Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Tuesday, 17 Jun 1986

Vol. 368 No. 1

Local Loans Fund (Amendment) Bill, 1986: Second Stage.

I move: "That the Bill be now read a Second Time."

The purpose of the Bill is to raise the cash ceiling on the amount which may be advanced from the Local Loans Fund. The fund provides loan capital to local authorities to finance their capital development programmes. The construction of local authority housing and sanitary services programmes are the largest beneficiaries from the fund. House purchase loans under the Small Dwellings Acquisition Acts — or SDA loans as they are generally known — are also financed from the fund.

The fund is itself financed by means of advances from the Exchequer. It was formally established in 1935 by the Local Loans Fund Act of that year although this form of financing of local authorities by the Exchequer originates in the 19th century, 1887 I think.

The ceiling on issues from the fund has been progressively increased since it was set up and now stands at £3,500 million as provided in the Act of 1983. This ceiling will be reached shortly and must be increased if the LLF is to continue to operate. The revised ceiling proposed is £4,500 million which should be sufficient to meet requirements for the next three to four years.

It might interest Deputies to know that the original ceiling on issues from the fund was set at a mere £5 million. Yet between 1983 and 1986 £1,000 million will have been issued reflecting the dramatic increase in public investment in infrastructure in recent years. This is even more striking when one considers that the £1,000 million I refer to does not include certain capital items notably roadworks, which are not funded through the LLF but through voted moneys, that is, direct grants payable from the Vote for the Department of the Environment.

Total public investment through the public capital programme this year will be £1,681 million, of which £324.0 million will be financed through the Local Loans Fund. The principal elements are £178.8 million for LA house construction, £77 million for sanitary services and £62.0 million for the SDA scheme. The total provision for SDA loans is £83 million, the balance coming from repayments on existing mortgages.

Housing continues to receive a large proportion of public investment. Public housing represents about 55 per cent of all expenditure from the LLF. House completions by local authorities for the years 1982 to 1985 reached 25,400. The total number housed increased from 7,900 in 1982 to 11,750 in 1985. A major factor in achieving this breakthrough in the provision of LA housing has been the success of the £5,000 grant scheme for LA tenants vacating their houses and moving into the private sector. The scheme which was introduced as part of the national plan has been remarkably successful. It is estimated that 2,200 dwellings were vacated in 1985 as a result of the scheme and this should be exceeded in 1986.

The level of expenditure on SDA loans, although sizeable at £83 million has fallen somewhat since loans from the Housing Finance Agency became available in 1982. In the meantime the agency have advanced mortgages totalling £280 million. The HFA raise their own funds directly from the market and are not financed from the Local Loans Fund. The PCP provision for HFA loans in 1986 is £86 million. Therefore, the pool of publicly funded mortgage finance available through these two schemes is substantial — £169 million in 1986 compared to £65 million in 1980 when only the SDA scheme existed.

Loans from the Local Loans Fund are repayable by the local authorities on an annuity basis. The normal period of repayment is 25-30 years. The rate of interest chargeable at present is 9 per cent — the current Exchequer lending rate. SDA capital is made available to local authorities at a fixed rate of 9 per cent, the current Exchequer lending rate.

In practice the Exchequer meets a large proportion of the loan charges on advances from the fund, both capital repayments and interest. For example, it meets the full loan charges on local authority housing and 40 per cent to 60 per cent of the charges in respect of sanitary services. The annual cost is shown in the Vote for the Department of the Environment. The amount provided for 1986 is £179 million for local authority housing and £46 million for sanitary services.

As I have said, the Local Loans Fund is an integral part of local authority financing and this legislation is required to allow the fund to continue to function. The existing ceiling will probably be reached by late summer and the revised ceiling must be approved by then.

I commend the Bill for the approval of the House.

As the Minister of State has indicated in introducing this Bill, when the Local Loans Fund was first established in 1935 on a statutory basis the amount involved was £5 million. Even allowing for inflation in the years between, it is clear that the scope and function of the Local Loans Fund has increased and extended quite dramatically to cover areas that the Minister has now referred to.

I want to make some comments generally in relation to local authority financing and to the manner of the administration of the Local Loans Fund, and to endeavour to ensure that in terms of the actual allocation of such major resources as we are speaking about here this afternoon — £4,500 million in terms of guaranteed loans — we can be guaranteed as well that the authorities that administer them are equipped and adequately financed in other directions to ensure that these programmes that have grown so enormously, from £5 million in 1935 to a loan guarantee of £4,500 million, are in line with the financial position at the moment and also with the most prudent and effective allocation of public resources.

The first point I would like to make is one that was made here on the last occasion when these were introduced, when our spokesman inquired of the Minister's predecessor why it was that this legislation was introduced by that Minister. Perhaps in this case it is because the Minister is the Minister of State in the Department of Finance and in that capacity can understand it quite well. Even if that is so, it would appear, however, that when we are talking of funds of such a significant amount that it should be the Minister for Finance himself who would introduce the legislation. I say this without any implied criticism of the Minister in the House or any suggestion that she has not the capacity or otherwise to deal with it. But it appears to me that in terms of ministerial function it would be more appropriate that a Minister for Finance would introduce this legislation. Alternatively, it would be appropriate for the Minister for the Environment to do so, because the total amount of funds being provided are for programmes which, as the Minister has indicated, are a very essential part of the funding of local authorities' housing programmes, service programmes, sewerage facilities and the whole SDA scheme.

I would ask a rhetorical question. In an era when we are talking about Dáil reform, why should a Minister who has responsibility for an important area — public works and all to do with public works — be introducing this legislation in the House? The same question was asked the last time. It was not, to my knowledge, answered; and apparently it is not going to be answered today. We are talking about major financing and I have no doubt at all that the Minister of State who is present here, given the responsibility for major financing, could cope very adequately with it, but in fact she does not have his responsibility.

On the question of financing of local authorities, of which this forms an integral part, it is very clear that the whole financing of local authorities is at this point in a state of crisis. At a recent meeting of the General Council of County Councils the chairman of the General Council of County Councils, in a very informed and direct address, pointed out that matter very cogently, and anyone who has any experience of local authorities at the moment will have to acknowledge that financing of local authorities today is in a state of crisis. Wherever we go we are informed that the necessary resources are not being provided by the Exchequer to make up for the base of local rating which was an essential part of local authority financing, and because they are not we are faced with the position where attempts are being made through a variety of means, notably local charges, to make up the differential between what the Exchequer should provide and that which would otherwise be available from local rates. This has clearly not worked. We find that charges are, for one reason or another, not being paid; people are unable to pay them or unwilling to pay them. They clearly will not meet these extra impositions which are the consequence of a Government decision about three years ago when they transferred the responsibility for these charges to the county manager.

We are dealing with local authorities, elected representatives. If elected representatives are to have a meaningful role at any level, then they must have authority. It is quite clear that the elected representatives of this nation who serve on local authorities do not have effective authority at this stage. I cannot think of any person in the democratic function in this country who has the powers now delegated, by this Government particularly, to the county manager — and already they were considerable. The Taoiseach, in order to bring proposals before this House, must get agreement not just from his own parties in Government but from his colleagues in collective responsibility in Government. That often involves a very detailed, difficult and important process; and, when that process has been completed in the proper democratic manner, the Taoiseach and the Government then bring the proposals before Dáil Éireann where they are debated in detail, questioned, analysed, sometimes opposed, sometimes supported. In any event it is subject to full democratic scrutiny in the way that democracy is meant to operate. On the other hand it has to be said — and this is evidenced by the significance of what the Government have done — that transferring powers such as have been transferred to county managers in addition to what they already enjoyed under the Managerial Act — and I say this without any criticism of individual managers — means, and any local representative will confirm this, that the manager effectively exercises almost exclusive authority. It means that the people elected by the people, the local authority representatives, are not enabled or allowed to discharge the effective, democratic role which is the cornerstone of the democratic procedure in most of our European partner countries. If we want to have full democratic involvement, so that the people will not feel remote from the decision-making and will feel directly able to make an input into it, then we will have to ensure that the local authorities in respect of whom we are making these major provisions are answerable to the people in respect of all the decisions they take, and that can only be achieved when those who are elected have authority and the responsibility of answering to the electorate.

The county manager does not have to bring his proposals before the Government as the Taoiseach does. He certainly does not have to bring them before the Dáil as the Taoiseach and his Government do. In many cases the decision is a fait accompli and mature adults are forced to react to decisions being taken by an administrator with very considerable powers. That is not the way in which democracy was meant to function. It is time that the Members on both sides of this House recognised that fact. If we want local authorities to function as originally envisaged there must be not just accountability on the part of the county manager with his rather extraordinary powers but on the part of the members of that authority.

It has been very clear for some time that the real potential of local authorities is as developmental bodies. The best example is Switzerland, but we can take as examples other countries in Europe such as The Netherlands, Belgium or France, which have real local authority devolved from central government. It is quite clear that these authorities function in a manner which is very much in tune with the developmental needs of their immediate communes or electoral areas. The elected members there have an authority, responsibility and status that our elected members do not have. It is time we realised that we have a major leap to make to achieve that position here. It is for that reason that we have proposed and will implement in Government local government reform, which is long overdue, in order to ensure that if there are, for instance, to be industrial development programmes the local authorities, be they county or urban, will be in tune constantly with the potential of and the need for those programmes and will harmonise all their policies to ensure a maximisation of the development of such programmes.

If there are to be housing programmes, it is important that decisions as to, first, the location of those programmes or schemes and, secondly, their nature and style, and all that means with regard to the housing environment in our towns and cities, should be conducive to better living and better community standards. They must be matters for full discussion by the relevant local authority. They are being discussed at present, but not as Members on either side of this House would wish. We do not want county councils to be told that they have a certain amount of money for a new scheme at Raheen or Killaloe and that is it. There is much more to local government than that, but that is the way it has been operating for some time now.

This Bill has the support of all sides of the House because of the important elements involved in the funding programmes. It is an opportunity for highlighting the fact that we are not talking about just passing on funds. Where funds of the nature of £4,500 million are being administered, there must be accountability to the electorate. That is not the characteristic of the local government scene at the moment. Secondly, everybody acknowledges and welcomes the fact that here we have had for a very considerable time a major commitment to public housing. Our expenditure is far higher than that of almost any other country in Europe. This is because of the very inadequate housing stock initially over the years and the obligation faced by the State to provide for the basic right and need for adequate housing for those who could not afford such from their own incomes. This has developed to the point that we are now probably more committed to public authority housing than any other country.

The basis for local authority housing goes back to the Housing of the Working Classes Act of the last century. The impression has stayed with the public generally that it is the manual working classes only who are suitably qualified for local authority housing. I am not saying that that is how it is applied by local authorities, but that is the perception of the public. Many people in clerical and administrative positions tend to provide and build their own houses for one reason or another, perhaps as a matter of pride or status. Many with lower incomes are providing their own housing through other loan facilities while some with higher incomes naturally are turning to the local authorities. We should have a good look at this aspect to ensure that incomes and not the nature of the work is and will always be the criterion for qualification for housing development. The traditional attitudes that we have all inherited are certainly due for review.

This Bill is short and, like all short Bills, is all the more significant in that in one line a figure can be increased from £3,500 million to £4,500 million, which is a matter of major significance. As a contrast, there is the Finance Bill where we must go through the most complex drafting of perhaps 25 pages to the least effect. This Bill in one line can achieve more than 40 or 50 sections of a Finance Bill. It is important that we address ourselves to the scope of action required here.

When we speak of home ownership, we mean the conventional home, if possible the house with its own frontage and garden based on the ground. High rise developments, a feature of other countries, have not worked successfully here, although time may demonstrate that what first was resisted can subsequently develop into a very fine housing programme. I am not an expert on housing and do not pose as such. In most other European towns the secure conventional house that we provide here through local authorities is not a feature of their public housing. They deal with apartments and high rise developments.

We must ensure that our pattern of housing must be maintained because it is more characteristic of the Irish house and home. We must also consider how long we shall be able to sustain effectively a rate of growth of guarantee funding at this level. How long can we see the expenditure grow from £5 million to £4,500 million in terms of ancillary services such as sanitation? One point that I would make, which I hope will be taken in the spirit suggested by the Minister, is that it is clear that there is now very considerable scope for a much more imaginative approach to local authority financing than we have seen in recent years. I am thinking particularly in terms of joint ventures, even in matters such as servicing and housing programmes and matters of that kind.

We can enlist the private sector in joint ventures with the public sector where funds are clearly in scarce supply in the public sector. We can give guarantees but at the end of the day we, the taxpayers, must pay for them. Anything that can be done to recruit others in support of essential housing programmes for the lower income groups must be done in a sophisticated and imaginative way.

I took up responsibility as spokesman for Finance some years ago. Many people are interested in joint ventures with the Government or with local government, be they pension funds, investment trusts or construction companies. Our major construction companies have at least 85 per cent of their investment programmes outside of Ireland. That is shocking, but it is true. The ones which we always regarded as the flagships are not developing here because the investment climate in terms of the private sector is such as to discourage investment here. I do not wish to name them because they do not require to be named.

If anyone wishes to check through the list of major construction companies, they will find that 85 per cent of their major investment commitments are not in Ireland but are a long distance from Ireland. As was said dramatically to me, that is necessary to maintain the 15 per cent skeleton at home. This is because the investment climate for the private sector, the whole tax regime and the incentive for investment have been suffocated. It is no surprise that where the private sector cannot get the opportunity to take a role in this area, we have to extend the limit of the public sector guarantee on loan funds to £4,500 million. In the old days we could boast that we were providing so much money. We are providing this money at a time when the local authority financing programme is in crisis and when those who could be involved in joint ventures which might lift some of the burden from the public purse are otherwise involved in imaginative areas and are not prepared to undertake this venture.

I suggest that we look at the role of building societies. I do not wish to be critical of our building societies. The role of building societies in Britain should be encouraged here if the climate for doing so is right. They can promote building programmes for people on low income, even for pensioners, on the basis of home ownership. We should encourage home ownership. I agree with any suggestion in terms of purchase schemes under local authorities. That is the right direction to take. It is not always essential that it be done through the expanding State or local authority sector. It is time that we asked ourselves how long can we continue without calling on the support of those who are ready to give it. If the return is there for them, they will do it at least as cost effectively as the public sector can.

If we compare the role of building societies in Britain with the role here, we will find that there is a considerale difference between them. It is time we looked at that. The nature of the housing programmes they undertake is very different. The income groups they accommodate are very different. The financial services they provide are very different. The opportunities available to them are very different and the burden they lift from the State purse is also very different. It is time that we looked at these areas to see how we can recruit either the capital or the expertise to ensure that our housing programmes, both public and private, are conducted efficiently in order to minimise the level of Exchequer guarantee where appropriate, which at the end of the day means tax and the taxpayer. It is for that reason that I look on this Bill as an opportunity at least to signal that it is time we reviewed our position. Deputies in the House who are members of local authorities—I am not—are much better equipped to talk in terms of the effective operation of these schemes.

I do not want to take any credit from the Minister. We are talking in terms of the total number of houses increasing from 7,900 in 1982 to 11,750 in 1985. A considerable number of houses are laying vacant in some areas. That may not be the case in regard to every county council administrative area. In some parts of Dublin houses are lying vacant for some time. That can hardly be said to be efficient. We cannot force people to occupy houses. Programmes based on home ownership are the best guarantee that people will either occupy their houses or dispose of them to others who will occupy them. In regard to local authority housing — and this is understandable — in many cases the rents paid are just about adequate, if they are, to finance the general maintenance of the houses, not the capital cost of construction. It has been an essential characteristic of our programmes and policies from the beginning that those who cannot afford houses will be guaranteed them. We should encourage people to seek finance from other sources in order to lift the burden from the taxpayer generally. I would like to see that approach adopted in the course of local government development programmes and housing programmes from now on.

Anything I have said has to be seen in the context that the local authorities who administer these funds must be meaningful, real, democratic authorities where the democratic process is exercised effectively and is seen to be exercised.

I would have to say, everyone in the House would have to say, that is not the way at present. If we want to recruit good young people into local government service—and we have a fantastic reserve of ability, knowledge and commitment throughout the country—we must do so on the basis that they will know that they will have a real role and responsibility as local representatives, that they will have something which will stimulate and challenge them and give them the opportunity to make an effective contribution to the development of their own communities. That role is not there at present. I say that only from a brief experience on a local authority and from very constant contacts with colleagues on local authorities. That has to change.

Fianna Fáil could never depart from what was an essential feature of our programme, adequate housing, particularly for the poorer groups. We have imaginative proposals, the full details of which will come in time, to ensure that we not only can provide adequate housing but can do so without increasing the burden on the State unnecessarily. We are prepared to support this Bill and allow it through. Why is the Minister for Finance not introducing this Bill? If not the Minister for Finance, why not the Minister for the Environment? Perhaps, the Minister will advance some of the points I have made to ensure we have the same standard of housing and at a lower cost to the State.

I welcome the amendment to the Bill. I am not a great expert on local authorities because I have not long been a member of one. It is right to say that local authorities are starved of finance. It is very frustrating to be a member of a local authority, as we like to get necessary work done. Yesterday, at Cork County Council I requested a survey be carried out in the northern area. I would class that as a very important survey from the point of view of making piped water available to people who can ill afford to pay for it. The engineer pointed out to me that they did not have the staff or resources to carry out such a task due to inadequate financing. We in the northern area of Cork County Council have been proud of the fact that we are one of the areas, after South Tipperary, which has the highest level of piped water supply in the country. There are still people living in areas which are without this facility. I would hope that some type of funding will be made available to alleviate this problem so that the job can be completed. This would be very worth while. It is very important to retain people in rural areas where they were born and raised and from where they would not like to move.

This Local Loans Fund has a wide spectrum of activity from the point of view of financing. It covers a broad area. By and large in my own county there have been many local authority housing developments built over the years. In towns like Fermoy and Mallow we are having problems. I do not want to be seen as too local when speaking on this fund. For the record, at present in the town of Mallow there are 105 applications for a 25 house scheme. That is serious in its own way. We are not keeping pace with the needs of families in the area. In Fermoy, there is a similar story to tell. One of the failings of local authorities is that they have an inclination, whether by policy or otherwise, to draw people from rural areas and house them in what I would call large built-up areas. This puts pressure on schools and facilities in those towns. Many of our villages are very well looked after with facilities such as post offices and adequate schools. Another failure is that when we take people from the environment in which they are born and raised and house them in new areas, it takes them a long time to settle down. This often does not suit them as they were raised in a rural area. The reason why they drift towards towns is that they falsely believe that they will become more entitled to housing by paying an exorbitant rate of rent.

I appreciate the Local Loans Fund goes to finance housing; but housing policy, I would imagine, would be environmental policy, not financial.

I am not too good at finance. I welcome the fact that extra finance is being made available through SDA loans. I am a great believer in people owning their own homes. This gives them an independence. Recently, the ceiling was raised from £16,000 to £20,000. It was a coincidence that I had a question on the Order Paper asking the Minister if he would have a look at that situation. Before my question was answered he had this changed. I was very proud that I was in line to know that people were so concerned about this. Local and SDA loans are very important from the point view of people who want to avail of moneys to build their own homes. The interest rate at 9 per cent is very competitive and is the best value for money one can get at present. If interest rates were keeping pace with inflation it should be substantially lower, but it is the best value on the market from the point of view of other agencies who are making funds available for private house building. For people who can afford to build their own houses there is encouragement in this.

Another area which I am concerned with is the level of repayments for tenant purchasers. This area should be looked at again. Many tenants are in local authority houses for five to six years before a tenant purchase scheme is brought into existence.

That is for the Minister for the Environment. The Minister of State has no responsibility whatsoever.

I thought the Minister of State had responsibility.

A good try on the part of the Deputy.

The financing of local authorities overall is far from satisfactory. Over the years there were Government promises to the effect that they would be refunded 100 per cent by the Exchequer whereas they have been refunded to the tune of 69 per cent only. This is a cause of major concern to all local authorities. Our roads are in a deplorable state, practically impassable, especially county and regional roads. There has been the discontinuation of local improvements schemes, all of which should come under the heading of the Local Loans Fund.

And the Minister for the Environment.

This Government have not kept pace or ensured that local authorities were adequately funded, which has led to a serious deterioration overall in their funding and which is very frustrating for local councillors. I would appeal to the Government to make extra funding available to them so that they can carry out the task assigned them.

Perhaps the Minister would have a survey carried out of every local authority in the country to ensure that proper sanitary services are available in all houses. I know there are a number of local authority houses with toilet but no bathroom facilities. Likewise, many local authority houses have no hot or cold water. I know that to be the case in my own town and county. Now that the £5,000 grant has been made available——

Proper to the Minister for the Environment, Deputy.

I know, but it arises under the Bill before us. I would ask that moneys be made available to ensure that every local authority house has proper sanitary services. There are also a number of local authority houses, still in the ownership of county councils and corporations, in need of repair. I hope that a survey will be undertaken and that moneys will be made available to ensure that such houses are brought up to the requisite standard.

I have not even had an opportunity of reading the Minister's introductory remarks. Are we allowed to speak about roads?

No, Deputy, I am sorry.

I see, just local authority funding. This £5,000 grant should ease the general housing situation. Unfortunately, the funds at present being made available to local authorities to provide housing accommodation are totally inadequate. Every local authority is in need of massive injections of money in order to keep going. Being a member of a local authority, having made representations to the county secretary, housing officers and so on, I am aware that the money made available from the Department by way of block grants towards repairs and maintenance of local authority housing is totally inadequate. I made representations to the county manager, county secretary and housing officer of Sligo County Council to ensure the availability of this £5,000 grant because one sees many pre-1940 houses on which very little maintenance work has been carried out in their lifetime.

Local authorities carry out a number of small sewerage and water schemes which are an asset to any town or village. Certainly I know that any small sewerage schemes undertaken by the local authority in my county, with the aid of a grant from the Department, have been much welcomed. Therefore, I would ask the Minister to make more moneys available for this purpose, which would also lead to the creation of employment. The same is applicable to water schemes, because there remain many houses throughout the country without a water supply. Therefore, the requisite finance should be made available to local authorities for the provision of these services. Finally, I would ask the Minister to initiate the survey I have mentioned.

Debate adjourned.