Which I am not discussing, with respect, Sir. I am discussing building societies' interest rates which arise, not on Section 19, but on Section 9. The local authority has to guarantee the building society the difference between their normal advance and what they do advance and I am discussing the hardship involved for an individual who has to enter into such an arrangement.
The points on which we want clarification from the Minister when he is replying are: who will be allowed to get Small Dwellings Acts loans; what is the limit; what is the tie-up between Small Dwellings Acts loans and the supplementary grant? That is most important. Does it mean that a person who has to borrow from a building society will not qualify for a supplementary grant? That is important. In the case of Limerick Corporation, a person can have £14 per week or approximately £700 per annum in relation to family income. He then gets the £137 10s. In any event, he gets the Government grant of £275 and he gets a supplementary grant, if his income is under £700 a year or £14 a week. He also gets his small dwellings loan.
In Dublin, the matter is much more stringent. For instance, you cannot get a supplementary grant if you have an income of over £500. Is all this to go by the board in Limerick and other places? Are we to say to a man with £14 a week getting a supplementary grant: "You have too much. You should not avail of the Small Dwellings (Acquisition) Acts. You should avail of the building society plan, under Section 9, introduced by the Minister for Local Government. It will confer great benefits on you"?
The individual concerned may ask what are the benefits and he can be told that he may switch from a lower percentage to the percentage of 7 per cent. When he asks whether he will get the loan for the 35-year period, of course he will not, and he will be very lucky, indeed, to get it at 20 years. There are newly-married couples in this country facing the appalling prospect of paying 60/- or 70/- a week for their houses. I do not exaggerate. The figures are there. Any Deputy who cares to write to a building society and ask for their repayment figures, principal and interest, in respect of the following sums: £1,800, £1,600, £1,400 over 20, 25 and 30 years will discover that my statement is more or less correct. It is very hard to understand the reasons why this section is being brought in.
If people are getting money under the Small Dwellings (Acquisition) Acts who have plenty of money themselves, cannot the Minister bring in legislation—not permissive legislation—and compel a local authority to put a limit on the total family income a person may have in order to avail of the Small Dwellings (Acquisition) Acts and who can get a supplementary grant? If the Minister wants to be consistent, let him do away with the giving of the Government grant to people who could well afford to do without it.
Let him face the facts and say: "From 1st October next, no local authority will be empowered to make a loan under the Small Dwellings (Acquisition) Acts to any person having an income in excess of £850 a year." Let us put any figure we like on it, let it be £1,000 or £700, but let a figure be stated. The idea of asking the local authority to do this deal with a building society will not materialise.
The Minister in his introductory remarks stated at column 500, Volume 159 of the Official Debates:
"It is intended that local authorities should continue to operate the Small Dwellings (Acquisition) Acts for persons willing to provide their own houses and who are unable to provide the necessary finances otherwise but many persons have been availing of the facilities provided under the Acts who either did not need to do so or who would not have needed to do so if commercial agencies would advance a higher percentage of the purchase price and would allow a longer repayment period."
The Minister goes on to say:—
"I have investigated this matter in recent months and, as already announced, discussions have been held with the principal commercial agencies engaged in house financing. I am pleased to say that the representatives of these agencies gave ready and generous co-operation in those discussions."
The Minister is the only person who is pleased about this measure. The Minister further said:—
"The principal building societies were willing to widen the scope of their loan activities by making higher proportionate advances than hitherto, and by extending the period of repayment as far as practicable, on the understanding that they would not be required to bear the full risk of the higher loans and longer repayment periods and they have now agreed to the terms of guarantee schemes which will enable them to extend their loan facilities in these respects."
The Minister at the end of column 501, even though some of the assurance companies had withdrawn, stated:—
"I may mention that some assurance companies, as well as continuing to make advances to individuals for house-purchase, are making or have offered to make direct loans to local authorities."
The point I want to make is—I trust it is constructive—that if the assurance companies and the building societies give these loans to individuals with the guarantees, why cannot the local authority consider the building society as its local loans fund and say: "Right; we will borrow from you?" Could the Minister not cut out this farce of underwriting, guarantee, and so on? Could he not say: "Right; you can borrow from the building society and with that money you can administer, as you have administered so competently, the Small Dwellings (Acquisition) Acts. There is no change. Possibly, the interest rates will be higher"? Would the Minister consider that point?
The Minister states that assurance companies have made loans to local authorities. That is true. Some time ago in this House, I said an assurance company made a loan of £49,000 to the Limerick Corporation. Deputy Carew will bear me out in that matter. We accepted the assurance company's rate, even though it was higher than that offered by the bank which was 4¾ per cent. We accepted their rate of 5¼ per cent. to pay the £49,000 when we were extending the borough in Limerick. We accepted the assurance company's offer at 5¼ per cent. because they offered us a 25-year period, whereas the bank offered us only 15 years.
The deed of mortgage came up for signature on Monday night and there was a letter from the Minister for Local Government who now lauds the deal that local authorities can make with assurance companies stating that the period of 25 years for the loan was too long. He would not sanction affixing the seal to the agreement between the Irish Assurance Company and the Limerick Corporation, unless the period was reduced to ten years. Where is the consistency in that? As reported at the end of column 501, the Minister made a very interesting statement:—
"The minimum deposit required from the borrower will be 5 per cent. Some of the societies are prepared to make advances repayable over 35 years."
My information is that none of the building societies will lend money for more than 25 years. They do not want this type of business, because they lose, of course. The terms offered by the Minister appear to be "a good thing", but as I say the position from their point of view is that 95 per cent. of the business of the building societies at the present time is devoted to lending money to those who purchase second-hand or old houses, not grant type houses. Not even .5 of 1 per cent. who buy grant houses to-day avail of building society rates—they all purchase under the Small Dwellings (Acquisition) Acts. The position is fantastic. The Minister now asks us as members of local authorities—in fact before we go to the local authorities, as members of this House—to bring in a section here empowering local authorities to enter into negotiations with the building societies at 7 per cent. for a start, not knowing what the interest will ultimately be.
The building societies are at present undertaking a continuous campaign for more funds. They have not sufficient funds at the present time to deal with applicants for old houses and they are seeking funds now to deal with the building contemplated under the arrangement now suggested. As one member of a building society said to me: "We will not get sufficient money. We have not sufficient money for the needs of one county, not to talk of the whole Twenty-Six Counties." I asked him what would happen, and he said: "It is quite obvious what will happen. We will have to offer increased interest rates next year, and the result of that will be that instead of lending money at 7 per cent. it will probably be 8 per cent. this time next year."
All this goes back to the point that this measure was brought in because the Government failed to get the money from the loan. Dublin and Cork Corporations failed and yet we have the extraordinary position now that, where the Government failed, a small body corporate or a company such as a building society can get the money at the same rate of interest. After all, looking at the advertisement in today's papers of the building societies' offer of 3¾ per cent. free of income-tax, we can recall that the Government went to the country with a 5 per cent. loan issued at 98½, I think, equivalent to £5 3s. 2d. per cent., approximately, per annum. Yet they could not get the money. But the building societies are getting the savings of the people in this country, the reason being that the people have no confidence in the Government. They have lost confidence in the Government and would not trust the Government to put the money to the best possible use. Therefore, they have said to a lesser body about which they might not know a great deal: "This is a building society; they offer such and such rates; we will invest with them."
The Minister was not truthful with the House. I suppose the shrewdest voter in the world is the Irishman who, when he reads something in the papers, can sum it up, and he knows in his heart and soul that there will be a further recession in house building —not a recession, a further recession. Any Deputy may go to the Library and see the figures there. He can see the number of carpenters, masons and plasterers and the number of labourers employed in work associated with the building industry. He can appreciate that those numbers have fallen in latter months and see how great is the fall since this time last year, due to Government policy.
The Minister, in his introductory remarks, lauded himself and the Minister for Finance for the help they were giving towards getting Deputy Briscoe and Deputy Larkin out of their troubles in Dublin Corporation. They have got no one out of their troubles. They allowed Dublin Corporation into the Local Loans Fund and they got members of local authorities down the country into trouble.