPs)adoption in Dublin, 177–8, 177overview of, 30–1, 79–80, 214–16steering/monitoring committees, 30,

31, 79–80, 209–10, 211and urban regeneration, 207–8see also Historic Area Rejuvenation

Project (HARP); Liberties-CoombeIAP (Liberties RegenerationProject (LRP))

International Financial Services Centre(IFSC), 24–5, 42, 95, 128, 177, 254–6

International Monetary Fund (IMF), 4–5Ireland

adoption of neoliberalism, 21–2, 25,159, 170, 171–2

economy, late 20th century, 20–1, 25role of Roman Catholic church, 271rural society of, 270

Index 281

Irish Bank Resolution Trust (IBRC),151–2

Irish Financial Services RegulatoryAuthority (IFSRA), 43

Irish Nationwide Building Society(INBS), 46, 48, 50

Irish State Authorities (PPP) Act 2002,162–3

Jessop, B., 4, 204, 205Johnston, D., 8Johnston, R. J., 99Jones, M., 174, 176Joseph, K., 5–6

Kearns, A., 222Kearns, G., 12Kearns, P., 198Kelly, J., 42Kelly, M., 125, 267Kelly, O., 222Kelly, R., 132Kelly, S., 3–16, 20–34, 37–51, 99, 174–86,

208, 257, 265–75Kennedy, T., 42, 43Kirby, P., 159, 171Kitchen, R., 122Kivell, P., 11Klein, N., 5, 266Kling, J., 250Konings, M., 39Kramer, R. M., 252Krueger, R., 193Künkel, J., 11

labour movementseffect of neoliberalism, 8post-financial crisis, 268–70and the social partnership model, 26,

170–1trade unions, restriction of (PPP),

169–70, 171Lane, P., 127, 131, 135n.8Larner, W., 4Laverny-Rafter, D., 11Lawton, P., 185, 189–200Lees, L., 14, 175Lefebvre, H., 121Leitner, H., 206, 213Lévy, D., 9, 37, 39, 127

Leyshon, A., 127Liberties-Coombe IAP (Liberties

Regeneration Project (LRP))availability for redevelopment, 178,

185, 208–9community appeals process, 213community involvement, 210–12,

215, 242, 257and creative-city thesis, 236–7, 238–9location, 177private consultancies, 238, 239–40,

241, 242–3property prices, 182social housing, 239

light rail system (Luas), 169–70local area plans (LAPs), 59local authorities

inclusive neoliberal politics and, 204–5marginalisation of planners, 70–2and private sector interests, 158–9,

166, 176–7, 235–6, 257and property developers, 28–9, 67reform of, 26–7restructuring committee system, 74–6role, planning system, 66–7suburban office development,

99–100, 104London Docklands Development

Corporation (LDDC), 13London underground, 15n.1Long, P. J., 193Lydon, R., 124, 132Lyons, T., 48

M50 toll bridge, 168MacLaran, A., 3–16, 20–34, 66–82, 73,

75–6, 77–8, 78–9, 93–106, 165, 176,177, 178, 179, 180, 181, 182, 183,185, 208, 215, 219, 256, 257, 265–75

MacLeod, D. G., 11, 174, 176Malone, P., 13Marcuse, P., 193marketisation, 158–9Markusen, A., 193Marston, S., 251Martin-Brelot, H., 192, 193Mason, P., 222Mayer, M., 11McCabe, C., 122McCann, E., 233, 234

282 Index

McCarthy, Y., 132McGuirk, P. M., 11, 12, 13, 27, 28, 29,

33, 54, 56, 57, 66, 67, 68, 71, 72, 73,165, 176, 177, 178, 219, 257

McCrory, N., 73, 74, 75, 78, 80, 81–2McKenna, F., 145McKeown, K., 21McNulty, P., 85, 108McQuinn, K., 132Meade, R., 204, 256Meen, G., 124Metronet, 15n.1Milesi-Ferritti, G., 135n.8Mission Coalition Organization, 251Mitchell, D., 13Mollenkopf, J. H., 252Molotch, H., 234Monbiot, G., 159Montgomery, J., 70Mont Pelerin Society, 4, 5Moore, N., 23, 102, 178Moral Hazard principle, 148–9mortgages

arrears, 131–3bank lending, 45–6, 85–7, 110–11,

110, 111, 113, 117, 247capital switching, 128–30, 130equity release loans, 124, 124market growth of, 122–3Mortgage Arrears Resolution Process

(MARP), 132negative equity, 87, 113, 117residential mortgage backed securities

(RMBS), 128Muellbauer, J., 122Mumford, L., 253Murphy, A. E., 53–64, 189–200, 220Murphy, L., 24, 42, 177Murphy, M., 191, 192, 194Murray, S., 158, 159

National Asset Management Agency(NAMA)

bank recapitalisation, 105, 145–6, 146business plan, 144–5Irish Bank Resolution Trust (IBRC)

loan book, 151–2lack of transparency, 149–51, 152overview of, 142–4, 147–8, 152pricing policy, 148–9, 153

recapitalisation of Anglo Irish Bank,50, 143, 144, 146, 151

reporting arrangements, 146–7Neary, P., 88neoliberalism

and creative-city thesis, 193–4in developing countries, 4–5effects on labour movements, 8and financial institutions, 8–9and financialisation, 8, 120–1, 127in Ireland, 21–2, 25, 33–4, 159,

170, 172lack of opposition to, 268–74origins and growth of, 3–8participatory initiatives, 204–6and private consultancies, 234–6,

243–4as a process (neoliberalisation), 53,

157–8roll-out neoliberalism, 204–6

Netherlands, 126, 126Newman, P., 12, 13, 71Nilsen, A. G., 262Nyberg, P., 43, 49, 50, 110,

140, 151

Oakley, K., 199Ó Broin, D., 27O’Boyle, B., 90, 266, 269, 270O’Brien, T., 238O’Connell, C., 122, 163O’Connell, R., 99O’Donovan, O., 204office development sector

development boom, 96–8, 98development companies, 96overview of, 93–5, 94rents, 104–5scale of developments, 98, 98site locations, 98–9suburban development, 99–100, 104tax incentives, 95–6user/investor demand, 96–7vacancy rates, 103–4, 103, 104

O’Hanlon, N., 113, 124O’Riain, S., 25O’Sullivan, K. P. V., 42, 43other financial intermediaries (OFIs),

127–8

Index 283

Painter, J., 12Peck, J., 4, 6, 8, 12, 13, 14, 37, 38, 53, 54,

157, 158, 189, 190, 191, 192, 193,194, 204, 214, 234, 235, 237, 244

Peet, R., 4, 9Philo, C., 12Planning and Development (Strategic

Infrastructure) Act, 2006, 57–9planning appeals process, 212–14planning officers, city

balanced role of, 80–2marginalisation of, 70–5, 76–8

planning permissions, 59–60planning system

changed ethos of, 58, 67, 79, 80–2,176–7, 185, 235

community involvement in, 30–1,56–7, 60–1, 67–8, 212–14

Custom House Dock DevelopmentAuthority (CHDDA), 100–1

development plans, flexible, 77–9fast-track planning applications, 57future policy, post housing crash,

116–17integrated area plans (IAPs), 30–1, 79,

177–8, 177judicial reviews, 61–2local area plans (LAPs), 59managerial changes within, 72–4, 75–6neoliberalisation of, 53–4, 63oral hearings, 62–3planning permissions, 59–60pre-application consultations, 56–7rights of appeal (third party), 60–1strategic development zones (SDZs),

55–6, 61strategic policy committees (SPCs),

74, 75traditional role of, 66–8see also urban planning

Pollock, A., 159, 168Powell, F., 256Pozsar, Z., 40Pratt, A., 190, 193pre-application consultations, 56–7Price, D., 159, 168Prince, R., 234principles-based regulation framework

(PBR), 43

private consultanciesLiberties Regeneration Project (LRP),

238, 239–40, 241, 242–3and neoliberalism, 234–6, 243–4partiality of, 241

private finance initiatives (PFI), 7, 15n.1Progressive Democratic Party (PDP), 21property developers (private sector)

access to sites, 29, 71, 93–4bad loans, 141–2bank lending to, 97–8, 105and local authorities, 28–9, 67pre-application consultations, 56provision of social housing, 28, 32–3,

166–7and urban planners, 72, 73, 81and urban planning (UK), 11–12, 14

property sectorbank lending to, 46–9, 47, 89, 97–8,

105, 109–10, 109boom, 85–7collapse of, 49–50, 87–8, 89, 112–13,

125–7, 126, 140–1, 152public services

impact of neoliberalisation and PPPs,158–9, 170–1

structural readjustmentprogramme, 266

public–private partnerships (PPP)Criminal Courts of Justice, 167–8Dublin waste-water treatment plant,

168–9Fatima Mansions PPP, 223, 258impact on public services, 158–9implementation in Ireland, 22,

159–60, 171infrastructure projects, 7, 160–1, 163Irish State Authorities (PPP) Act 2002,

162–3lack of political opposition to, 170–1light rail system (Luas), 169–70M50 toll bridge, 168overview of, 258as poor value for money, 167–8prioritisation of private profit over

public services, 166–7property crash and end of

regeneration projects, 222, 249proposed benefits of, 160–2

284 Index

public–private partnerships(PPP) – continued

social housing, de-tenanting, 224,224, 254

social housing provision, 32–3, 163–7,219–22, 221

St. Michael’s Estate, 259–60public-sector policies

and neoliberalism, 158and private consultancies, 235–6and private-sector profitability, 13,

29–30Punch, M., 31, 122, 164, 165, 178, 179,

182, 184, 234, 249–63Purcell, M., 198

Raco, M., 222Rafferty, M., 254Rand, A., 7Redmond, D., 107–17, 189–200, 219–31regeneration

community involvement in, 30–1community opposition to, 250–6de-tenanting, social housing, 224,

224, 254Dolphin House estate, 226–30as entrepreneurial planning, 12–14,

206–7, 247Fatima Mansions PPP, 223, 258financial incentives, 22–3integrated area plans (IAPs), 30–1,

68–9, 69, 79, 176–8, 177, 207–8population redistribution, 14–15, 179social housing, post PPP collapse, 222,

225–6, 225urban development corporations, 23see also creative-city thesis;

gentrification; urban regenerationRegling, K., 126, 139, 140regulation, financial

Anglo-American model, 38–9deregulation, 8–9light-touch regulation, 24–5principles-based regulation framework

(PBR), 43Reinhart, C. M., 135n.7rights of appeal (third party), 60–1Rodriguez, A., 176Rogers, S., 7, 15Rogoff, K. S., 135n.7

Roman Catholic Church, role of, 271Rose, K., 237Ross, S., 44, 45, 47Rubin, R., 15n.2Ruimy, M., 198Russell, P., 209, 210, 216n.3, 220,

221, 230

Saad-Filho, A., 8Sager, T., 53, 54Sassen, S., 121Scott, A. J., 191, 192, 193Scott, M., 54, 63shadow banking sector, 9, 38, 41, 127–8Sheriff Street, 255–6Shiels, P., 109Simmie, J., 57site resolution plans (SRPs), 115Slater, T., 176Smith, M., 250Smith, N., 14, 34, 174, 175, 176,

179, 184Smyth, H., 12social housing

de-tenanting, 224, 224, 254Fatima Mansions PPP (copy), 223, 258impact of gentrification, 181, 183land values, 219private sector provision of, 28, 32–3,

166–7regeneration, post-PPP collapse, 222,

225–6, 225regeneration, PPPs, 32–3, 163–7,

219–22, 221St. Michael’s Estate, 259–60see also Liberties-Coombe IAP

(Liberties Regeneration Project(LRP))

social housing leasing initiative (SHLI),115–16

social movementslocalism, 252Mission Coalition Organization, 251protests, PPP collapse, 249–50and urban policies, research, 250–2,

262–3social partnership model, 26, 170–1,

256, 269–70Soden, M., 87Spain, 126, 126

Index 285

special-purpose authorities (SPA),12–13, 68

Stam, E., 192Stanislaw, J., 5, 6state, the

bank guarantees, 50, 89–90, 130–1,141–2, 267

intervention in ghost estates, 115–16Irish Government’s definition of PPPs,

162–3policy of light financial regulation,

24–5role of, 4, 16n.3, 38, 161social partnership model, 256structural readjustment programme,

265–6and urban regeneration, 13–14, 175–7,

182–3, 184, 215–16Stephens, M., 129Stewart, J., 127, 128, 268Stiglitz, J., 267St. Michael’s Estate, 259–60Storper, M., 191, 192strategic development zones (SDZs),

55–6, 61strategic policy committees (SPCs),

74, 75Summers, L., 15n.2

Tardanico, R., 250tax incentives

commercial property, 95–6integrated area plans (IAPs), 215International Financial Services Centre

(IFSC), 24property developers/regeneration,

22–3, 68, 69, 70, 176, 178, 206–7,247–8

tax rates, 26, 265–6, 267–8Temple Bar renewal, 70Terrones, M., 125Thatcher, M., 6Theodore, N., 3, 4, 11, 54, 157, 158, 172,

174, 184, 204, 234Thomas, H., 13Thornley, A., 12, 13, 71Thrift, N., 127Tickell, A., 6, 8, 12, 38, 54, 157, 158,

204, 214Towers, G., 251

trade unions, restriction of (PPP),169–70, 171

troika (EU/ECB/IMF), 90, 133, 142, 265,266, 268, 269

Turner, G., 129Turner, Lord Adair, 10Turok, I., 12

Ulster Bank, 105unemployment rates, 20–1, 131, 142,

189–90, 266United Kingdom

adoption of neoliberalism, 5–6gentrification, 14property market collapse, 126, 126urban planning, 11–12

United States of Americaadoption of neoliberalism, 5, 6property market collapse, 126, 126urban planning, 11

urban planningand creative-city thesis, 14–15, 189,

192–4, 199–200entrepreneurialism in, 11–13, 28, 54,

56, 72, 76–8, 80–2and private consultancies, 234–5state’s role, 233weakened local government planning

powers, 13, 54see also integrated area plans (IAPs);

planning systemurban regeneration

capital investment and, 22–3community action and, 260–3gentrification and, 30, 174–5integrated area plans (IAPs) and, 207–8the state and, 13–14, 175–7, 182–3,

184, 215–16see also regeneration

Urban Renewal Act (1986), 22–3, 68–9,93, 206

urban renewal scheme (URS), 208,209–10, 214, 215

van Egeraat, C., 195Veitch, A., 128Volcker, P., 5, 6

Wade, R., 38, 39Waldron, R., 117

286 Index

Ward, K., 11, 176, 234Watson, M., 126, 139, 140Weber, R., 234Westrup, J., 43Whitfield, D., 157, 158, 159, 168wholesale money markets, 41, 42, 140Williams, B., 22, 23, 25, 27, 28, 67, 68,

69, 107–17, 139–53, 203, 206, 219Williams, R., 252

Williamson, A., 252Willis, N. R., 41World Bank, 4–5

Yergin, D., 5, 6

Zimmerman, J., 189, 191zoning, 59, 116

Neoliberal Urban Policy and the Transformation of the City: Reshaping Dublin

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