This Bill proposes to raise the statutory ceiling on total issues from the Local Loans Fund from its present level of £2,500 million to a new level of £3,500 million. Total issues to date are £2,300 million, leaving only £200 million available within the margin. At the present rate of issue this margin may be exhausted by late summer or early autumn of this year. It has therefore become necessary to raise the limit so as to make provision for future years.
Raising the limit on loan issues does not of itself have any implications for the size of allocations for the various services financed by the Local Loans Fund. These allocations are fixed annually by Government decision in the context of the Public Capital Programme. The Local Loans Fund merely provides a channel through which the approved allocations may be transmitted to the local authorities.
The Local Loans Fund was established in 1935 as a facility for providing loan capital to local authorities. The main services it finances are local authority housing and sanitary schemes. It also makes funds available for house purchase loans. The fund is also the channel for the Exchequer contribution to fire services, swimming pools, and itinerant settlement, as well as courthouses and harbour works. Until recent years loans were also provided from the fund for capital works at second level vocational schools and for certain categories of hospital. These services are now financed fully by direct grant through the Votes for Post-Primary Education and Health respectively.
Of the advances made annually from the fund, by far the biggest share goes to local authority housing and sanitary services. In 1982 total advances amounted to £386 million. Of this total £186 million was allocated to local authority housing and £82 million to water and sewerage schemes. The corresponding allocations in 1983 are £208 million and £97 million respectively, out of estimated total issues of £377 million.
Loans from the fund are repayable on an annuity basis. The normal repayment period is between 25 and 35 years, varying from service to service. In practice the Exchequer meets a very large proportion of the loan charges, principal and interest, on advances from the fund. Repayments on local authority housing loans are fully subsidised by the Exchequer and sanitary services loans attract subsidies of between 40 per cent and 60 per cent. In 1983 the subsidies for housing and sanitary service loan repayments amount to £128 million and £29 million respectively. Certain minor services are also subsidised fully or partially.
Members of the House will have noted that total estimated issues from the fund in 1983 are slightly down on the 1982 aggregate. This reduction is due to a shift in the relative weights of SDA loans and Housing Finance Agency loans in the State's mortgage finance programme and does not represent a reduction in State support for the services involved. House purchase loans — that is the SDA loans — are financed mainly from the Local Loans Fund, while the HFA obtains its funds directly from its own bond issues. The allocation for SDA loans and supplementary grants in the current year is £64 million, to be supplemented by an additional £16 million from local authorities' internal revenue, mainly from the sale of local authority houses. This represents a reduction on the £93.3 million provided in 1982, but this reduction is more than offset by the increase in the level of mortgage finance being provided by the Housing Finance Agency. The HFA made £15.6 million available last year, whereas this year's estimate stands at £50 million.
As I mentioned earlier, the Bill is simply an enabling measure providing the statutory machinery for channelling loan capital allocations to local authorities. The Local Loans Fund does not itself specify allocations for services. The limit on issues is raised from time to time as required. When the fund was established in 1935 the limit was fixed at £5 million. Over the years it has been increased 16 times. The last occasion was in 1980 when it was set at its present level of £2,500 million. I would expect that the new limit of £3,500 million should meet requirements over the next few years.
I recommend the Bill for the approval of the House.