Noel Dempsey
Question:60 Mr. Dempsey asked the Minister for Finance the way in which he proposes to capitalise the local loans fund; and if he will make a statement on the matter. [6037/95]
Written Answers. - Local Loans Fund.
The local loans fund is a statutory fund under the control of the Minister for Finance, the capital for which has been provided by way of loans from the Exchequer. The fund used these resources to make loans to local authorities for various purposes, mainly housing related. Most of the loans currently outstanding to the fund have been used by the local authorities to finance the advancing of mortgage loans to house purchasers.
At the end of 1994, the amount of principal on foot of such loans outstanding by authorities to the local loans fund was £490 million approximately. The local authorities make capital and interest repayments on these loans to the fund twice a year. Almost all these loans were advanced prior to 1 July 1986. Since then, most of the capital required by the local authorities to finance their mortgage lending activities has been provided by the Housing Finance Agency.
The Government announced recently that it was accepting the judgement of the High Court in relation to the entitlements of women under the EU equal treatment directive. It committed itself to paying the £260 million involved as quickly as possible. In the current year, payments to the women affected will amount to an estimated £200 million. These liabilities are, of course, nonrecurrent.
In the budget, I made a provision of £60 million against this contingency. The additional expenditure of £140 million in 1995 will not increase the Exchequer borrowing requirement because the Government has decided to finance it by the sale of certain assets. Sales will be limited to the amount needed to cover the additional Exchequer cost arising from the decision to accept the court judgment.
Possible methods for the disposal of part of the local loans funds loan portfolio for this purpose are being examined at present. However, only methods which will not alter in any way the existing relationship between the local authorities and individual borrowers are being considered. The Housing Finance Agency and the National Treasury Management Agency are advising me on the technical aspects of the sale. A final decision is expected shortly.