We accept that this Bill is necessary now that the level of money expended from the fund is coming up to the ceiling of £1,500 million that had obtained up to now. The Minister says that the increase in this Bill to £2,500 million is necessary if the capital expenditure of local authorities is to be undertaken in 1981.
We should not be under any delusion that the passage of this Bill, of itself, will be of any help to local authorities who are now in a more critical condition as regards finance than at any time since their establishment. This Bill merely gives the Minister power, if he wishes, to release funds up to that amount of money but does not automatically release funds up to £2,500 million. Any public representative who holds a clinic, or any Member of this House who is a member of a local authority, will know that at present local authorities were never in a worse state for money. I had a parliamentary question answered on 3 December about the state of Cork Corporation. I put that question down because I see almost every consecutive day, certainly every week, in the Cork Examiner and Cork Evening Echo reports of Cork Corporation meetings at which the standard answer given by the manager of Cork Corporation seems to be that they cannot undertake something because they have not got the money. That applies particularly to housing. It applies also to Cork County Council and probably to every local authority in the country at present, that proposals put forward for housing, sewerage, land reclamation or for the building of new roads receive the standard answer from the manager to the effect that they cannot undertake them because they have not got the money.
It has been customary for as long as I can remember and has certainly been the practice in Cork Corporation, and I presume in other local authorities, that at Christmas time councillors submit lists of names of people who are given what is called Christmas work. It is a method by which a local authority recognises the less well-off members of their society, giving them a week's work at Christmas and of course, a stamp at the same time. It has always been the practice that everyone who applied for that work got work. There was a major row at Cork Corporation on Monday evening last—as reported in the Cork Examiner yesterday—because, I think, one-third only of those who had been on the list seeking Christmas work had been employed. There was a motion before Cork Corporation by some members of the council maintaining that additional money should be supplied to employ those who had not got work. The manager said it was up to the council themselves, if they wanted to pass that motion, but that there was nothing he could do about it because he just had not got the money to employ people. In my ten or fifteen years in public life I never remember so many people coming to my clinics telling me that they cannot afford to build their own houses, that their names are on the local authority list and that they are being informed by the local authority that it may be two, three or four years before they get housing.
The attitude of the Minister for Finance, as conveyed by the Minister for the Environment to the local authorities, appears to be that of a poor man aping the policies being pursued on the other side of the Irish Sea of cutting back funds to local authorities which is having the effect of reducing the number of local authority houses available. At the same time private housing is not going ahead because of the recession in the construction industry.
This is the same position as the position in which we found ourselves in 1974 when because of a recession there was a drop in the number of private houses being built. Our answer was to increase the amount of money available through the local authority mortgage schemes and the amount of money given to local authorities to build local authority houses. Therefore the level of activity in the construction industry did not vary. The number of privately financed houses built in 1973 was almost 14,000. The following year, because of the recession, that number dropped to 11,000. We raised the number of houses financed by local authority mortgages from 4,600 to 8,500 and we raised the number of houses built by local authorities from 6,000 to 6,700. That position obtained throughout 1974, 1975 and 1976 and in 1976 we could afford to lower the amount of support given to local authority mortgage scheme houses.
The conditions in which too many of our citizens are living are a reflection on both sides of this House because we cannot find the courage to raise money to finance very many more local authority houses than are being financed at the moment. With the escalation in the price of houses over the past five or six years people are trapped between two situations. They are not eligible for SDA loans because they are earning over £3,500 or whatever the figure is now. They cannot afford the difference between two and a half times their salary and £20,000 for a privately owned house and they cannot put down a deposit of £7,000. They are not eligible for local authority houses because their income is too high. They get no support from the State. People building their own houses get the £1,000 grant and they get income tax relief on their mortgage repayments. Others get low rise mortgage facilities from the local authorities. People living in local authority houses have their rent subsidised. There is a whole wedge of people who are renting accommodation at £25, £30 or £40 a week. They are getting absolutely no support from the State.
I hope that when he is replying the Minister will tell us what he thinks of the scheme launched by Fine Gael about two months ago to cater for this body of people who cannot put down a deposit and who are not eligible under the SDA scheme or for local authority houses. Our scheme does not suit everybody. People who can find a deposit of £6,000, £7,000 or £8,000 will take advantage of building society mortgage schemes and pay roughly the same amount of money throughout the lifetime of the loan. It may vary according to the interest rates but, by and large, they pay out the same amount of money every week for the 25 or 30 years during which they have the loan.
We were trying to cater for those who cannot find a deposit of £6,000, £7,000 or £8,000 and who are ineligible for local authority loans or housing. Our proposal was that a new housing agency should be set up which would make use of the funds available in ever increasing amounts through pension funds and guarantee that inflation would not erode the value of the funds over 20 or 30 years. The only people who could live up to that guarantee would be the State and, therefore, the housing agency would have to have a State guarantee. The housing agency would lend money to people in the category I have mentioned. The repayment method would be that the amount would increase over the period of the mortgage by a percentage increase in their earnings. In other words, they would pay a fixed percentage of their earnings over the period of the mortgage and the percentage would be fixed at 18, 19 or 22 per cent or somewhere on either side of 20 per cent. As they got increases in wages they would make increased repayments. If their salary doubled or trebled over 20 years their repayments would double or treble.
Obviously that scheme would not be attractive to somebody who could make a deposit. Nor would it be attractive to somebody who was eligible for a local authority house or a mortgage loan. The wealthiest people get some form of subsidy from the State for houses because they can make a claim against their taxes. People who are first time buyers can get the grant of £1,000. The category of people who pay significant sums of money every week for accommodation get no subsidy from the State.
We estimate that this scheme could be implemented reasonably quickly. It would have the benefit of giving a boost to the construction industry, which is in a pretty difficult position at the moment. Many building firms and people working in the industry are not looking forward to the new year with any great joy because they do not feel the position will improve in January or February. In my own constituency and in Cork county as a whole things are much worse than they have ever been in my memory. I was interested to find out if my instinct about this was correct and I put down a question asking for the up-to-date unemployment figures for Cork city and county and corresponding figures for the past ten years. I discovered that I was correct. On 31 October 1980, the latest date for which figures were available, the unemployment figures for Cork city and county were higher than at any time in the past ten years. Those are frightening statistics to somebody living in the area. I am sure they apply to other regions as well. I cannot speak specifically about other cities or towns or even counties.
In reply to Question No. 18 on 3 December last the Minister said a further instalment of £170,000 issued to Cork Corporation from the Local Loans Fund and that a further sum will be made available before the end of the year. A sum of £170,000 is the cost of about eight local authority houses. When the Minister says that a further sum will be made available before the end of the year, I do not know whether it will be more or less than £170,000.
There is a rather anomalous last paragraph to the Minister's reply when he said that available resources do not permit the issue of additional funds from the Local Loans Fund to the corporation but that these amounts, together with the further amounts arising from internal resources, will ensure that payments on maturing loans will not be delayed unreasonably. If a young married man entitled to a loan is building a house he should not have to seek bridging finance from the bank because of delays in the local authority scheme. A scheme will have to be devised so that a person obtaining a local authority loan can follow the usual practice of paying the builder a deposit and making further payments at various stages of building. The initial capital cost of such a scheme would be high because payments would be brought forward, but the Department will have to face up to the realities of life for young people. Very often they start married life facing not only mortgage repayments but a bridging loan as well. Some way must be found to release funds to people entitled to mortgages as soon as payments are demanded from them by the builder. They should not be forced to seek bridging finance while waiting for payment of their mortgage.
I understand the reluctance of the Department of the Environment to expend funds until they have been able to carry out inspections. They have some justification in their attitude because of some types of building work which have been carried on during the past 30 or 40 years. They do not want to part with money until they see a finished product which represents value for money. At the some time we must consider the plight of young people who are, in effect, facing two mortgages. It would be an enormous relief to them if payments could be made at various stages of building work. It would also be helpful if the Minister would investigate the scheme announced by Fine Gael about two months ago for an alternative method of financing some people who want to own their own houses. If it were feasible to put through the necessary legislation early in the new year it would be of great advantage to the construction industry and would increase employment. It would involve the setting up of an agency and the terms of reference given to its directors would be all important.
I would ask the Minister to ensure the release of significant amounts of money to local authorities. The construction industry will certainly grind to a halt if ordinary infrastructural work on roads, harbours and sewerage is not carried on and if local authority housing does not go ahead. During the mid-seventies, when private house building was falling off because of the recession, we put considerable sums of money into building increased numbers of local authority houses and providing increased mortgages. Such action taken now would help the construction industry and ease the problems of the country during the present recession.