I move:
That Dáil Éireann deplores the decision of the Government to deprive a large section of the community of new house grants and demands their immediate restoration.
The Minister's amendment asks the Dáil to take note of "the Government's decision to provide from the Exchequer in 1976 a record amount of finance for housing." The Minister must have been hard-pressed to put down such a meaningless amendment. One could say what is in this amendment about any year's expenditure compared with the previous year's. Such a statement might have some relevance in stable conditions, but it is meaningless in the highly inflationary conditions in which we live.
The Government's capital budget was no consolation for the house building industry with its miserable increase of 4.3 per cent for housing at a time when the projected inflation rate was 16 per cent, and I would emphasise the word "was" because since then we have had the calamitous budget which will raise the inflation rate considerably higher. There was a fair cutback in the money being made available in real terms. The tragedy is that an industry which is capable of giving such a quick and worthwhile return in the employment field if it is properly financed and directed, is left floundering through lack of a sound policy. This is nothing short of disgraceful when we have 117,000 people unemployed, and which shows the Minister's amendment to be the mockery it is.
In 1972-73 we built approximately 22,000 houses with £46 million, while the Government last year built, if I may take the Minister's figures, about 25,000 houses for almost three times that amount of money. This is a pointer to the complete incompetence of the Government in controlling inflation, and it also points to the nonsense of referring to amounts of expenditure without reference to inflation. I asked a question last week about the increase in the average gross price of new houses from June, 1973, to September, 1975, and the increase was given as 38.5 per cent. I wonder how this can relate to the fact that it has cost in money terms considerably more if we are to take the figures I have given for the cost of building the 22,000 houses as compared with the cost of building the 25,000 houses.
The private sector of the house building industry has been in a state of crisis for the past two years. This has been recognised by everybody, by public representatives at all levels and in all parties, by the Congress of Trade Unions, by the Federated Union of Employers, by those who are involved in building the houses and those who are involved in buying them, and by the media generally—in fact, by everybody in the country except the Minister for Local Government and the Government who keep trotting out statistics relating to house building time and time again as if these figures were a panacea for all ills. No matter what cries for assistance arose from this hard-pressed industry, the Minister simply brushed them aside. He repeated his now well-known, and, may I say, well-worn housing statistics, and he attributed all opposition to political opportunism.
I shall deal later on with our proposals in this field. I would point to the fact that the proposals we made for loans and grants and qualifying income limits were accepted in toto by many and varied groups throughout the country as being realistic and as being urgently necessary. I think we can take some pride from the fact that motions which were passed by the General Council of County Councils and by municipal authorities were almost word for word with and in the exact same form as the motions we had put forward in our policy for the general election and the local elections.
We have to consider a serious psychological situation. I am convinced that the Minister has now reached the stage where he believes his own propaganda, where he believes that all is well with the house building industry, where he believes that there is no crisis despite all the evidence to the contrary. If he does not believe it, I cannot understand how he has taken the decisions over the past six months which any person would hesitate to take even if the industry were enjoying prosperity.
If he did not believe this propaganda, how could he over the past six months have removed the State grant from over 50 per cent of house buyers? How could he raise the interest rate on the SDA loans by 2 per cent to a now colossal 12½ per cent? How could he remove the Government subsidy from the building societies, allowing them to raise their interest rate to 12½ per cent? How could he refuse—seeing that the increase in the cost has gone up, as per the question I put down, by 38½ per cent—to increase the SDA loan and the qualifying income limits? If he is so engulfed in his own propaganda as to believe that these hammer blows to the ailing private sector of the building industry will not severely damage that industry. then the prospects for this very great industry are very grim indeed.
It is only when those who are in a position to help recognise that there are problems that there is any hope that anything of consequence will be done to help the industry. So long as the Minister persists in holding the view that there is nothing wrong, so long will this industry continue to deteriorate. I would hope that he will change his mind in relation to it. At this stage I think I could ask with some justification why the Minister and, to some extent, the Government, appear to be bent on wrecking the private sector of the house building industry. Can it have anything to do with the Minister's many charges that the criticisms of those who are involved in the industry are politically motivated? If that is so, I can assure him that Governments in the past have always had similar feelings about any group that strongly pressed its case to the embarrassment of the Government concerned, and I have no doubt this will continue to be the position in the future. However, Governments and Ministers in a democratic society must accept criticism and continue to act responsibly.
I have often wondered whether the Minister felt that it was necessary to uphold socialist principles by stultifying the initiative of individuals who are willing and anxious to provide through their own efforts a home for their families. Whatever the reason is, the damage which has been caused to the industry generally and the problems and difficulties besetting individuals and families because of the present non-policy are very real, and unless something is done quickly to counteract the present trend, then the future for this industry is very bleak.
The policy of my party is to continue to develop the industry and to increase the number of local authority houses, to ensure that they are of a high standard, that they are sited in a suitable environment, and to give every possible assistance to those who desire to build or to buy their own houses. In May, 1973, the level of the SDA loans obtained from local authorities to enable people to build or buy their own homes was increased to £4,500. The qualifying income limit was fixed at £2,350, or £45 a week, for such loans. At that time the average gross price of an SDA loan house was £5,700 and the average income of industrial workers, for example, qualified them for loans. Quite clearly at that time, and previous to it, it was intended that people such as industrial workers would qualify for such loans. Indeed, many of them availed of the opportunity afforded to them. They do not qualify now because of the qualifying income limit.
Building and construction costs have escalated since that time. The average price of a house built under the SDA loan scheme in September, 1975, the latest date for which I have statistics, was £7,900 and, again, as per the question I asked, that is an increase of 38.5 per cent. To build or buy such a house prior to December, 1975, a person with an income of £2,350, or less, would qualify for an SDA loan of £4,500 which is the maximum loan. He would then need to procure £3,400 elsewhere. When the Minister was questioned as to where he would find this extra money, he declared as a solution to the problem that the person concerned should save. I would agree that thrift is a virtue. I, too, would advocate that those intending to get married should save as much as they can towards the cost of purchasing a house. Any reasonable person would agree that a young man or woman who could save £3,400 on a salary of less than £2,350, or £45 a week, in these days of constantly escalating prices, would merit the award of a very special medal.
It is interesting to note the manner in which the Minister repaid those who took his advice and scrimped and saved on a meagre salary since this advice was given. On 1st January, 1976, he removed from most of those people the State grant of £325 while, at the same time, his colleague, the Minister for Industry and Commerce, surreptitiously permitted increases ranging from 15 per cent to 25 per cent in the price of building material. In that way the Government, with one stroke of the pen, wiped out a saving of £1,000 by adding £1,000 to the cost of the house to the people concerned who proposed to build or buy in the coming year. In my view, this was not only a mean but a very cynical action. It did little to encourage the ordinary man in the street to have any faith in this Government.
The plain fact is that the applicant for an SDA loan has no alternative but to borrow most of the extra money from some other financial agency at a very much higher rate than he pays on the local authority market, bad and all as that is at present. Out of his, in present day conditions, very meagre salary or wage, he must repay the principal and interest on both loans at the same time. Thereby he is spending a very high proportion of his income on housing with a resultant financial squeeze on all other aspects of living. As I said previously, this has caused very considerable stress and strain which arise from the financial problems which have resulted from this position. In many instances, it has caused a nervous breakdown. In many instances, the wife is forced to continue working in outside employment after marriage. While I have no objections whatever to a wife working in outside employment after marriage if she so desires, it is quite a different matter altogether if she is forced to do so by a necessity of this kind.
We should remember that the applicant who borrows £4,500, which is the maximum loan, will now pay £48 a month, as opposed to £45 a month at the end of December, 1975. The latter figure is very much larger than that which was payable before the June budget of last year. In other words, repayment on the SDA loan amounts to about 25 per cent of his income, which income must be less than £45 a week. Over and above this he must repay the principal and interest on the extra money, the extra £3,400 which it was necessary for him to borrow at a high interest rate. Also involved in the purchase of a house are the cost of the furniture, the solicitor's fees, the surveyor's fees, and so on.
To add further to the problem of the unfortunate applicant, the Minister has now removed the State grant from all those who do not qualify for the supplementary grant, who are the majority of house purchasers. I want to stress this. The income limit to qualify for a supplementary new house grant for a single person is £1,950, or £37 a week. For a newly-married couple it is £2,050, or £39 a week. These are the figures with which we must concern ourselves and not the £2,350 per annum, small and all as that is, which was so well stressed by the Minister and his Department in the statements issued after the decision to withdraw the grants.
The income limit of £2,350 applies only to a man with a wife and three children dependent on him. The majority of those who are anxious to build or buy their own homes are either young men who propose to get married in the not-too-distant future, or young married couples. These are the people who are being forced by the Minister to forego the State grant of £325, the grant which the Minister and his Department described as having only minimal effect on those intending to build or purchase their own homes. If one were to relate the £325 to the total cost of the house, it might be said it constituted a relatively small portion of the cost. If the person buying a new house had only to find £325 we might agree it was a relatively small sum. Of course this is not the case at all.
We must relate the £325 State grant to the £3,400 he needs over and above the SDA loan and the now new total of £3,725 required could hardly be described as minimal for anybody not to mention those who have less than £37 a week. I should like to stress this again. The figure of £3,725 is just about two years' gross salary for a single man who would be entitled to a State grant. To find that kind of sum on that sort of income is impossible.
The fact is that for over 50 per cent of applicants who normally qualify for the State new house grant, the price of the house will rise by £325. They must find this money on top of the already high amount of extra money they need. This means that a single man who is anxious to get married and to buy or build his own house, if his income is more than £1,950 a year, or £37 a week, must find another £325. It means that a married couple without a family whose income is over £39 a week must find an extra £325. It means, in effect, that a very large number of those people will be forced to decide against providing their own houses and depend on the local authorities to do so. I do not need to add that these days the local authorities have very limited resources.
I noted with some interest the reaction of some Government Deputies in their efforts to support what I might term the insupportable decision of the Minister in relation to the grants. They stated that the grants simply went into the builders' pockets. I wonder if these Deputies have ever heard of the certificate of reasonable value issued by the Minister's Department in relation to house prices? Are they aware that, when reaching their conclusions on a fair price for a house, the Department take cognisance of the fact that the State grant is paid to the builder? Are they aware that the Minister himself recognised this when he stated recently that he would react strongly to any attempt by builders to increase house prices by more—I emphasise more—than the £325 per house as a result of the removal of the State grant. The case made by the Department simply will not wash. The fact remains that prices are rising by £325, which the unfortunate purchaser with more than £37 or £39 a week must pay.
Hard on the heels of this catastrophic decision by the Government and the Minister came another decision of a similar nature. This time the interest rate on SDA loans was increased for the second time in a few months and the rate now stands at a staggering 12½ per cent. These loans, intended to encourage people to provide homes for themselves, are now like the carrot too far ahead to reach. The various decisions taken by the Minister call into question the whole Government policy relating to private house building. Is it proposed to undermine it completely? Remember those paying this 12½ per cent interest are people with incomes of less than £45 a week. This is often forgotten, and unless we relate the shockingly high interest rate of 12½ per cent to the income of the borrower the real significance of the problem is not realised. Unless we relate the maximum SDA loan of £4,300 to the average price of a new house at £7,500 it is not possible to appreciate what the position is. It is only when all these factors are taken together that the frightening situation can be sufficiently emphasised.
To come back now to housing grants, on 1st January, 1976, which was a bank holiday, the announcement about the removal of the State grants was made. On the same day the Minister for Industry and Commerce secretly sanctioned a very large increase in the price of building materials. I say "secretly" because it did not appear in any of the papers for quite some time, in fact, not until my colleague, Deputy John O'Leary, raised it. On 2nd January, 1976, the rise in the interest rate on SDA loans to 12½ per cent was announced. This was in line with the familiar Coalition exercise of confusing the people and thereby avoiding debate. I refer to this specifically because of the now long forgotten promises of "open Government" by the Coalition before they got into office. The attempt to bemuse the people failed however and the country received the information with shocked surprise.
The arbitrary manner in which the announcement was made and the complete lack of consultation has deprived a great many small builders and many private individuals of their rights and, as far as I am concerned, of their money. The Department are well aware of the fact that in many instances, either because of lack of staff or ignorance of the rules and regulations, many small firms and individuals did not apply for grants until the new houses were well advanced. In fact, because the builder or the person buying the house was aware that part of the grant would not be paid until a certain stage in building had been reached, he did not apply for the grant until the house had reached that particular stage.
