I move:
"That the Bill be now read a Second Time."
The purpose of this Bill is to increase, from £1,000 million to £1,500 million, the statutory limit on issues from the Local Loans Fund through which the Exchequer loans money to local authorities to finance essential capital services.
When the Local Loans Fund was established in 1935 a statutory limit of £5 million was set on issues from the fund. The limit has had to be increased periodically over the years by successive enactments. The present figure of £1,000 million was fixed in 1974.
Local authorities, including the regional health boards, vocational education committees and harbour authorities are heavily dependent on this fund to finance their capital projects. In 1977 over 92 per cent of their capital expenditure was met from the fund. At 31 March 1978 total issues from the fund were £968 million, of which £485 million was for local authority dwellings, £255 million for house purchase loans and supplementary grants. Sanitary services accounted for a further £153 million while the balance of £75 million was provided for vocational schools, hospitals, harbour works, libraries, fire stations, itinerant resettlement and other services.
Issues from the fund have increased substantially in recent years. The level of annual issues went up from £100 million in 1974 to an estimated £150 million in 1978. During that period the most marked increase is that estimated between 1977 and 1978—from £114 million to £150 million. This reflects the increased provision for the local authority house purchase loan scheme, the loan and income eligibility limits of which were increased by the Government on taking office last July. There is also a significant increase in the provision for local authority housing, and for water and sewerage schemes to service new housing development and to provide infrastructure for new industry.
As I have mentioned already, the total issues from the fund reached £968 million at the end of March. At the present rate of issues the limit will be reached next month. It will be necessary to raise the limit substantially to provide for the estimated capital requirements of the local authorities over the next few years. Accordingly, a new limit of £1,500 million is proposed in the Bill which I commend to the House.
