I propose to take Questions Nos. 15 and 40 together.
The judgment of the High Court in relation to the entitlements of women under the Equal Treatment Directive was delivered on 3 February this year. The Government announced recently that it was accepting the judgment and we committed ourselves to paying the £260 million involved as quickly as possible, given that these payments are legally due. In the current year payments to the women affected will amount to approximately £200 million.
As I have already provided £60 million towards the cost of such payments in the budget, further expenditure this year will be limited to £140 million. I propose to finance this additional expenditure from the proceeds of the disposal of a portion of the local loans fund loan portfolio. Sales of these assets will be limited to the amount needed to cover the additional Exchequer cost arising from the decision to accept the court judgment.
The local loans fund is a statutory fund under the control of the Minister for Finance. It has assets of about £550 million, of which £490 million are fixed rate loans made to local authorities which the authorities used to advance mortgage loans to persons who satisfied a means test. The local authorities make capital and interest payments on these loans to the fund twice a year. Almost all of these loans were made prior to 1 July 1986 and since then most of the capital required by local authorities to finance their mortgage lending activities has been provided by the Housing Finance Agency at variable rates of interest.
Two avenues for disposal of part of the assets of the fund are being examined at present. One would involve a securitisation by the National Treasury Management Agency and the other would be by the activation of section 15 of the Housing (Miscellaneous Provisions) Act, 1992 which allows the sale of local loans fund assets to the Housing Finance Agency. The comparative merits of each course are being examined at present by officials in my Department who are being advised by the two agencies. I expect to make a decision on the route to be followed in relation to the sale of the assets in the near future.
The income from the local loans fund forms part of the general receipts into the Exchequer. The extent of loss of income to the State, if any, will depend on the route to be followed in relation to the sale of the local loans fund assets and the timing of the sale.
The increase in current Government spending underlying the budget was 5.8 per cent. The increase of £140 million in spending to which I have already referred will result in the increase in 1995 current spending compared with 1994 being 7.1 per cent. However, as the additional spending now envisaged is exceptional and once-off, it will not be taken into account in determining the 2 per cent target for non-capital spending in 1996 and 1997.
When I addressed the question of providing the resources to pay the legally determined entitlements of married women to social welfare equality payments in my 1995 Budget Statement, I indicated that "should it prove necessary to spend more on these exceptional payments this year, there are funding possibilities open to me through the disposal of State assets". I also stated that "my target for the EBR would not then be increased by making further payments" and that "the assets I will consider disposing of are not in commercial semi-State bodies". The assets I was referring to were, of course, the loans made by the Exchequer to the local authorities via the local loans fund, which were in turn used by the local authorities for their mortgage lending activities.
As my Budget Statement sets out the Government's budgetary and economic policy, its contents, including the extracts from it which I have just quoted, have the unequivocal support of the entire Government.
