Dáil Éireann debate -
Wednesday, 27 Nov 1957

Vol. 164 No. 7

Committee on Finance. - Local Loans Fund (Amendment) Bill, 1957—Second Stage.

Minister for Finance (Dr. Ryan)

I move that the Bill be now read a Second Time. The purpose of this Bill is to make provision for further issues from the Local Loans Fund in respect of local loans.

The existing statutory limit on aggregate issues as fixed by the Local Loans Fund (Amendment) Act, 1956, is £110,000,000. The Bill raises this limit to £135,000,000.

The fund was originally established on the 1st May, 1935, and issues from that date up to the 30th September, 1957, amounted to just over £93,500,000. Of this total approximately £75,500,000 related to loans for housing, some £50,000,000 being for the purpose of local authority housing and £20,000,000 for the purpose of advances under the Small Dwellings (Acquisition) Acts. Over £14,000,000 related to sanitary and public health services and £3,750,000 to the provision of vocational schools and various other services.

The commitments of the fund in the period from its establishment to the 30th September last aggregated almost £106,000,000, the excess over the figure for issues being accounted for by the fact that most loans are issued in instalments according as the particular works progress. A sum estimated at £1,000,000 may, however, be deducted in respect of loans and balances of loans not now required because some works have either been abandoned or completed at a lower cost than first estimated. This leaves the net total of commitments at the end of last September at some £105,000,000, or within about £5,000,000 of the existing statutory limit of £110,000,000 which, it is expected, will be reached in the near future.

It is necessary, therefore, to raise the limit for issues from the fund and the new limit proposed is £135,000,000 which should cover commitments for a period of two to three years ahead.

As is clear from the figures I have given, it is housing which has constituted by far the greatest demand on the Local Loans Fund and that demand has been of very considerable magnitude. Major public housing programmes have now been completed or are nearing completion in many areas and, generally, requirements under this head may be expected to decline in the coming years. It has, however, been necessary to continue assistance to Dublin and Cork Corporations which formerly raised the capital they required by independent borrowing. These corporations are placing a substantial additional burden on the fund from which they are at present drawing almost their entire requirements. Were it not for them, it would not be necessary to seek authority to extend the limit for issues so soon after the passage of the Local Loans Fund (Amendment) Act, 1956, which, less than a year and a half ago, raised the limit from £90,000,000 to £110,000,000. I hope, however, that, in the not too distant future, some relief will be forthcoming here also through the resumption of independent borrowing and the completion of building schemes.

Every reasonable relief must, indeed, be looked for so as to release capital for investment in productive enterprises contributing to a genuine expension in the economy and providing more and continuing employment for our people. It follows, therefore, that all requests for loans from the Local Loans Fund must be examined very critically.

Mr. Sweetman

As the Minister stated, the Bill was introduced in 1956 and enacted by the Oireachtas. It was expected to carry sufficient sanction for a period of approximately three years. Subsequent to the enactment of that 1956 measure, for the first time I think since the inception of the State—certainly for the first time for many years—I had to come to the assistance of Dublin Corporation and allow Dublin Corporation to draw on the Local Loans Fund. I had to take similar action in relation to Cork Corporation because neither Cork nor Dublin would have been in the position of being able otherwise to finance their own housing schemes.

That departure from the previous pattern which I introduced soon after the passage of the 1956 measure has had the effect, as the Minister stated, of meaning that it was necessary for him to come to the House for a further sanction to increase the limit. I should like the Minister to give us so that it could be on the records of the House, some information about certain aspects of the Local Loans Fund.

The Minister will forgive me if I say that it was a little bit hard to follow the figures he gave when he mentioned them at the speed at which he did but we will have another opportunity on the Committee Stage, when I will have read those figures more carefully. As far as I could understand him to say, about £50,000,000 of the issues already made of £93,500,000 had gone to local authority housing and about £20,000,000 had gone to private grant housing.

Dr. Ryan

£20,000,000 to small dwellings.

Mr. Sweetman

I beg the Minister's pardon—small dwellings. I am not quite clear whether the Minister in his figure of £93,500,000 and the subsequent figure of £75,500,000 for housing was speaking about allocations or about actual issues.

Dr. Ryan

They are issues.

Mr. Sweetman

Can the Minister, therefore, tell me whether I am correct in saying that allocations made to date were the total of £105,000,000 which he mentioned?

Dr. Ryan

They are commitments.

Mr. Sweetman

The £12,000,000 are in the machine, so to speak?

Dr. Ryan

That is right.

Mr. Sweetman

I think that is a greater sum than is normal in the machine. I appreciate, of course, at once that the amount that there is normally of allocation, apart from expenditure, must vary. Allocations, commitments, call them what you like, sanctions are needed and the local authorities concerned, naturally, do not draw the moneys they require until it is really necessary. I should like the Minister to tell us whether or not there is anything unusual in that amount. I should also like the Minister to give us, for the benefit of having it on the record of the House, the various periods of repayment for Local Loans Fund advances.

There used to be an arrangement by virtue of which in respect of housing loans for working classes and labourers Acts, that is to say, housing directly by the local authorities, the period of repayment would be 50 years and in respect of the Small Dwelling (Acquisition) Acts the period would be 35 years, but in relation to that 35-year period for loans in connection with the Small Dwellings (Acquisition) Acts, I have a recollection that certain local authorities did not conform to that standard period. I should like to know, therefore, whether the situation is that the 35 years for small dwellings is a fixed period or a maximum period. The normal position in respect of public health, water and sewerage schemes used to vary somewhere between 25 and 30 years, and I think that for vocational schools the same periods operated. The periods in respect of hospitals and dispensaries were, I think, normally 35 years.

I was never quite satisfied myself as to why these various periods were fixed on such an entirely different basis. It seems to me particularly hard to understand why the periods for direct housing differed so much from the periods fixed for small dwellings repayment loans. I should have thought that the length of life of a house was going to be just the same whether it was a local authority applicant or a person with assistance from that local authority who was erecting the house. In fact, I think it would be fair to say that the person erecting his own house and caring for his own house is more likely to protract the life of the house than a person merely living in a rented house.

We have had over the years two substantial variations from time to time in the interest rates payable in respect of issues made from the Local Loans Fund. Perhaps the Minister would be good enough to give us the rates of interest which are payable for issues from the fund for, shall we say, the last two or three years, whatever period in that respect he has convenient to his hand. Particularly I should like to know whether there is at present any variation in the interest rate charged to a local authority for its own direct housing as apart from its small dwellings requirements.

The Minister referred to the fact that amounts in Dublin and Cork had almost entirely to be provided from the Local Loans Fund. I assume in that respect that he was referring to the existence of certain moneys arranged last year from the Irish Assurance Company, amongst other bodies, for the provision of £500,000 to Dublin Corporation. Have any similar arrangements been made for Dublin or Cork which would ease the draw that there would be on the Local Loans Fund in respect of the current financial year or for the future?

I think I am correct in saying that, in the year 1955-56, the last year for which I have the exact figures, the issue from the loans fund, excluding, of course, Dublin and Cork, for housing purposes was £6,570,000; sanitary and public health services, £1,830,000; vocational education, £90,000, and some £70,000 for miscellaneous purposes, making a total gross issue for that year of £8.56 million. I should be glad if the Minister has available the amount that was so issued in 1956-57 and if he would give it to the House. I should also be glad if he would give to the House the similar anticipated requirements for the current year.

I think that the amount for 1956-57 and the current year 1957-58 would require to be adjusted by some £2,500,000 in respect of Dublin Corporation and some £750,000 in respect of Cork Corporation so as to provide a proper comparison with the earlier years. However, it would be desirable to have that information and if the Minister has not got the information readily to his hand now I should be quite happy to have it on the Committee Stage.

Might I inquire from the Minister whether the figures he gave for issues —£93,500,000, £75,500,000, and so on— were in respect of the present time or up to the 31st March last?

Dr. Ryan

30th September.

Mr. Sweetman

In addition to the local authority housing, there were also, previously, grants for housing under the Gaeltacht Acts. I presume that those continue also. Up to the 31st March last, I think the amounts so issued were £118,000. I wonder what has been the issue since that time. Up to the 31st March, 1956, the issues for local authority housing had been more or less equal as between urban and rural housing. I think that up to that time, the amount expended on urban housing had been some £20,000,000 and on rural housing some £25,000,000. It would be interesting to see how the trend of the proportions between those two had since varied and whether it appears in the future that the trend will be more or less of the same proportions.

It is clear to us on all sides of the House that it is necessary to have an extension of the amount provided to date in the Local Loans Fund sanctioned. I thought I might have heard from the Minister some indication of how he expected expenditure in general to run from this fund. The Minister did give an indication that he was hoping there would be some relief for the fund by means of direct borrowing from Dublin and Cork. One of the relevant factors, perhaps, there, is the new Trustee Savings Bank Bill which has been on the stocks now for some time. However, apart from that, I think it would be desirable that the Minister should give us some indication, when he is giving the figures up to the 31st March last for that year, of how he considers draws from the fund will run this year compared to the original estimate, what he sees in the future and particularly what he sees in the future in relation to the trend of interest rates on the amounts that may be allocated from the fund.

Mr. MacCarthy

While I welcome the advance in the figures brought forward in the Local Loans Fund I should like to say that the housing programme in Cork is still far from being completed. It will take a few years before it can be tapered off and, due to the non-availability of sufficient funds, about 40 operatives had to be dismissed recently.

The last two local issues cost £8,150 and, in order to meet this, we shall have to raise a short-term loan or put 7d. in the £ on the rates. Furthermore, the issues which were made at 97 now stand at 84, which is not an encouragement for local issues again for housing or other such purposes. I think we shall have to depend largely on the Local Loans Fund. There is also a difficulty in relation to the 35 years' term, to which Deputy Sweetman has referred, in regard to house purchase schemes for tenants. If you want to avoid the impact of too heavy a weekly charge on the tenants and want to extend the period to a 40-year period, there is a difficulty about the availability of finance for houses for which grants are being made, and other things of that kind. I should like the Minister to consider those two points.

Mr. Cunningham

I should like to know whether it is the intention now to cater wholly for applications for housing and the other services mentioned from local authorities out of the Local Loans Fund. There was, in 1956, a decision to tell local authorities to get moneys elsewhere, from the banks and from the insurance companies. I should like to hear from the Minister what were the results of that fairly new departure from the position which had obtained. Does the Minister intend or visualise that in future all, or nearly all, of the money to be borrowed by local authorities will be provided out of the Local Loans Fund? If that is his view, can we take it that the other idea of having local authorities borrow from banks and insurance companies has been a failure? What was the result of that policy while it was in operation? How much money was provided to local authorities outside the Local Loans Fund by the bodies I have mentioned? I would be interested to hear about that particular matter.

Dr. Ryan

Deputy Sweetman said that I went a bit too fast and I want to repeat that the issue to date was £93,500,000 and we are committed to £106,000,000.

Mr. Sweetman

I did not say that the Minister was too fast but that I was a bit slow.

Dr. Ryan

I see. The periods of repayment vary very much. In fact, Deputy Sweetman gave them all and gave them correctly. The period of repayment in local authority housing— these are all maxima—is 50 years; Small Dwellings Acquisition Acts, 35 years; sanitary services, usually 25 years—25 years for small loans and 35 years for loans over £10,000; vocational schools, 25 to 30 years, also according to the amount; hospitals, 35 and dispensaries 35. The only reason I can give for the difference is that the borrower, the local authority, is perpetual and the individual is not. That is the reason why a longer term is given to the local authority than to the individual.

In regard to the rates of interest, I could go back a few years. I have figures going back to 6th October, 1952. At that time it was raised to 5¼ per cent. but local authority housing was not put up for some time afterwards —it was 3¼ per cent. but on 1st May, 1953, it was made 5¼ per cent.; on 1st January, 1954, 4¾ per cent.; on 1st December, 1954, 4½ per cent.; on 10th March, 1956, 5¼ per cent.; on 14th November, 1956, 5¾ per cent. and then, on 28th October last, it was raised from 5¾ per cent. to 6¼ per cent., except for Small Dwellings Acts and Gaeltacht Housing Loans, which were left as they had been at 5¾ per cent.

Mr. Sweetman

Was there in respect of those that were left any guarantee as to how long they would be left?

Dr. Ryan

Until the end of this financial year. That is as far as we are committed at the moment. The total issues for 1955-56 from this Local Loans Fund were correctly stated by Deputy Sweetman at £8.56 million and for the financial year 1956-57, £11 million and the amount provided in this financial year was £13.98 million. I am sorry that I have not got a revised estimate of what may be issued actually for that year. We should be able to get that in the very near future and, if possible, I will have some estimate of that next week.

Deputy Sweetman is also right that these figures should be adjusted because last year and this year Cork and Dublin to a great extent have been looked after from the fund, with the exception, as the Deputy pointed out, of £500,000 secured by the Dublin Corporation from the Irish Insurance Company and £160,000 secured by the Cork Corporation by way of additional overdraft from the bank. Apart from that, these authorities were looked after and the adjustment should be, in 1956-57 at any rate, £3.34 million for Dublin and £67 million for Cork. Of course, if we take that from the amount issued and the amount allocated this year, it leaves a fairly level pattern also in the last four or five years.

I am afraid that I have not got a very exact allocation of the expenditure between urban and rural housing by local authorities. In 1955-56 it was, for urban, £1.33 million and, for rural, £1.89 million and in 1956-57, £3.60 million for urban and £1.93 million for rural. I cannot give figures for this year.

The only other question raised was one by Deputy Cunningham with regard to whether we are continuing the practice of getting local authorities to raise their own money as far as possible. All I can say is that, if any local authority can raise capital on favourable terms, it would be very welcome but I do not think they will get very much that way. We are taking a realistic view of the matter and we are assuming that they will not get anything substantial in that way and, for that reason, are providing what we think is the total amount required. I think that is all I have to say on this stage of the Bill.

Question put and agreed to.

Committee Stage ordered for Wednesday, 4th December, 1957.