The Ministry of Regional Development planned on building 5,000 social housing units with EU funds. Only less than a half is actually going to be built.
Press release on audit No 21/08 – 7 February 2022
The Supreme Audit Office examined how the Ministry of Regional Development (MoRD) distributed European subsidies from the ‘Integrated Regional Operational Programme’ dedicated to social housing between the years 2016 and 2021. The auditors looked into how the MoRD had prepared the allocation system for these subsidies, how the subsidies themselves had been allocated, and how the projects were selected in order to receive financial support. The auditors also focused on a sample of nine supported projects worth almost CZK 80 million. Although the original plan of the MoRD was to build 5,000 social housing units from these subsidies by the end of 2023, only a maximum of 2,212 will be created by then. However, this will be the case if all projects already under way are successfully completed.
The failure to reach the planned 5,000 social housing units was mainly due to the low interest of the subsidy applicants. Due to their lack of interest, the MoRD reduced the amount of funds prepared from the initial bulk of CZK 7.5 billion in 2015 to CZK 4.5 billion in 2017. Only later did the Ministry make the conditions for receiving the subsidy more appealing, thus, partly increasing the interest of applicants. However, due to the reduction in the allocation of money, which occurred in 2017, 28 projects were no longer eligible for financial support despite fulfilling the conditions.
In addition, a number of applicants withdrew their projects after the MoRD had already decided to pay out the subsidy. By the end of the audit, 76 projects had been withdrawn, which were to result in 522 social housing units. The applicants explained their decision to withdraw with the uncertainty of the legal environment caused by the absence of a law on social housing, the high administrative burden and so on.
The auditors also focused on the actual administrative procedure connected with the projects. When selecting the projects, the MoRD did not take into consideration the costs per social housing unit, per bed or per person using the social housing, nor did it provide any other criterion that would take into account the money spent in relation to its benefits. Furthermore, the evaluation period of the project appeared to be 252 days on average, mainly due to the long process connected with obtaining a building permit. Initially, the MoRD envisaged that the project evaluation process would take about 152 days.
Finally, the MoRD does not assess the impact of the subsidy on improving the quality and accessibility of services leading to social inclusion, which is one of the objectives to be achieved by means of the aforementioned subsidies. In order to carry out such an assessment, comprehensive information on the area in question are required — for example, the total number of social housing units in the Czech Republic, data on the number of social housing units needed, etc. However, this information was not available to the MoRD at the time of the audit.