Vol. 285 No. 9
I move:
That a supplementary sum not exceeding £1,536,500 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1975, for the salaries and expenses of the Office of the Minister for Local Government, including grants to Local Authorities, grants and other expenses in connection with housing, and miscellaneous schemes and grants including a grant-in-aid.
The gross amount required is £1,974,000 but this amount is offset in part by an increase of £147,500 in Appropriations-in-Aid and a further sum of £290,000 in savings, leaving the net amount required at £1,536,500. The net additional amount required brings the net Estimate for my Department for the present year to a total sum of £50,989,510. This sum represents part only of the total expenditure on Local Government. When account is taken of the moneys provided from the Local Loans Fund, the Road Fund and the expenditure financed from local authority sources, the total expenditure is estimated to be about £365 million. Of this sum, £218 million approximately is financed from Exchequer sources and forms part of the very large financial provisions made by the Government for essential services.
These provisions have been made despite the extraordinary financial difficulties facing the Government in common with other Governments. Failure to provide adequately for important services which had been starved of money in the past made it necessary for the Government to step up considerably the level of provision for these services, but such expansion in capital expenditure cannot be continued indefinitely. Those who think that capital can be handed out freely merely for the asking show little appreciation of the financial realities which obtain here and elsewhere at present.
The total amount in the present Supplementary Estimate for my Department is spread over six separate subheads. The largest of these amounts is an extra £1,000,000 for subhead E2—Private Housing Grants. The original provision of £6.5 million for 1975 was based on the situation and prospects at the end of 1974. Only £5.35 million of the £6 million voted for the nine-month period ended the 31st December, 1974 was actually spent. However, the first five months of 1975 showed an expansion in operations under the grant scheme and in June the Government agreed to an increased provision. The extra £1,000,000 being provided brings the total of the subhead for this year to £7.5 million.
Next in importance is the supplementary sum of £650,000 for subhead N—Interest Subsidy for Building Societies. I am glad to say that the net inflow of funds to the societies has shown a very satisfactory up-turn during the present year and, as a consequence, mortgages are now more freely available. It is expected that the societies will advance about £60 million in 1975 as compared with £39.6 million last year.
This subsidy, which was introduced by the Government in May, 1973, enabled the societies to offer a higher rate of interest on shares and deposits than would otherwise have been possible at a time when there was a serious fall in the inflow of funds to the societies. The original sum of £1.4 million voted for this subhead was the amount estimated to fall due for payment in 1975 in respect of the continuance of the interest subsidy up to the 31st December, 1974 which was the termination date when the Estimate was framed. The Government's decision to continue the subsidy during 1975 has led to the supplementary sum now required. Because of the improvement in the inflow of funds to the societies, the continuance of the subsidy from the 1st August last has been at the reduced rate of ¾ per cent instead of the original 1 per cent and naturally the question of continuing the subsidy payment has had to be reviewed. The matter will be discussed with the building societies very shortly. The Supplementary Estimate includes an additional amount of £205,000 required in respect of subhead A—Salaries, Wages and allowances—to bring the total for the year to £3,060,000. The increase is due to the cost of the 15th-round pay increase and the cost of certain grade increases not provided for in the original Estimate.
There is also a sum of £30,000 included in the Supplementary Estimate to bring the total requirement for the year to £365,500 in respect of subhead B—Travelling and Incidental Expenses. The increase is required mainly to meet the cost of increases in subsistence rates since the original Estimate was prepared, and to provide for the cost of the Conference on Peripheral Regions held recently in Galway.
The amount of the grant-in-aid provided under subhead I for An Foras Forbartha is being increased by £55,000 to a total of £572,000. The additional sum is to meet the cost of salary increases arising since the original Estimate was prepared.
The final item in the Supplementary Estimate is an extra £34,000 to bring the total of subhead H to £174,000. The subhead provides for the recoupment of 50 per cent of the cost to county councils and county borough corporations of preparing and publishing the register of electors. The increase is due to increases in the remuneration of those engaged on the compilation of the Register and to increases in incidental costs since the original Estimate was prepared.
While not arising specifically on the items covered by the Supplementary Estimate, I should like to take the opportunity to refer to two other matters. The first relates to an appeal by Aquarius Securities Ltd., under section 26 of the Local Government (Planning and Development) Act, 1963 against the decision of the Dublin Corporation to refuse permission for the erection of an oil refinery in Dublin Bay. The appeal is before me at present.
Statements have appeared in the public Press to the effect that there are indications that the Government intend to allow the oil refinery to go ahead. These statements were made by persons who should know better. It is a matter for me and not for the Government to decide the appeal. In doing so, I must have regard to the matters laid down by law. Not alone does section 26 restrict consideration to the improvement of the amenities thereof but, since I decided that there should be an oral hearing, I must consider the report of the hearing before I make up my mind as to what decision should be made. It is highly improper that any suggestion should be made that I have made up my mind in advance.
There have on the other hand been some suggestions that I have not dealt expeditiously with the case. My wish has been to have this project fully and openly considered and it is for that reason that, on my own initiative, I fixed 14th July, 1975 as the date for the hearing. Representations seeking a postponement were then made by a number of individuals and associations, by the planning authority and by the developers I agreed to this on the understanding that early October might suit Aquarius Securities Ltd., and the various objectors but since I heard nothing further from the developers, I wrote to their agents on the 13th October, 1975 stating that I proposed to fix a new date for the holding of the oral hearing but before doing so I wished to have confirmation that they intended to pursue the appeal. So far, I have received only an acknowledgement and a promise of a further communication. I have since written to the agents asking that they indicate their principal's intentions without delay. I hope that it will be appreciated from this account of what has transpired that such delay as has occurred is not attributed to me. Responsibility for the delay rests with the appellants and the individuals and bodies who pressed for postponement of the oral hearing.
The second relates to the fire service. The report of the working party which reviewed this was published in July. The working party made a broad examination of the organisation and operation of the service and made many recommendations, some of them of a fundamental nature. In view of the importance of the service not only from the point of view of the personnel directly involved in it and of the local authorities who have responsibility for running it, but from the point of view of the general public, it is right that there should be full opportunity for consideration of the report by the various interests concerned.
The report was published, therefore, without commitment so as to provide that opportunity for organisations and individuals to read it and, to make known any views they wish to put forward. Everything possible will be done to expedite and implement decisions on the report. However, with the best will in the world it will take time to complete the process of change and improvement.
In the meantime brigade strengths and equipment must be maintained at an adequate level having regard to the fire cover appropriate in each area. If there are deficiencies my Department will carefully consider such proposals to make them good as are put forward after due consideration by the local authority concerned.
One of the reasons for the growing importance of the fire service is the added emphasis on fire prevention in the modern approach to the fire problem. There is tremendous scope here and now for greatly increasing the effectiveness of the fire prevention effort by personal communication at local level, backed up by the powers of inspection and control which local authorities have under the Fire Brigades Act, 1940. I would like to avail of this opportunity to appeal again to local authorities to step up their fire prevention inspections especially where the risk of fire is greatest and where fire could have the most serious consequences. My Department have encouraged local authorities to review their fire prevention capacities and arranged a special course in fire prevention to make the necessary skills more widely available.
The question of having further courses of this kind is one aspect of a general examination of the programme of central training for fire brigade personnel which has been undertaken. The local authorities have been consulted for their views as to future needs and a special working group is now being set up to advance the work, with representation of the various interests concerned.
This is the first opportunity that has presented itself to me to wish the Parliamentary Secretary every success in his new appointment.
Thank you very much.
Perhaps the most significant matter in the Parliamentary Secretary's speech refers to the building societies, particularly the sentence in which he refers to the continuance of the subsidy from 1st August last which had been reduced by ¼ per cent from the original 1 per cent. He went on to say that naturally the question of continuing the subsidy payment has had to be reviewed. This is a very significant and I think very disturbing statement because it appears to suggest that the Government have in mind the removal of the subsidy at present available to the building societies. It appears to give some substance to a report which appeared in an evening paper in relation to this matter. It is necessary to stress the serious consequences which would arise from any such change in policy as the removal of this subsidy, the effect it would have on mortgage holders and the effect it would have, depending on the decision made by the building societies, on the inflow of moneys into these societies which is so essential for the well-being of the building industry which has been in an ailing condition for a considerable time.
It is rather strange that at a time when we are being asked to vote extra money to pay the building society subsidy there should be at the same time an inference in the speech that this subsidy will be removed. If such a step were taken it could have very serious consequences and I appeal very strongly to the Government to rethink this matter if this is what they have in mind in the review being conducted by them. They should very seriously consider the effect such a move would have.
In regard to the Supplementary Estimate and the building societies the additional sum required for the interest subsidy for the building societies should have been very much larger and would have been were it not that the Minister and the Government decided in the June budget to reduce that subsidy from 1 per cent to ¾ per cent. I found it difficult then—as I do now— to understand the Government's reason for the reduction. Those who borrowed money from building societies have had their interest rates increased and their repayments increased at various stages over the years because of the increasing cost of money. Most of them, when they borrowed the money, budgeted with a certain interest level in mind and the fact that repayments rose quite considerably above the original level was the cause in many instances of severe hardship especially when this happened, as it usually did, at a time when family outgoings were increasing because there was a number of children to be catered for and educated. I found it very difficult to understand why the Government decided in the June budget to reduce this subsidy and therefore by their own deliberate action put a further burden on the already hard-pressed shoulders of those who had borrowed money from building societies.
As far as I can remember the reason given by the Government then was that borrowers from building societies should not have better terms than those borrowing through SDA loans. The logic of that argument still escapes me, particularly when the Government in the same budget increased the SDA loan interest rate from 10½ per cent to 11½ per cent. Surely at a time of crisis in the industry the logical thing would have been to have left the interest rate on SDA loans as it was and relate the building society interest rate to that situation. It seemed to be a peculiar way of managing affairs that the Government should state that they were increasing the SDA loan interest level and then state that building society borrowers should not have better terms. Why not have left the SDA rate at 10½ per cent and then relate the building society interest rate to that?
When costs of all kinds are increasing very rapidly and when people repaying mortagages find it very difficult to make ends meet the Government might have had more consideration for such people and retained the subsidy as it was. The borrowers concerned must now increase their repayments or repay the loans over longer periods. This is not because of a decision on the part of the building societies but rather because of a deliberate decision of the Government to pass on part of their financial problems to the already overloaded mortgage holders just as in the same way they decided to charge a higher rate of interest to SDA borrowers. They did this in both cases at a time when it is so vitally essential that the private house building industry should get every help. The Government went out of their way at that time both in relation to the SDA loans and building society mortgages to make it less attractive to borrow money for house building purposes.
It is not long since the income of the building societies fell drastically. This had serious consequences for the building industry and helped to create the serious problem that industry has had to face in recent years. The Government of the time came to the aid of the societies in an effort to ensure that they could retain their competitiveness in the money market. The subsidy was necessary to help the building societies to retain that position.
Because of changing interest rates related to many different financial agencies, there has been an increase in the flow of money into these societies. In the long term I believe the subsidy will not be helpful in ensuring a continuation of this inflow of money into these societies. It is necessary for the building industry that this inflow of money at a worthwhile rate is continued so as to avoid the stop-go situation which obtains when there are wide variations from year to year in the amounts of money being invested in the societies. In Britain some time ago when there was a lack of funds in the building societies the number of houses constructed dropped.
A change came in the situation and the inflow increased considerably with the result that building societies were able to make more money available to borrowers. However, because there were not sufficient houses built the price of the houses increased. When the builders saw that the money was available and that house prices had increased, they built as rapidly as possible but by the time the houses were built the inflow of money into the societies had fallen. The result was that builders were left with many houses on their hands. There was a depression in the building industry then.
We have had a similar experience here in relation to a slump in the buying of private houses. While to some extent this related to the fact that for a period the building societies were not getting sufficient money it also related to the inadequacy of the SDA loans and house grants. We must try to avoid such a situation in future. The Government should not have made the change in the subsidy in the June budget. When the inflow of money to the societies was low in the past the Government did not admit responsibility for it and this Government cannot claim, in the present circumstances, credit for the fact that there has been a higher inflow of money into the societies. It is the duty of the Government to ensure that the inflow of money continues.
It was disturbing to find that the Parliamentary Secretary, in referring to the cut already made in the subsidy from 1 per cent to ¾ per cent, went on to say that the matter must be further considered. The only conclusion I can come to is that in such circumstances the Government intend to abolish the subsidy altogether. If that happens, there will be serious repercussions because the societies would have only two options open to them, to raise the mortgage rates or lower the interest rates to depositors. If the societies decided to raise the mortgage rates, it would have serious repercussions for the mortgage holders because the rates have increased considerably in recent times. Some people find that they are unable to pay. When one relates increases of this kind to the fact that every other commodity people need for their homes, food and clothing and other items necessary for the upbringing of children, have increased enormously it would be the last straw if the Government were to remove this subsidy or reduce it further. The people I am referring to would be placed in a position where they could only pay the mortgage by reducing the intake of food or cutting down on heating in their homes. This in turn would lead to considerably higher bills from the health side.
On the other hand, the building societies could decide to lower the interest rates to depositors but we know what would happen in such circumstances: the amount of money that would be available to the building societies would drop rapidly. We have seen that a change of ½ per cent has caused money to flow from one area to another. We have also had experience of the effect on the building industry of a shortage of money invested in the building societies. At a time when the private housebuilding industry is in a crisis situation and where there are many unemployed workers the Government should think many times before making a change which would have such a disastrous effect on such an ailing industry.
Originally, the Government recognised that it was essential to make this money available to the building societies so that the societies could maintain their mortgage rates at 11½ per cent and their deposit interest rates at 8 per cent. It was vitally important that they should be given this subsidy but to remove it would force building societies into a situation where they would have to lower their interest rates to depositors and this would mean that there would be a rapid outflow of money from the societies. I ask the Parliamentary Secretary to convey my feelings on this matter to the Government.
The increase for salaries, wages, allowances, travelling and incidental expenses is indicative of the rising costs which are noticeable in all aspects of life. The increase in private housing grants is not sufficient. Does the figure for the private housing grants refer to the total for private housing and reconstruction grants?
Yes.
The Parliamentary Secretary knows that the total amounts available this year for private housing grants was £6,500,000 and for the nine months of 1974 was £6 million. This shows that there was a considerable reduction in the 1975 figure compared with that for the nine months in 1974—£6 million would be equivalent to £8 million this year. Yet the figure for this year was only £6,500,000. I am not taking into consideration the very rapid increases in costs, nor do the figures I have given take account of the inflation rate. The official figures I got show that the ordinary inflationary rate a year ago was about 24 per cent to 25 per cent, and the rate of increase in the building industry was over 30 per cent. It is in this context that we must view the extra £1 million being made available in this Suplementary Estimate, which is totally inadequate. The figure for last year is greater then the total being provided for this year, including the £1 million in this Supplementary Estimate. It is greater even without taking into consideration the rapid rate of inflation experienced over the past year.
This extra money is not sufficient to give the necessary fillip to the building industry. I stated before that there has been a crisis situation in the building industry over the past year. The Parliamentary Secretary is aware that the number engaged in this industry dropped by about 8,000 compared with the number employed in the industry last year. There are approximately 20,000 building workers unemployed, an increase of approximately 50 per cent on the number unemployed a year ago. We on this side of the House asked the Minister on many occasions to take positive action to overcome this problem, but without success. I hope I may have more success in my appeal to the Parliamentary Secretary.
I am convinced that the only real way in which the Minister and the Parliamentary Secretary can reverse the unemployment trend in this industry is by making more money available to the private housing sector by increasing the level of loans and grants and the qualifying income limit. Until such a step is taken the employment situation will continue to deteriorate, as it has done in the past year.
The levels of the SDA grants and loans were fixed in May, 1973. Since then there have been enormous increases in building costs and salaries and wages, which have resulted in many people who were entitled to housing grants and loans in May, 1973, not being entitled to them any longer. It should be remembered that increases in salaries and wages over the past two years were merely keeping in line with the increases in the cost of living. Therefore people in receipt of the increased salaries and wages were no better off than they had been at the earlier stage. At best, they were keeping up with the cost of living.
To be eligible for supplementary private house grants one had to have an income of less than £1,950 per annum and this was increased in certain circumstances, depending on the size of the family. The maximum income limit, irrespective of the size of the family, was £2,350. One need only try to compare the buying power of such an income today with that of 1973 to see the enormous difference involved. If it were accepted that one needed such an income in 1973 to build or buy a new house, it should be obvious that the same income today falls well below the necessary level to enable a person to buy or build his own house. The average wage of industrial workers—and I would like to impress this on the Parliamentary Secretary— is approximately £400 higher than the maximum qualifying income limit for loans and grants. This means that to a great extent the people for whom these grants and loans were made available originally cannot benefit from them.
I asked the Taoiseach recently what was the increase in building and construction costs since 1973. The answer I received was that it was over 70 per cent. We should remember that the calculation on which this reply was based did not take cognisance of all the factors involved. Therefore the true percentage increase is much higher than 70 per cent. Surely it should be obvious that there is a real need to increase the level of housing grants and loans in order to do justice to those who wish to build or buy their own house and, perhaps equally important, to ensure that many of those at present unemployed in the building industry will return to work. If the Parliamentary Secretary were to convince the Minister and the Government that an increase in the grant and loan levels under the qualifying income limit for private house building were essential he would be doing a very good day's work.
It has been said in this House on many occasions by me and my colleagues, and it is generally accepted, that there is no industry which can bring about a worthwhile improvement in our unemployment problem as speedily as the building industry, if it is properly financed. The private sector of the house building industry can effect this improvement much quicker than any other section of the construction industry. If a loan is made available for a new house as well as a realistic grant, it takes a very short period to begin work on the house. Other types of construction take more time because very often elaborate plans have to be prepared and there is much to-ing and fro-ing between the local authority and the Department.
Though I am not objecting to the request for the provision of money for new houses, I want to point out that the £1 million is totally inadequate, that the money will not improve the position in the building industry one iota, that it will not help to improve the chronic unemployment situation in the industry. It simply makes money available to fulfil existing commitments and I do not think it will be even sufficient to do that: there will be many people awaiting payment of grants into the New Year.
I again appeal to the Minister and the Parliamentary Secretary for a change of heart in regard to the level of grants and loans and the qualifying period. We are anxious to see a dent made in the numbers unemployed, and the advice we are giving to the Parliamentary Secretary would help not only those in need of houses but also to re-employ the many building workers who are now out of work. The Minister has said, and I suppose he will say it again, that he is concentrating on the building of local authority houses, but he is well aware that the total number of such houses built is only about one-third of the number built heretofore. If the necessary fillip is not given to the private sector many of our people in need of houses will have to wait for years.
We know the enormous number of people living in flats or in rooms with relatives. These conditions, to say the least, will result in the break-down of marriages. Many such people are anxious to build their own houses or to buy their own houses but they can only do so if realistic grants and loans are available. It is of little use offering loans and grants which fall short by several thousands of pounds of the price which a new house costs—I am referring to the average price of SDA houses. The position is that because of the low levels of loans and grants, unless a person proposing to build a house has another source from which he can get finance he simply is not able to proceed with the building of his house.
The spin-off effects of the fall in private house building have had serious effects in ancillary industry. Cement sales in the first half of this year fell by 9 per cent and this is a pointer to the condition in which the industry finds itself. The fact that there has been such a fall in cement sales is felt at the production and the retail levels and in employment. I know there is money available for private house building from sources such as the building societies and the associated banks but the changing rates of interest and the interest levels have meant that these sources were not much availed of in the past. SDA loans and grants were favoured because of the fixed interest rates. This was unfortunately changed in the June budget when the interest rate was changed from 10½ per cent to 11 per cent, but at least the borrower is still in the advantageous position that he knows the rate will not change suddenly. Such grants and loans were the source of finance for home building for the man of small means. Today levels of income and of interest rates make it impossible for people to avail of loans and, therefore, numbers of people who used to avail of them will be joining the queues for local authority houses. This in turn will mean that applicants for local authority houses who would not normally consider building houses themselves will find themselves competing with many more people.
My next point relates to the expenditure on the register of electors. This is a reflection on the increased cost of living in an inflationary position. It might be well to note that the increase over the original estimated expenditure is about 23 per cent. This is a small business venture and if we apply it to production costs generally we can see how difficult it is for us to sell our goods in competition both at home and abroad where inflation rates are much lower. The compilation and preparation of the register of electors is necessary work and I congratulate those involved in it for the manner in which they do the work. A moment ago I said it is necessary because of the inflationary situation to make extra money available. I would very much prefer to see the extra money spent on continuing to do a good job rather than making a saving which would reduce the standard with which we have been accustomed in this work.
I support the appeal made by the Minister on a number of occasions to political parties and to other individuals to study carefully the draft register so as to ensure that every citizen is entitled to vote in elections, a right which he will not have if his name is not included on the register. The greatest care must be exercised at all levels to ensure that no name is omitted. This process requires the help of all those concerned in the preparation of the register, from those who originally collected the names for insertion, through the publishers and printers who finalise the work. It is very disappointing for a person to arrive at a polling station only to be told that he is not entitled to vote because of the absence of his name from the register but more than that he is being deprived of a fundamental right, a right that is essential if democracy is to continue to operate. Therefore, I join with the Minister in appealing to those concerned to give all possible assistance in regard to the compilation and publication of an accurate register.
There is the question, too, of the extra money required for An Foras Forbartha. I take this opportunity of commending An Foras for the excellent work they are doing in the field of research. No doubt this work is appreciated by the Minister and his Department. An Foras have issued many reports on matters relating to the work of the Department and to such matters as housing, studies of the environment, planning, water pollution, water quality and so on. In times of economic depression there is considerable merit in increasing involvement in research so as to make the best possible use of available resources and, thereby, help to increase employment.
I am somewhat saddened, however, when I note that small industries have decided to cut back on expenses by leaving research aside for a period. This is a retrograde step and the money so saved is money which would have produced worthwhile results if the research concerned had been continued.
There is a tendency in most places at times of economic depression to cut back on research although increasing aid for work in this field could produce much more desirable results than a saving in expenditure.
I wonder whether An Foras Forbartha have stopped to ask themselves if the work they are doing is helping, for example, the building industry, to respond quickly to the economic situation. No doubt it is very useful to plan the kind of house we are likely to build in three years time but for the moment perhaps it would be more advantageous if an examination were to be carried out into methods used in house building so as to ascertain how we could make better use of the means available. Perhaps, too, some of the resources of An Foras might be diverted to studying the problems which are now awaiting urgent solutions. Some worthwhile reports have been published by An Foras, reports which highlighted areas in which, if action were taken, worthwhile improvements would result. I am concerned to some extent regarding the lack of follow-up in relation to these reports. Admittedly, it would not be possible to act at once on all reports but where possible there should be a follow-up and concrete action taken.
I note from the Parliamentary Secretary's statement that the increase for An Foras is in respect of wages and salaries. It is regrettable that it has not been possible to make much more money available to them for the purpose of funding research. I am convinced that it is at times such as those that the need is greatest for research into the most persistent of the problems facing the Department.
I should like briefly to return to the statement in the brief which would lead one to believe that it is intended to discontinue the subsidy being paid to building societies. When I read this in the context of a reduced rate of ¾ per cent instead of the original one per cent I cannot come to any other conclusion and then there is a further reference which indicates that the matter will be reviewed. This step would mean very serious consequences for the mortgage holders who are overburdened with repayments particularly at times when there is such a considerable increase in the cost of all other aspects of living.
On the other hand, the consequences would be equally serious if the building societies were to decide to lower their interest rates to depositors because in that event the money which has been building up for some time past would flow out again. There is nothing so sensitive as money. Even a change of a ½ per cent means that money will flow from one area to another. If this were to happen at a time when the situation in relation to building is very serious, when so many people in the industry are unemployed and when so many are becoming redundant in ancillary industries, the consequences would be grave. That is why it would be a very serious step on the part of the Government to remove the ¾ per cent subsidy, a subsidy which I believe should still be 1 per cent. At the time that this problem was before them, the Government realised that it was essential to make this subsidy available if the building societies were to be enabled to retain their mortgage rates at 11½ per cent and their interest rates at 8 per cent. The Government know that if they did not make this subsidy available the situation in regard to the building societies would be very serious.
It is less than a year since we had the situation where the societies had very much less money than they would have wished for. This had a detrimental effect on the building industry. We do not wish for a recurrence of that situation but if the Government were to remove the subsidy entirely we would have a recurrence of that. It is only because interest rates dropped that building societies were able to hold their interest rates at a steady level. Money flowed in but nobody knows better than the societies how rapidly that money would move out again if the subsidy were changed and they were forced to reduce their rates. I appeal again to the Parliamentary Secretary to impress on the Minister and the Government the importance of being very careful in this matter. Over the past year we have had a dual problem —one in relation to the shortage of money in the societies and another in relation to the qualifying income limit levels and the levels of loans and grants. Both contributed to a very serious situation in the building industry. Money has once again flowed into the building industry because the rates are better now than they are elsewhere. We should be careful not to disturb that situation. We should be careful to ensure that not alone will that level be maintained but that the inflow will increase. If we do this the building industry will successfully overcome the crisis and do what only the building industry can do, namely, provide homes for our people more quickly than any other agency and provide work for those who are unemployed.
I wish the Parliamentary Secretary well in his appointment. Like Deputy Faulkner, I hope there will be no cutback in the subsidy because, if there is, there will be a very definite danger of interest rates being increased. High interest rates mean more people looking for local authority housing, more people who would normally build their own houses provided they could get money for that purpose at a reasonable rate of interest. One of the advantages of people building their own houses is that there is a greater diversity in architectural design. This is something to be commended. Industrial wage earners are nearly all over the income levels for a local authority loan which means that a young married couple are in the position that they simply cannot provide homes for themselves. This is where the building society can help. I appeal to the Minister not to hinder building societies in any way. It would indeed be bad economics to interfere with the building societies. If they have to reduce the rate of interest the inflow of money will cease and the only alternative will be to increase the interest rate on mortgages. One cannot emphasise too much the importance of making money available for people to build their own houses. It is astonishing the kind of people who come along now to the local authority looking for help. They cannot build themselves because the loans and grants are not sufficient and it is impossible for them to get a bridging loan.
I appeal to the Parliamentary Secretary to impress on the Minister the importance of increasing the grants. They are absolutely useless. At present £410 is the maximum from the local authority, if you are entitled to the full grant. If you are entitled to a county council grant, it is £920. Two days ago I met a man who was charged £920 for ESB connection. These building grants should be doubled. By doing that, we would save money on housing. If they were sufficiently high to tempt people to build their own houses they would be taken off the queue which all local authorities have at the moment.
People talk about solving the housing problem but I believe that if that problem were completely solved something would be wrong with the country. When a country is expanding you need houses. The real problem arises when you have too many houses and nobody to live in them. Comments were made about what previous Governments did about housing. They did their best. While people are looking for houses the country is not too badly off because it shows that people are working and are able to pay for them. This is important. We would like to provide housing as quickly as possible. We should provide an incentive for people who may be able to build their own houses by giving them a good grant and a decent loan. This question of the income limit for a loan is absolutely ridiculous. The income limit for getting a local authority loan is so low that very few people qualify for it. With inflation and increased salaries they are all over the limit.
The building societies should not be tampered with in any way. The fact that they got the subsidy increased the pool of money. Do not take away this subsidy. Do not give a feeling to the people who got loans that the mortgage rate will go up and up. I would make a special request to the Parliamentary Secretary to tell his Minister not to do that. I would also ask him to consider increasing the local authority loans and the income limit because even the maximum of the local authority loan at the moment is no use and the income limit is too low. If the loans and the grants were increased many people would build their own homes to their own liking. I might have my own design for my house and I should be entitled to build it as I like provided I keep away from roads. In this way, the countryside would look nicer. Some people who think they know everything build blocks of houses which are all the same. I hate the sight of them. When you see one you have seen them all. Every man should be allowed to design his own house provided he does not exceed a certain figure.
The only way to encourage private building is to ensure that the building societies have enough money to increase the loan and the grant. I appeal to the Parliamentary Secretary to do that. If that is not done we will be in trouble. I advise people who come to me that, if at all possible, they should build their own houses. The fact is that the only place they can get a large enough loan to start to build is from the building societies. They must have a few thousand pounds saved. Very few young couples have £2,000 or £3,000, and they cannot start to build if they have not got that much saved. Quite a number of people have gone to the building societies since they were made financially strong enough to give them loans. I make a special appeal to the Minister on that score.
I am very keen on the whole question of housing. I am very concerned about the type of houses being built. I firmly believe that the ordinary "Joe Soap" who builds his own house should also design it. No one should tell him the type of slates or the colour of the slates he should use. He should be allowed to do what he likes provided he keeps well in out of the way. Tourists would prefer the country to look like that rather than being in character as it is called by the experts. The Parliamentary Secretary said the additional sum provided for An Foras Forbartha was to meet salary increases. I agree with Deputy Faulkner on the question of research even when industry is not expanding. The present depression will not last forever. During a time like this industrialists should be doing research into the question of how they will expand when markets are available to them in future years. To tighten the belt on the question of research is not good business. I know money is scarce but An Foras Forbartha are doing a good job.
The Parliamentary Secretary also mentioned the oil refinery and pollution. The Minister who is in charge of planning has to decide the balance between having as little pollution as possible and industrial development. With industrialisation it is impossible not to have some pollution of the air. We must ensure that State companies are not the biggest offenders and that everything possible to ensure that the air is kept reasonably clean and that our waters are kept reasonably clean. The decision has to be made on balance. Everything humanly possible should be done to prevent pollution.
The Minister for Transport and Power said Bord na Móna were doing everything they could. We have heard many complaints about Bord na Móna on the question of settling lakes. I just refer to that in passing because the oil refinery in Dublin Bay was mentioned. A great deal of common sense is needed. The air cannot be kept as pure after industrialisation as it was before. The balance is very important.
The Parliamentary Secretary also referred to the checking of the voting register and the increases in salaries in that category. There are many young people on the register now. They move about a good deal and it has become a difficult task to keep a proper register. A fair effort is being made to do this. I have no objection to this increase because a vote is a civil right. Nobody sets much value on it until they realise they have not got it. Some people stay at home when they have it, but if they discover they are not on the register they kick up a heck of a row. It is up to the State to see that everybody who is entitled to a vote has one.
I could say a lot on local government but I shall confine my remarks to housing. Perhaps I am the odd man out when discussing houses. I believe that if people want to build their own houses they should be able to do so, but it is a question of money. A number of people came to me looking for local authority loans but were unsuccessful because their incomes were too high. Since the building societies' capital was increased such people managed to get loans from them. If there is any alteration in this subsidy I believe there will be no money available or that interest rates on mortgages will have to be raised. If that happens people will lose confidence, because when they borrow at a certain rate they budget each year, knowing they will have to pay £X on their loan. If that is increased, they lose confidence completely. I would ask the Parliamentary Secretary to ensure that that does not happen and impress upon the Minister, now that the building societies are fairly sound, to let this situation obtain.
I put down a number of parliamentary questions about grants in the last 12 months and each time the Minister answered by saying he was still considering the matter. However he did make one change for which I asked and with which I was delighted. As a farmer I always thought that the non-farmer was very handicapped in regard to grants. At least a farmer had a site of his own but for the man who had to buy a site, without a valuation, he got only £300. It has been changed now in accordance with income rather than valuation. However the most important matter is that the grants be raised. Loans have to be repaid, grants have not, and I believe the Exchequer would save on local authority housing by doing so. Therefore, I would make a final plea, to the Minister, through the Parliamentary Secretary, to increase grants and local authority loans. In the long run the local authorities, the Exchequer and the countryside generally will gain because the country will be a lot nicer, more attractive to tourists and houses will be more varied.
I want to intervene in this debate very briefly. I want to deal with the matter of fire service in so far as it relates to Dún Laoghaire. The Parliamentary Secretary, in his introductory speech, referred to the report of a working party which reviewed this matter and which was published in July. I am not quite certain because this matter was referred to by the Dublin city manager who arranged a meeting of the Dublin and Dún Laoghaire fire services. I understand also that a commission was set up by the Minister for Local Government in 1972 to report on the fire services for the whole country. Perhaps I might refer to the report of that commision. In recommendation 6.3.10 they recommended that Dún Laoghaire fire brigade merge with Dublin city fire brigade. I understand that the Dún Laoghaire fire brigade chief, who was a member of that commission, made a minority report not accepting the view of the majority. I need hardly say to the Parliamentary Secretary that we, in Dún Laoghaire, are very proud of our fire brigade. If we recall the time when Belfast was in danger, the first fire brigade to go up from the South was the Dún Laoghaire one. We are anxious to keep Dún Laoghaire fire brigade under Dún Laoghaire Corporation and separate from Dublin city.
This matter has been reported to Dún Laoghaire Corporation and we have had reports made to us by our own fire chief. I must make it clear that the Corporation of Dún Laoghaire, as yet, have not finalised their decision in this matter. I want to state quite clearly that I want to see Dún Laoghaire a separate fire brigade. I want adequate cover for the people of Dún Laoghaire. While there should be co-operation and while Dún Laoghaire fire brigade covers not alone the Dún Laoghaire borough area but a large portion of what might be described as the Rathdown area of south county Dublin, I would appeal to the Parliamentary Secretary to ensure that we have a separate fire brigade in Dún Laoghaire. We feel that an outsider fire brigade based in Dublin would not be adequate because if and when a major fire occurred in Dún Laoghaire the fire brigade from Dublin would have to travel out on a major road with great traffic hazards. The Parliamentary Secretary will remember that there was a very tragic fire recently in Dalkey although the fire brigade arrived on the scene within minutes. However if a major fire brigade were based in Dublin it could not have done so. In Dún Laoghaire we have hotels and some industries and we are anxious to retain our own brigade.
This is the second Supplementary Estimate for Local Government we have had before the House. Reading through it, I notice emphasis is placed on the trend in general spending. It is both centralised and local.
If one looks at the total spending in relation not merely to the Department of Local Government but all local authorities together it amounts to £365 million, and that is £1 million a day. It is a good deal of money but, as was said here tonight and as is freely admitted, the trend is Government spending. Whether or not the money is always wisely spent is the question, and I am not referring specifically to the Department of Local Government. The Department of Local Government performs very useful functions in the sense that it is responsible for many matters which affect the lives of the people. Not the least of these is the administration of local government for housing, roads, sanitation, and I was hoping to add earlier tonight when we were talking on the subject of tourism, another subhead. I suggest some Department be made ultimately responsible for pollution. However, I cannot elaborate on that here because one is confined to the six subheads mentioned in this Supplementary Estimate.
As I said, housing is not the least of them and in the last number of years housing has become a very hot subject. It is debated on and off platforms, on the floor of this House, at local authority meetings and so on. We were castigated for not being interested in building houses. Yet we find that the last year we were in office we left 24,000 houses behind us. They were houses at a price to suit the pockets of the newly-weds and they were able to pay for them. Today we find, unfortunately, that even the State support for housing is not all that strong despite the amount in question here. When a newly-wed buys a house, contemplates the repayments on it and the investment involved, he finds it hard to earn enough money to service the money he borrowed for the house. This is the crucial question for newly-weds. I am not referring to quality, merely to price. It behoves this House and especially the Minister for Local Government and all local authorities to re-affirm intentions in this regard. The price of money is driving housing out of the reach of the ordinary working person. There is no doubt about this. Despite the fact that we have recourse to the Local Loans Fund, the building societies, the insurance companies, and the £40 million set aside by the banks this year, those of us who are members of local authorities still find ourselves having to build houses for people with relatively high incomes compared with a few years ago, simply because those people are not able to avail themselves of the opportunity to borrow from the Local Loans Fund because the amount available would not be of any use to them.
Another big problem connected with the financing of housing is that a person who borrows from the Local Loans Fund may have to have recourse to a bridging loan. I have seen unfortunate young fellows nearly robbed clean by bridging loans while waiting for clearance for local authority loans. The Minister, in conjunction with banks, building societies, insurance companies and other lending sources should examine this question. Housing is of paramount importance and we should always aim at cheap housing and at providing finance for houses where they are most needed and at reduced interest rates. This is not an easy task, because the more we spend on development the more demand there is on the money. When there is demand for anything it becomes scarce and dear, and this is just what is happening at present.
The argument which goes on about whether we should expand the private housing sector or build more public authority houses is irrelevant when it comes to the price of money. A question I have asked for some time-and I have not seen concrete figures in this respect—is: what is the real cost of, say, a four-roomed public authority house? I suspect that when everything is taken into account it is a pretty dear house. As I said, I was searching through various publications and documents to see if someone would come up with a figure, and someone did ultimately mention a figure of £10,000. I have not seen that figure disputed, and regrettably, I never had time to refer to An Foras Forbartha to verify that figure. If a public authority house costs £10,000, it is a very dear house, and we should take steps to find out what is the actual cost.
I am not blaming local authorities because we are all caught up in this system of dear money and scrambling for scarce resources. As Deputy Faulkner said, it is a tender market and if you put your finger on a nerve you are liable to bring about some type of seizure in the system where money will either disappear, go up in price and certainly get scarce. Today the cost of money, labour, and land tends to push up the value of the house on the unfortunate person seeking one. It would not be an easy task to bring down the price of housing in a hurry. Whatever way we may differ about who will build the cheapest house, who will provide the cheapest land or which system of erecting the house is the cheapest, whether in the public sector or the private sector, we should try to find some system of keeping the price of housing on a more even keel here.
We will not be able to meet the backlog in local authority housing if we do not do something about the price. The cost is enormous today if one takes the cost of providing proper servicing for those houses, proper sanitary services, lighting and so on. This results in either higher rates to the local authorities where they have a gain to create a special interest subsidy to service the cash, or the unfortunate tenant finds himself hardly able to meet the rent involved. If it were not for the differential renting system a great number of people in houses would not be able to afford them. Whether we agree with this system, or not whatever is dear in the system, housing is relatively cheap.
We have available to us the best guidance and advice and it should not be beyond our imagination or the bounds of possibility to make some impact on the cost of housing. An Foras Forbartha or the Minister should in any year provide a special prize for the firm or local authority who can come up with the most functional house at the keenest price. Such a house should include all the latest requirements of insulation and so on. This would renew interest in this very important sector of our economy. House building provides a living for a great number of people. Our hopes in the last couple of years were not maintained in this regard. We were not able to provide employment for such a large number in the private sector. The result is that a number of men who were gainfully employed up to this are now on the unemployment lists. The sooner they can be got back into full employment the better.
The amount of money allocated to an applicant through the local loans fund is not enough having regard to cost generally. We should take steps at local authority level, in conjunction with the Department of Local Government in an administrative way, to try to kill off for all time, the bridging loan system. Until legal conditions are fulfilled the law demands that before money can be issued from the local loans fund certain documents in connection with a house must be provided. That relates to ownership of the site. No money will issue to an applicant until those conditions are fulfilled. We should be able to find a way around that. Surely an applicant who selects a site for a house and proceeds to lay a foundation intends to complete the house. Therefore, there should be some statutory conditions which could be met by applicants who otherwise have to have recourse to the bridging loans. It is despicable what banks charge and also the way they hound the unfortunate applicants to pay back the money lent.
The Parliamentary Secretary mentioned the building societies. Once the subsidisation to the building societies of 1 per cent, now ¾ per cent, took place they began to loan money again and people were prepared to invest money with them. It will be an interesting question if this subsidy is withdrawn. I am not saying it will, but it is certainly being scaled down. If it is withdrawn it will be interesting to see what results it will produce having regard to the conditions which exist now. In the light of those conditions and in view of the demand for housing I would be against withdrawal of the subsidy.
Money devoted to house building multiplies itself and the multiplier factor here works faster in regard to housing than in many other sectors of the economy. If we allocate money to housing we do not create a balance of payments problem because the labour content in that industry is high and the demand for imports is not great if we use our native resources of timber, cement and other building materials.
In addition to recommending that bridging finance be eased, I hope the Minister will be in a position to advocate higher loans from the Local Loans Fund and also an increase in housing grants. This is good business because the improvement of the national housing stock is a long-term investment. During the years we have been able to keep the housing stock in a reasonable state of repair, but at the same time there are enormous numbers of applicants for new houses in each local authority area. There is a place for the private sector as well as the public sector. There is plenty of scope for building societies provided they are competitive. There is opportunity for investment by insurance companies and by the banks who have provided finance in the last year. This is welcome trend. It may be that housing is not as lucrative as office building, but if the Government have any voice in this matter they should concentrate more on housing. Having regard to the development that has taken place in this city in the last few years, office building must be up to requirement now. If we have the money we must concentrate on providing homes for needy people. At the same time we will be giving employment for 70,000 or 80,000 skilled people in the industry.
The Minister for Local Government should urge the Minister for Finance to remove income tax liability from building societies. It would be a relief and it would lessen the cost of housing. He should insist on the building societies using all their funds for house building alone. The business of these societies should be to deal wholly with the building of houses in the private sector and they should allocate all their funds to housing loans. If the Minister for Local Government is able to prevail on his colleague to get the building societies to agree to this he will be doing a good day's work. We should be considering the design of a new system for loans and built into that design should be cheaper finance.
The Minister referred to the oil refinery for Dublin Bay. It was somewhat disappointing to see that the agency involved do not seem to be pushing ahead. It appears the Minister has had to use the whip in order to get a reply from those people. If they were sufficiently concerned to make application in the first instance and if they were so annoyed that their application was refused by the Dublin authority, why are they not replying to the Minister, putting forward arguments in support of their case? The Minister has invited them to do so but the agency are not giving any sign that they are in any hurry to bring the case to a conclusion. The Minister is entitled to ask those involved to speed up their consultations in order to finalise the matter.
The Minister also referred to the report on the fire services. Members of local authorities have received copies of the report of the working party who considered this matter. Those of us who are involved in local authority work know that fire brigades in each area are called upon to deal with a variety of outbreaks.
