Seanad Éireann debate -
Wednesday, 3 Feb 1988

Vol. 118 No. 7

Housing Finance Agency (Amendment) Bill, 1987: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. McCormack

I would like to speak briefly on the Housing Finance Agency (Amendment) Bill, 1987. I welcome the Minister of State, Deputy Connolly. I wish to bring some points to the Minister's attention so that he may take heed of them and take action to rectify them in cases where it involves local authorities as we are representatives at that level also. I would like to refer to the differential rents. They have gone up by nearly 100 per cent in the local authority of which I am a member. This is a very serious increase. At this time it is hardly acceptable that an order could be made to change rents of lower income people because it is generally lower income groups who are living in local authority housing. In some cases these rents have been increased by 100 per cent. That is a very severe handicap on those people at this time.

On the broader issue, I would like to ask the Minister what is the exact policy of the Government at this time towards the provision of local authority houses or towards the provision of finance for local authority houses. In the Galway borough area for which I am a local representative no new houses were started in 1987. Thatmeans that no new houses were started since this Government came into office. In the Galway County Council area only two new houses were completed in 1987. We consider it a very serious and backward step that finance is not being provided for the provision of necessary houses for the people who are waiting for them.

To get that into perspective we would have to look back on the previous three or four years and see what exactly the situation is now in relation to what it was in the previous years. For example, in 1983 in the Galway borough area £3,500,000 was provided for local authority houses. In 1984, £4,220,000 was provided for local authority houses; in 1985, £2,674,000 was provided, in 1986, £2,130,000 was provided and in 1987 only £210,000 was provided. That was only provided to finish schemes already in progress, schemes that were started in 1986 and completed in 1987. There is no indication so far of what the estimate for 1988 will be. The same applies to County Galway. The figures are quite similar for that so there is no use quoting them here.

In the Galway borough area there are plans submitted for over a year now for a scheme for 20 town houses in a city centre development site which was acquired by the corporation and cleared in Whitehall. It is in the centre of Galway, in the designated area in fact, and we have planned 16 one-bedroomed houses and 4 two-bedroomed houses for that site. We are pressing for finance for those houses for the past six or eight months, because this is essential housing. In fact, there is more demand for this type of house now than there is for the conventional type. In most local authority schemes a number of houses of one bedroom and two bedroom dimensions were included for older people, but older people do not want to move out from the city centre to isolated areas — even though these are within the borough — two or three miles from the city centre, away from shops, Churches and services.

Therefore, I ask the Minister to provide finance at least to let us go ahead with the scheme in Whitehall in Galway city where plans have been submitted for the erection of 20 houses. This would cost about £500,000 or £600,000 and it is essential. Land has been provided for housing in other parts of the city also. A scheme was submitted to the Department for 70 houses in Ballybane about six or eight months ago and we have had nothing to indicate to us what we can do in that regard. For the past eight to ten months the building of local authority houses had ceased entirely in the Galway borough area and this is having serious social and other repercussions on the people waiting for houses. A backlog is building up of applicants waiting to be housed. There are 150 qualified people waiting for housing in the borough area and 60 of them are elderly, qualified people and there is no indication of what finance will be provided to allow us to start those houses.

Also, since the abolition of all housing reconstruction grants by the present Government, extra strain and demand have been put on the local authority to provide houses because when a person urgently needs to repair a house and cannot get a grant to do it, the only alternative open to that person is to go on the local authority housing list, whether in a rural area or in an urban area. This is also adding to the lists of people waiting for houses and is very false economy because eventually the local authority will have to provide such people with houses.

Essential repair grants have been cut back drastically. In the Galway County Council area £30,000 only has been allocated this year for essential repair grants. Thirty thousand pounds would not do essential repairs on two houses. Again, that is false economy because the essential repairs grant was intended to cater mainly for old people who wished to prolong the life of a house for their life time so that they could continue to live there until they died. That was the practice and the idea behind the essential repairs grant. That is now cut back. Because of this, houses have actually fallen down around these old people and I have first hand knowledge of this in Galway. Then the local authority by de-mountable structure, by caravan or by emergency accommodation have to accommodate such persons. I believe that, if we were allocated a reasonable amount of money, as in previous years, such as £200,000 for essential repairs grants, we could allow those people to do the necessary repairs themselves. It is very false economy to allow the present position to continue.

It is also false economy to allow the situation to develop to where we are running down our housing stock. If we are not providing houses in either rural or urban areas, the housing waiting list will build up beyond all reasonable proportions in the next three or four years. Then we will have an emergency such as happened in the seventies when we had to have an emergency housing programme. We solved that housing emergency by providing low cost housing and flats and we are paying for that ever since. We provided the Rahoon flats in Galway which are a monument to that error. Also, under the Minister for Local Government at that time, low-cost housing schemes in different parts of the city were provided. Houses were built in blocks with no chimneys, no fireplaces and it has cost the local authority, the Government and the State many thousands of pounds. It was the worst disaster in catering for a particular housing problem at that time. It cost more than the original cost of providing proper houses for those people would have been.

Therefore, I would like to warn the Minister and the Department to end the present housing situation throughout Ireland. I am dealing with my own local authorities, both urban and rural with which I am familiar. Every other Senator could deal with his or her local authority and the same remarks, I am sure, would apply. It is very false economy and very dangerous to allow a situation to develop where we are not building houses in Galway and allowing a waiting list to build up of people who are essentially in need of housing now having to wait to see if the position will change in two or three years time. Because of the amounts of money allocated — about £14 million in four years — by the previous Government for the provision of local authority houses in the borough area alone naturally part of the housing problem was solved and it may not now be necessary to continue building 100 or 150 houses a year in my local authority. It would be adequate to contain the situation by continuing to build 40 to 50 houses in the local authority. That is my case. It is false economy for the Department not to see that and not to provide the finances — to run down the housing stock altogether and, in so doing, allowing the housing waiting list to build up. That raises all sorts of problems. Apart from the actual problem of housing those people and providing them with the houses necessary for them to live in, it leads to social, medical and other types of problems and it is entirely wrong that this should be allowed to happen.

Finally, I would like to make a special case — and I am doing this on behalf of all of the Galway Borough Council — that the Minister should provide £500,000, or £600,000, or whatever is required, to allow us to continue with the scheme of 20 houses for old people in Whitehall, part of the scheme of housing Ballybane — not necessarily the 70 applied for, but at least 30 or 40 houses to cater for our need. I make a special plea about Whitehall because Whitehall is an area in the heart of the city, in the centre of the area designated by the Government as an area for special concessions for redevelopment and expansion. Now the Department have a chance to play their part in that by providing the finances to allow us in Galway Borough Council to start the scheme of houses for old people in Whitehall.

Mr. Cregan

First, I want to congratulate the Minister on allowing the increase from £500 million to £1,000 million. The Housing Finance Agency is an agency about which, when first established, there were questions regarding its working and the role it was trying to play. The general impression was that it was not catering for the people who were trying to use it and that people who could not finance themselves would not be able to use the system. It worked out differently. I am glad it worked so well. I will readily admit that there were areas where there was an impression that, among people we would like to see doing things for themselves, they were not quite happy.

The Government are now asking us to allow them to increase the agency's funding. May I say in passing that by increasing funding to an agency like this, the impression might be given that the contributors are doing us a favour? When you are 4 per cent over the odds and when there is a recognition that £7 million was given last year to the society, £9 million this year and an anticipated £11 million in 1988 — somebody said that it would be decreasing in further years: I hope so and I think that would be right — the people who are giving in their money are getting a good deal, especially when there is the guarantee of the backing of the Government of the day.

At the same time I do not deny that it is money that we were not getting before from corporations or insurance associations and I do not say we should not be using it. I welcome that type of idea but, at the same time, we should make it clear also. These associations now see that what is being pushed is the ideal thing, that there should be more encouragement. Certainly, they now see the inducement to provide money for areas like this. I would not like to give the impression — and I am sorry to say that it is being given — that we are prepared to say: "We will do less if you do more." We should not say to people who are in the less-well-off bracket that we will provide less for them or that it will cost more — like the increase in rents and in the rent review earlier this year.

I would not like to give an impression to people who are in a stand-off situation — we are doing that — that by giving them more money we will be prepared to do less. In other words, the Government are saying: "We want the private sector to come up with more." I am not saying that is wrong. What I am saying is that it would be wrong if it is costing up to £9 million, £11 million and 4 per cent over the odds all the time. We have to maintain a question mark over that. It is only right to question it.

The HFA have done a good job up to now. Within the past 12 months or within the past two years people who took out a HFA loan were allowed over a period of time to transfer to the Small Dwelling Act loans, if they felt that would better their position. I would appreciate it if the Minister would look at this. Many people came off the housing list at the start of the HFA system and took out these loans on the recommendation of local councillors and local officials. They are not allowed to transfer to the SDA system. We should allow these people who have paid a certain amount to transfer. I know people whose position, I am glad to say, has improved. There are very few of whom we can say their conditions have improved over the past five or six years. I know one person on a HFA loan who is now paying back 18 per cent of his gross earnings, a lot of money, and such persons would like very much to transfer to the SDA system where they would have a fixed amount. It would give them a fair break. After all, they put a lot of money into it. I wonder if the Minister would look at that.

As regards the reconstruction area, if we are saying the agency is now allowed to give out money for reconstruction and if we are saying we are increasing their amount by 100 per cent, should not the agency be seen at local authority level because SDA loans and other loans are now transferred to the banks and building societies. The Minister indicated that he was happy with the outcome and had the impression that it was working smoothly enough.

The indications I have — and I know that the Minister listens at a local level — are that these arrangements are not working all that well. I know many people who would be quite prepared to take the Small Dwellings Act loan or the HFA loan but, because of an indication from a local authority, they have to go to the bank or a building society and if they have not money on deposit they are not favoured very much. If they have not got £3,000 or £4,000 in the local building society, or if they have it in the Trustee Bank rather than in one of the other banks, the banks are not prepared to consider them although they are quite comfortably circumstanced.

The banks make a lot of money and they know when they are onto a thing and they are onto a good thing here. Generally, when people get a mortgage they are quite prepared to pay on it. Unhappily, I will readily admit that, when they get a local authority dwelling, a higher percentage of people are inclined to think that because it is a local authority dwelling, they should not pay as much, or they should not be paying as happily. Generally, mortgage repayments here are quite good. I do not agree generally with the idea of that the Government should not be getting involved more with banks or building societies. If the money is there we should be using it and they should be getting a fair return for it.

There are indications to me that the idea is not working so well and there is increased strain on the local authority lists. Within the past few months — and I can say this for the Cork area — there has been an increase in the applicant list, whereas when we had the grants and when the authority were dealing with the matter themselves, we built up a relationship with people coming in and if they were comfortable at all we were prepared to sell them the HFA loan or the SDA loan, on better terms, I think than the banks or building societies. We should not lose out now on that. In the end — and this has been proved — the construction industry are not building as many houses. Builders are saying that new houses are not going up as fast as they would like. We know that, and the Minister knows that. Naturally, every, incentive possible should be given to encourage a person to live in his own house if at all possible. I am not happy with the new system that was implemented. I hope I am wrong about it and that it can be changed.

There was certainly an impression in our city that when you went to the local authority you got every assistance possible to enable us to sell the idea to you. We were getting our lists down. Admittedly, the £5,000 grant scheme was an enormous success and I make no apologies for saying I was one of those who pushed very hard for it. Even in Cork where there was a lot of accommodation — if not houses — available, within a very short period we will be back to square one. Many people are saying: "I cannot go to the banks because I do not have money there" and "I cannot go to a building society because I do not have money there". They get an impression, even though they know they can go back to the local authority, that they are better off on the housing list. That is very sad indeed. There are massive reductions in local authority building and I am not saying that is wrong. I will admit that there were areas in which we were oversupplied as regards accommodation.

The Minister has a duty not to spend money if he does not have to. I like to spend money the best way I can and I look for ways to get the most from my money. Are we to say to the agency: "we must give you more money; you should be able to give out more because you should be making more"?

That would be very unfair to the less well off. I do not want people to get the impression from this House, from the Minister, or from any Department that we are allowing a situation to develop where private funding is spent willy-nilly. It is private funding because the taxpayer does not have to pay for it. I am not stupid enough to say that we should not be spending less but, at the same time, I do not want to see anyone in a situation he cannot get out of. That is what I would be very much afraid of. That would be sad.

There have been massive reductions in the amount of money being allocated to local authorities. Would I be right in saying that it has been reduced from £150 million to £50 million? That is a saving of £100 million. Could more be done with the £50 million? Could we decide not to build in an area such as Cork, with a large population, where about 300 houses a year are built? We will not be building that many this year. I am not saying we will be short of accommodation. We will be short of houses but we will not be short of accommodation because, we have plenty of flats built in the sixties. It is an indictment of us as a society that we built them at all, but they are there so we must use them in the best way possible. Those buildings need to be reconstructed because they were not built properly. The Irish are not used to accommodation like that.

We should tell the local authority in Cork that they will get not £10 million or £8 million, but £5 million and it is up to them to do with that what they think is best for that area. Unfortunately that will not be the case. We will save a lot of money because we will not build more houses but we are not giving the local authorities the opportunity to do what they think is best. Many local authorities are very good at accommodating the less well off.

A lot of concern has been expressed about the homeless but, as a member of a local authority, I know that if we were allowed to allocate a certain amount per year in local grants we would shorten our housing lists. There is no question about that. People should be entitled to receive the agency loan.

With the introduction of the £5,000 grant many people were able to buy their own houses. In a short period of 14 months we got over 750 local authority houses back in Cork City because we gave a grant of £5,000 which enabled people to buy their own houses. We saved £20,000 because we did not build new houses. I will admit that the money paid out was probably paid out too fast.

I can understand that when this Government came to office a lot of moneys were due and they had to cut back but they should not have eliminated the grants completely. That has resulted in people rushing back to local authorities looking for houses. The housing lists are increasing rapidly in all local authorities again. The Government should give, say, 100 grants per year in the Cork area. They would have to pay that money but 100 local authority houses would be made available every year. In the Dublin area perhaps 500 or 1,000 people could get the grant. Many houses were made available in the Dublin region as a result of the £5,000 grant but problems were also created. Local authorities should be allowed to give the £5,000 grant to a certain number of people. There are people living in local authority housing who can accommodate themselves and that has been proven without doubt. A certain number of grants should be paid and this would not cost the Government a large sum. In the region of £120 million was paid in grants in a very short period. That is probably a little too high. I am saddened to think that we have abolished nearly all grants.

Loans are still being given for reconstruction purposes but the people are not fully informed of this. The local authority will not inform people because it is the HFA agency that is involved. The local authorities should have more responsibility for looking after their local affairs. Everybody in Government or in politics seems to agree with that but they never seem to do anything about it. They are not prepared to say that local authorities should have that responsibility. The national politician is the local hawk; he is the watchdog. He is the man who says if something is going wrong he will report it nationally, and rightly so. He is elected to represent people nationally and keep his eye on matters.

I have listened to the Minister many times and he has shown an interest in this area. I ask him to consider giving a certain amount of money per year in local grants but I am not saying that everybody who applies should get them. If we could get 100 houses back every year we should do so but we should not try to get 300 houses a year. If we got 300 back over a three year period it would mean not having to build as many at £25,000 each. People should be given the agency loan. We should concentrate more on that area. I understand that if we open the floodgates here will be a massive flow of people looking for grants. The construction industry said to us locally that they could not believe that all the grants were taken at once. Much employment can be created in this area. We know we are losing many people from the industry to Britain in particular. A certain percentage of grants should be allowed and I am sure that could only help the agency.

In regard to the Housing Finance Agency, there are certain regulations and rules. I ask the Minister is it possible that the agency can be sold better? We in Government circles unfortunately give the impression that we have nothing to do with them. Nobody likes getting letters from the Government, particularly if they are in brown envelopes and therefore how can we inform people about our national building agency, the Housing Finance Agency? Generally people get the impression that they are stand-offish, that they are not associated with the person on £200 a week or on £10,000, £8,000 or £7,000 a year. What can we do to dispel that impression? Can we ask our local authorities, for instance, to send information to people, perhaps in the form of a leaflet such as that used by political parties? The local authorities should inform every one of their tenants about the Housing Finance Agency.

People should not get the impression that because their parents live in a local authority house they too should live in one. We should tell people the options that are open to them, for instance, that the £2,000 first time buyer's grant is still in existence. Many people have the impression and the Minister knows this as well as I do — that all grants are gone. I know that is not true. When will the Government tell people that the £2,000 grant for the first time buyer is still in existence? It would be unfair to the Government if people thought that grant was abolished.

I do not think we are doing enough as a Government to inform our young people in particular that there are agencies and facilities available to them. It is appalling for the Minister to say that happily the early indications are that the new arrangements are now working well. That is not so. Young couples going into banks with no accounts are being told they will not get a loan. Those people want to do something for themselves. They go to building societies and the position is the same and that is sad. When they go to the authority they are asked where they are working and how much they are earning and are told they can be assisted. I have pushed for a very long time for this type of system.

I make no apologies for saying that many more of our people should not be in local authority housing. With a little bit of assistance they can provide houses for themselves. That has been proved with the introduction of the £5,000 grant. We should concentrate more on that area. The Government will allocate £50 million next year and this year to local authorities. I ask the Minister to allocate to local authorities £500,000 a year to do with it what they think best and perhaps provide grants for people to buy their own houses rather than put them in local authority houses. That would mean a saving of £25,000 per couple. The taxpayer pays £90 a week on average for every local authority tenant. If you told a person in a local authority house that is so he would not believe you but it is a fact of life. Great savings can be made in that area.

I know I digressed a little from the agency. The Minister is saying that the scope of the agency must be broadened, particularly in the area of reconstruction. If that is done the National Housing Finance Agency should advertise and inform people what they are entitled to. That would be doing something positive.

Mrs. Robinson

This Bill seeks to achieve a comparatively modest purpose, to double the ceiling on the borrowing which the Housing Finance Agency can enter into in order to fund house purchase loans. It has been clear from the reception of the Bill that that purpose is supported on all sides of the House. Clearly it is desirable that there should be more funds available for use by those who are availing of an income-related loan scheme and who are therefore helped to buy houses. At the moment this measure, and any measure in the area of housing, has to be examined in the context of the overall housing situation. I find it difficult to assess objectively and accurately how this measure affects the overall housing situation.

I have listened carefully to the contributions in this House and I have examined the record of the contributions made in the other House when this Bill was being debated and it is clear that those representatives who serve on local authorities placed great emphasis on the crisis in local authority funding, which we are all aware of and on the fact that there are going to be virtually no new starts on corporation housing in 1988 and probably for the next couple of years. This in itself will contribute to worsening the problem, particularly in some areas with housing lists. It is also clear that social problems have existed for some time but have become strikingly worse, for example, the problem of young homeless people. That problem has become notably worse in the past 12 months and there is no reason, unfortunately, to believe that it is evening out. On the contrary the voluntary agencies dealing with the young homeless are gravely concerned that the problem is accelerating at a very serious rate.

Another problem we are failing to cope with and which is also increasing, because the net numbers are increasing, is the problem of the travelling community. We still have a major social, housing and sheltered problem and we are failing to address the needs of travellers in our communities. Some local authorities have made greater efforts than others and the Department of the Environment have taken some steps in that regard. I accept that the recent budget acknowledged the severity of the problem of homelessness. This is the first time I can recall that a specific allocation was made — an allocation of £1 million — to be diverted to the needs of the homeless.

That is only recognising the manifestations and the visible evidence of a very serious problem. It does not really meet what I believe is a crucial element of the present situation, that is, that we need to review our overall housing policy precisely because we have to provide for housing as for any other need within the constraints of the present crisis in our overall finances. When it comes to housing, that poses particular difficulties because you have to have lead times and you have to have policies well established in order to provide overtime for housing needs.

This Bill will improve in some measure the situation of the low income family who need support in order to be able to apply for and obtain a loan to enter into a house mortgage. That is meeting one defined need, but where does it come in the order of priorities and what policy considerations does it reflect? At a recent international conference Ireland was shown up as being the only country represented at the conference that did not have legislation supporting the right of people to basic shelter, in other words, a legislative right to have housing needs not only considered and then put on a list but actually dealt with. We pride ourselves on the fundamental rights provisions of our Constitution. Where is the right to shelter in our Constitution and how is it reflected in our housing policy? This is the critical issue that arises on any Bill relating to housing, including this Bill increasing the loan capacity of the Housing Finance Agency.

It would seem a matter of urgency that the Department of the Environment should publish a review of policy in the area of housing and establish, or at least propose for consideration, the priorities within the limited resources. It seems that those priorities should start with those in greatest need. At the moment the funds are being allocated to those who already have a base, who have grounds to argue that they should be supported or helped and not, for example, those without shelter, persons who for various social reasons have been rendered homeless, or who have not got serviced sites or other places where they can have the most basic right to water and sanitary facilities which go with minimal shelter requirements. We do not seem to have an order of priorities.

My colleague, Senator Brendan Ryan, has sought on innumerable occasions in this House to bring forward his Private Members' Bill on housing the homeless but it has not been possible to give time for the priority consideration of that Bill. The failure in this House to get a debate on it reflects an overall failure. I am not blaming this Government specifically. It is not a new problem; it is a problem we have had in the past and it continues to be a problem. We do not have a real order of priorities which reflects the priority of housing needs. We are addressing the issues on an ad hoc basis.

Many of the contributions to the debate on this Bill have reflected frustration with the way in which local authorities are prevented from addressing the priorities within their own areas. A number of the points that have been made, including those made by the last speaker, on that point warrant attention. If we have a genuine willingness to look at the overall resources which are there to meet housing needs and to help people to meet their own housing needs we can then have a value system which is fair. If it is to be fair there must be a much greater recognition of the housing needs of those who have no shelter at the moment. That must mean that there cannot be the kind of starving of funds to local authorities in the area of housing which is evident at the moment, because there is no way that people who have neither a home nor even a modest income can avail of the resources of the house purchase loans provided under the auspices of the Housing Finance Agency. Therefore, it is important when the Minister is replying to the debate on this Bill that he places the purposes of it in an overall context.

I would welcome some indication that there will be a published review of our housing policy and of the policy of this Government on meeting the needs of those who are not able to provide for their own housing needs either with the help of a loan, where there is an income-related loan scheme such as this, or otherwise, and those who need some special kind of provision such as the travelling community who need particular provision either by way of serviced sites, group housing or other appropriate accommodation. We must ensure, not that they are given some kind of favoured treatment but, for the first time perhaps as a society, that we can say we are beginning to ensure that they have the most minimal rights to shelter, water and sanitary facilities.

Another issue in relation to our housing policy which has been referred to by a number of contributors to this debate is the extent to which it is encouraging the segregation of the population, particularly in Dublin and other urban areas. Housing estates have become, in effect, social ghettos where, partly because of the very policy that we are adopting, those who can get out do so with the result that there is a very high rate of unemployment, up to 75 per cent, in those estates. There are single parent families and people with multiple problems but there are no resources within that community to meet those problems. That is part of the housing issue. It is greatly influenced by our policies and our priorities in relation to housing. It cannot be dealt with purely under a housing hat but our policy on housing has a very major effect on it.

All of these problems have been there in the past. They have been there in various ways over the past decades. It is my experience, and it is a more limited experience than that of those who serve on local authorities, that those problems are becoming dramatically worse. The segregation problem is worse; the number of homeless people is increasing; and the number of travelling families in need of basic shelter is greater. It is a matter of urgent priority that we stand back from the components of the problem and decide to take the decisions that are open to us, notwithstanding the constraints on the public purse.

Most of those decisions have to do with diverting resources to those in greatest need, designing those resources to ensure that we are not aggravating the social problems on the ground and, above all, ensuring that any citizen of the State who is not able to provide for his shelter needs has, under our Constitution and our law, a right to those basic facilities which really are an extension of the basic human personality, the right to a basic home and shelter.

While I welcome the limited purposes of this Bill for the reasons which were given by the Minister in introducing it to this House, it must be seen in that overall context and I hope the Minister, in his reply, will deal more fully with that context.

Minister of State at the Department of the Environment (Mr. Connolly)

First, I would like to thank Senators for their very positive contributions to this debate. It has been a very wide-ranging debate, going far beyond the context of the Bill, but I accept it in the spirit in which it was put forward by Members. A Leas-Chathaoirligh, you might have to bear with me if I go a little outside the scope of the Bill, if that is in order, but I will be directed by you.

Senator McCormack complained about the new differential rents scheme in Galway. That is a matter for the local authority in Galway. The previous Government amended the regulations to give the local authority and, especially the manager, power in that area. That concerns all local authorities. Discussions with the National Association of Tenants Organisations are in progress with a view to formulating a new rents scheme which, while maintaining the traditional social character of the local authority rents scheme, will ensure that those tenants who can afford them will pay realistic rents. I want to point out that the revision taking place in many local authorities is being done by the managers and I have explained the reason for that.

Senator Cregan suggested that there should be flexibility for changing from income-related loans to annuity loans. This flexibility does exist. A person can change from an income-related loan to an annuity loan at any time during the life of the loan. The loan will, however, continue to attract a variable interest rate which at present is very favourable. Senator Cregan also suggested that the HFA should be sold better to potential borrowers. I would remind the Senator that the agency no longer lends money to individual borrowers. That is now done by local authorities. The agency's function is to raise funds which it lends to the local authorities to finance house loan schemes.

This Bill is a technical measure designed to provide a statutory basis for the broader role which the Housing Finance Agency is now undertaking, as the primary source of State funding for private house loans. Despite the fact that it is a short Bill it is an important one.

A number of Senators referred to the new arrangement whereby applicants must first approach a building society or a banks before applying to a local authority for a loan. As the Senators are aware, these publicly-funded loan schemes were always intended to assist those in need of housing and who are unable to obtain a loan from any other financial institution. In practice this requirement was implemented in varying degrees by different authorities. The new arrangement, under which the commercial lending agencies have undertaken to contribute £70 million to the market sector currently catered for by the local authorities renders it essential that this requirement be implemented in full. The arrangement now in operation is the most efficient one. For example, an arrangement under which local authorities will assess all applicants in the first instance would not work. How could a local authority have access to the criteria used by banks and building societies for assessing applicants?

It would inconvenience an applicant far more were he assessed by a local authority, told to apply to a bank or a building society — be refused by them — and then forced to return to the local authority. It is preferable that he go first to a bank or building society so that, on applying to a local authority, he knows that his application will be accepted and processed. I must emphasise that these arrangements with the commercial lending agencies will not affect a person's capacity to house himself or herself. On the contrary, there will be more funds available in 1988 than would otherwise have been the case. In addition, a borrower is afforded greater choice and flexibility in choosing the type of loan financing best suited to his or her particular needs. I am happy to say that these arrangements are now working well. I want to commend the banks and building societies for the prompt, efficient way in which they are dealing with applications.

It has been my experience of this new arrangement that many banks and building societies are issuing approval of loans within 48 hours. While not wishing to condemn any local authority or throw any aspersion on them, in some cases many applications to local authorities have taken up to two months to be approved. Not alone are the banks or building societies giving a commitment to enable people build a house, but some are giving a commitment up to a certain level. This means that an applicant can go anywhere in the county provided the relevant house passes a surveyor's report and is otherwise in order. That constitutes a big step. Another matter I dealt with on resuming office — and for which I should get some thanks — is that the income of the second spouse is not now taken into consideration by local authorities. Let us say the income of the main earner is £9,800 and the wife's income is £8,000. That £8,000 income is not now taken into account by local authorities. The Minister and I should be thanked for that. That is a big help to applicants for house purchase finance.

I admit that there were some teething problems in the operation of the new arrangements. I accept that. Many Members of this House brought it to my attention. We did our best to sort them out. There have been no complaints recently on the operation of the scheme. In local authorities in many instances there were as many as six people handling a loan application. In the other lending institutions there are now only three, which is speeding up the process. That is what I am endeavouring to bring about. I do not think it is right that anybody should have to wait up to eight weeks — after planning permission has been granted and all the necessary documentation supplied — to learn what may be wrong in the processing of their loan. I do not agree there should be such delay. I have asked all the local authorities to speed up the process. I do not want any local authority to obstruct the operation of the scheme — I am not saying they are — I want it to run smoothly. If an applicant is refused a housing loan by a bank or building society they can go back to the local authority. All the local authority require is the relevant correspondence from the institution that refused the application, when they will process the application. That is a very fair method.

Senator Fallon suggested that a loan guarantee should not be given to the banks and building societies. The reason for the guarantee is that these agencies are now granting loans of a higher percentage of house value than they would normally. The guarantee is a very limited one and covers 50 per cent only of the amount by which the loan exceeds 75 per cent of the value of the house. It has been my experience that some banks and building societies do not seek such a guarantee at all.

I am glad to hear Senator Doyle welcome the recent introduction of the variable interest rate for housing loans at a time of falling interest rates. Obviously it is in the interests of borrowers to be able to avail of the cheaper rates as they arise. Senator Doyle suggested that borrowers should be given a choice between fixed or variable rate loans. It would not be practical to operate two schemes side by side. In any event I consider the variable rate the correct arrangement. However, I should like to point out that people whose loans were approved before 28 October last when the new system was announced are being given the option of a fixed rate of 10.75 per cent, including mortgage protection, or a variable rate which is currently 9.25 per cent.

Senator Hogan suggested that the £2,000 unsecured, improvement loan should be increased. The unsecured loan was increased from £1,000 to £2,000 in May 1986. I do not consider it would be prudent for local authorities to lend more than £2,000 without security.

Senator McMahon questioned why it had been found necessary to increase the borrowing limit to the Housing Finance Agency in view of the fall-off in demand for loans. As I explained in my opening speech, the role of the Housing Finance Agency has now been broadened to include the provision of all funds which local authorities lend by way of income-related, convertible and SDA loans as well as improvement loans. To enable the agency raise the funds necessary for all these loans the borrowing limit had to be increased.

Senator Hogan suggested that we should look at other sources of funding for house loans. He suggested that insurance and pension funds might be used in this respect. The Housing Finance Agency relies on various agencies, such as insurance companies and pension funds, to invest in the various bonds the agency issues.

Senator McGowan suggested that the directors of the Housing Finance Agency meet with local authority members as all of the loan schemes operations are now the responsibility of local authorities. The Housing Finance Agency does not grant loans to individuals. The role of the agency is now one of block lending of funds to local authorities. In these circumstances there would be little point in a meeting as was suggested by Senator McGowan. The Senator also spoke of a penalty being imposed by the Housing Finance Agency when an income tax return is not furnished on the due date. I presume he was talking about a return of income required to be at the end of the tax year, in other words by 5 April. I should say that there is no penalty imposed if an income tax return is not furnished on time. Instead the agency puts the relevant borrower on an annuity repayment basis until such time as the relevant return of income is received. The agency must have some basis for calculating repayment in the absence of an income tax return. This is the logical basis on which to proceed in the interim.

Many members have a great interest in the usage of Housing Finance Agency loans for voluntary housing. I have a great interest in it also. Senator Hogan suggested that the Housing Finance Agency funds be used to help in the provision of voluntary housing. We are effecting some amendments in regard to the amount that has to be advanced in order to help voluntary housing organisations. I should say that the expenditure under the voluntary housing scheme is increased annually. However, it has not achieved much by way of additional accommodation for the homeless. The additional £1 million provided in the budget will bring to £4 million my Department's contribution to fully subsidised loans to the voluntary housing organisations in 1988. In addition to increasing the funding, I should inform the House that I am also amending the terms of this scheme in recognition of the fact that the existing requirement to meet 20 per cent of the cost of providing accommodation is particularly harsh on voluntary organisations assisting the homeless. We have decided to increase from 80 per cent to 95 per cent the level of assistance available in any case of accommodation for homeless persons. That is to be welcomed. I know many Senators like myself, have very strong views on that matter.

Senator Norris suggested that housing co-operatives should be encouraged more. I should point out that housing co-operatives have been given support over the years by way of flexibility in relation to eligibility for loans and higher levels of loans. This means that housing co-operatives could avail of sites provided by local authorities at a subsidised price. However, the level of activity of housing co-operatives in recent years has been disappointing. I would hope that local authorities would see the encouragement of housing co-operatives as a means of meeting part of the housing needs in their areas. Certainly I and my Department will continue to encourage local authorities to do so.

Senator McMahon urged me to make money available to Dublin County Council for the purchase of re-possessed houses. I should say that, where a local authority re-possesses a house — which cannot be sold at a reasonable price on the open market — they can take such a house into their housing stock. The outstanding debt on such a house can be met from the relevant local authority's internal housing capital receipts. It is a matter for each local authority to arrange their programme accordingly.

Senators Doyle and Hogan referred to the matter of local authority housing. I should point out that each housing authority have been asked to submit a claim for capital allocation for their 1988 housing construction programme. Until such claims have been received, allocations cannot be made to individual local authorities. Having regard to the current law numbers on housing authority waiting lists and the large numbers of vacant houses I am satisfied that the availability of local authority housing will not constitute a problem this year.

Senator Fitzsimons referred to delays in the carrying out of essential repairs. The implementation of such works is entirely a matter for the local authority concerned, who can decide on the amount of money they will spend in any year within their overall allocation for loans and grants.

Senator Robinson dealt in some detail with our overall housing problems. Here I might point out that we have the highest home ownership ratio in Europe. When I came to the Department in 1979, the then Minister and Government initiated a major housing programme. I would like to point out that in that respect we changed the policy that had pertained until then. What concerned me at that time was that most houses were being built in the greater urban areas. I decided that rural Ireland should be looked after as well and that we should spread out our activities into towns and villages. I am glad to say that that happened throughout the country.

I have a good knowledge of the way things operate on the ground. As you know, a Leas-Chathaoirligh, people in the midlands will not accept a house if it is not the end one with the large garden. They will not accept a centre one.

Mr. Fallon

The one with a lake view.

Mr. Connolly

They will accept an end house with a large garden or possibly one with the nice entrance. They say to me: "There is a house coming up in Daingean in County Offaly; we will not take one in another part of the country." No; they are picking and choosing. I should like to say to local authorities — and I have been saying this to county managers also — that, in regard to the allocation of houses, I should like to see them allocated more speedily. Delays in allocation create problems, such as vandalism and so on.

I should like to turn now to a thorny problem, that of the housing of itinerants. We have allocated money this year for caravan parks in various parts of the country. We are giving up to 100 per cent grants. But in many such cases we are not receiving much co-operation from members of local authorities. There are also those do-gooders who say: "Yes, look after them but do not locate them near me."

Mr. Doyle

And some of the Minister's own party too.

Mr. Connolly

In my county, in Tullamore, we have looked after the itinerants. I will bring the Senator down to see it. Many members of local authorities have seen the excellent job we have done in Tullamore thanks to the urban council and others also. I will do my utmost to get agreement on the part of all concerned so that we will be able to look after these people, placing them into what I might describe as reasonably good housing conditions. But we cannot do so without support.

As Senators are aware, the Minister announced £3 million for the homeless in the budget. We must take into account the fact that local authorities are dealing with a new type of applicant, one with whom they did not have to deal, say, 20 years ago; there are unmarried mothers, separated people and so on. Local authorities are looking after their housing needs. I want to thank them in that respect.

On the future of local authority housing in general it should be remembered that before I allocate a penny for local authority housing this year, the subsidy to local authority housing will be over £200 million, or approximately £85 per local authority house. That is an enormous amount. If all goes well the Minister and I hope to be able to announce shortly a new tenants' house purchase scheme. I know many Senators are anxious that something should be done in that area also.

We have increased the allocation for remedial works on housing from £7 million to £10 million this year. This means we will be able to carry out essential repairs on houses in a large number of estates throughout the country. I admit we could do with more funds but Senators know where such must emanate from. Many Senators asked how I envisage local authority funding in the future. Senators will realise that, as a result of the very tight financial position in which we find ourselves in there is one way only in which we can provide money for housing, that is, by way of taxation or borrowing. I am hoping we will be able to involve the financial institutions more. With interest rates coming down the prospects are looking good. For example, the reduction on a £25,000 20-year mortgage is £55 per month on the loan repayment compared with that obtaining at the same time last year. Remember that is cash into the pocket of the householder. That reduction has been brought about by a tight rein being maintained on national finances.

We cannot depart from that strategy. We must live within the overall Estimate for our Department passed by Dáil Éireann. There are many projects, a Leas-Chathaoirligh, for which we would like to provide funds but we are unable to do so — some very good projects. But we will have to devise some new means of making funds available for local authority housing in the future. There now is a limit to what tax revenue can do. It will be a good thing if we can involve the financial institutions more. Over the years there have been many people Governments have rehoused who, in my opinion, were well able to house themselves. If we can make loans and interest rates attractive, they should house themselves and not expect the taxpayer to do so. I am not prepared to house them. This should be entertained only where there is need. The homeless spring to mind immediately. There are many good voluntary organisations undertaking tremendous work in this respect. You know that to be the case, a Leas-Chathaoirligh, in your county. I am very favourably disposed in that direction.

There is another group of people I should like to help also. I would also like to help those people who want isolated cottages in the country, maybe on a small piece of land where they have lived all their lives. As a rural man I do not want to see rural Ireland deserted.

Finally, the new arrangements we have made are working satisfactorily. They will always be open to review. If improvements can be brought about and I have the finances to do so, I shall be only too glad to carry them out. I hope I have covered most of the points raised. It was a very wide-ranging and interesting debate. There were many enlightening contributions made, some of which I have taken notes on as time does not allow me to go into them in more detail. Nevertheless, I am hopeful that all of the money made available by the financial institutions will be taken up this year. I want to thank all Senators for their help and co-operation.

Question put and agreed to.

Agreed to take remaining Stages today.