Jack Wall (Kildare South, Labour)
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I thank the Minister of State for the previous debate. The manner in which it was taken should be repeated regularly, as it was of benefit to the Opposition.

I raised the matter of local authorities' household loans in March. It relates to the announcement yesterday by the Taoiseach and the Ministers for Finance and Communications, Energy and Natural Resources concerning their proposal. In Dan White's Evening Herald article entitled, "NAMA for the little man? Not a chance", he states: "For those of us who were hoping for some original thinking on the problems of mortgage arrears and other personal debt, a NAMA for the little man, the report came as a severe disappointment." According to Charlie Weston and Áine Kerr in today's Irish Independent, yesterday's announcement meant that "people unable to manage repayments should be encouraged to leave their home and be provided with social housing". Their article went on: "When it is concluded that the mortgage is unsustainable then forbearance is unlikely to be appropriate and voluntary surrender may be necessary." The article also states: "People should be assisted in 'applying for social housing or other long-term housing supports appropriate to their needs'." They assert that the mortgage arrears resolution process, MARP, would allow home buyers to extend the terms of their mortgages, pay interest only or take payment breaks.

In the context of people with local authority loans, I have been seeking this type of latitude from the Minister for the Environment, Heritage and Local Government. I have asked him to implement a ministerial order in respect of section 34 of the Housing (Miscellaneous Provisions) Act 2009, which states: "Where there are moneys due and owing by a household to a housing authority under any of the provisions to which this section applies and the housing authority is satisfied that the household would otherwise suffer undue hardship, the housing authority may enter into arrangements with the household for the payment of those moneys (together with any interest that may have accrued under section 33(2)) by such instalments and at such times as the housing authority considers reasonable in all the circumstances in addition to any rent, charges, fees or loan repayments that the household is paying to the authority." That would allow the local authority to deal with the person in receipt of the loan. On the one hand we are talking about the Government giving direction to the banks as to how they should deal with the matter, while on the other within its own remit, it is refusing to allow the people to deal with the local authorities. In the essence of natural justice one would have to ask how the Government is doing this. How in the name of God is it saying that the banks must do this while denying people who purchase from local authorities the right to do it? That could not be fair.

The amazing thing is that under other sections of the Housing (Miscellaneous Provisions) Bill 2009 the Minister made a ministerial order. However, the one that would be effective in ensuring that a person has a roof over his or her head he denies. In today's newspaper report of what was announced yesterday it states that people will have to look for social housing yet when people talk to the local authorities they are being told in effect: "No, the deal is there and you contracted to pay so much per month. We have no leeway to work with you in relation to anything else." The local authority has no leeway under the legislation to purchase the house.

This is contradictory to what the local authorities are having to suffer. I have tremendous faith in this Minister of State, Deputy Moloney. I am asking him to bring this back to the Minister for the Environment, Heritage and Local Government and ask that natural justice prevail, so that section 34 of that Act is brought into play, and persons with loans from local authorities will be afforded the same leeway the expert group has given to the banks in this regard. Then people will be happy.

John Moloney (Laois-Offaly, Fianna Fail)
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I have heard Deputy Wall raise this issue on many occasions and I know how committed he is to see change here.

I thank the Deputy again for raising this important matter. As has been made clear by our swift response in immediately accepting all of the recommendations made by the mortgage arrears and personal debt review group in its interim report published yesterday, the Government is extremely conscious of the high value Irish people place on home ownership. Indeed, long before the setting up of the review group, we have already brought forward a range of measures to support and protect families having difficulties with their home mortgage payments.

The single most important advice for any borrower facing difficulties in meeting repayments - whether their mortgage is with a local authority or private institution - is to engage early, proactively and constructively with their lender to seek to achieve an agreed solution. To date there is no evidence to suggest that wider economic circumstances are creating problems specifically for local authority borrowers in meeting mortgage repayments. The most recent published data available to me are the service indicators 2008, published in June 2009. This shows local authority mortgage arrears levels running at 11.7%, a marginal increase on the level in 2007, which stood at 11.6%. Similarly, despite worsening economic conditions generally, repossession remains extremely rare for local authority borrowers with only 66 repossessions across all local authorities carried out in the five year period 2005-09.

Local authority borrowers have received considerable protection from the worst effects of the downturn in terms of their borrowing costs. The effective rate for borrowers has come down by 3% since end November 2008 and now stands at just 2.25%. These rates represent exceptional value by comparison to rates charged by commercial lenders; as of now, the local authority rate is more than 0.9% lower than the average market variable rate.

Provisions regarding lending by local authorities for the purposes of house purchase are set out in section 11 of the Housing (Miscellaneous Provisions) Act 1992. Where a loan stands in default, section 11(10), and more recently section 34 of the Housing (Miscellaneous Provisions) Act 2009, provide that a local authority may make such monetary arrangements with a borrower as the authority considers equitable to take account of the particular circumstances. Local authorities can and do exercise the powers available to them under this section and endeavour, in all arrears cases, to engage proactively and constructively with a distressed borrower with the aim of enabling a household to regain its home. The available data strongly bears this out and suggests that repossession, where it occurs, is always a last resort.

In addition, and to support consistency of approach and ensure best practice across all local authority areas, the Department of the Environment, Heritage and Local Government recently circulated guidance, based on the regulator's code of conduct on mortgage arrears. This guidance will ensure that cases of local authority mortgage arrears are handled in a manner that is sympathetic to the needs of the particular household while also protecting the position of the local authority concerned and ensuring that distressed local authority borrowers enjoy the same protections as borrowers from other institutions.

The Minister welcomes the commitment given yesterday by the Financial Regulator to bring forward changes to the code of conduct to reflect the recommendations of the mortgage arrears and personal debt review group. He is also committed to ensuring that the guidance to local authorities fully reflects any changes made to the code of conduct.

I assure Deputy Wall that I will pass on the issues he has raised to the Minister, and I apologise that he could not be here this evening.