Seanad Éireann debate -
Thursday, 25 Feb 1954

Vol. 43 No. 6

Motion—Loan Charges on Small Dwellings.

Mr. Tunney

I move:—

That Seanad Eireann deplores the action of the Government which has resulted in the raising of the loan charges on small dwellings by 2 per cent. with the result that many persons endeavouring to provide their own homes will now be prevented from doing so, and that Seanad Eireann, therefore, demands that the Government reconsider their decision so that loans under the Small Dwellings (Acquisition) Acts may be granted at the old rate of interest.

Although this is a very important motion I understand it is desired to take another motion, and I shall be very brief. Before I refer to the motion, I would like as a member of the House to utter the strongest possible protest against the treatment that this and other motions have received. At the time this motion was tabled last May it was a very important motion. It was a question that affected thousands upon thousands of persons in this country, yet it was not reached until the following February. I took it that it was the right of any Senator, who so desired, to table a motion here, but there is certainly not very much incentive if you have to wait 12 months for an opportunity of having it discussed.

I hope the House will be unanimous in support of this motion because not alone does it seriously affect many of the present citizens of the country but also our future citizens. I am one of those who believe that if you are going to build a nation you must give as many people as possible a stake in that nation, give them something in which they will have an interest. To increase the loan charges under the Small Dwellings (Acquisition) Acts was a grave injustice. We have reached the stage now when instead of giving encouragement to people to own any property and to provide their own homes, we are giving them every encouragement to own nothing.

Take the case of a person who sets out to provide his own home — I assume that it will be the same down the country as in Dublin. They first of all purchase a plot of ground on which they are prepared to pay ground rent. The average cost of the house is about £1,500 and the interest alone on that in repayment of principal is something like £75. With the interest, the ground rent and the rates as they are now, the total expenses must amount to over £2 a week. The majority of people who are providing these homes are industrious and enterprising and deserve every encouragement. I am very much in favour of local authority services. I believe everybody in the country should have a house but I would like to warn everybody concerned that you will never build a nation around local authority houses.

The person who is prepared to provide a plot of ground in order to build a home, to become a ratepayer, to pay income-tax on the ground rent and be responsible for the repairs of the house for all time, is putting a burden on himself. It is his duty to provide a home but greater assistance should be given to him. On the other hand, let us consider local authority houses. I am sure other Senators who are members of local authorities realise as well as I do that repairs are becoming a cruel burden. In County Dublin alone, £250,000 has been spent on repairing local authority houses. The people who are seeking a loan under the Small Dwellings (Acquisition) Acts will be responsible for their own repairs, they are increasing the valuation of whatever county they reside in and they are making for better citizens. There is no greater bulwark against Communism than that provision should be made so that everybody would own something. If you want to kill Communism, you should try to give everybody some little stake in their own country.

Of course, it would not be in order to say that, apart from increased loan charges, there are also the increased professional charges, both legal and other charges. I appeal to the Minister to reduce the loan charges to at least what they were. If the position is allowed to remain as it is nine out of ten of those people with small dwellings, in Dublin City and County at any rate, will eventually have to go back to seek local authority houses. As their family grows bigger, they will become entitled to a local authority house. I have given you the figures for the Dublin County Council in connection with repairs but it would be interesting to know what the Dublin Corporation figures are for repairs. I believe that the system is wrong where you provide, say, a painter with a house and send in another painter to paint it. Where you have a painter or any other tradesman who is willing and anxious to provide his own home, to pay rates and ground rent and be responsible for his own repairs, he should get special treatment. Instead of increasing the loan charges by 2 per cent. if I could help it I would reduce them by 1 per cent.

County Dublin is, of course, out on its own as regards the provision of loans under the Small Dwellings (Acquisition) Act — we have given more than any other county—but since the loan charges were increased the number of applicants has decreased to an abnormally low figure. The majority of people who seek such loans are people with salaries of from £8 10s. 0d. to £10. They are unable at the present time to take the responsibility of building a house.

Then, again, you have the question of employment. If you give loans at a reasonable rate of interest many people will be enabled to provide homes for themselves and, in so doing, employment will be given to labourers and tradesmen. We have experience of the Government allocating, and rightly so, large sums of money to help to provide employment. This is one way in which the Government could help in a sound and practical manner. We would be building up the nation and at the same time reducing the number of people who are unemployed. I hope every member of the House will agree that this motion should be passed unanimously and that the Government should reconsider their decision about the increased loan charges and bring them down to the rate which operated before they were increased. I know many persons who got loans at the high rate of interest. Not having had previous experience, they were unprepared for ground rent and rates.

At the present time there is a two-thirds remission of rates for seven years on their property but, even with that two-thirds remission, they are finding it extremely difficult to meet the outgoings. The poor law valuation of the majority of the houses I have in mind is about £20. What will happen when these people will have to pay the full rates, I do not know, seeing that many of them are unable to meet their present liabilities. I will go so far as to prophesy that, should the cost of living remain at its present high level, all those people who got loans at the high rate of interest will be unable to hold on to their houses because of their great difficulty in meeting their liabilities. For these reasons, I earnestly appeal to the House, to the Minister and to everybody concerned, to reduce the loan charges to their former rate.

I have already mentioned that increased building activity, which would come about as a result of lower loan charges, would provide a great deal of employment and that would help to do away with slowness. I am a worker myself and I do not wish to cast any reflection on workers: as a matter of fact, I am strongly swayed in the opposite direction. I hold that we would have far better nation building if, in every scheme and every area, we had a certain number of people who owned their own homes. By their thrift, industry and example these people would encourage other people who live beside them to raise themselves up to their standard. That is a point which is deserving of every consideration.

My last word is that I feel that to increase the loan charges on a person who is trying to provide his own home is a national crime and that it should not take place.

Mr. McCrea

I second this motion. Perhaps some remarks which I made here yesterday were responsible for the fact that this motion was brought before this House so quickly. While I hope I am not causing too much inconvenience to the Minister, I hope, at the same time, that more notice will be taken of motions that are put down on the Order Paper by members of this House. After all, when these motions are first put down they are of current and topical interest and that is the time when they should be dealt with. The procedure here has been, during my term in the House, that the Leader of the House gives out the business of the day and usually tells us that the motions will not be taken.

I am aware that the reason which is given is that the Minister concerned cannot be present. After all, they are our Ministers also. I think they spend an hour every day in the other House answering questions that are placed on the Order Paper. If they spent a short time here with us they would find that the atmosphere here is just as pleasant as it is in the other House, and as pleasant as anything they could hope for in the other House.

This motion has been lying in cold storage for so long that there is very little that one can say about it now except to repeat what has been said in every county council chamber in the State and in every other chamber where people meet who are charged with housing our community. In Wicklow, we are very perturbed about the increased loan charges. Lying, as we do, beside Dublin City, and having adopted the Small Dwellings (Acquisition) Acts many years ago, numbers of people working in this city acquired sites and slowly but surely built up the northern end of our county. The county council gave them every encouragement and placed no obstacles in their way. Loans were placed at their disposal with as little delay as was humanly possible. It meant a lot to the Wicklow County Council for the reasons that it did not cause any hardship to the ratepayers, it increased our population and certainly it increased considerably the valuation of the county. Therefore, we were very perturbed when the loan charges were increased.

We were also concerned about our rural housing schemes — labourers' cottages. I do not think any other county in Ireland, in proportion to its population and wealth, built more houses than the Wicklow County Council. I may say that these houses were the cheapest which were built in the State. We built them by direct labour. The highest rent charged is 4/- a week and that is in respect of a small number of cottages only. We had a scheme for 400 cottages practically ready to send to the Department of Local Government but when the engineers told us that the rents of these houses would be in the region of 7/6 to 8/- a week we did not proceed with the scheme. For that reason, there has been a general slowing down in house building.

Another matter we are very concerned about is that, under the 1950 Housing Act, county councils were given power to build better-class houses in non-municipal towns. We immediately made a survey of every non-municipal town in the county and we prepared schemes in that connection. In my own town, as a first instalment, we had ten applications. We had plans prepared. We purchased a site and were ready to submit a scheme to the Department of Local Government— and then these increased loan charges were announced. The approximate rent was to be about 24/- a week. When the increased loan charges came into operation the rent was pushed up to 33/- or 34/- a week and we had to drop the scheme.

I would impress upon the Minister and the Government the necessity to reduce the loan charges to local authorities for the housing of the people. There has been a definite slowing down and unless something is done about it I am afraid we will come to a standstill so far as our housing work is concerned.

Mr. Yeats

We must all agree with the complaint made by the mover and seconder of the motion. We must sympathise with them in not having a discussion on this motion, which has been on the Order Paper for over a year. It is difficult to discuss it now, when the immediate matter with which it was intended to deal has become a matter of past history. In the case of housing loans under the Small Dwellings (Acquisition) Acts, anyone could agree that it would be better if house owners in the country could get lower rates. However, we must look at this in a common-sense way, from a practical point of view. The Government cannot manufacture money. The money that is made available to local authorities by the State has to be got somewhere. It has to be got from the people by means of national loans. I should have thought it was a self-evident fact that if the rate of interest on such loans goes up the rate of interest to house purchasers also has to go up.

The suggestion might be made that the last two national loans were issued at too high a rate of interest. I cannot see any evidence to support that suggestion, if it were made. The National Loan of 1952 was issued at 5 per cent. for £20,000,000. That sum was obtained and a bit more besides — the total was about £21,250,000. That is 5 or 6 per cent. above the amount that was required. It is not a substantial difference. It is clear that any lowering of the interest rate at which the loan was issued would result in not filling it. The last national loan was issued at 4¾ per cent. for £20,000,000, and of this only £15.3 millions was obtained. It cannot be said that the rate of interest was too high. The State gets the money at the cheapest rate it can from the people, from our own people who have money to lend. That rate regulates the rates under the Small Dwellings (Acquisition) Acts. That is the only answer to the motion and it is a perfectly sufficient and satisfactory answer.

It would be desirable to reassure the proposer and seconder with regard to the results which the increase in the interest rate has had. Apparently, they are under the impression that there has been a considerable reduction in the number of persons applying for loans. The facts show that the very opposite is the case. In the financial year 1950-51 the number of loans sanctioned for the whole country by the Department was 2,181. In the financial year ending 31st March last, the number was 3,052, an increase of nearly 50 per cent. The amount of money went up from £2,250,000 to £3,750,000. That is not the picture which we have been given by the proposer and seconder of the motion.

I was amazed to hear Senator Tunney pointing particularly to County Dublin and saying that he knew as a fact there was a great decrease in the number of people applying for housing. The most recent figures I have been able to get relate to the first six months of the present financial year, from April to September, 1953. During those six months, taking the City and County of Dublin together, more loans were sanctioned under the Small Dwellings (Acquisition) Acts by the Department of Local Government than in any previous 12 months' period. In other words, in the first six months of this financial year the rate at which housing loans under these Acts were being sanctioned by the Department was more than double that in any previous year. That is not the picture put before us to-day.

The suggestion has been made by the proposer and seconder that there has been a great slowing down in housing. Here, again, the facts show that this is not a correct estimate of the position. Some 50 local authorities have fulfilled their housing needs, which they had estimated in 1947. Under those circumstances one must expect to have a gradual slowing down in the rate of local authority housing. As against that, there has been a considerable increase in the number of new private houses and these are not referred to in the motion. In the calendar year 1950, the total number of houses built or reconstructed was 13,759; in the calendar year 1951 it was 14,088; in 1952 it was 15,565 and in 1953 it was 15,555. These figures show that, while we must all sympathise with people who have to pay a higher interest rate than others paid a few years ago, it is ridiculous to suggest that this has caused a great decrease in housing or in the number of people applying for houses. That is simply not so. I think that is the answer to this case.

Mr. O'Donnell

I have not the figures that Senator Yeats has quoted to refute the statements by Senators Tunney and McCrea, but there is a much more fundamental problem involved than that covered by those quotations. He bases his assumption on a greater demand — but there would have been a still greater demand had the interest rates been lower. He justifies the high rate on the ground that the Government had to get money at a higher rate. That brings us down to the question as to who controls credit and the creation of credit. We go on with a never-ending increase in the cycle of charges, just because through national State loans we can get money only at an increased rate of interest. I am sure the statistics Senator Yeats has quoted are correct and that he has verified them, but there are poor people without houses and suffering privations, as the result of a higher interest rate than can be argued for in this House. The interest rate follows willy nilly the interest rates laid down by the Bank of England. I would like the Minister to justify the creation of any banking monopoly or any credit creating monopoly and to justify such a policy.

I have referred already in another sphere to interest rates charged by banks to traders and manufacturers— an interest rate which in itself amounts to an annual profit on a percentage basis. Here again you have, coming down the line to the ordinary workers' cottages, the same interest rate. Does Senator Yeats really think that there can be national development to supply the needs of the people for this type of house, on that rate of interest? Is he defending the banks?

Mr. Yeats

The banks have nothing to do with it.

Mr. O'Donnell

I am trying to understand the Senator's attitude. He refuted the statements of Senators Tunney and McCrea by saying that there has been an increased demand and consequently the rate of interest is justified. He said it is justified also because State loans must be made at a certain rate of interest and those supporting the loan are lending the money at that rate. What I want justified is the rate of interest, generally speaking, for and long-term loans, as approved of or accepted by the Government at the moment.

It may be said that I am arguing for the machine production of money. It has been a constant sneer that nobody dare dispute the rights of a banking monopoly or credit control monopoly to control our rates of interest and our issues of money. In a country which is fundamentally wealthy — I am talking about real wealth, and not in terms of financial wealth — in a country which would have all the essentials of life, even if you erected a 30 foot wall all round it, a country which is a rich country in the fullest economic sense, would the Minister say why it is necessary for us to keep on basing our currency and credit values on those of an outside country?

Why does our so-called Central Bank not recognise the fact that developments are necessary here which have been made impossible by the high rates of interest? Where is the profit going to eventually? Will the Minister explain for me that extraordinarily inexplicable thing described in the Bank of Ireland accounts as "the rest"?

An Cathaoirleach

Will the Senator now come to the terms of the motion, which deals with loans under the Small Dwellings Act?

Mr. O'Donnell

I am discussing rates of interest and the reason for the rates of interest, arising out of loans under the Small Dwellings Act. If I am out of order, I will sit down, but I am trying to point out that the rates of interest on these loans are governed by factors which are much wider and much more fundamental, as are the implications of the motion, than the mere statement of the motion itself.

An Cathaoirleach

The Senator will have to seek another occasion, if he wants a wider discussion.

Mr. O'Donnell

If I am not allowed to speak on banking and credit on this motion, I will accept your ruling.

Acting-Minister for Finance (Mr. Aiken)

Senator Yeats gave figures which show that Senator Tunney's fears about a decrease in the rate of housing are without foundation. I can support those figures from the knowledge I have and the statistics of house building over the past few years, and also the statistics of the amount of money that has been issued from the Local Loans Fund for the purposes of the Small Dwellings (Acquisition) Act. Undoubtedly, we and could have issued this money for the Small Dwellings (Acquisition) Act at a cheaper rate of interest, but the rate of interest charged was just what the Minister for Finance paid for public loans. When the rate of interest on the public loan was 5 per cent. — all of which money was got from the public, none being got from the banks — the interest charged for issues from the Local Loans Fund was 5¼ per cent. A few months ago, after the recent loan at an effective 4¾ per cent., the interest rate on advances from the Local Loans Fund was decreased by ¾ per cent. Are we going to subsidise still further the people who are getting the facilities of drawing 95 per cent. of the money from public sources for the building of their own private houses? At one time, the only people helped in housing were the very poorest sections of the community, but at the moment a person who has a little money and wants to build a house for himself can get a grant of £275 from the State. Where certain local authorities supplement that State grant by a grant from the local auhority, he can get additional grants ranging from £92 to £275, and, on top of that, he can get, in Dublin County and Cork suburbs, a loan of £1,800. In other parts of the country, he can get a loan of £1,600.

Mr. McCrea

At 6 per cent.

Mr. Aiken

We will come to the percentage. The only condition in respect of issues from the Local Loans Fund is that the person must put up at least 5 per cent. of the money, excluding from that calculation any sums which come from State grants. I should like to know in what other country at any time could an individual get a sum of £1,800 on loan, plus a grant of £275, the only security to be put up being a sum of 5 per cent. of his own money. Even in the boom period in America, when all sorts of banks and lending institutions were looking for people to give money to, a person would have to put up at least 50 per cent. of his own money before getting a loan. Here all he has to put up is 5 per cent. and the State and the local authority give him £275 free grant, perhaps another £275, plus a loan of up to £1,800.

Professor Hayes

Does that apply to Dublin City? Does a man buying a £2,000 house have to put down only £100? I am certain that is not correct, and I have had recent experience of it.

Mr. Aiken

The only condition in respect of loans issued from the Local Loans Fund is that no advance shall be made under the Acts, unless the applicant contributes towards the purchase price or the cost of the building at least 5 per cent.

Professor Hayes

I am only making the point that, in Dublin, one certainly cannot get a house by putting down 5 per cent. of the total value.

Mr. Aiken

Dublin City does not draw from the Local Loans Fund. It gets its own loans from the public and has its own conditions.

Professor Hayes

It does not apply to Dublin City then?

Mr. Aiken

The only condition in respect of loans from the Local Loans Fund is that the borrower must pay at least 5 per cent. A local authority may demand somewhat more from place to place, but that is a handsome handful of money — up to £1,800 loan and these grants.

Let us come now to the rate of interest. That rate of interest from the Local Loans Fund at the moment is 4¾ per cent. for this purpose. The local authority adds a slight service charge in order to cover itself against bad debts and for administration purposes. In most of the country at the moment, outside Dublin City, which raises its own capital, the rate of interest charged is 5¼ per cent.

In many places on the Continent of Europe if a man was lucky enough to get a loan even of 10 per cent. of the value of his house he would have to pay, according to the country, anywhere from 5 per cent. to 12 per cent. for the money. A lot of them would, indeed, think themselves lucky if they could get even 20 per cent. of the cost of a house at 7 per cent. or 8 per cent. There is no use blinking the fact that we, as a nation, have done a tremendous amount for housing in the past 25 years. We have done it at a tremendous cost to the taxpayers. It was a job of work that was well done and well worth the cost in my opinion.

We started off 25 years ago when we were probably the worst housed white race in the world. At the moment, we are among the first few of the highest and best housed nations. The Local Loans Fund which we are discussing played its part in that because, in addition to the many millions and ten of millions given by way of grants to local authorities to rehouse the people, there was over, £11,000,000 issued from the Local Loans Fund for this particular activity, the making of advances under the Small Dwellings (Acquisition) Acts.

I do not think we have anything to be ashamed of as a people. In fact, we have every right to be proud of the way in which we tackled this job of rehousing and how quickly the problem was overcome in a great part of the country. Senator Yeats very properly pointed out that quite a number of local authorities has already completed their rehousing programme. They have abolished the slums and have provided decent housing conditions for the people at reasonable rents.

We would all want to see the rents lowered on some of the houses, but it is better to have a reasonably good houses at even a fairly high rent than to have a wretchedly unhealthy dwelling at a middling rent. When we started off you had, with the famine for houses, people paying more for one room in an insanitary building than they are now paying for a four or five-roomed house with bath and every other accommodation.

I am glad the situation is not as represented by Senator Tunney. Even in the last year or two people have been taking full advantage of the Small Dwellings (Acquisition) Act. They have been putting down a little of their own money, obtaining Government grants, in some cases grants from the local authority and, in addition, obtaining loans up to £1,600 and, in some cases, £1,800. I agree with Senator Tunney, of course, that to the extent people build for themselves it relieves the job of the public authority. In fact, only they did so relieve the public authority there would be no excuse for giving the money on these terms.

Some people who might get money from the Local Loans Fund could very well look after themselves and would look after themselves if there was no such fund to draw upon. There is a necessity to get up the total number of houses in the country and for that reason local authorities do not turn anybody down because he has too much money. They are glad to get a person who is solvent and who is good security for the money. They are more than anxious to give him the money because they know they have a better chance of getting it back than they have of getting it from people who are very much less well off.

Senator Tunney pointed out that this motion was out of date and, indeed, it is. As I pointed out, the rate of interest has recently dropped ¾ per cent. If the rates of interest drop further in the immediate future — and we all hope they will — I have no doubt that that will be reflected in the rate of interest for the Small Dwellings (Acquisition) Act.

Mr. Tunney

Senator Yeats is not correct in his figures. He may be correct in one direction. He mentioned that there were more loans sanctioned last year than any other year. That may be. If Senator Yeats will come with me to the Dublin County Council I will guarantee that if the loans were sanctioned applications were made for them before a certain date. The Dublin County Council has given out in loans — I am speaking subject to correction — more than half a dozen county councils in this country. The applications dropped because, to start off with, hundreds were cut out from being eligible. There was a time when a person with £7 per week could get a small loan of £700 or £1,000, but immediately the housing director, with the approval of the county council, cut out these people you could not accept an application from a person who would not have at least £2 per week more.

I appreciate that every word the Minister said is true and correct. This and every other Government has done a lot for the housing position which was deplorable and a disgrace some years ago. A person in the gallery listening to the Minister speaking in connection with loans under the Small Dwellings (Acquisition) Act would imagine that they were giving something for nothing. He mentioned that the person received £1,800 as a loan but the person who gets that amount repays over £3,000 plus what he pays in rates which helps to increase the valuation of his county. The average rates are now £32 to £40 on these houses. Therefore, these people are not getting as much as the Minister would make one believe. It boils down to the point that was raised by my friend Senator O'Donnell, that it is wrong that people should be allowed to profiteer in money as in anything else.

I do not wish to detain the House. I appreciate the way the Minister has received the motion, and I would like it to be on record that the House accepted the motion. The proof of the genuineness of the motion is that at the time it was taken we asked for a reduction of 2 per cent.; in the meantime there was a ¾ per cent. reduction. I would appeal to the Minister to go the whole distance and give us the other 1¼ per cent. In that way he would be doing a good day's work.

An Leas-Chathaoirleach

Is the Senator pressing the motion?

Mr. Tunney

I take it the House will agree to the motion. I feel there is not one Senator who is not in favour of the motion.

Motion put and declared negatived.