I move:
That a supplementary sum not exceeding £5,671,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1973, for the salaries and expenses of the Office of the Minister for Local Government, including grants to Local Authorities, grants and other expenses in connection with housing, and miscellaneous schemes and grants including a grant-in-aid.
The gross amount required is £5,776,000 but this amount is offset in part by an increase of £16,000 in Appropriations-in-Aid and a further sum of £89,000 in savings, the net amount of £5,671,000 is spread over ten separate subheads of the Vote for my Department and corresponds to 36 per cent of the original Estimate for the Department for 1972-73. The largest single element in the Supplementary Estimate is the new subhead O in which provision is being made for a sum of £2,400,000 as a grant to the Road Fund. This amount is required because of the extent by which allocations from the Road Fund in respect of the current year exceeded the estimated income from the Fund.
Next in importance is a sum of £1,800,000 in subhead E 2. This additional amount is necessary to meet the Department's commitments in respect of grants for private houses. The original provision of £4,700,000 for this proposal was exhausted some months ago. A sum of £542,000 is required under subhead E 1 to meet arrears of subsidy due to local authorities in respect of their own direct housing operations. Similarly, the additional £310,000 sought in subhead F is necessary to meet commitments to local authorities in respect of subsidy towards loan charges on capital moneys borrowed by local authorities for water and sewerage schemes. The additional £500,000 required under subhead K is to meet commitments in respect of local improvement schemes on foot of supplementary allocations made to local authorities for this purpose in September, 1972, and December, 1972.
As Deputies are aware, the Exchequer pays a subsidy to local authorities towards the current costs of providing dwellings. The subsidy is in the form of an annual contribution towards the loan charges payable by the authorities on the capital borrowed by them and may amount to 66? per cent of those charges. The Exchequer contribution, however, is restricted to a percentage of the loan charges on fixed limits of capital costs. Because these limits were not revised regularly and adequately by the previous Government to take account of increases in the actual cost of providing housing, they are very much too low and, in fact, now represent less than 50 per cent of the present cost of providing a typical local authority house.
For example, the provision of a local authority house now costs £4,700 on average but the limit of capital cost for subsidy purpose is only £2,200. The annual cost of providing and maintaining such a house is about £514. The maximum annual subsidy paid by the Exchequer amounts to only £138 which, taking into account an average annual rent of about £114, leaves £262 to be met annually from the rates in respect of each new house provided by a local authority. Therefore, the situation at present is that subsidy from the Exchequer, although nominally payable at a rate of up to 66? per cent of annual loan charges, in fact meets only 35 per cent of the annual loss on each new local authority house. The disparity in the apportionment of the burden is even more marked in the case of flats because the subsidy from the Exchequer meets only 27 per cent of the annual loss of each new flat. The restriction of housing subsidy from the Exchequer to fix limits of capital costs which are so much out of date is indicative of the previous Government's unrealistic approach to local authority housing and has resulted in an excessive housing subsidy burden falling on the rates.
