I move: "That the Bill be now read a Second Time."
This Bill is concerned with the extensions and improvements of the social insurance and social assistance schemes which were provided for in the budget. The Bill also provides for increases, consequential on the budget increases, in occupational injuries benefits and improvements of the scheme of voluntary insurance and the school meals scheme operated by urban local authorities.
As Deputies will understand, Bills such as this contain a number of provisions which are amendments to existing legislation and are necessarily technical. The explanatory memorandum which has been circulated with the Bill is aimed at clarifying these provisions and I hope that Deputies will have been helped by it in their examination of the Bill.
The provisions contained in this Bill represent a further advance in the Government's social programme. They fulfil the undertakings given to the people in the White Paper A National Partnership which stated that “the Government believe that those who are dependent on social welfare payments should be cushioned against price rises and should also be assured of at least an adequate maintenance of their position vis-á-vis other sections of the community”.
The increases announced in the budget and provided for in this Bill do not just keep pace with inflation. They represent a real increase and they are in line with the Government's policy of improving the position of all social welfare recipients.
With the implementation in April of the various improvements covered by the Bill, the rates of social welfare payments will have been raised by this Government since 1973 by figures which range from 66 per cent in the case of some personal rates of benefit, to 80-90 per cent for single-parent families and to 96-140 per cent for child dependent allowances. Children's allowances—which it is proposed to raise again for the third successive year—will have gone up since 1973 by 360 per cent for the first child, by 140 per cent for the second child and by 93 per cent for the third and subsequent children. In the same period, the cost of living has risen by between 35 and 40 per cent.
Total Exchequer expenditure on Social Welfare, that is on the services administered by the Department of Social Welfare, in 1975 is now estimated at approximately £210 million, compared with £92 million in 1972-73. This increase of over 125 per cent, which far outstrips inflation, is an accurate reflection of the expansion and improvement of our Social Welfare services which are regarded as central to the social reform programme of the Government.
The budget proposals for social welfare involved a substantial increase in the rates of non-contributory old age and blind pensions, a further easing of the means test and a further reduction in the qualifying age for pension from 68 to 67 years. The maximum weekly personal rate of non-contributory pension is being raised from £7.30 to £8.85 for persons under 80 years of age and from £7.85 to £9.55 for persons aged 80 and over. The maximum weekly payment for dependent spouses who are not themselves entitled to pension is being raised from £3.65 to £4.40 so that the overall weekly payment for a non-contributory pensioner with a dependent spouse will, at maximum rates, be increased from £10.95 to £13.25 or, if the pensioner is aged 80 or over, from £11.50 to £13.95. In addition, increases of pension for qualified children of pensioners are being raised by 40p a week to £2.35 for each of the first two children and by 30p a week to £1.80 for each further child while the payment for a prescribed relative looking after an incapacitated pensioner is being increased from £4.15 to £4.95.
The further easing of the means test, by disregarding the first £6 of assessed weekly means instead of the first £5 as at present, will again improve the position of existing pensioners who have less than the maximum pension. The increase in the amount of means which can be disregarded for pension purposes will apply only in the case of means in the form of current income. Generally, it will not apply where the means take the form of ownership of capital as the existing provisions in regard to the assessment of such means are sufficiently liberal.
In addition, the reduction in the qualifying age from 68 to 67 will bring some 10,500 new pensioners into the scheme. The total number of pensions affected by the improvements in the non-contributory old age and blind pensions schemes will be 156,000 made up of 124,000 existing pensioners, 11,500 new pensioners, 15,500 adult dependants and 5,000 children.
Non-contributory widows' and orphans' pensions are being similarly improved. The maximum weekly personal rate of pension will be increased by £1.55 to £8.85 and the first £6 of weekly means will likewise be ignored. The weekly amounts payable in respect of qualified children are being increased by 55p to £2.95. Together with the existing amounts of a widow's earnings which may be disregarded in assessing her means, the ignoring of the first £6 of weekly income will allow a widow greater scope for supplementing her income by earnings. Thus a widow with no other means who has two children could earn up to £9 a week and still draw the new maximum pension of £14.75 for herself and her two children. The increased weekly rates and the easing of the means test will apply also to the allowances for deserted wives, unmarried mothers and prisoners' wives.
An estimated 12,500 widows will benefit from the improvements in the scheme, of whom about 200 will be new pensioners. Additionally, some 2,600 deserted wives with 3,100 children, 2,200 unmarried mothers with 2,300 children and 100 prisoners' wives with 300 children will also benefit from the improvements. The weekly rates of non-contributory orphan's pension are being increased by £1 bringing the maximum rate to £5.75.
I turn now to unemployment assistance. The maximum weekly rates of payment are being increased by £1.35 to £7.70 for persons in urban areas and by £1.30 to £7.35 for persons resident elsewhere. The rate for an adult dependant is being increased by 95p bringing the maximum rate for a married couple to £13.25 in an urban area and to £12.80 elsewhere. The rates for children will go up to £2.35 for each of the first two and to £1.80 for the third and each subsequent child. It is estimated that the average number of persons who will benefit from these increases will be 62,000 including about 24,000 smallholders together with some 37,000 adult dependants and 102,000 dependent children.
There are increases also in the general children's allowances scheme. The monthly rates of the allowances are being increased by 30p for the second and each subsequent child. The rate for the first child will remain at £2.30 but the rate for the second child will become £3.60 and will be £4.35 for the third and each further child. The number of families who will benefit from the increase in rates is about 275,000 involving about 720,000 children.
Last year we introduced a scheme of allowances for single women who had attained the age of 58 years. The means test applied in this scheme is broadly on the same lines as for unemployment assistance and the maximum rate of allowance is the same as the urban rate of that assistance. The weekly rates are being increased by £1.35 to a maximum £7.70 and will, accordingly, remain in line with unemployment assistance for persons in urban areas.
The reduction in pensionable age affects not only the qualifying age for old age pensions but also the maximum age up to which short-term benefits such as disability and unemployment benefit can be paid. Liability for the payment of social insurance contributions will, of course, also cease at 67 years instead of 68 as at present. A number of "saver" clauses have been included in section 10 to protect the position of existing pensioners and persons approaching the age of 68 years. These saver clauses are similar to those enacted in last year's Social Welfare Act which also reduced pensionable age. I may mention here that in consequence of the reduction in pension age to 67 all persons of that age, whether pensioners or not, will now become entitled to benefit from the free travel arrangements. The free electricity and free television licence concessions will also be available to qualified pensioners over 67 years.
I come now to increases in the rates of pensions and short-term benefits under the social insurance system. In the case of retirement pension and old age, contributory, pension the personal rates go up by £2 a week to £10.50 where the pensioner is under the age of 80 and to £11.10 where the pensioner is aged 80 or over. The allowances for adult dependants are being increased by £1.15 for those under 67 years and by £1.40 for those who are 67 years or over. The payment for a prescribed relative looking after an incapacitated pensioner is being increased from £4.15 to £4.95 as in the case of non-contributory old age pensioners. The personal rates of widow's, contributory, pension and deserted wife's benefit are being increased by £1.70 to £9.50 a week. In the case of a recipient of widow's, contributory, pension who is aged 80 or over, the increase will be £1.80 a week. The new weekly rates of flat-rate unemployment and disability benefit will be increased by £1.65 to £9.40 for a single person and the allowance for an adult dependant will be increased by £1.05 to £6.10 a week. Maternity allowance is also being increased by £1.65 to £9.40 a week.
The allowances paid with pensions and other benefits in respect of qualified children are also being increased. In the case of widow's, contributory, pension and deserted wife's benefit the increase is 60p for each child and in the case of the remaining pensions and benefits the increase is 45p for each of the first two children and 40p for each other child.
In addition to these flat-rate benefit payments, pay-related benefit is payable also as a supplement to unemployment and disability benefit, maternity allowance, and in certain circumstances, with occupational injury benefit.
Some examples of the effect of the increases may be of interest to Deputies. In the case of retirement pension and old age, contributory, pension a married pensioner whose spouse is aged 67 or over will, at the maximum rate, receive a weekly pension of £18.40 as against the present £15, or £19 as against £15.60 if the pensioner is aged 80 or over. A widow with two qualified children will get £15.80 a week compared with £12.90 at present, and one with four qualified children will get £22.10 as against £18. In the case of unemployment benefit and disability benefit a married man with two qualified children will receive £20.80 a week as compared with £17.20. A man with four qualified children will receive £25.20 a week as against £20.80 at present.
In line with the improvements in the general social insurance system, the Bill also provides for increases in the rates of various benefits payable under the occupational injuries scheme. The increase in weekly rates will be broadly in line with those provided in the general social insurance benefits.
I come now to the question of the increase in the rates of social insurance contributions which cover all benefits of the social insurance system. This year, the total increase in the contribution will comprise two elements of which the first will be in respect of increases in benefits and pensions and the general improvements to be made in social insurance schemes. The second element of the increase has its origin in the current unemployment position. Deputies will recall that in the course of his budget statement the Minister for Finance indicated that in view of the likely trends in employment in 1975 the Government had decided that it would be prudent to make available an extra £15 million against additional unemployment benefit and unemployment assistance claims above the level provided for in the published Estimate for Social Welfare. The Exchequer, the Minister stated, will provide £7.1 million of this sum and the balance will be raised by way of a special increase in the social insurance contributions. I would like to emphasise that this special increase will be strictly a temporary one to meet the current abnormal unemployment position.
The increase in contributions which will be necessary in respect of the first element will be 93p to be shared as to 63p by employers and 30p by employees. The amount of the special increase to which I have referred will be 31p, to be shared as to 21p by employers and 10p by employees. Thus the total increase will be £1.24 of which 84p will be borne by employers and 40p by employees. Increases of less than £1.24 will be applied to those rates of social insurance contributions which do not cover all the benefits of the system. A small increase of one penny in the contributions payable to the occupational injuries fund by the employers only will also be necessary towards meeting the cost of the improvements in payments under this scheme. Accordingly the new rates of contribution in respect of this scheme will be 12p for a male employee and 9p for a female.
The ordinary rates of contribution covering the social insurance services administered by my Department, including the increase of £1.24 and the new occupational injuries contribution, will thus be increased to £4.23 for men of which the employer will pay £2.59 and the employee £1.64. For women the new ordinary rate will be £4.12 of which the employer will pay £2.54 and the employee £1.58.
I would like at this point to comment briefly on the question of financing the social welfare and health services, and of the social welfare services in particular. The gross cost in the present financial year of the social welfare and health services will be in excess of £380 million. Where public expenditure is at such high levels it is obviously necessary to give careful consideration to all the implications.
It is essential that we seek to obtain the best return, in terms of genuine social service, for such high and increasing totals of expenditure. We must look initially at the effects of what we are doing in order to ensure that adequate funds are directed to the relief and eradication of particular hard-core problems. I welcome the recent publication of research findings which focus our attention on this matter and which, I might add, was brought to the notice of the House when I presented the Estimate for my Department last year.
In this country the major share of the cost of the social welfare and health services is borne by the Exchequer. Such a situation might be thought to imply a major element of vertical redistribution of income. However, it must be borne in mind that a very high proportion of the general taxation raised in this country comes from various forms of indirect taxation. Indirect taxation—and flat-rate social security contributions— tend to be regressive.
It is the intention of the Government that the present system of financing these services should be restructured over a period of years to ensure a more equitable approach, to bring our systems more into line with the situation in the European Community and to concentrate Exchequer outlays more directly on areas of real need. Accordingly, the Minister for Social Welfare has arranged to have this whole area examined with a view to appropriate proposals being formulated as soon as possible.
The fact that a Green Paper concerning a national income-related pension scheme and the question of providing social security pension coverage for the self-employed is to be published during the year will of course have a direct bearing on this matter.
Provision is also included in the Bill to rectify a situation which arose following the abolition of the remuneration limit for compulsory insurance of non-manual employees. In this connection I should like to explain that there are two classes of voluntary contributors under the Social Welfare Acts: the first group comprises persons who pay higher rate contributions which provide cover for retirement pension, old age (contributory) pension, widow's (contributory) pension, deserted wife's benefit and death grants, and the second group are persons who pay lower rate contributions which provide cover for widow's (contributory) pension and deserted wife's benefit only.
The first group—that is, persons paying the higher rate contributions— are persons who, when they ceased to be compulsorily insurable, were in employment which was insurable for benefits which included retirement and old age (contributory) pension. The second group of persons paying the lower rate contributions are persons who were formerly compulsorily insurable for widow's and orphan's pension, deserted wife's benefit and occupational injuries benefit and for no other benefit or pension under the Acts. These are persons employed in the public sector and include civil servants, officers of local and public authorities, teachers, army officers and others.
Under existing legislation a voluntary contributor who becomes an employed contributor ceases to be a voluntary contributor. When the remuneration limit for compulsory insurability of non-manual workers was abolished with effect from 1st April, 1974, persons in the public sector who had until then been higher rate voluntary contributors again became compulsorily insurable as employed contributors for widow's and orphan's pension, deserted wife's benefit and occupational injuries benefit and for no other benefit or pension under the Acts. They were accordingly precluded under existing legislation from continuing to pay contributions as voluntary contributors for retirement pension and old age (contributory) pension and death grant. Provision is made in the Bill to enable persons in the category mentioned to continue as voluntary contributors so that they may continue their insurance cover for the benefits referred to.
The Minister for Finance in his budget statement announced that the weekly rates of the various pension, benefit and assistance payments would be further increased with effect from the beginning of October next following a review in the light of the rise in the cost of living. As the House may not be in session in the months immediately preceding October next it is proposed to effect this increase by regulations and the Bill accordingly provides that the Minister for Social Welfare, with the consent of the Minister for Finance, may, by regulations, increase the weekly rates of benefit and so on. Provision is included in the relevant section of the Bill to ensure that the regulations will be laid before each House of the Oireachtas as soon as may be after they are made and, if a resolution annulling the regulations is passed by either House within the next 21 days on which that House has sat after the regulations have been laid before it, the regulations will be annulled.
As the Minister for Finance said in his budget statement, the October review will be designed to maintain the real value of the level of payments established in April. The erosion of the purchasing power of welfare payments in a period of rapid inflation is a cause of concern and the Government are determined to protect social welfare recipients against this result of the present economic difficulties.
This innovation is a fulfilment of the commitment given in the White Paper A National Partnership and it will be implemented under the terms of this Bill by means of a review of and further increase in rates of weekly payments, taking into consideration the movement in the cost of living and other relevant factors. I propose also to make an improvement in the school meals scheme operated by urban local authorities. Under existing legislation such authorities are empowered to provide school meals for children attending national schools in their functional areas. With the growth of local authority housing on the fringe of their areas large numbers of children who are living in an urban authority's area or in dwellings outside the area which are owned or have been provided by the local authority in question are attending national schools which have been built just outside the functional area of the urban authority. Consequently these children cannot be provided with school meals as the scheme stands at present.
To resolve this situation I propose to amend the School Meals Acts for the purpose of providing that, where not less than half of the children attending a national school outside the functional area of an urban local authority reside either in that area or outside that area in dwellings owned or provided by the urban authority, that authority may determine that school meals may be provided in the national school in question. In this connection the instance that will immediately come to Deputies' minds is the housing area of Ballymun. In this district the corporation have built over 2,000 houses in the county area and there are some 4,500 children attending national schools which are just outside the city boundary.
In the past two years the budget improvements in the social welfare scheme were brought into operation from the beginning of July. Previously increases in the rates of social assistance operated from August and in the rates of social insurance benefits from October. This year, because of the change in the financial year which now coincides with the calendar year, all the improvements proposed in the Bill will come into effect much earlier, that is, the beginning of April next. Further increases in weekly payments are, as I have mentioned earlier, also to be made from October next.
Thus, rates will have been increased only nine months after the previous rise and will be further raised after six months. An example may serve to underline the impact of this change. In June, 1974, the old age contributory pension for a person aged 69 years was £7.20. In April, 1975—just ten months later—a person at the age of 67 years will receive a pension of £10.50. That is an increase in pension rate of 46 per cent in ten months, with a two-year reduction in qualifying age.
These combined increases will add considerably to the overall expenditure of social welfare. On the social assistance side, including children's allowances, the increase in cost to the Exchequer will be £22.4 million up to the end of December, 1975. On the social insurance side the gross increase in expenditure from the social insurance fund is estimated at £26.6 million to the end of December, 1975, of which £23.7 million will be met by increased contribution income, leaving £2.9 million to be borne by the Exchequer in that period. The total cost to the Exchequer for the period April to December, 1975, will therefore be £25.3 million.
As I have indicated already, the Exchequer will, in addition, provide £7.1 million towards the cost of additional unemployment benefit and unemployment assistance claims. The special contribution increase of 31p is intended to provide a further £7.9 million towards the cost of these additional unemployment claims. The Exchequer will also meet the cost, estimated at £430,000, of the extension of the schemes of free travel, electricity and television licences which, from April next, will result from the further reduction in pension age.
In bringing before the House a measure such as this, I am more than conscious of the complexities of our social welfare legislation at this point in its development. The Bill's title of itself indicates the range of legislation governing this area—with reference being made to Acts including the Old Age Pensions Acts and the Education (Provision of Meals) Acts and covering the period from 1908 to 1974.
There are approximately 60 basic Acts and at least 350 regulations governing the schemes operated by my Department, not to mention innumerable examples of case or precedent law arising from the application of these.
I have initiated work in my Department on the codification and simplification of the whole field of social welfare legislation. This will be a long and complex task and one which should ideally lead to the production of a new consolidated Social Welfare Act. The work on this badly-needed improvement will be proceeded with with all possible speed.
I am happy to be able to sponsor the improvements covered by the Bill, which I recommend to Dáil Éireann for speedy and favourable consideration.