(Limerick East): The maximum ceiling on the local loans fund at present is £4.5 billion. Can the Minister give us any idea of how much he is going to waive under the powers he is now taking under this section? Obviously, that arithmetic must have been done before the Bill was introduced.
Local Loans Fund (Amendment) Bill, 1987: Committee Stage.
Question proposed: "That section 1 stand part of the Bill".
All that I can say on that point, as I said when moving Second Stage, is I may or may not write off loans. The figure for the total amount is not available but the write off on the national debt side could amount to £1.6 billion. This legislation will give me the power to write off these loans and to waive the subsidies and so on. I cannot give a figure for the exact amount to be written off. I know what the Deputy is getting at and I am anxious to ensure that we do the same with every single pound involved. I give a guarantee on that.
(Limerick East): The Minister is also taking power in section 1 (b) to waive the whole or such part of the interest as may be specified on such sum then unpaid. Does that envisage a situation where the Minister could write off an outstanding loan while holding the local authority liable for all or part of the interest which was due on that loan? Could the Minister explain the circumstances where that eventuality could arise?
There is no question of making a local authority any worse or any better off. If a loan is written off, whoever is at the loss, be it the Exchequer or the local authority, will be compensated by either side. Local authorities will not be allowed to avoid fulfilling their commitments to the Exchequer or the Exchequer will not be allowed to avoid fulfilling its commitments to local authorities.
(Limerick East): That is not the point which I am chasing. If a local authority owes money to the Exchequer the Minister has the power to write off what they owe but this goes further in that it allows the Minister to write off all or part of the interest due. If the Minister uses that power, to fulfil his other commitment he will have to give a compensating amount in the grant-in-aid for all or part of the interest due. I cannot envisage a particular circumstance where the Minister could write off a loan without also writing off the interest. I need clarification on that point before I can agree to the section.
The point the Deputy raises is a valid one and it will be taken into account. If a loan is written off that will end the local authority's liability.
(Limerick East): If that is all you want to do you will have enough power in section 1 (a) to do so. What is the purpose of subsection (b)? It must envisage circumstances where one writes off a loan while, at the same time, maintaining the liability for all or part of the interest. There is a commitment that no local authority will be worse off. Therefore, is the Minister still providing for circular transfers through the grant-in-aid?
It is to cover any unpaid interest. The interest will have to be written off. That is the necessity for subsection (b). Therefore, one needs to read the whole section as we are talking about principal and interest, the date on which the loan is written off and the amount of interest due on that date and so on.
(Limerick East): Why then does not the Bill read: “the balance at the time of the direction remaining unpaid, be waived together with the whole of the interest on such sum then unpaid”? Why is the subordinate clause “or such part as may be so specified” included in the section?
I think we need the draftsman here to tell us that. I am satisfied——
(Limerick East): It is not a drafting point. It is an extension of the power of the section. The Minister will be able to waive either the whole or part of the interest. I can see why he may need to waive the whole——
It is not an extension. It is giving a flexibility to do what needs to be done.
(Limerick East): Therefore, the power the Minister is taking to move from a loans system to a grants system is not on the face of the Bill at all. I take it that it is merely an administrative decision?
I will be getting that power.
(Limerick East): The Minister will not. He will be getting the power to write off outstanding amounts but he also said that in future where there is a 100 per cent circular transfer we are going to move from a loans system under the local loans fund to a grants system. Therefore, there will not be double counting and the same level of bureaucracy will not be involved in the circular transfer. There is nothing on the face of the Bill which will give the Minister that power. Section 1 will give him the power to write off loans and section 2 states that he will lay a statement before the House. Then there are the tidying up sections thereafter. On the face of the Bill there is no power given to move from a loans system to a grants system.
I am just informed that there is separate legislation already in existence affording power to give grants, other Acts.
(Limerick East): To get the full picture, are we talking about the cessation of the Local Loans Fund from 1 January 1988 in so far as housing and sanitary services are affected because, from then on, anything provided in those areas will be done on foot of other legislation by way of grant rather than loan?
The Local Loans Fund will still be there for house mortgages.
(Limerick East): But in respect of new sums required by local authorities from 1 January 1988, the Minister's introductory remarks indicate that he will move away from the mechanism of the the Local Loans Fund and will fund these capital projects by means of direct grant. I contend that there is no power under the provisions of this Bill to do that. Therefore might I have the statutory reference under which the Minister will be acting administratively. Would the Minister not agree that, once he takes that administrative decision, the Local Loans Fund, as we know it, will cease to operate for capital projects on sanitary services and housing? This means that there is a major change involved here.
I am informed that the power is a matter for the Housing Acts. I have not the exact detail. Probably there are other Acts whose provisions afford Ministers power to give grants. We could keep debating this forever. I can assure the Deputy that what we have said is all that is being done here, that is eleminating circular transfers, replacing these loans, because the Exchequer is responsible for giving and paying them in the form of grant, with the exception of house mortgage. The provisions of this Bill enable us to do that. The point the Deputy is making, that the provisions of this Bill do not afford us power to give the grants, is true because that power is a matter for the Housing Acts. I am sure there must be other Acts involved but that is all the information I have here.
(Limerick East): Therefore, from 1 January 1988 the Minister will have power under statute to give grants where previously one would have operated the Local Loans Fund mechanism. Does that require an order to be placed before the House?
No. Section 2 deals with some parts of that. But it does not require an order, which is the answer to the Deputy's question.
Question put and agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill".
(Limerick East): This query arises from the point I made on the previous section. If the Minister will look at section 2 he will see that there is an onus being placed on the Minister to lay a statement of waiver before each House of the Oireachtas. For example, subsection (2) (c) and (d) place an obligation on the Minister to inform the Houses of the total amount of principal, the repayment of which is being waived and the total amount of interest, the repayment of which is also being waived. It is not put in the manner of saying that the Houses must be informed as to whether the totality of the interest is being waived. It is the total amount of the interest. Therefore, the provisions of the section envisage a partial write-off of interest rather than a total interest write-off. I am not getting a satisfactory explanation in this regard.
I do not think there is anything in what the Deputy is saying. It is just a drafting point, to afford the flexibility about which we spoke in section 1.
As the payment of interest on loan charges comprises a very high percentage of the revenue accruing to local authorities how will that position be affected by the passage of this Bill? If the Local Loans Fund as it exists at present for the purpose of providing finance for housing and sanitary services is to be abolished, how will that affect the position under which such a high proportion of local authority finance accrues from interest on loan charges from the Local Loans Fund?
I want to reiterate that local authorities will not be any worse off. I accept the point the Deputy makes, that local loans and interest charges form a large proportion of local authority activity. That is occasioned by the amount of work a given local authority will have undertaken. The Exchequer paid that anyway in a circular form. Local authorities will be no worse and no better off in what is being proposed under the provisions of this Bill.
Suppose a situation arises in which a sanitary services loan carries a 40 per cent interest subsidy, is it then the intention of the Minister to write off 40 per cent of the capital sum and to waive 40 per cent of the interest? Would that be the way in which it would work?
We are talking about writing off 100 per cent. In cases where loan charges are generally subsidised to the extent of 50 per cent the neutral financial impact will be achieved, on the one by not paying subsidy, and on the other hand by reducing the rates support grant by the amount of loan charges which local authorities would have had to meet from their own resources. That is the way it will work. One hundred per cent will be written off but——
One hundred per cent principal and whatever percentage is subsidised of the interest?
Yes.
Question put and agreed to.
Section 3 agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill".
(Limerick East): Second Stage only was ordered. It is not fair to the Minister or his officials then to expect them to answer detailed questions on Committee Stage. I think we can probably nod it through but I am a little unhappy. If nobody has any strong objections I think we should leave Report and Final Stages to Tuesday next, subject to agreement between the Whips. I should just like to re-examine it. We will probably be nodding it through on Tuesday next anyway. Is that acceptable?
That is all right with me. I must apologise to Deputy Noonan for not having the details of how much of the total £4,500 million is to be written off in addition to details on other points he raised. I understand now that the Deputy has further points he wishes to raise. I have no objection whatsoever to leaving Report and Final Stages, when these points can be raised.
Question put and agreed to.
Title agreed to.
Next Stage?
(Limerick East): I should like to leave Report and Final Stages.
I have no objection.
It will not take long whenever it is ordered.
Does the House have a date in mind?
Tuesday next, by agreement between the Whips.
Report Stage ordered for Tuesday, 20 October 1987.
The next item is No. 7 — Agreement on the International Carriage of Perishable Foodstuffs and on the Special Equipment to be Used for such Carriage and so on. I suggest that Items Nos. 8 and 15 be discussed in conjunction with Item No. 7. Clearly they are related. Therefore I would ask that the Minister move No. 15 and Nos. 7 and 8 can be debated therewith.