asked the Minister for the Environment the precise mechanism that will result in the transfer of responsibility for SDA loans from the public sector finances to private sector finances; if such a change will result in private finance companies having direct mortgages on individual properties; and if he will make a statement on the matter.

44.

asked the Minister for the Environment if, following his announcement of the transfer of the funding system from SDA housing loans from public to private sources, he will outline whether local authorities will be required to administer the system; if so, the administration fees; if any, they would receive from the private finance sources; and if he will make a statement on the matter.

79.

asked the Minister for the Environment if his attention has been drawn to the difficulty being experienced by SDA loan applicants who are now directed by virtue of his Department's circular to approach financial institutions in the first instance.

I propose to take Questions Nos. 29, 44 and 79 together.

I announced on 27 October, that the banks and building societies have agreed to provide up to £70 million in 1988 to meet some of the demands for house purchase loans from persons who would normally have recourse to a local authority. Where a lending agency makes a loan under these arrangements it will, of course, take a mortgage on the property in line with standard practice. The agencies involved will administer their own loans and there is no question of the payment of fees by them to the local authority. Under the arrangements made, the lending agencies will not apply prior deposit or savings requirements to loan applicants and have agreed to lend up to 90 per cent of the house value.

To ensure that there is a transfer of demand from local authorities to the banks and building societies, all applicants seeking a local authority loan after 28 October must apply in the first place to a building society and/or a bank and produce evidence of refusal of a suitable loan by both a society and a bank before the application can be considered by the local authority. Applications already approved by local authorities at that date will be processed and paid in the normal way. Others who had lodged applications with local authorities which had not been approved, will, in general, be required to approach a bank or building society; in this connection a reasonable approach will be adopted by local authorities, where an applicant who is eligible for a local authority loan has failed to obtain a loan suitable to his needs from a building society or a bank, his application for a loan will be considered in the normal way by the local authority.

I am aware that in these initial stages difficulties have been experienced by some persons seeking loans from individual branches of the lending agencies. Steps have been taken by the Department and the agencies to overcome these teething problems and I am satisfied that the new arrangements will work well once the transitional difficulties have been resolved.

Is the Minister aware that at present these arrangements are causing chaos to people who otherwise would have applied for SDA loans? Is the Minister aware that many people who approach the addresses given for branches or agencies of these financial institutions are being refused a hearing and a letter of refusal on the basis that they are not clients, or customers or have money invested with those institutions? Is the Minister aware that as a result those people are unable to return to local authorities to apply for an SDA loan? What does the Minister intend to do about this?

The Deputy is correct in so far as there were some teething troubles attached to the administration of the scheme. Consultations have taken place with building societies and the banks because of the problems the Deputy has referred to. In my view, it was a problem of communication and, in some instances, of interpretation. The problem largely has been put right at this stage and arrangements have been made with the branch managers of building societies and circulars have been sent to the banks to give them a full briefing as to how they should approach the scheme. I have suggested to local authorities that they should liaise directly with the lending agencies in their respective areas. That has taken place in some areas and there is a working arrangement between the banks and local authorities. Where that has been put in place it has worked extremely well. I have received very good reports from those seeking loans and the institutions. I agree that the problem has not been fully sorted out but I am satisfied it will work well when the teething troubles have been overcome. Any inconvenience that has been suffered by applicants I regret but one way or another those entitled to a loan and those who are in a position to meet repayments on a loan will not be denied it because of this scheme. In fact, the scheme has advantages for them.

Will the Minister arrange that people who are not existing customers of those financial institutions be at least given a letter of refusal so that they can in turn apply for the SDA loan which they are deprived of under the new arrangements?

Following recent discussions with building societies, and a high level banking official, I am able to point out that it is not necessary to have a bank account or to have been a depositor with a building society to qualify for such a loan.

Unfortunately, some societies will not give a letter of refusal to people on the basis that they are not customers. They will not deal with them even to the level of issuing a formal refusal.

If that is the case I will take the matter up with them tomorrow.

I gather the Minister has very close contact with some of them. Will the Minister explain to us the level of unhappiness that the construction industry have in regard to this? I understand it has reached the stage where a delegation from the CIF walked out of a meeting in the Minister's Department last week because of the way the scheme is being administered.

There is no point in being provocative as far as relationships with the building societies are concerned but it is only right that I should point out that good relations exist between the Department of the Environment and the building societies.

The Minister has already been provocative towards the construction industry.

The question relates to SDA loans.

Is the Minister aware that representatives of the CIF walked out of a meeting last week?

It is not often understood that publicly funded loan schemes were always intended for those who were unable to obtain loans from the commercial sector. That was the position in many local authority areas long before I announced the details of the new scheme. The scheme which will apply across the board now has many advantages attached to it. I understand that many local authorities have expressed a great welcome for it.

Will the Minister say why representatives of the house builders walked out of a meeting which was discussing this scheme last week in his Department?

When the house builders see the scheme functioning properly they will find some positive aspects in it.

That is if there are any house builders left.

There will be increased activity as a result of the introduction of the scheme. In my view it will be to the advantage of the construction industry and that is what the Deputy and I wish.

Why did the representatives walk out of the meeting in the Minister's Department?

That concludes Question Time for today.