Indeed, as an initial part of my approach to the matter of house improvements, I intend to outline to local authorities very shortly a new and imaginative policy relating to the future financing of improvements to their rented housing stock. I know Deputy Fitzpatrick will be pleased about that as he mentioned the improvements to the rented housing stock.
In January 1980, the Government also announced that they proposed to re-deploy the capital resources available for housing in order to maximise the national benefits and, in particular, to apply public funds to assisting categories and individuals in relation to their genuine need for such supports.
The provision for housing capital expenditure by the Exchequer in 1981 is £242 million. This represents an increase of 33 per cent on the original provision of £183 million for 1980 and an increase of 20 per cent on the estimated outturn of £201 million. In fact, in 1981, the amount of money we are providing for housing shows an increase of 34 per cent in real terms as compared with 1977. On the other hand, while the Coalition Government were in power, expenditure dropped by 57 per cent in real terms between 1975 and 1977. This shows very clearly where their priorities were during their last two years in office.
In terminating some grants, the Government looked at ways of compensating people of modest means who would otherwise suffer hardship. Such people are more than compensated for the termination of open-ended grants by large increases in local authority house improvement loans and in the qualifying income limits. The maximum unsecured loan which had been increased from £200 to £600 in November 1977 was raised to £1,000 in respect of 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 considerably lower than that charged by commercial lending agencies. In February 1980 the income limits for these loans was increased from £4,000 to £5,500.
Deputies supporting the original motion may attempt to cloud the issue by giving misleading figures for expenditure, but let us take a more simple yardstick. When it comes to the question of total new house completions, the present Government's record speaks for itself. When the Coalition Government took up office in 1973, we handed over to them a housing programme which had a completion rate of 25,000 well within its sights. Completions rose to 26,900 in 1975, but by then the Coalition Government had run out of steam. Completions fell by almost 3,000 to 24,000 in 1976. In the first six months of 1977, the annual completion rate had dropped to 21,000 before they were voted out of office. Since then we have effected a steady recovery. Completions increased to 25,400 in 1978, to 26,500 in 1979 and to an all-time record of 27,785 last year. This achievement did not happen accidentally. It was the result of the development of appropriate policies over the past few years. Let us consider these policies and contrast them with the performance of the Coalition Government while they were in power.
The number of non-local authority house completions increased from 16,700 in 1976 to an estimated record level of 21,785 last year. In other words, there were 5,000 more private houses built last year than in 1976 and this achievement no doubt considerably helped young couples who were seeking to buy their first home. While the Coalition were in power, the number of private house completions dropped from 18,600 in 1973 to 16,700 in 1976.
In 1977, we introduced a grant of £1,000 for first time owner/occupiers of new houses. This grant replaced a grant based on restrictive income limits which the Coalition Government had imposed in 1976. Since 1977, the SDA loan and income limits were increased on three occasions by a total of 166 per cent and 134 per cent, respectively. The Coalition Government allowed these limits to remain static between September 1973 and July 1977, despite the fact that house prices and earnings more than doubled during that period. Expenditure on SDA loans increased from £17 million in 1977 to an estimated £63 million in 1980 and the provision for this year is £93 million.
The impact of building societies in private housing investment has expanded considerably in recent years. Total advances by the societies increased from £119 million in 1977 to an estimated £270 million last year. With effect from August 1979 all registered societies were asked to:
(a) allocate at least 70 per cent of available mortgage finance in providing mortgages for house purchasers whose mortgage requirements did not exceed £20,000.
(b) require that certificates of reasonable value be furnished by all applicants for mortgages for the purchase of new houses and
(c) allocate at least 40 per cent of all loans for the purchase of new houses.
In keeping with this policy of encouraging the application of the bulk of their funds to borrowers in the lower loan bands and in particular to new house loans, societies financed the purchase of about 7,500 new house loans in 1980. The fact that societies maintained a high rate of approvals last year augurs well for 1981. It is estimated that they will have over £300 million available to them which will finance the purchase of approximately 7,000 new houses.
A temporary subsidy was introduced last year which enabled building societies to increase their investment rates and let mortgage rates stand at 14.15 per cent. With the general downward movement of interest rates, there is now no need for the subsidy, and the societies have been enabled to reduce their mortgage rates by 1 per cent. Since 1977, the maximum amount of personal interest — including house mortgage interest — qualifying for income tax relief has been increased from £2,000 to £4,800.
Deputies opposite have been critical from time to time about increases in house prices — carefully ignoring the concurrent increases in average earnings. One has only to look at the remarkable growth since 1977 in home ownership as indicated in new house completions to realise that house prices have not moved beyond the purchasing capacity of the general public.
At the same time this Government have been genuinely concerned about the control of new house prices. A Fianna Fáil Government introduced the first ever form of control on such prices in 1973. While the Coalition were in power, they exercised little or no control over rising house prices and costs. In fact, the system of house price control was largely undermined by the income limits which they imposed on the new house grant system in 1976, thus greatly lessening the scope of the controls which were associated with that system. Since 1977, the form of control of new house prices has been extended on several occasions. CRVs are now required for practically all new house purchases for which loans are obtained excluding only a very limited number of flats, and for all grant-aided houses. Since September 1980 the CRV system has been put on a firm statutory basis, and provision has been introduced to enable appeals to the courts by any builder dissatisfied with the operation of the controls. I regard it as a vote of confidence in the equitable manner in which the system is operated by my Department that no builder has, so far, felt constrained to have recourse to the courts.
In the area of non-profit housing, a grant is available since 1979 to meet a substantial part of the administrative costs of the National Association of Building Co-operatives. In 1978, an improved package of financial assistance to voluntary housing associations providing housing for elderly persons came into operation. Again, the Coalition fell down on the job in as much as they did not take any steps to assist non-profit housing bodies between 1973 and 1977.
Another way in which private housing activity was encouraged was that the subsidisable cost limit on each housing site developed by local authorities and approved bodies for modestly priced private housing was increased from £900 to £1,500. This limit had remained unchanged between 1972 and 1977.
When the Coalition took up office in 1973, they set out in a determined fashion to increase the rate of local authority housing completions. They succeeded in reaching a completion figure of almost 8,800 in 1975. They then realised that the country could not afford such a high proportion of council houses out of the total of new house completions. During their last year in office, in 1977, the completion rate had dropped by almost 2,500 to an annual level of 6,300. Since then, the annual rate of completions has been maintained at a steady level ranging from 6,000 to 6,300. This is infinitely preferable to the peaks and valleys in output which occurred under the previous Administration.
Low-rise mortgages were advanced for the first time by local authorities in 1977 and the number of these loans advanced for the purchase of private houses has been of the order of 700 annually. Over the last three years the number of tenants and prospective tenants of council houses who have either qualified for a low-rise mortgage or obtained a council house on a tenancy basis ranged from 6,700 to 7,000. When the number of casual vacancies in council houses is taken into account, the total number of persons qualifying for such houses or mortgages has been about 9,000 in each of the last few years.
Having put the subject of this motion into its proper and wider perspective I would like to deal with its limited and specific terms. I welcome the opportunity given to me by the Opposition to deal in detail with the Government's reasons for terminating certain house improvement grants, and in doing so I will once again remind the Deputies opposite, however much they may dislike it, of their miserable record in housing grants during their term of office.
The Government did not make their decision lightly in January 1980. House improvement grants, in one form or another, have existed since 1924 and, over the years, made an important contribution to helping people to conserve and improve their houses. But it must be kept in mind that housing grants have always been one of the components in financing the element of the housing programme. They cannot be considered in isolation from the other elements of housing policy concerned with improving the quality of the national housing stock, especially the scheme of loans at relatively low interest rates, to which I have already referred and which were greatly increased by the present Government.
Deputies opposite choose also to overlook the other house improvement grants schemes which have been retained — the group water and group sewerage facilities grants, the scheme to help voluntary organisations adapt existing dwellings in order to provide decent housing for old people, the grants to make houses suitable for persons suffering from physical handicap or severe mental illness and the essential repairs grants. The Fine Gael motion blandly ignores these factors, and, in highlighting the need to conserve energy, overlooks the highly popular and successful scheme of grants introduced last year by the Department of Energy to encourage householders to reduce energy consumption in their dwellings.
Having regard to the extent of the demands on the Exchequer, it was evident that public expenditure in 1980 had to be controlled, more particularly in the light of trends in the national and international economic climate. Radical measures had to be taken without delay to bring the expenditure on housing within the extent of the public funds which could be provided and to re-deploy resources in the manner I have indicated. It was in this context that the decision was taken to phase out certain parts of the house improvement grants scheme.
I stress once again that only parts of the overall grants scheme were ended. The Government looked in detail at the different categories of applicants and of works which had been benefiting. The works assisted were certainly wide-ranging. Grants were being paid for the provision of works such as sun-parlours and playrooms, the conversion of garages into livingrooms and the building of extra rooms which were not needed to relieve overcrowding. It is understandable that people should seek as good a standard of housing for themselves and their families as they can achieve, but they cannot reasonably expect the State to contribute towards the cost of non-essential improvements at the expense of people who need extra accommodation for their families or who must carry out urgent repairs and who cannot do so without some help from the State.
The Government's decision in announcing the package of changes in the loans and grants was made on the basis of these priorities. The payment of a grant of up to £600 to people changing their oil-fired central heating to an expensive solid-fuel burning unit could not continue to be a priority in the circumstances.
During the past few years, a significant increase has occurred in the numbers of new houses being provided with solid-fuel systems. Nowadays, practically every scheme of houses has such a system. I might add that poor people did not, in general, avail of these grants. Consequently, where hard decisions had to be made this pilot scheme had to be terminated. In passing, I might suggest that with the constantly escalating costs of heating oil, many householders find that, over a period, the change to solid-fuel heating can be self-financing.
Of course, the Government in announcing the termination of certain grants on 21 January 1980 did not follow the lead given by the Coalition when they restricted new house and reconstruction grants in 1976 and 1977 respectively. Without any advance warning, the Coalition imposed income limits and valuation limits overnight consequently excluding people who had entered into binding commitments or purchased materials in the expectation of getting grants. In contrast, this Government allowed a period of grace up to 1 February 1980 to enable people in similar circumstances to submit applications. Later on, applications were accepted which reached the Department after 1 February but which had been posted at a time by which they could reasonably be expected to arrive in the Department by that date. The result was that almost 46,000 applications were accepted following the announcement of the termination of the grants. In fact, between 1 January and 1 February 1980 about 50,000 applications were received and accepted, corresponding to practically the entire intake for 1979. As well, the final date of 1 October 1980 for the completion of works and claiming of grants was extended to 31 March 1981.
I come again to the Opposition's sorry record on housing grants. When they came into office in March 1973 they inherited various grants schemes — new house and improvement. The State new house grant was generally of the order of £300 to £325 and was paid mainly to builders, except where applicants were building their own houses. Higher grants were paid to farmers and to people on low incomes. The State reconstruction grant had a maximum of £200, the water grant £75, the sewerage facilities grant £25 and the essential repairs grant £80. The maximum recoupment paid by my Department to local authorities in respect of handicapped persons grants was £400, which meant that the maximum grant paid by the local authorities rarely exceeded £800. Local authorities paid supplementary grants corresponding to the State grants in respect of new houses, reconstruction and water and sewerage.
What did the Coalition do in their four years of office? Did they improve the grants about which they are now shedding crocodile tears? Did they introduce any new scheme of grants? The simple and concise answer is: no, they did not. Let me suggest that "crocodile tears" describes the motion put on the Order Paper by Fine Gael. Their record in Government, when they had the reins of office and when they could have done something for the people that they now cry for, was so deplorable that they should have the good grace to blush about putting down a motion of this type. I would commend the amendment in my own name to the House.
