I move amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
"welcomes the steps taken by the Government to redeploy the public funds available for housing in the current year, to ensure that priority is given to the most deserving categories of housing need".
I am grateful to the Deputies opposite who decided that this motion be discussed. The debate gives me a welcome opportunity to correct some misrepresentations and misunderstandings which have been aired both within this House and outside it. It is right and proper that the reasons for the Government's decision about house improvement grants should be put on the record and I have no doubt that fair-minded people, irrespective of their political affiliations, will agree that the package of measures taken including the abolition of house improvement grants, is in the best interest of the national housing programme.
The Labour Party motion criticised the decision to end the house improvement grants scheme, including grants to reduce dependence on oil for domestic heating purposes. Their motion ignores some basic facts governing the situation which were made clear by the Minister for the Environment in his public statement on the subject on 21 January last—in particular, that the amount of money which the State can afford to provide for housing operations this year is not unlimited and that the decision in regard to the grants was only one of a comprehensive set of actions taken to redeploy the available finances in such a way that assistance from public funds would be channeled to help persons who genuinely need and merit that help.
To put our country on a sound economic footing it is necessary that the community should stop living beyond their means, and especially that the extent of taxation on public borrowing should be rigidly controlled. In this context every aspect of public expenditure has had to be critically examined and some services, however desirable from a public viewpoint, suspended or curtailed. Against that background it was inevitable that the nature and scope of the Government's investment in housing would have to be included in that review. The Government's investment in and subvention of housing operations rose from £130 million under the Coalition's last budget to £180 million in 1978 and £212 million, in round figures, last year.
If the financial arrangements which applied in 1979 were to remain unaltered in the current year, it is estimated that more than £250 million would be required to fund the operations. Having regard to the scale of these and other demands on the Exchequer, the present economic situation, the outlook for the immediate future and anticipated international developments, it was clear to the Government that expenditure of this order from public funds on housing would not be feasible in 1980. Immediate and radical measures were necessary to bring the spending within the limit of the public funds which could be provided. It was in that situation that a decision was made to end the house improvement grants scheme.
In deploying the total provision expected to be available for housing in the present year, the Government were concerned to ensure that the major part of the funds would be applied to deal with the housing needs of the less well-to-do and most deserving categories in the population. It was also considered that schemes of assistance which, at public expense and without regard to the means of the beneficiaries, increase the value of existing houses should not be continued.
I challenge any Deputy opposite to condemn the policies inherent in that reallocation, to advise that the unprecedented increases in local authority house purchase and repair loans and in the income limits applicable to these loans should be cancelled or that the allocations for local authority housing programmes should be cut back in order that the house improvement grants scheme could be revived.
The general scheme of house improvement grants had no regard to the economic circumstances of applicants. The work which qualified for grants was very wide-ranging, including the extension, enlargement, improvement or repair of a house which were reasonably necessary to make the house more suitable as a dwelling. Grants were paid for sun parlours, playrooms, the conversion of garages into living accommodation tion and the provision of extra rooms which were in no way needed to relieve overcrowding.
I would like to remind the House that while the basic scheme of grants has been ended, the Government have decided to continue paying grants in cases in which exceptional conditions justify such exceptional treatment as for essential repairs to old rural houses, for the provision of accommodation for elderly persons and for the adaptation of existing houses to make them suitable for occupants suffering from physical disability or acute mental illness or mental handicap. Grants for the provision of group piped water and sewerage schemes are, of course, being continued.
It has been argued that the termination of the grants to reduce dependence on oil is a retrograde step, having regard to the need for energy conservation. I would suggest, however that the massive price increases and the occasional scarcity of supply of oil in 1979 and the rather grim prospects in this regard for 1980, should make people in their own interest convert from oil-fired to solid fuel heating. In fact this was being done independently of the grants and a survey by An Foras Forbartha of private house building in Ireland in 1976 and 1978 showed that between those two years, while no grants to reduce dependence on oil were available, the proportion of new houses being provided with solid fuel systems increased from 13 per cent to 33 per cent or a 150 per cent increase. This trend obviously is continuing and advertisements for many new private houses feature the provision of solid fuel systems.
Persons of modest means will be more than compensated for the termination of the open-ended scheme of house improvement grants by the concurrent big increase in local authority loans for house improvement work. The maximum unsecured loan which was a mere £200 before the change of Government in 1977 was increased to £600 in November of that year and has now been raised to £1,000 for work started on or after 1 February 1980. Where security can be provided a loan of up to £4,000 may be advanced. The interest rate on these loans is substantially lower than that charged by banks and other commercial agencies.
Deputies opposite have a hard neck in criticising the action taken last January in connection with the house improvement grants. They have short memories indeed if they cannot or do not choose to remember that under a Labour Minister for Local Government reconstruction grants were suddenly restricted in January 1977 to houses with low valuations with the result that only 11,517 reconstruction grants amounting to £2 million were paid in that year—this notwithstanding the abolition of the valuation restrictions by the present administration immediately on resuming office in July 1977. Compare that record with the 29,764 grants, over and above water and sewerage grants, totalling £15 million which were paid last year.
I would remind Deputies also that the severe restrictions on eligibility for reconstruction grants introduced in January 1977 came into operation without any warning and without giving an opportunity to persons excluded from eligibility who might have entered into binding commitments or bought materials in the expectation of obtaining a grant. The previous administration gave no notice and did not give a hoot about anyone. In contrast, my Government allowed a period of grace of two weeks up to 1 February 1980 to allow people in such circumstances to submit their applications for grants. In consequence, 44,800 applications were submitted to my Department in that fortnight alone, corresponding to the total intake of applications during the first nine months of 1979.
In January 1977, when the Coalition Government introduced the restrictions on reconstructon grants, the building industry was barely beginning to recover from the recession which occurred in the mid-seventies. It was not until 1978, as a consequence of measures taken by the present Government, that the output of the industry again reached the level it had achieved when we left office in 1973. In other words, when the industry most needed additional capital expenditure and investment, the previous Government were, in fact, reducing the capital available to it.
The situation in January 1980 was precisely the opposite to that which obtained in January 1977. During the past two years the building industry had experienced rapid and unprecedented growth. Indeed, the industry had grown at such a rate that there was evidence of a certain degree of overheating in some areas. This was reflected in the difficulty experienced by builders in recruiting skilled workers in 1978 and 1979 and by the shortages of some building materials, notably cement, in 1979.
If I have dealt at some length with the matter of house improvement works, it is necessary for the purpose of clarifying the Government's decision in relation to this particular scheme of grants to deal also with the question of new housing.
It has been the basic principle of the Government's housing policies to encourage and assist every household to obtain a house of good standard, located in an acceptable environment, at a price or rent which they can afford, The only qualification on the implementation of this fundamental principle is the availability of the necessary national resources. As a natural corollary of this policy the Government are committed to promoting the concept of home ownership. Our achievements in this regard have been so successful that we have the highest rate of owner-occupation of any European country.
At the same time the Government also accept their responsibility to provide sufficient capital to enable local authorities to maintain a steady programme for the accommodation of persons living in unfit or overcrowded accommodation who lack the personal resources to rehouse themselves. The local authority programme which had run into a serious decline from 1975 onwards has now been put on a basis in which about 6,000-plus dwellings are being completed at a steady rate year by year. One of the results of the discontinuance of the house improvement grants is that practically £100 million is being made available to local authorities for their direct house building operations in 1980.
The Government felt that they had a strong commitment to facilitate persons who did not already own houses and were not accepted for rehousing by local authorities to purchase dwellings for their occupation. The claims of these people were felt to be more genuine than those of individuals who already had homes of their own and who, if the grants scheme were continued, would probably turn to the State for grants towards improving their existing accommodation.
When we resumed office two and a half years ago the maximum annual income for qualification for a local authority house purchase loan was £2,350 and the maximum loan that could be obtained was £4,500 only. Those limits had not been increased since 1973; four and a half years almost in which the Coalition had to do it but they did not. We increased the income and loan limits on three occasions in less than three years. Now the maximum income is £5,500 a year, the maximum loan for new housing being £12,000, representing increases of 134 per cent and 166 per cent respectively over the July 1977 limits.
The success of this policy of regular revisions of the limits is shown by the fact that last year local authorities approved 8,850 house purchase loans, including loans under the low-rise mortgage scheme, amounting to £72 million and that at the end of last December they had on hands over 14,913 applications for loans totalling £97.5 million. The policy is an indication of the acceptance by the Government of the importance of these loans schemes in enabling persons in the middle and lower income groups to house themselves.
The provision of mortgage finance from public funds for these categories was matched by the activities of the other main lending agencies and, during 1979, a total of £293 million in respect of a record 24,742 new and previously occupied houses was advanced by all such agencies, compared with £223 million for 22,648 houses in 1978. Loans approved by the agencies totalled £374 million in value, representing 30,051 loans of which 15,833 were in respect of new houses. Each of these three figures was a record for any one year.
I am particularly happy to report that despite the huge and continuing volume of new house building in progress, stimulated by this massive investment of public and private funds, for the second consecutive quarter the Bulletin of Housing Statistics published by my Department has recorded a decrease in the average gross price of new houses for which loans were approved by the main lending agencies. This welcome outcome is due in large measure to the measures taken by the Government to ensure that new houses for which loans are sought represent reasonable value for the price charged.
Our success in pressing forward the objective of owner-occupation can be gauged from the fact that the number of now private houses built last year, at 20,330, was the highest total ever recorded. This form of tenure makes for national social stability. It provides the householder with an asset the value of which is constantly increasing and, at the same time, vests in him a stake in the local community and a positive interest in working for the improvement of the standard of public services in his neighbourhood and the quality of his environment.
I want now to deal with the delay in dealing with grant applications. I do not deny that there are, and have been, delays on the part of the Department in dealing with grant applications. From my own direct personal association with the working of the grants section I am satisfied that these delays are due to the huge growth in the numbers of applications for house improvement grants and particularly the unprecedented inflow during the fortnight ended 1 February 1980. For example, the total numbers of such applications received in 1977, 1978 and 1979 were 18,907, 37,550 and 52,533 respectively. The total number received between 1 January and 1 February 1980, was 49,381, including 44,800 in the final two weeks of that period. In other words, the house improvement grant applications received in the five weeks of 1980 up to 1 February was almost the equivalent of the number received in 1979.
I admit that there has been a delay. Steps had to be taken to enable the staff to deal with this unprecedented volume of work. The public offices were closed, the telephone service suspended, staff was assigned temporarily from other sections to help and constant overtime was worked. The position now is that all applications received have been acknowledged and practically all have been indexed, recorded and filed. If there are now any outstanding cases they will be dealt with within a week.
I want to say also that I am the first Minister to set up office in O'Connell Bridge House, where all the sections of the Department dealing with housing have been located for several years past. I did so because I considered housing too important and sensitive a matter to be dealt with by remote control from the Custom House. I want to say also that I know every member of the staff in O'Connell Bridge House. I wish to refer to remarks made by Deputy Tully last week and by Deputy Quinn. An article appeared in the Irish Independent of 25 January last stating that because of the queues of people waiting outside the office in connection with house improvement grants I was unable to gain admission to my office. The story is without foundation. When I pointed this out in a letter to the Editor he had not the good grace to admit that the second- or thirdhand report which he had accepted for publication was a fabrication but suggested instead that his reporter had merely mistaken the date of the imaginery incident.
I refer to this, not because I am thin skinned—what politician is? —but because the story reflected on the competence and intelligence of the staff concerned and also in the hope that the truth of the matter will register with Deputy Tully who gave the fairy story an airing in the Dáil last week. Deputy Tully knows how unwilling some prominent newspapers are to say honestly that they mistook fiction for genuine news. The staff in O'Connell Bridge House are competent to deal with the position as they always have been. The manner in which they dealt with the public was courteous and efficient and I thank them for that. I am sure they will continue to deal with the public in regard to all grant applications in the same way. If any Deputies write to me I will answer them and will not send a stereotype letter.
