asked the Minister for Local Government if he will introduce a scheme to provide cheap interest loans for local authorities to build houses to offset the steep increase in the capital cost of housing and of interest rates in recent months.
Ceisteanna—Questions. Oral Answers. - Local Authority Housing Loans.
64.
The Government pays an annual contribution towards the loan charges on the capital borrowed by local authorities to finance the provision of houses. This subsidy is equivalent to about £106 a year for most serviced houses and, in effect, reduces the interest rate of 8½ per cent, at which local authorities at present borrow from the Local Loans Fund, to an average of about 5 per cent. There has been no increase in the Local Loans Fund interest rate in recent months.
Subsidies for local authority housing from central taxation and rates are estimated at substantially more than £9 million in the current financial year and are expected to grow by about £1 million a year on the basis of the current local authority housing programme. The more these subsidies grow the more they absorb money which could be used to build decent houses for those who have not got them. The estimated current level of subsidy payments could, in fact, finance the building of a further 3,000 local authority houses annually if it were available for that purpose.
While the level of subsidies is kept under constant review, I do not propose to increase it at this stage.
Is the Minister aware that the capital cost of local authority houses has increased by as much as £1,000 in the past few years and that it is becoming increasingly difficult for people to pay the rent and for local authorities to finance this type of building?
I do not understand the Deputy's reference to the ability of persons to pay rent because where the differential rent scheme applies it takes account of the person's income. However, as I said, I am keeping the matter under review.