Dáil Éireann debate -
Tuesday, 7 Apr 1987

Vol. 371 No. 8

Private Members' Business. - Housing Grants: Statements.

Minister for the Environment (Mr. Flynn)

There has been a rush of motions on to the Dáil Order Paper since the Government's decision to abolish three of the four schemes of housing grants was announced in the budget. Various parties were, I would suggest, somewhat hastily falling over themselves in a public relations exercise to cynically exploit the Government's courageous and responsible decision to abolish these grant schemes. Many of the precipitate statements made could have been avoided if those making them had waited until details of the implementation of the decisions were made available by me as Minister responsible for the operation of the scheme.

In making this statement I want to indicate briefly the budgetary strategy which underlies the decision to abolish these grants. I want to put on the record of the House the appalling extent of the housing grants liabilities I inherited on becoming Minister for the Environment and, finally, I will elaborate for the information of Deputies on the detailed arrangements which will apply to the termination of these schemes.

Our budgetary strategy sets out to tackle the three evils of high taxation, high interest rates and the lack of confidence that continue to undermine our economy. Unsustainably high levels of public expenditure and its offspring, national debt, is at the root of these three evils. Therefore, any radical attempt to tackle our serious economic problems must start with public expenditure. It must be brought down to a level that can be sustained without choking the economy to death. If we are to do this we must be prepared to cut out some expenditure programmes while ensuring that the rest are both efficient and effective.

Housing, as the largest single constituent of the Public Capital Programme area, cannot be exempted from the overall need to cut back on public expenditure. While in receipt of large scale and expensive public expenditures, the housing sector is at the same time suffering from excessively high taxation, including the trebling of VAT since 1983. Furthermore, it is severely afflicted by very high inflation rates and widespread lack of confidence. Clearly the existing policies and the wide, if not contradictory, range of Government interventions have failed to arrest the decline in the industry. To suggest that we continue down this road is hardly credible: a redirection that will contribute to a resolution of the underlying problems is what is needed now.

I want to put on record the appalling situation in regard to the public expenditure commitments I found in the housing grants area on becoming Minister for the Environment. On house improvement grants alone I found that grants approved totalled almost £230 million with applications still coming in at a rate that would add £5 million a month to this staggering figure. Payments this year will cost at least the £100 million provided in the Estimates and even this may not be enough. Compare this with expenditure of £7 million on house improvement grants in 1985 and £27.5 million in 1986. The legacy of public debt bequeathed by this scheme results from a crude attempt to buy survival for a shaken Coalition Government who were having grave difficulties facing the resumption of the Dáil after the 1985 summer recess. This was a hastily conceived open ended scheme under which expenditure could neither be predicted nor controlled. It provided large handouts of taxpayers' money to individuals regardless of their means for doing often inessential or even cosmetic works. It was the better off people who were able to make most use of these grants. Moreover they have not had the impact on employment that was originally predicted for them.

Mr. Farrelly

For £5,000 they were not better off.

Acting Chairman (Mr. M. Barrett)

Please allow the Minister to continue.

Mr. Flynn

To compound the dangers, my predecessor engaged in an unnecessary hype of the scheme by means of a saturation and expensive campaign of public advertising. Had the 1985 scheme continued the extra administrative cost alone this year would have come to £2.5 million. How any party supposedly espousing financial rectitude could have promoted this great scheme is beyond comprehension. However, my predecessor continues to defend the scheme. If it was so good why was it necessary to extensively revise it and change the grant ceiling in the abortive 1987 Fine Gael Estimates? If it was wrong then surely it was wrong in the first place.

Mr. Noonan

(Limerick East): Get on to the U-turn.

Mr. N. Treacy

You shirked your responsibility.

Mr. Flynn

Even with the payment of a wholly unprecedented sum of £100 million in 1987 there will still be a very large liability to be met next year and even the year after. The only way to bring the situation under control and to stop this intolerable escalation of liabilities was to bring the whole scheme to an end at this time.

Because of the huge build up of approvals, the decision to abolish the grants will have very little impact on the public finances this year and the cost of the scheme will continue to make sizeable demands on the Exchequer well into 1988 and 1989 and even up to 1990. When these bills have been cleared off we will be in a position to look again at the nature, extent and type of assistance that is necessary, appropriate and affordable in the area of improvements to the existing private housing stock.

It is now clear that the multiplier effect of these grants in terms of building work fell short of expectations generally. It now appears likely that the cost of the scheme to the Exchequer will only represent something like half of the total output generated by the grants. Furthermore the facts cast grave doubts on the earlier claims that the scheme would create thousands of jobs in the building industry. A year after its introduction the number of building workers on the live register of unemployed was only marginally reduced from 45,207 in October 1985 to 43,550 in October 1986. When one considers that building workers were emigrating throughout that period it is evident that the scheme has not fulfilled its expectations in yielding legitimate employment. The gratuitous nature of the scheme is underlined by the fact that a total of 66,223 grant approvals have issued for window replacements to the value of £42 million. Yet previously many householders would have regarded this type of work as part of the normal upkeep of a house. There is also evidence to suggest that the availability of grants for these works tends to inflate the cost to householders further, diminishing the real benefit of the grants. The grant aiding of totally unnecessary extensions to houses is perhaps even more difficult to justify. The cost of the 19,360 grant approvals for extensions generally amounts to £37.2 million. It is estimated that over 75 per cent of these would not be justifiable by reference to the relief of overcrowding.

Just one year after the inception of the improvement grant, as if to celebrate its anniversary, my predecessor brought in the £2,250 builder's new house grant last October. In many respects this measure had even less merit than the improvement grants. This grant was supposed to compensate builders for the devastating effects of the increase in the VAT rate on building from 3 per cent in 1983 to 10 per cent up to 1985. Clearly, it is self-defeating and highly inefficient to be raising taxes and then introducing subsidies to compensate for those taxes.

The rationale behind the grant to builders in order that they might reduce new house prices is highly dubious in the absence of a procedure to ensure that the benefit of the grant is actually passed on to the house purchaser.

Mr. Farrelly

What about the £1,000 grant?

Mr. Flynn

While the benefits of the builder's grant of £2,250 were largely notional, the costs which were building up for the taxpayer were very real indeed. A disturbing aspect of this scheme was the fact that the grant was payable in two deferred instalments, 12 months and 18 months after completion, and would have cost £22 million in 1988 and £29 million in 1989. This grant scheme was ill-conceived, badly structured and hurriedly introduced. Its primary purpose was to placate a demoralised building industry without any thought as to its effectiveness or the administrative difficulties it was bound to throw up. In fact, it proved to be an administrative nightmare. It was confusing for the builder, for the industry as a whole and for the client and it patently failed to create the stimulus for house building that it was supposedly intended to do.

Mr. Farrelly

Ask the builders.

Mr. Flynn

I did today and I am repeating what they told me. At any time it would have been the wrong kind of grant to introduce. Financial support for those wishing to house themselves should be aimed at the individual and this has been the principle for many years. It was a retrograde step, therefore, to make it a builder's grant.

Additionally, the decision to delay payment to the builder necessarily meant that frequently he would not be able to allow for the full value of the grant when pricing his house for sale purposes. It was aimed at encouraging trading up, or so we were told, and no upper limit was placed on house sizes for the purpose of eligibility. The greatest criticism of the scheme, however, is that it failed through a combination of complexity, confusion and flawed purpose. It might well be described as the wrong grant for the wrong purpose at the wrong time. I do not mourn its passing.

By 1989 the total cost of both new house grants would have been up to £15 million compared to the £14 million paid out last year. Deferred grants are a dangerous and irresponsible practice because they can be brought in painlessly enough at no cost in the first year while building up intolerable debts years on.

I will now go on to refer to the £5,000 surrender grant for local authority tenants and tenant purchasers purchasing houses in the private sector. I exempt this grant from my earlier comments on the other two grant schemes. It has been effective in achieving its purpose and it has given good value in terms of public expenditure by increasing the number of dwellings which local authorities have available for letting to applicants on their waiting lists.

Mr. Farrelly

Hear, hear.

Mr. Flynn

By doing so it has assisted the reduction in the total number on the waiting lists over the past five years. However, against that, the scheme had a serious, adverse impact on a number of very large local authority estates. Many tenants in employment who had previously purchased their houses under the house tenant purchase scheme and who had established and developed their roots in the area and in the community decided instead to avail of the £5,000 grant and move to another area.

The segregation of employed from unemployed is harmful to society. Indeed, this undesirable aspect of the £5,000 grant scheme was publicly acknowledged by the former Taoiseach, Deputy FitzGerald, at a conference in Dublin earlier this year. However, even without the surrender grant, local authority tenants are still assisted in a substantial way to become house owners. In the first place, they may buy their existing houses on very favourable terms under the tenant purchase scheme. This arrangement is in many ways preferable to enticing tenants out of their neighbourhoods in that it avoids the adverse social consequences to which I have already referred.

Considerable assistance remains available to any tenant who wishes to purchase a private house including a special category house purchase loan of up to £27,000, the £2,000 first time purchase grant and, in certain cases, the £1,000 site subsidy. Because of the misrepresentation of the Government's position on the grants issue in recent days, it is necessary to state explicitly that it was never the Government's intention that persons who had entered into binding contracts prior to the termination of the grants should lose out financially.

Mr. Farrelly

The Minister should have told the officials in the Department of Finance.

Mr. Flynn

The Government decided correctly——

Mr. Farrelly

Incorrectly.

Mr. Flynn

——that the grants should be terminated as and from 27 March 1987 and correctly that the implementation of this decision was a matter for the Minister for the Environment.

Mr. Farrelly

A somersault.

Mr. Flynn

Despite the difficult financial circumstances which made termination of the grant schemes unavoidable I have ensured that the schemes have been terminated in such a way as to prevent any adverse effect on those who have a legally binding and irrevocable commitment to acquiring a new house or improving their existing dwellings. Applicants for the £2,250 grant for the purchase or building of a new house and the £5,000 grant payable to local authority tenants will qualify when they can establish that by 27 March 1987 they had entered into a legally binding and irrevocable commitment on foot of a reasonable expectation of getting a grant.

Mr. Shatter

What happens if they had entered into that commitment on 30 March?

Mr. Flynn

In short any person purchasing or building a house who can meet these requirements and the other conditions of the scheme will qualify for the relevant grant. In this way persons who had committed themselves and who otherwise have suffered financial loss by the abolition of these schemes have been fully protected. My Department will be in touch with existing unapproved house grant applicants over the next few weeks to obtain particulars of their contracts, if any, and a certificate of approval will follow when it is established that there is an entitlement to the grant.

Similarly, in relation to the £5,000 surrender grant, the local authorities are being advised of these requirements and they are free to approve applications for surrender grants where they are satisfied that the necessary commitment exists. In the case of house improvement grant applicants, I have also ensured that no one is unjustly deprived of the grant. Deputies will be well aware of the fundamental and longstanding prior inspection condition of that scheme which is an absolute prerequisite to eligibility. Any applicant who had the necessary inspection on or before 27 March and whose proposal was found to be in order will qualify for the grant. Accordingly, no applicant who has started work in good faith and in accordance with the terms of the scheme will be affected by the ending of the grants. Obviously there would be no basis for extending eligibility under the scheme to others such as those who had lately submitted applications but who had not received a visit from the inspector. No work would have commenced in those cases, or if it had no grant would have been allowable in any event. Therefore, such applicants would in fairness have no more claim to a grant than persons who had not applied at all.

What I have just said clearly shows that in putting down his ill-considered motion, Deputy Boland was more anxious to be seen decrying the Government's decision than he was concerned about any implication it might have for the public. On the one hand, the Deputy is looking for grant approval for all existing applicants whether or not they have entered into any real commitments, but he does not apparently consider that anything should be done for those who have contracted to buy houses in expectation of a grant but who have not yet applied. It was Deputy Boland's Government, and in the case of the £2,250 builder's grant Deputy Boland personally, who were responsible for bringing in schemes which encouraged people to enter commitments without reference to their eligibility for grants. Seemingly Deputy Boland has now no concern for those who were encouraged in that way to make commitments and who might have been disqualified but for the fact that this Government were fully conscious of their situation.

Similarly, Deputy Harney and The Workers' Party Deputies have referred, apparently again with little thought, to the creation of extreme hardship by the termination of the grants. I am catering for everybody who had made a commitment and who could legitimately have expected a grant. I am now waiting for those Deputies to explain how there can be undue hardship for thousands of families in the light of the arrangements I have detailed here this evening.

Mr. Farrelly

Another U-turn; a complete somersault.

Mr. Flynn

There have been suggestions that this year's budget figures will be thrown out to the extent of £30 million by the way in which the decision to abolish the three housing grant schemes is to be implemented. I want to completely refute this type of misinformed comment. It is not possible at this stage to establish how many cases, as yet unapproved, will be able to satisfy the requirements laid down and eventually mature for payment. It is clear, however, that having regard to the existing pattern of time lag between grant approval and payment relatively few of those yet to be approved will mature for payment this year. These will be of little significance in the context of provisions totalling £122.5 million for all three grants this year. I fully accept that no more money can be made available for these grants this year unless there is a shortfall of expenditure in other areas of my Department's budget which would enable me to transfer moneys to grants in the event of that being necessary but it is not envisaged that it will be necessary. Any shortfall will have to be accommodated some other year from some other Estimates.

Before I finish, let me reiterate my dismay at the way in which the house improvement and builder's new house grants were introduced and operated adding to an appalling level of national debt and pre-empting scarce resources for future years. They were brought in for party political gain at the expense of the nation. If the managing director of a company conducted his business in this way by running up debts which he knew the company could not afford, he would be held personally responsible under the reckless trading provisions of the new Companies Bill. By adding wantonly to public expenditure and debt these grants were contributing to the problems they were supposed to solve. In the context of the overall strategy underlying the budget there was no alternative to a root and branch job. A regime of lower interest rates and lower taxation, which we are endeavouring to make a reality, will be of immeasurably greater benefit to house builders and householders alike. It is a pity the previous Government did not see it that way. They are now held responsible for the confusion that exists in this matter.

Mr. Farrelly

The Minister has some neck.

Mr. Boland

The Minister for the Environment has defended a bad case from a bad script in a mildly entertaining manner but that does not gainsay the fact that we are looking at a disastrous situation, ill-conceived, hastily put together and confusingly presented by the Minister and his colleague to the detriment of applicants, the building industry and to the absolute confusion of the general public and the body politic over the past week. Various documents were published in recent months and one was entitled, Construction and the Environment, published by Fianna Fáil, The Republican Party. That document states that the entire system of existing grants to the construction industry will be reviewed to ensure maximum effectiveness. I am not sure I need to say anymore than to quote from that document. We should put that document beside the Minister's interesting perambulations across the various provisions of the Vote of the Department of the Environment. We are told that having reviewed the grants to the construction industry the Government decided in one fell swoop to abolish three of the four grant schemes to ensure that the entire system would work to the maximum effectiveness. I wonder how that can be explained.

On the Order of Business on the Thursday before the budget I asked whether the Government intended to introduce legislation to abolish the new house grants or the house improvement grants. There was silence from the Government benches which, I suppose, spoke a multitude, but never did any Member dream even at that stage, that there could have been the intention to abolish those grants and abolish them retrospectively. It has always been the tradition as any of us with any experience of the House or the operation of local government know that while it is the prerogative of Government to change or amend schemes from time to time it has always been regarded as basic equity and fair play that for a scheme to be changed an announcement is made in relation to it and that that announcement applies to applications arising after that date. In my 20 years experience in local government I do not remember a scheme being abolished retrospectively or applicants who applied before the supposed termination date being unilaterally deprived of entitlement to the scheme for which they validly applied and which was in operation to their knowledge, and the knowledge of everybody including the Minister and the officials administering it, at the time they applied. Indeed, the opposite is the case. If the Minister turns to his left I am sure he could be entertained for quite a long time by the Minister of State at the Department of the Environment on that score. I am sure some Members remember when on a very limited reconstruction grants scheme a Fianna Fáil Government deciding to abolish that scheme. However, they went about it the opposite way, though just as ineffectually, because they announced one day that the scheme was being abolished with effect from a fortnight hence. They managed to accumulate the equivalent of three years applications in that fortnight and the dregs of that are still with us.

Mr. N. Treacy

This is the first time I have heard of 14 days being equal to three years.

Mr. Boland

The Deputy was not a Member of the House at the time.

Mr. N. Treacy

The Deputy should be ashamed to be in here tonight.

Mr. Boland

When I came in tonight I did not expect to have to deal with the "B" team.

Mr. N. Treacy

I understand the Deputy was on the "B" team until recently.

Mr. Boland

The dregs of that 1981 scheme are still hanging around O'Connell Bridge House and still have an impact on the Vote of the Department of the Environment because of the ineptitude of the Government in abolishing it. I venture to suggest that the ineptitude of that abolition has been more than surpassed by the clumsy way that these three schemes were abolished, the consequential mopping-up job and, I suggest, the consequential perambulations through the courts before the matter is finally resolved.

In contrast and despite the Minister's bluster, I should like to remind the House that in the budget published by our Government in January, we provided for the continuation of each of these three schemes during 1987. The Minister is, of course, quite right in saying that we modified and refined some of the terms of the very extensive and successful house improvement grants scheme which was introduced in November 1985. We did so in order to lessen its impact on the Exchequer, while at the same time continuing the high level of support for the construction industry and for employment within the construction and allied industries which the scheme had so obviously brought about. Despite whatever else the Minister and his colleagues might venture to say about that Government, I do not think it could be argued that there were any 15 people in the country who were better aware of the exigencies of the situation and of the demands on the Exchequer and the public finances than were the Government in January. In preparing a budget which would have resulted in a current budget deficit of 7.4 per cent and an estimated borrowing requirement of 11.8 per cent, we nonetheless recognised the importance of the stimulative effect which each of these grants had for the construction industry and for the assistance and encouragement of that well-recognised desire of the Irish people to own their own houses. In so doing, we ensured that these three schemes would continue and provided the financing accordingly, while still producing a budget which arrived at an Exchequer borrowing requirement of 11.4 per cent.

That these people could arrive in Government and within three weeks manage not to find that money and to abolish the schemes in such a clumsy way speaks for itself. Since the afternoon of last Tuesday when these three announcements were visited upon this House and the nation, we have witnessed what can only be described as high farce, a situation where a new Government who came into office having claimed that they could do it a better way managed in the space of three weeks to write high farce in relation to the Department of the Environment, not just in connection with these grants but in virtually all their works and pomps. It speaks ill of the manner in which the representative of that Department presented his case to that Cabinet that we should be holding this, the first of a series of discussions that will be inevitable in relation to the Environment Vote because of the way in which it has been decimated in the space of less than one month. We have been witnessing in the past week the writing of high farce in relation to all matters conducted at the Department of the Environment, a farce conceived in Merrion Street, gestated in the Cabinet, produced from the Custom House, rewritten on Friday to reviews which could only be described as a washout, which will have to be visited with a totally new production and presentation before it will pass the censor.

When reading the statement issued by the Government on Friday evening, following their U-turn, one had to ask in relation to the original decision, where was the sense of equity, the sense of fair play or the understanding of how any one of these three schemes worked on the part of the Government who were going to do it in a better way. The Government statement suggests that one of the reasons for changing the scheme was that "the State could have incurred a legal obligation". Where was the legal advice available to the Cabinet who took this precipitate decision? Where was the Attorney? Where was the legal advice available to the Minister for the Environment? Where was the common sense? Where was the experience we were advised was manifest inside this Cabinet? Where was any sense of reality?

The statement issued on Friday night contains a number of extraordinary claims. It refers to the looseness of the terms under which the various grant schemes were operated. This is rather extraordinary when one recalls that most of the Deputies now sitting on the Government side of the House spoke when on this side of the House in praise of the introduction of each of these schemes, the last of which was introduced in October last year. I see Deputy Treacy opposite and I recall Deputies from the west of Ireland using the first available opportunity to welcome that scheme without reservation.

Mr. N. Treacy

We sounded alarm bells. We could see it coming.

Mr. Connaughton

Is that what they told Deputy Treacy on Saturday?

Mr. Boland

I shall not mention the names of the Deputies involved. The Government statement suggests that the grant of £2,250 would in a full year have had an annual cost of £29 million. That is rather disingenuous on the part of the Minister. He forgets that the scheme was replacing the scheme of mortgage interest subsidy which would in a full year have cost more than £29 million and that this scheme was carefully designed, especially in its phasing arrangements to ensure that the impact of the Exchequer this year and next year would be minimal and that over a five to six-year period there would actually be a saving to the Exchequer through the operation of this scheme and the elimination and phasing down of the five-year mortgage interest subsidy scheme. That was precisely the reason the £2,250 scheme was introduced on a phased 12 and 18-month payment basis. The Minister suggested this evening that the scheme in a full year costing £29 million compared unfavourably with the cost of £14 million for new house grants last year. The Minister is not comparing like with like. He is comparing the cost of one scheme with the potential cost of another, ignoring the elimination of the mortgage interest subsidy scheme.

There are further extraordinary contradictions and strange claims within the statement issued on Friday night. The Minister announced that he had no alternative but to close the offices of his Department until yesterday in order "to check the position with local authorities responsible for the administration of the £5,000 (surrender grant) scheme". Yet in reply to a written question of mine today, when I asked how many people had lodged their £5,000 surrender grant application with his Department between the termination date of the scheme on 27 March and the date on which termination was officially announced, 31 March, the Minister said that as the scheme in the first instance is a matter for the local authority, the information is not available in his Department. On Friday he was closing down the whole housing grants section so that he could ring up a few county councils to ask how many applications they had received, but on Tuesday he says he does not know how many applications they have, and this evening he tells us what the potential financial obligation of the scheme would have been. Either he knows or he does not. If he knows, he has answered my Parliamentary Question in a manner that is less than fulsome. If he does not know, what on earth was he doing closing the housing grants section to the public for a period of time, claiming that he was doing so in order to ascertain details from the local authorities?

Be that as it may and leaving aside some of the hyperbole, it is still difficult to accept the Minister's continued assertion that the announcement of last Friday or the attitude this evening does not represent a U-turn, a backing down on the part of the Government. The Minister says it was never the intention of the Government to deny to people who had legally binding and irrevocable commitments their entitlements to the grants. If that is the case, why did the advertisement placed by the Minister's Department in the newspapers on Wednesday last and in The Sunday Tribune clearly indicate that in respect of not one of the three grants would any application be further processed unless the applicants had the magic certificate of approval in their hands by 27 March? Anybody who read those advertisements or who heard the statements will know whether the statement by the Minister for Finance at the weekend or by the Minister for the Environment here again this evening can really stand up. Indeed, they will know whether to believe any other statement on any issue made by either of those gentlemen. The Minister was scathing in his comments on the £2,250 grant.

Mr. Flynn

I know that privately the Deputy agrees with me.

Mr. Boland

If the Minister knows so much privately, it is a pity he did not put a better public face on his performance over the last week. On Wednesday, 1 October 1986 the Irish Independent——

(Interruptions.)

Mr. Boland

It must be magic to return to the Department that you were in five years ago to discover that one of your problems is to clean up on the mess from the scheme you abolished five years earlier. That must be magic all right.

Mr. Connolly

The Deputy's Labour Party colleagues walked out on him.

Mr. Boland

In the Irish Independent of 1 October 1986 in relation to the announcement of the introduction of the scheme, the editorial suggested that the money involved could tilt domestic decisions to move up market and so start a chain of activity in the housing sector which would benefit builders, their suppliers and the public as well. On the same day The Irish Times said “what the grant will do, and it is important, is to improve the competitive position of the tax-paying builder vis-á-vis the ‘black economy’ operator. The new grant, in taking its place, represents an imaginative redirecting of resources... the measures do not represent a major financial boost for the construction industry and a few months will pass before they manifest a greater level of activity. They will, however, greatly increase the confidence in the industry.” Less than six months later the grant is abolished unilaterally and 3,517 applications later, of which 3,237 have yet to be determined, the grant is abolished without warning, without notice, having been in operation for less than six months.

There are a series of questions that need to be asked in relation to the house improvement grant. The Government and the Minister kindly acceded to a request for this debate in order to clarify matters. Perhaps the Minister will take note of the questions and reply to them at the end of the debate. In relation to the house improvement grants, the Minister has suggested that persons who had received a visit from an inspector will have their grant processed and, if in order, paid in the normal way. Those who did not, will not. Question No. 1: why should an applicant who has applied for a grant but had not received a visit from a departmental inspector be treated any differently from somebody who did have such a visit? Question No. 2: Why should an applicant in one part of the country where there is no backlog of applications and where, following application, inspections are carried out within a couple of weeks, be treated differently from an applicant in another part of the country where there is a delay of perhaps eight to ten weeks?

As the Minister may know, or will discover eventually, there is a wide variation in the length of time taken between inspections following application from one part of the country to another. Why has there been a departure from previous practices where applications received up to the date of the announcement of a change have always been accepted and processed in the normal way? What is the position of applicants who had a visit to their homes from an inspector but were not at home when the inspector called? What is the position when the amount of work to be done was disputed by the inspector when he called and is the subject of ongoing correspondence and discussion between the departmental inspector and the applicant? Is there not a clear inequity in processing applications which were received some months ago and were inspected, and denying applications which were lodged in the week ending 27 March 1987? Those applicants could not have hoped to have an inspection before the announcement.

Is there not a clear inequity in denying people who applied between 27 March — when unknown to them the scheme had been abolished — and 31 March when the termination was announced? According to the Minister's own information 723 applications were received between 27 and 31 March, the day the abolition was announced. Altogether there are 4,500 applicants throughout the country who are to be denied their house improvement grants because of the unilateral introduction of this extraordinary new rule that if you were lucky enough to have been visited by the inspector your application would be processed, otherwise not.

Perhaps most important of all, in view of the belated discovery by the Government that they have legal obligations on foot of schemes operating and offered to the public at any given time, is the Minister satisfied that those who are now being refused because they did not have an inspection have no legal case vis-à-vis those who applied at the same time, or perhaps even later, and who merely because they had a visit from a departmental inspector are now to have their applications processed and paid? Can the Minister guarantee the House that there is no legal obligation outstanding in relation to those cases? The Minister should think before he answers that in the same way as he and his colleagues should have thought before they made the announcement last Tuesday on which they had to backtrack on Friday.

In relation to that grant, the Minister said — and he has made the claim more than once — that the £100 million provided by the Coalition Government for the administration of this grant in 1987 was not sufficient. This is marked at variance with the statement made by the Minister for Finance in the course of his budget speech when he said that the sum was examined carefully to see whether it could be reduced, but the Government came to the conclusion that it could not, and £100 million was necessary. It would be better if the Minister stuck to his facts, realised the embarrassing situation which he and his colleagues have reversed into and accepted the consequences without endeavouring to apportion blame to others who had provided for the continuation of this and other schemes. It is interesting to reflect that, according to official figures, there are some 6,000 people in employment in the construction industry today because of the operation of the house improvement grant scheme. It ill-behoves the Minister to deny that figure, which is accepted by all sides of the industry.

There is another interesting aspect to the house improvement grant scheme. Whilst the scheme was abolished for the vast majority of people living in Ireland as and from 27 January, but announced only on 31 March, it appears now that the house improvement grant scheme, with an additional premium payable still applies in all its arts and parts, water grant, sewerage grant, house extension grant, pre-1940 improvement grant and chimney grants, the lot, if you happen to be fortunate enough to live in a Gaeltacht area. Perhaps the Minister would explain whether the financial exigencies and the demands of the public purse extend only as far as the borders of the seven Gaeltacht counties and the Meath Gaeltacht. Perhaps the Minister would explain, as I am sure he has explained to people in his own constituency, why in parts of the Breac-Ghaeltacht in Mayo people can still apply for a house improvement grant and in other parts of his constituency they cannot. Why have people in one part of Mayo to bear the burden of the difficulties of the public finances, but in another part they are O.K. as long as they apply trí Ghaeilge? That, I am sure, would be a great consolation to those in the greater part of the country and of enormous consolation to the 4,500 applicants who are told they are not going to be processed any further because they did not have an inspector call and speak to them in Irish, English or Hindustani.

(Interruptions.)

Mr. Boland

The Minister has had nothing but the height of contempt in regard to the £2,250 grant. This is extraordinary considering that this grant was negotiated with the CIF on foot of an idea of theirs for some six months before it was introduced, and it was carefully, in order to minimise the budgetary impact in 1987. It replaced the mortgage interest subsidy which was no longer effective. It would be more cost effective than the mortgage interest subsidy in the next five to six years. It was designed to encourage the range and type of new housing being built. As the Minister said, it was certainly designed to encourage trading up, to give builders cash flow to encourage them to build ahead, and it was geared in its provisions towards the new house-builders' guarantee scheme. In all of those ways this scheme which the Minister said "has patently failed" but which was welcomed by the editorials generated 3,517 applications, and for the first time in two years the number of new house starts in the last quarter of 1986 had increased on the previous year, from 1,854 in the last quarter of 1985 to 2,137 new starts in the last quarter of 1986.

There are questions to be asked about that scheme also. The Minister says that an applicant may be processed if he has a binding and irrevocable contract. That seems to indicate that if an applicant had a contract where there was no let out clause, subject to grant approval he will now have the grant paid to him whereas an applicant who had a prudent and careful solicitor who inserted clauses demanding that there would be a caveat regarding the approval of the grant, is now to be deprived vis-á-vis the applicant whose solicitor was not so careful. If that applicant is to be deprived in any large measure, then presumably the unfortunate builders who are now well into the construction of the houses which they understood they had contracts for will be left to bear the cost of an enormous number of houses returned to them through cancelled contracts, and they are operating in many cases on the minimum of margins.

Can the Minister make it clear to us that somebody who signed a contract before 27 March can still apply for this grant even after 27 March and, if so, up to what date can he apply?

Mr. Flynn

If I knew the terms of the application——

Mr. Boland

The same questions apply in relation to the £5,000 surrender grant. I do not understand how the cancellation of that grant which allowed local authority houses to be provided at a cost of £5,000 and in circumstances in which £12 million has been taken from the local authority housing Estimate this year, can have any other effect but to drive more and more people back on the local authority waiting list with the inevitable consequential pressure on local authority housing capital. All in all, the abolition of that grant will impose an inevitable and dreadful burden on Exchequer financing and create demands for more and more local authority houses to be built with all of the consequences of that in the years to come. The abolition of these three grants has all the hallmarks of ineptitude, haste, lack of guidance and lack of leadership.

Acting Chairman

I ask the Deputy to conclude.

Mr. Boland

The announcement of Friday last is indicative merely of panic, is a palliative badly thought out and has created as many anomalies as it has solved. It is to be hoped that the Minister this evening will give some clarification in relation to just some of these anomalies, but we have a long way to go before this is handled with what one might expect to be minimum efficiency.

Mr. Gibbons

The callous and uncaring way the Government announced the cancellation of the various grant schemes in last week's budget has been matched only by their brazenness at the weekend in pretending that the U-turn they did on the issue was not a U-turn but a clarification. That kind of arrogance was not only an insult to the intelligence of the people, but if it were to be taken seriously for one moment it simply underlines the contempt that Fianna Fáil have for the many thousands of householders affected by the original budget decision. Last Thursday I issued a statement on behalf of the Progressive Democrats condemning the retrospective abolition of the grant scheme as grossly unfair. I would go so far as to question its legality in that it would have hit at people who had entered into house purchase contracts in all good faith on a State scheme which existed at the time of their action and which this Government sought retrospectively to cancel.

This party accept the necessity to cut back on various Government schemes. Indeed, our own economic programme, A Nation That Works, published in October last, proposed that the home improvements grants scheme should be abolished because it was a luxury the country could not afford especially considering the way the window replacement grants scheme was being operated. In its place we called for a home improvements grants scheme restricted to pre-1940 houses. Because of the totally unfair and unjust way the Government sought to cancel this and the two other grant schemes, we welcome the weekend reversal of policy by the Minister and his Cabinet colleagues to allow all valid applications of 27 March last to stand. This is only fair and proper. The retrospective cancellation of the schemes would not only have caused immense hardship to house purchasers, it was grossly unfair to many building firms who were proceeding with house construction on the understanding of having the support of the grant scheme.

Any consideration of the grant scheme in this area cannot overlook the irresponsibility of the former Coalition Government in allowing massive claims to build up under the home improvements grants scheme which was introduced as an attempt to boost the badly tarnished image of the Government in 1985. To date applications totalling £230 million for that scheme have been approved, yet only £27 million was originally allocated for the scheme in last year's Estimates, and payment to date totals just £47 million. This means that potentially the Exchequer will have to come up with an additional £180 million to meet grant commitments under this scheme. This was the height of irresponsibility on the part of the former Coalition. They began to realise the folly of their ways at the beginning of this year when the separate window replacement scheme was abolished.

According to the Department of the Environment figures last week the number of applicants for the £5,000 local authority grant scheme at 27 March last who had not written approval then was 2,500 with a potential cost to the Exchequer of £12.5 million. For the builder's £2,250 grant there were about 2,845 applications outstanding. Most of these will now also qualify under the terms of the reprieve which the Government were panicked into conceding last Friday. The potential value of those is in the region of £6.4 million.

In broad terms we welcome the change of heart by the Government. The people affected have rightly been given a chance to fulfil their housing plans, but the Government must spell out what they see as the consequences for the construction industry of their decision to terminate the grants and what developmental plans they have for the economy in this area. In the last election Fianna Fáil were big on developing the economy and making what has now been revealed to be a litany of false promises to every sectional interest. We are now entitled to know the Government's real plans for the construction industry and for the other sectors. Now reality has dawned on the Government and they realise that their "happy day" formula of the past four years is no longer a viable political stance in a country that is in such severe financial difficulties.

Mr. Howlin

I am quite pleased to have the opportunity to address the House on this issue. That pleasure is tinged with sadness in that my colleague, the Labour Party spokesman on the environment is unable to be here because he was suspended from this House for taking a courageous stand against the chaos which has resulted in the total dismantling of an apparatus set up so meticulously by the Coalition Government over a number of years.

Mr. M. Ahern

Meticulous?

Acting Chairman

Order, please.

Mr. Howlin

I wish to indicate to you also, a Chathaoirleach, that I wish to share my time — I understand I have half an hour — with Deputy Kemmy.

Mr. Browne

A new alliance.

Mr. Howlin

The budget promulgated by the Government has caused untold hardship and confusion all over the country.

Acting Chairman

Excuse me, Deputy. You can only do that with the agreement of the House. Does the House agree to that suggestion, that Deputy Howlin should share his time with Deputy Kemmy?

Mr. Flynn

By all means, I would hate to upset the Deputy at this late hour.

Mr. Howlin

I am obliged to the Minister and the Fianna Fáil benches. The Minister is most co-operative. I should be most delighted to hear the views of Deputy Browne because the people——

Acting Chairman

Do not encourage interruptions, Deputy.

Mr. Boland

Has Deputy Browne had a visit from an inspector?

Mr. Browne

Deputy Browne will give his views.

Mr. Howlin

I shall try not to respond to the jibes from the Fianna Fáil benches. I think Deputy Browne has heard enough in his constituency to keep a low profile. The opinions of a councillor was enough indication to me of the attitude. The social welfare and health cuts have yet to be felt and no doubt we shall have time later on in this parliamentary session to deal with them. Deputies on all sides of the House have been inundated with representations about the effects which are already being felt from the changes signalled in the budget speech of last Tuesday.

In no area is the case more true than in relation to the retrospective termination of the three or four major grant schemes in the housing area. The cases of injustice and broken faith arising from these decisions must run now into thousands. From my own experience and from checking with my colleagues, the number of people who are desperately in need of clarification and relief is now legion.

Examples of cases which have been brought to my attention over the past number of days include some of the following — and I should stress that this is only a small number of examples — local authority tenants who have paid a deposit on a new house in the expectation of having access to grants and who now do not know if they must forfeit the deposit, in some cases their life savings, because they are more than £7,000 short of the asking price——

Mr. Flynn

The Deputy was not listening to me.

Mr. Howlin

To be quite honest, I as a Member of this House, much less the public at large, am not aware of the full implications of the Minister's action. We shall have to see each case examined. Many will end up in the courts.

(Interruptions.)

Mr. Howlin

There are families who had committed themselves to a new mortgage after agreeing to the sale of a house. The Minister responds that legally binding and irrevocable agreements will be honoured. That, no doubt, will provide employment for one section of the community, the legal profession, who will have a field day again, unravelling the morass that this Government have visited upon these people.

If anything, the U-turn announced by the Government last Friday and the Mark II U-turn announced tonight have made the situation worse in many regards. They have piled confusion on top of chaos. People no longer know where they stand and are anxiously trying to find out the situation from other Deputies and myself and from the Department. The Department's telephone lines are inundated and this staff were, for the best part of last week, unreachable for people trying to ascertain whether they have any prospect of achieving the improvement in their living conditions which many of them have sought and striven for and for which they have saved for a considerable portion of their lives.

Mr. Browne

That is what they were doing for the past five years.

Mr. Howlin

While the Government's decision to allow some people to qualify is welcome, and I welcome the modification and remodification and perhaps there is more to come tomorrow, the way in which it was done has created an intolerable and unholy mess.

Of course, the manner of changing this decision has reflected little credit on the Government. Last weekend we were afforded the unseeming spectacle of the Minister for the Environment insisting on radio and television that there was no U-turn, while we could read in the Sunday papers the details of how he had conspired against his colleague, the Minister for Finance, to secure precisely the U-turn he was so vociferously denying on the national media.

Mr. Browne

Did the Deputy read the papers that day?

Mr. Howlin

This is the first effect of the budget which is being felt in the community. Over the next couple of weeks the very deep and harsh cuts which have been made in social welfare entitlements will begin to be felt. The impact of the £30 million cut in local authority revenue will become ever clearer as local authorities meet to compile their estimates in the weeks and days to come. When they receive their notification from the Minister's Department health boards will be told what their individual allocations are and now much they must cut in terms of staff numbers and services. Already today we have seen the INO declare a virtual work-to-rule that will visit hardship and chaos on the health services, on the very people the posters all over the country suggested Fianna Fáil were going to protect. How much more of this must we endure? The Finance Bill which will be published will obviously contain much of the fine print, the details——

Mr. Browne

The Deputy's party talked about it for the past four and a half years.

Mr. Howlin

——of how this budget is going to impact. We will then be able to see in detail and scrutinise the effect it will have. We shall see in the coming weeks the impact of the first interviews under the job search programme. We shall see how many are removed from the live register under the promises made by the Minister for Finance.

Mr. Browne

There will be a lot more than in the past four years.

Mr. Howlin

All this from the party which festooned the country with hoardings and posters proclaiming that cuts hurt the old and the sick, the poor and the homeless. God help us. This is the same party which endlessly attacked the cutting of public expenditure during the whole campaign. This was again and again talked about during the election campaign.

An Leas-Cheann Comhairle

I would ask you to get back to the housing grants.

Mr. Howlin

I welcome you back to the House, a Leas-Cheann Comhairle. I, of course, shall endeavour to comply with your wishes. This is the same party that in the aftermath of the election campaign when it was clear that they had no overall majority in the House had the neck to send spokespersons on television to say that the Labour Party had a duty to support them since our policies and theirs were so close.

Mr. Browne

No chance of an overall majority there.

Mr. Howlin

That was the suggestion made in the aftermath of the election. The gulf between the policies of the Labour Party and the party in Government was never clearer than in the esposition given by the Minister for Finance last Tuesday and the details became clearer as the days passed with the litany of hardship becoming more obvious. I, for one, am glad that on every occasion when we were asked during the election campaign if we were supporting Fianna Fáil policies we were in a position to answer that no one knew what was the Fianna Fáil policy.

An Leas-Cheann Comhairle

The Deputy is rambling too far away from the housing grants.

Mr. Howlin

I will take the direction of the Chair but——

Mr. Browne

The Deputy is new to the game.

Mr. Howlin

—— I am setting the scene.

An Leas-Cheann Comhairle

I am asking the Deputy's partner from Wexford not to interrupt.

Mr. Howlin

I am much obliged to the Chair. The cynical decision which jettisoned the whole of that approach and, which I will decline to outline in further detail, has been thrown out the window without a blush, and an even more extreme version of monetarism is now visible.

I should like to say a few words in detail about the grants that have been abolished. Let us take the £5,000 grant to local authority tenants who surrendered houses. That was a very imaginative and just as important a very cost effective grant. In towns like my own, where the unit cost of providing local authority housing is £30,000, Wexford Corporation were able to fulfil 25 per cent of its housing start needs last year by the use of this grant. We had the equivalent return to us of 25 per cent of the houses we built last year under this scheme. For a sum of £5,000 we got back the equivalent of a house valued at £30,000.

Mr. Browne

The Deputy's Government did not build too many.

Mr. Howlin

We have had, and the Deputy will be aware, the best housing programme in the history of the State. Indeed, in the Deputy's own home town of Enniscorthy, for the first time ever there is not a waiting list of any measurable dimension, thanks to the policies pursued by the Minister's predecessors.

Mr. Browne

They all left the country.

Mr. Connolly

Thank the Deputy for that.

Mr. Howlin

This imaginative grant fulfilled a number of purposes. It enabled major inroads to be made on our housing list, it enabled people who had never owned a home of their own to fulfil that life long ambition and it enabled builders to find purchasers for houses that might never have been built otherwise. The termination of that grant spells the end of the dream of all those tenants who had hoped to buy their own houses. It means also that in most local authority areas the cost of providing new houses will increase six fold in realistic terms. This is craziness and it is compounded by the fact that local authority revenue will be intolerably squeezed in the years ahead. The Government, therefore, are squeezed in what they can do. The result of all this will be that local authorities will have longer waiting lists after we having tried and succeeded in reducing them. It may become necessary again to have two, three or four children or to be housed in a grotty flat before you have enough points amassed to get your own local authority house. We had come away from that position and we had begun, for the first time to allow people to live in decent conditions while waiting for local authority housing, to allow them to plan their families as they wished and not to have to have children in order to gain points to obtain a local authority house. All of that has now gone out of the window in one fell swoop. This decision ultimately will cost a great deal more than money but in the process it will create hardship and bitterness.

The second grant which has been terminated is the house improvement grant and it, too, will bring with it its own share of hardship. This was another imaginative scheme which was designed to attract £4 to £5 of private investment for every £1 of public money involved. The cost to date of this scheme has not been excessive and it lies within the power of the Government to regulate expenditure on it, to ensure that its cost never becomes over excessive, if that is the road they choose to follow. One way of doing so, for example, would have been to establish priorities within the scheme so that people living in overcrowded accommodation could have availed of the scheme when money was tight and built patios, porches and other luxuries if, and when, money became plentiful again.

Mr. M. Ahern

Why did the Deputy not do that?

Mr. Howlin

That was not done. The scheme was butchered, thrown out and thrown to the winds depriving people of any prospect of improving their housing and their standard of living. Instead of adopting that rational approach the Government have decided to do away with the scheme altogether — another crazy decision in economic terms. The scheme was beginning to breathe new life into the construction industry and into the industries that are ancillary to building and it was doing so by providing an incentive to householders to spend their own money. The cancellations which have now occurred will lead to hundreds, if not to thousands, of lay offs in an industry in which the unemployment rate is already scandalously high. It will have another effect, too. It will drive a number of small builders and people operating on their own back into the black economy from which they had been enticed by the conditions of the house improvement grants scheme. The work which had been done by builders who had registered for VAT, who were paying tax and PRSI, will now only be feasible for householders if they can get it done in the black economy. For many people that is the reality of this decision. The result will be that in an attempt to save revenue the Government will lose revenue and a substantial opportunity to clean up a major problem of tax evasion will be lost to the State. We have a double blow — unemployment and layoffs for workers who were just beginning to feel there was a future for them. Deputies may be aware of companies such as Weatherglaze Anglian in the Wexford constituency who are feeling the pinch and who will vent their feelings on Wexford Deputies when they have the opportunity.

Mr. Browne

It was the Coalition Government who were responsible.

An Leas-Cheann Comhairle

I am appealing to Deputy Browne for the last time to allow the Deputy to make his contribution without interruption.

Mr. Howlin

The third grant which has been terminated is the £2,250 builder's grant for new houses. This will have one net effect. It will drive up the cost of new houses and make them more inaccessible to young couples. This, in turn, will increase the problems of overcrowding at a time when all the mechanisms by which overcrowding can be alleviated are being done away with and revenue available to local authorities is being removed. Taken together, the removal of these grants adds up to a change not only of policy but of philosophy. When two of these schemes were introduced in October 1985 Fianna Fáil accused the then Government of "stealing their clothes". To a certain extent they were right. It has always been Fianna Fáil policy to look after and provide a decent standard of housing. The Fianna Fáil Government of old would not have embarked on the wholesale butchery of schemes that we have witnessed in the past week or two. The £2,250 builder's grant for new houses has another aspect to it. It was not necessary to claim this grant until the owner was in occupancy for 12 months. Many people therefore have built new homes but have not yet made formal application to the Department. They will be numbered among those who will be left high and dry by this arbitrary decision.

Mr. Browne

Have they made application?

Mr. Howlin

No. The anomalies inherent in the arbitrary, illogical and totally unresearched decision become more and more obvious in every letter I open and in every telephone call I receive. The Government have shaken the nation, in two months in office, visiting hardship, confusion and worry on a significant number of households. How can people have faith in a Government or, in the State itself, when the ground rules for major decisions are changed at a whim and retrospectively to boot? People's confidence in schemes and measures to be announced by this administration in the future will be zero. Nobody will take a financial decision based on a promise or a structure established by this Government since they cannot know the day or the hour when that structure will be swept aside and dismantled in front of them. The justification for this unholy mess is given as the state of the country's finances. We are told that corrective measures must be taken.

Labour has always accepted the need for strong and determined action. How can any administration reduce taxation in one area — by abolishing the land tax — and at the same time appear so desperate for money that they would willingly increase unemployment, expand the black economy, worsen our housing stock, lengthen our house waiting lists, sap the nation of any remaining vestige of confidence in Government, knock the construction industry for six and rob thousands of people of any hope of implementing a life-long plan to improve their housing circumstances? In charity I say the Government's action was simply not thought out. I honestly believe that Fianna Fáil would not consciously and knowingly have cobbled together such a destructive cocktail. I say to the Minister that he has made a mistake; he should rescind that decision and start again.

What is most sad about this development is that it constitutes the beginning only; over ensuing months and years we shall see more and more hardship being brought to bear on people who simply cannot withstand it. The next few years will prove to be a time of increasing hardship and division in our society. This Government have ensured that that division will be deep and long-lasting.

I have a few minutes remaining which I want to give to Deputy Kemmy. The Minister's reply is a pathetic response to a crisis affecting the nation.

An Leas-Cheann Comhairle

I understand there has been agreement that Deputy Kemmy would have the balance of Deputy Howlin's time. I hope the Deputy will be able to summarise his thoughts in seven minutes.

Mr. Kemmy

This decision of the Minister and his Government has caused widespread distress and hardship in many sections of the industry. Normally I would not speak here on behalf of building contractors. On this occasion I must point out that I have been approached in Limerick by people who have been involved in the withdrawal of these grants, trade unionists, building workers and contractors. That might amaze the Minister because, in Limerick, the local branch of the Construction Industry Federation is almost synonymous with a local Fianna Fáil cumann. I have spent over 30 years in the building industry and have a close attachment to it so that I would have as much knowledge of the building industry as any other Member. All three groups, that is trade unionists, building workers and contractors have approached me. The Minister has misjudged, indeed underestimated, the effect of these cutbacks on such people and he is in for a rude awakening. I could have made my contribution in a different fashion this evening when perhaps I might have been put out of the House — which would take some doing if I were sufficiently determined — but I have chosen not to do so. I hope the Minister will take note of my comments.

The Minister said earlier this evening, that as a people, we could not afford these grants. That may well be so but the manner in which he abolished them was insensitive, drastic and certainly will lead to more unemployment within the building industry. On the Minister's own admission there are at present more than 40,000 building workers unemployed. Certainly that number will rise, leading to more emigration. Building workers, even apprentices, are emigrating in large numbers to Britain, to America, illegally, to Australia and Canada. I know something of the hardship of emigration myself because almost 30 years ago to the day I emigrated.

The Minister has voiced some criticism of the schemes, much of which could be true. I might well find myself agreeing with many of the things he said. For example, he expressed the view that it was an administrative nightmare. One might well ask: what has he done? He has now caused a greater nightmare in the short term at least by imposing hardship and distress on people who are helpless and have been caught in this trap. As a result of the Minister's action many of them will lose £7,250. These are not wealthy people; those who have been flocking to my advice centres are ordinary people. The Minister has imposed nerve-racking pressures on them. I do not know whether the Minister has met such people in his constituency but certainly, in Limerick, I have been inundated by people who have come to see me, some of them almost suicidal. As an experienced politician I have seen people commit suicide on account of their problems. I have had the experience of people drowning themselves in the River Shannon because of the problems obtaining in our society. I am not somebody who is easily scared. The Minister is making a big mistake if he thinks he can get away unscathed with this action.

With regard to the first grant the Minister mentioned, that of £2,250, he said he would examine the matter in the light of legally binding agreements. I hope he will do so but one might well ask: what does it mean? I hope he will examine that in a humane and compassionate way. On the question of the £5,000 grant the Minister said he would examine commitments where they exist, that his inspectors and officials will examine that matter also. Then the Minister said that, where an inspector has already inspected the work, home improvement grants will be honoured. One can apply legalistic formulae to the situation but that will not alleviate the hardship caused by the Minister's decision.

I admit that our public finances are in a mess and that there are urgent remedies needed. I believe the Minister has been wrong in the way he has gone about this. I believe he will have to re-examine the whole question with regard to the people who genuinely applied for such grants before 31 March. He should remember that the effect of these cutbacks will be widespread. I am concerned more immediately with the effect on urban and rural programmes in Dublin, Cork and Limerick, especially in Limerick where people have committed themselves to buying houses in an inner city development. The Minister is not long in office. Obviously he does not have knowledge of the urban and rural programmes in Limerick whereby private contractors have undertaken to build houses with the help and blessing of Limerick Corporation. In turn, people have agreed to buy those houses. As a result of the Minister's action that scheme has been put in jeopardy. If the Minister wants to talk to me privately about that I will inform him of the position. The same must apply to other housing estates throughout the country. One must remember also the effect on local authority building schemes, which will be fairly drastic because the £5,000 grant had obviated the need for them to build as many houses as heretofore. This means that local authority house building has slowed down and one cannot expect them to accelerate and build more houses overnight.

I have not come here to threaten the Minister or the Government. Rather have I come as a building worker to give the Minister some advice. The Government have caused problems for young people who have committed themselves to buying or to building houses. I heard of a man who lost £7,250 as a result of the Government decision. I appeal to the Taoiseach to look at this again. I am not given to making pleas, as I have other ways of doing business, but on this occasion I appeal to the Government on behalf of the people I represent to consider this matter again in a compassionate and humane way. I appeal to the Minister to consider all the applications made before 31 March and not to adopt a legalistic bureaucratic approach to those applications. I would like the Government to set up a special committee to examine the applications with a view to adopting an approach which will help the people who have applied for these grants.

Admittedly action had to be taken somewhere along the line and I acknowledge that the Government had an unpleasant job to do, but innocent people have been caught by the decision. Although public finances are strained, by changing their minds on this issue the Government will win the approval of the people on whose behalf I am speaking tonight. I hope they will take my view seriously because, if not, the consequences for the Government could be drastic.

Proinsias De Rossa

I have not got a lot to say because most of the points have already been made. It is obvious that the decision arbitrarily and retrospectively to cancel three of the four housing grant schemes has led to a degree of hardship and distress for many thousands of people, not only those who had already applied but for many who were waiting until the end of their tax year to make applications for grants, to go looking for a change of house and to move out of Corporation houses and so on.

I am not sure that the builder's grant was of any great advantage to the house buyer in the way it affected the price. I do not cry about that grant. I also had reservations about the £5,000 grant, the arbitrary way in which it was introduced without consultation with local authorities and the very severe side effects it had on the communities affected by that grant. However, my reservations do not deny the fact that expectations were there in many cases where people had applied, although in some cases the inspectors had not been out to them. People built their hopes on the expectation that they would get a grant and some had committed themselves by way of holding deposits on houses to which, were it not for the £5,000 grant, they would not have committed themselves.

The decision was clearly a mistake. The Government, in their decision at the weekend to clarify the position, seemed to recognise that an error had been made and fair dues to the Government for recognising that. To be completely fair the Government should recognise the full extent of that error and allow any applications received up to the date of their announcement to be accepted as valid assuming everything else is in order.

There is a need to ensure that those who applied for the various grants up to 31 March are accepted as valid applicants and are dealt with on that basis. As well as that, the Government must recognise the dire state of the building industry and the fact that there is a 50 per cent unemployment rate amongst building workers in this city. It is particularly high in Dublin city. I know of quite a number of building workers in my constituency who have emigrated to London looking for work. The Government must also recognise that there is an urgent need for investment in the building industry.

An Leas-Cheann Comhairle

Deputy Desmond. The Deputy will appreciate that we will be calling on the Minister not later than 10.30 p.m.

Mr. Desmond

If this debate highlights one aspect of social policy, it indicates that there is an absolute need to examine and re-examine the whole question of housing policy. I have been a Member of this House since 1969 and I can recall very few occasions, except spasmodically in the course of debates on the old local government Estimates or in more recent years on the Votes for the Department of the Environment, when there was a serious analysis by Deputies of the major anomalies that exist in our national housing policy.

I draw the following analogy. On the one hand we have a complex series of grants introduced in recent years with varying eligibility conditions and varying amounts of payments. On the other hand I could bring Members of this House to a village in Limerick where a public health nurse could bring me within a ten mile radius of where she works to 26 houses, where mostly elderly people live, which have outside toilets, cold water, one tap, open fires and are generally unsanitary and decrepit. How is it that in the Book of Estimates this year we have £100 million for grant schemes, we have £70 million or £80 million in local authority capital moneys for local authority housing, and yet those kinds of conditions are existing in terms of social policy? I could bring Members to areas of my constituency in Shankhill and Ballybrack where people have left houses which cost Dublin County Council £32,000 to build. Families occupying good dwellings, in some cases four bedroomed dwellings with solid fuel central heating, in an excellent well planned environment, and not overcrowded in any way, have decided that what they want more than anything else is a new address in a non-local authority housing estate and they have availed of the £5,000 surrender grant. We call that housing policy. On the one hand one has the impoverishment of people who cannot even write a letter of application for a grant, who are too unaware and too deprived to talk to a local county councillor about their needs, who are ignored in the social services system and are in dire need of better living, habitable accommodation. On the other hand, we have people of substantial means, in permanent pensionable jobs, whose families are virtually reared who get grants for double glazing. At the rate we are going the whole country will be double glazed. That is what we call a social housing policy.

These are major issues. There are people living in intolerable conditions. I know many psychiatric hospitals which would be transformed by an expenditure of £10 million. There are people in those hospitals living in dreadful conditions. Yet we reduce in the capital programme this year the capital moneys to provide these people with habitable accommodation. I challenge Members of this House to go to the Dundrum Mental Hospital to see the conditions under which these people live. They will inhabit these cells for the rest of their lives. They are living in what are in some respects sub-human conditions but what do we do? We tell a family we will give them £2,500 tax free, irrespective of income.

I approach this debate on the basis that we have a national housing mess when it comes to a national housing policy. The Department of the Environment have one great policy — and I do not blame them — which is to hold on to the money for God's sake. It is a reflection on the manhood of the holder of the portfolio if he cannot hold on to the money. What he does with the money subsequently is a matter of political ad hoc-ery. Our housing policy is one huge ad hoc scheme after the other, with nothing coherent about it and no long term planning involved.

People in public life in the greater Dublin area can go into one housing estate after another and they will see there has been no effort to spend a few million pounds in a rational way to integrate the infrastructure into a habitable vibrant community where people are happy to live. I am speaking of Tallaght, Blanchardstown, Jobstown, Killenarden, Shanganagh, Shankill and so on. The houses are there, but where are the schools, the community centres and integrated planning? There is virtually none. I plead guilty because I was a member of Dublin County Council. I fought for that but most of my colleagues were interested in the housing allocations list. Once the letters went out and the people were allegedly happy, we had a housing policy. That policy flourished in the political millieu of trying to get votes. There was no planning in terms of transport, education, social services and so on. I could take Deputies into the areas I mentioned and show them that in most cases there is not even an employment exchange or Manpower office. If we were to convert some of the empty houses there we might be able to provide some facilities in those areas.

Finally, we have the mess which is called the differential rents scheme. Is it a differential rents scheme? Where are the real differentials? Where is the real reform? It is an unholy mess compounded by the fact that, uniquely in Europe, we do not have a rates charges scheme on houses. This is in a country where normally one would expect people of all social classes to expend a minimum of around 15 per cent to a maximum of 30 per cent of income on housing depending on income differential. We have virtually no relativity in this country because if one has plenty of money what does one get? One gets mortgage interest relief. Uniquely in western Europe we actually give income tax relief to these people. That, too, is a mess. No matter where one looks there are grant schemes and mortgage interest relief schemes but in regard to paying for services, be it water, sanitary services, public lighting and so on we have nothing. This is because the politicians in their puerile efforts to have a political social policy have dismantled and reconstructed the scheme——

An Leas-Cheann Comhairle

Would the Deputy discuss the housing grants, please?

Mr. Desmond

I come back to the family in Croom, County Limerick. I recommend that the public health nurse's report about Croom, County Limerick, be read by all. The Department and the Minister should examine the housing policy and read the NESC reports. They are worth reading but many of us do not read anything, apart from the PR preferences in an election. For many of us that is what really counts.

I now come to the mess in the grants decision. I do not know how that decision was made. There are many ways a Government arrive at a decision. I learned from experience, as Deputy Boland learned and as the Minister is learning, that when a decision is arrived at around the Cabinet table the matter then goes to the Taoiseach's secretariat, and is transmitted to the Department of Finance who honeycomb it for anomalies and decide to take a few more stabs at a draft decision——

Mr. Flynn

It is not that way with us.

Mr. Desmond

By the time it arrives in the Custom House, where it is once again filtered through the system, it can be dramatically different from the decision taken in principle around the Cabinet table. I was appalled when the Minister for the Environment indicated he had gone back to the Custom House after the Government decision was announced, had examined the consequences of this unholy mess and decided something would have to be done about it. He corralled his officials until midnight.

Mr. Boland

I suppose they like him——

An Leas-Cheann Comhairle

Order, please.

Mr. Desmond

I suggest, with due respect, that the mess was self-created, not born of inexperience but born of a lack of diligence on the part of a Cabinet that surely knew that the anomalies were manifestly evident. If they did not know, then the Cabinet, in their first month in office, must be taking their directions on a straightforward basis from the Department of Finance, the Minister for Finance or the Taoiseach. The decision was published in national advertisements for all to see. Surely it merited a cursory glance from the AG before it was published or before the final Government decision was circulated. There are, as we well know, legal advisers in the Department of the Environment who also work for the Department of Health. They would have examined the decision and their eyebrows would have arched quite flexibly. They would have indicated to the Minister that this decision was wide open to question.

What we have is an exhibition of slovenly Government — I say Government because they are responsible — and a Minister who, for all his volubleness in approaching these matters, must not have burned the midnight oil in ensuring that he was fully briefed before he went to the Cabinet and defended his manhood before his colleagues in the best interests of the schemes that he is there to administer. I am glad there was "clarification" on the part of the Minister. The Minister, Deputy MacSharry, emerged in a very clear, unambiguous light whether one agrees with him or not. I disagree with the thrust of the budget because it was in many ways contrary to social policy. He conveyed the impression that he knew precisely what he was doing in that regard. I very much regret that he should have resorted to that age old cosmetic of blaming the media and of saying they got it wrong. God help the media. They are only three weeks old in their relations with the Government. They are a very newly born baby. To suggest that the media got it all wrong about the grants scheme and the Government decision is stretching credulity somewhat in relation to this matter.

What the Minister for Finance should have done — I do not think we would have considered his strength of purpose any worse that what our original view might be — was simply admit that there was a serious mistake made, that the policy decision was now being reviewed and that of course there would be consequential capital programme costs in 1988 and 1989.

Unquestionably, this will have a substantial impact on the Public Capital Programme on the housing side. I regret I did not hear the Minister's initial statement in this regard. I ask him to be quite specific in his reply because the numbers and the average costings are there. We know the take-up figure for 1986, we know the budget provision for 1986 and all the basic data in relation to these schemes are now available to the Minister even if they were not available at the time or perhaps he did not brief himself fully in that regard. We owe it to the House and to the country to tell people precisely what money is involved in relation to the changes that have been made.

I am glad the Government have changed their policy on this matter. Unquestionably, many thousands of families directly concerned were being penalised by this decision. I share Deputy De Rossa's trenchant and, as ever, appropriate comments in this regard. I share his reservations on that aspect of social policy. We in the Labour Party would have given due notice of policy changes and we would have prepared the ground. The Government might have been surprised at the degree of understanding and accommodation which they might have found in relation to the operation of some of the grant schemes and the criticisms by Deputy Howlin and myself in relation to the Government decision would not have arisen in such a trenchant form. A very bad mistake was made. Having treated the matter in this regard I hope the Department and the Minister will deal with the outstanding applications in an effective way and will not cause what must be very disturbing and what we underestimate in the House, the declining confidence and declining regard which the people have for the Government, for departmental schemes and for politicians who change their minds with such cavalier lack of thought for those who have made applications. For all of us, the process of buying a house and applying for a grant in order to buy a house are very serious decisions. The home owners of Ireland deserve better than to be treated in that manner.

I am gravely concerned about the impact on employment in the construction industry. That industry may be less political and more objective in its dealings with political parties in future. They may be more rational in terms of the social policy implications. If they were building a Taj Mahal at every crossroads in the country, as long as there is money from the Public Capital Programme they would build it without giving much thought to the real impact of social policy. The construction industry have learned a very salutary lesson in relation to this scheme — that they should not trust any political party. Their role and their contribution to the development of infrastructure should be well apart from the political process rather than singing "happy days are here again" as happened in my constituency when it looked as though Deputy Haughey, the Taoiseach, had 86 seats. It rapidly died out when they appreciated that Fianna Fáil got only 81 seats. Leaflets were dumped into every home in my constituency about bringing on the JCBs and bringing on the jobs. That kind of superficial politics and sloganising on the part of the Fianna Fáil Party has a hollow ring to it.

I urge the Taoiseach, the Minister for Finance and the Government — I hope the Minister for the Environment will make a distinct contribution by urging his officials in the Department — to initiate, within the framework of the several hundreds of millions of pounds which we are still spending on house construction, improvements and developments and on infrastructure, a thoroughgoing social policy review so that the money we are spending will go to those in greatest need in our community. I estimate that about 25,000 families are living in appalling housing conditions. Help is not being given to those families who are spread throughout every county and we owe most to them in spending scarce national resources. We should turn our attention to aiding these people instead of flooding constituencies with leaflets relating to home improvement grants. They are entitled to at least fundamental improvements in their living conditions.

Minister for the Environment (Mr. Flynn)

I should like to express my thanks to those who contributed to the debate although I was not impressed by many of them. Indeed, it became more obvious as the debate went on that there was a certain lack of sincerity in some of the speeches, although others were sincere.

If I deal with some of the points raised by individual speakers it might be the best way to bring the debate to a close. Deputy Boland seemed to be much more concerned about public notices in newspapers, the closing of departmental offices and articles concerning them instead of the termination of the grants scheme. The sole purpose of the motion is obvious; it is to try to score cheap political points. The Government's schemes, of which Deputy Boland was in charge for a while, were ineffective in achieving their purpose and inefficient in the use of public funds applied to them. It is not a question of how hastily my script was put together tonight. The only thing I remember about the grants is that some of them were hastily put together by Deputy Boland which is why they were so ineffective. There is now a general consensus that they were badly planned and many speakers implied that they were glad to see the end of them. Unfortunately, the millstone around my neck and that of the Government will have to be borne for a considerable time before we can get away from the ineffective mechanism of house grants which Deputy Boland placed on the back of the Government.

Deputy Boland might have liked a different way of terminating the grants and having another date applied to the termination. However, as he well knows, the experience of 1980 still lingers. He was quite right in saying that, of the 45,000 applications made in the few short weeks at that time until the discontinuation of the scheme, some of the grants have yet to be cleared and finally paid by the Department. It is regrettable that obviously there will be the dregs of the Minister's scheme which will have to be paid for at a later date. There seems to have been an attitude prevalent in the previous Government that perhaps it was time to terminate the grants but, unfortunately, they did not have the courage in the dying days of their term of office to do that and to make a statement to the public. They went a little bit of the road in January but failed to carry out their intentions. As Deputy Boland knows, they had intended to terminate all these schemes before the end of this year.

Mr. Boland

That is not correct.

Mr. Flynn

There has been a lot of talk here tonight about equity and fair play but I repeat that a Government decision had been taken to terminate the grants and it was left to the Minister for the Environment to implement that decision, to see where the anomalies were and where difficulties might arise. Deputy Boland should have advised the Government subsequently and clarified the position for all and sundry. That is exactly what I did when I closed down the Department for a limited period although I did not make a public statement, as it might have been misleading, until I knew exactly what was involved because of the various agencies which were responsible for the approvals, the different system of inspection that took place for various schemes and the morass I inherited owing to the mismanagement of the schemes by the previous administration.

It is not unusual to close down an office for that purpose. I wish to remind Deputy Boland that he closed down Department of the Environment offices for over a week last January and he spent that time sending out personal letters to all existing applicants. He did this in the middle of a general election campaign. At least I closed down the Department for a week to give the officials there an opportunity to get to grips with the mess which existed. I certainly did not close it down so that half the staff could compile and send out letters to all parts of the country in the hope of gaining political advantage.

My predecessor in office acknowledged that he was in charge of a scheme which had gone completely out of control. He proved that when he arbitrarily abolished the fire inspection requirement for the house improvement grant in 1986. The schemes had reached such proportions that it was beyond the capacity of the Department to administer them properly. We all acknowledge the value of prior inspection as a measure of protection for the taxpayer funding the scheme but the then Minister was unable to provide that safeguard for the taxpayers. Instead of suspending the scheme, to allow the Department to do the decent thing, he completely abandoned it and wrote to 23,000 applicants advising them to go ahead and do the work without any inspection. Is that a responsible way of dealing with taxpayer's money? At the stroke of a pen, the then Minister, Deputy Boland, incurred a debt of £46 million without any restrictions.

Mr. Connolly

One would never think that Deputy Boland would do that.

Mr. Boland

I know that the Minister, Deputy Connolly, would not do such a thing.

Mr. Connolly

Deputy Boland certainly left a mess after him.

Mr. Flynn

Contrast that with the action I took. The Cabinet made a general decision to abolish the grants and there has been no change in that. It was not a matter for the Cabinet to go into all the details about the implementation of that decision. It was a matter for me as Minister for the Environment and that is why I had to take the time necessary to go through the mess that was there and to sort out the confusion. The schemes were introduced in an irresponsible way by the previous Government and the looseness of the application form was very hard to clarify. However, the way we do business——

Mr. Boland

Could the Minister explain the advertisements in Wednesday's newspaper?

Mr. Flynn

I am not happy to discuss advertisements with Deputy Boland because he has a good record in that regard——

Mr. Connolly

He is a good letter writer.

Mr. Flynn

I referred to the advertisement which my predecessor in office put in the newpapers when he introduced the grants scheme of £2,250, when he told all and sundry that there was a grant available for anybody who wanted to buy a new house but he did not bother to say how much that was going to cost. Mind you, he went further, I suggest in a slightly devious way, when he inserted the advertisement because he did not tell the poor unfortunates that they would not get the £2,250 themselves but that it would go to the builders.

Mr. Connolly

It was probably a printing error.

Mr. Flynn

That is the kind of advertisement that was inserted in the newspapers by my predecessor. Was it sleight of hand or sleight of word?

Mr. Boland

Will you explain last Tuesday's budget?

Mr. Flynn

So far as I am concerned he has no case to make and he cannot justify what he did. It was bordering on the irresponsible not just the way he inserted the advertisement when he introduced the £2,250 grant but that he never let anybody know what it was going to cost thereafter. He never bothered to tell anybody that this money would go to the builders and that it would cost £22 million, £25 million thereafter. I regard that kind of delayed payment tactic as being all right in the short term — and it was short term when he introduced it last October — but he left it to some other administration to pick up the pieces afterwards. This is the reason why so many people who have contributed to this debate this evening were happy to see the end of that scheme and so am I.

I would like to put it on the record that legitimate contracts signed before 27 March where it can be shown that there is an irrevocable commitment to purchase will qualify for the grant assistance as long as they comply with the various other conditions of the scheme as they are laid down in the application form and memorandum.

Deputy Boland showed scant regard for certain types of people, most of whom live in the west of Ireland along the coast. Rinne sé tagairt dos na daoine atá in a gcónaí sa Ghaeltacht. Níl aon athrú ar na scéimeanna atá ann maidir leis na Gaeltachtaí. An bhfuil sé in aghaidh é sin? Nach bhfuil sé sásta tacaíocht a thabhairt dos na daoine sin trí leanúint ar aghaidh leis na scéimeanna feabhsúcháin dóibh?

I did not hear much from the Gaeltacht representatives sitting behind Deputy Boland when he was criticising the fact that the poor Gaeltacht people were going to be given the opportunity of continuing with the grants. They vanished from the back benches very quickly when he set out on that line of chat. This is a far cry from the £1.6 million which will be expended on all grants, new, secondhand, old improvement or whatever for the people of the Gaeltacht who in normal circumstances would be admitted even by your colleagues as being somewhat disadvantaged by way of geography and by way of income and entitled to that little extra. I am proud of the fact that it has been possible to maintain the grant structure for those people living in the Gaeltacht.

We should not be talking about retrospection. It is not correct to say that the grants have been abolished retrospectively to the detriment of many applicants. Everybody who had a legitimate commitment on 27 March 1987 in accordance with the terms of a particular scheme will get their grant.

Mr. Howlin

When was this announced? What is a legitimate commitment?

Mr. Flynn

I have something to say to Deputy Howlin if I get time to do it.

Mr. Howlin

The Minister has 30 seconds.

Mr. Flynn

Deputy Gibbons agreed that clarification was welcome and was happy about the whole thing. Deputy Howlin made an emotional outburst to suit his own socialist stripe and the crocodile tears he shed on this occasion for Deputy Kemmy seem strange to me. Deputy Howlin was right when he said that the Department were unreachable. The reason they were unreachable was that my predecessor in office made such a mess of the implementation of the schemes that nobody could get through to the office for the last six months. I have changed that and tomorrow morning——

Mr. Boland

You sure have — there will be no need to ring any more.

Mr. Flynn

My predecessor would not even take the initiative by providing a new telephone system in that Department. Tomorrow morning there will be a new telephone arrangement——

Mr. S. Barrett

For what?

Mr. Flynn

——whereby even he will be able to make contact with the Department he scuttled for the time he was there.

Mr. Boland

There will be no need to ring them any more because they will be doing nothing.

Mr. Flynn

It is extraordinary that Deputy Howlin says there are no waiting lists now in Wexford. I am happy to hear that.

Mr. Howlin

On a point of order, I did not make that statement.

Mr. Connolly

You implied it, which is the same thing.

Mr. Flynn

I would have been happier if Deputy Howlin, who likes to preach as a good socialist, had made some remark about the bad social effects the £5,000 surrender grant is having in many areas. At least his colleague, Deputy Desmond, recognised that that was a difficulty in some areas and that there was a need for a review of social policy in so far as housing is concerned but you could not even find it in your pseudo socialistic heart to make any reference to the difficulties that that scheme brought about. So far as I am concerned your attitude does not even bear comment on.

An Leas-Cheann Comhairle

I would like to remind the Minister that it appears that that last comment was directed at the Chair.

Mr. Flynn

I am sorry, a Leas-Cheann Comhairle.

Mr. S. Barrett

He is accusing us but he is not accusing the public outside.

Mr. Flynn

This was a poor debate and the reason for this was that apart from Deputy Kemmy nobody really sought to defend their position. In his contribution I detected a sincerity about the people who might be disadvantaged. I would like to assure him that that will not be the case. Everybody else went on their own track with no recognition at all of any difficulties that might be experienced. They made their own political points seeking to embarrass me and the Government. I want to put on the record that there is no change in the Government's decision in so far as the termination of these grants is concerned. All those who have a legitimate commitment and who are entitled and eligible under the schemes as and on 27 March 1987 will get a grant. This was a Government decision and it was left to me to implement it. Anomalies arose and have been identified by me because of the different grant approval systems which were in existence as a result of the means of inspections which are applied to the various schemes. It was reasonable to expect that I would be given some time before clarification could be made. That is why I closed the Department and did not make a public statement until Friday of last week. If Deputies pay a little more attention to the clarification statement made last Friday then they will have no difficulties whatsoever in advising their constituents that all those without exception who qualified and who are eligible for a grant through a legitimate legal commitment as and on 27 March will be grant-aided by the Department and the Government.

Mr. S. Barrett

That is a major U-turn.

Mr. Boland

I appreciate the time constraints involved but the Minister did not answer a number of questions. If applicants who qualify for the £2,250 grant but did not apply before 27 March apply now and show that they had a contract which is legally binding and irreversible is that application still valid, will it be processed and for how long?

Mr. Flynn

The answer is yes.

Mr. Boland

For that period?

Mr. Flynn

That was clear from what I said. All those who have a legally binding irrevocable commitment and who have done as you say are entitled to a grant under the terms of this scheme which you introduced.

An Leas-Cheann Comhairle

We are now encroaching into Deputy Seán Barrett's time.

Mr. Flynn

If you were to look at your own application form——

Mr. Desmond

How long will this last?

Mr. Flynn

—— it is obvious who would qualify in ordinary circumstances as long as that commitment was entered into before 27 March.

Mr. Desmond

How long will that provision last?

Mr. Flynn

That is also included in the form. Read it.

An Leas-Cheann Comhairle

We are moving on to the next business.