That a sum not exceeding £1,026,926,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1983, for the salaries and expenses of the Office of the Minister for Social Welfare, for certain services administered by that Office, for payments to the Social Insurance Fund, and for sundry grants.
At the outset I would like to make what I regard as a few important general comments relating to the Social Welfare Estimate. I will return to these points in more detail later in my speech.
First of all, social welfare expenditure as a whole is now running at around £1,950 million a year. As such it is the largest public expenditure programme we have. Social welfare expenditure must be met from one source or another and in the context of the current concern about the rates of PRSI contributions, I make the point that there has been no increase this year in the rate of social insurance contribution, despite the increases provided in payments from the end of June.
Despite the levels of contributions, an estimated 21.5 per cent of social insurance expenditure in 1983 must be borne by the Exchequer as well as the total expenditure on social assistance payments. The overall question of financing the social welfare services will be one of the matters to be examined by the Commission on Social Welfare to which I will refer in more detail later.
It will be clear from an examination of the Estimate that a number of schemes are of major significance in expenditure terms. The total cost of the unemployment services will be around £473 million this year or around 25 per cent of total estimated expenditure on social welfare services. While this is a very large item of overall expenditure I am particularly concerned at the levels of payments to the long-term unemployed on unemployment assistance who suffer a severe drop in income at present. I will be examining this to see what scope there is for improving the situation of these people.
Another area which is of major importance is of course the provision for children's allowances. Expenditure on children's allowances is estimated at £164.7 million in 1983. Provision is also made, however, for expenditure of £5 million on family income supplements as announced in the budget. I will shortly be bringing forward proposals in this area.
Another area to which I would like to refer at the outset is administration. The overall costs of administration on social insurance and assistance services in 1983 will be approximately £75 million which represents just 4 per cent of total expenditure. The efficient delivery of the social welfare services is of primary importance and in this context computerisation will have an increasingly important role. Provision is made in the Estimate for the resources necessary to continue the computerisation programme in the Department and I see this as a very important aspect of the Department's efforts to make the system more effective and more responsive to individual needs.
After these introductory comments I turn now to consider the Estimate in more detail, elaborating on the points already made. I mentioned that overall expenditure is running at £1,950 million a year. This takes account of the improvements provided in the budget, the full year cost of which is around £170 million. For 1983 itself, allowing for the fact that the increases in payments come into effect at the end of June, the cost is estimated at £86.6 million, giving overall expenditure this year of around £1,870 million.
I referred to the growing significance of social welfare expenditure in economic terms. To illustrate this, it is worth mentioning that social welfare expenditure as a percentage of gross national product has increased from under 7 per cent in 1972-73 to almost 14 per cent this year. Not all of this increase, of course, has occurred as a result of real improvements in social welfare benefits. Much has come from the policy of successive Governments to protect the value of benefits against the effects of inflation. A large part of the increase is due to increases in the numbers of recipients of benefits and in this context the increase in the numbers unemployed has been a major factor in recent years. An increase in expenditure of itself, therefore, does not automatically mean a corresponding increase in welfare in the broad sense. Even if no improvements are made in social welfare schemes, rising numbers of recipients tend to lead to increases in expenditure. This was graphically illustrated at the beginning of this year when the Government had to provide an additional £31 million merely to meet the cost of additional unemployment payments, without any improvement in benefit levels. This Government are committed to protecting the living standards of social welfare recipients notwithstanding the extraordinarily difficult circumstances of this year.
The overall expenditure figure of £1,870 includes total expenditure on social assistance and social insurance schemes this year. Part of the expenditure on social insurance schemes is, as I explained earlier, met by income from social insurance contributions and the amount which the House is asked to grant for social insurance services is a residual figure after account is taken of income from contributions and other sources. The cost of social assistance services is for practical purposes, borne entirely by the Exchequer. The total amount which the House is asked to grant, is £1,026.926 million. I would point out that, unlike the position in previous years when the costs of the increases in rates of payment provided in the budget were not included in the original Estimate but were provided for separately in a Supplementary Estimate, on this occasion the Estimate now before the House takes account of the social welfare measures provided for in the budget. These measures were discussed by the House in March in the debate on the Social Welfare Bill giving effect to them.
The Estimate falls into three parts — subheads A to D refer to administration costs and represent the total administration expenses of the Department of Social Welfare in respect of the social insurance and assistance schemes. Social insurance administration costs are recovered from the Social Insurance Fund as an Appropriation-in-Aid under subhead Q(1). Administration costs in connection with social welfare services are also, of course, incurred by certain other Departments and in so far as these refer to the social assistance services they are, apart from the Department of Posts and Telegraphs, borne, without repayment, on the Votes of the Departments concerned.
I referred already to my Department's continuing efforts to improve the administration of the social welfare services and in particular to the increasing use of computers. Computerisation was introduced initially to deal with records and payments in relation to pay-related benefit and has been extended to handle all records arising under the PRSI system and all disability benefit payments. Based on the experience to date, there is clearly considerable potential for the use of computerisation in the paying of other social welfare benefits. In this connection it is planned to introduce computerisation into employment exchanges on a phased basis. Preliminary work has also commenced on the computerisation of the children's allowances and pensions area. The overall computer development programme will make a major contribution to more effective and efficient day-to-day administration, including better retrieval and communication of information in individual cases. Computer terminals have been installed in a number of public offices of the Department, providing instant access for inquiry purposes to information on disability benefit claims and it is proposed to extend this inquiry facility to all the Department's public offices and information centres over the coming years.
To move on to the second major part of the Estimate, subheads E and F refer to the social insurance services. Subhead E represents the Exchequer contribution to the Social Insurance Fund in 1983 and, as I referred to earlier, it is a residual figure which represents the difference between total expenditure out of the fund and the income received into the fund mainly by way of contributions from employers and employees. Details of the expenditure and income of the Social Insurance Fund are given in the appendix to the published Estimate. The estimated income from social insurance contributions in 1983 is £797.5 million. The standard rate of social insurance contribution is 16.8 per cent out of a total PRSI contribution of 20.11 per cent. The remaining elements of the PRSI contribution are — 1 per cent health contribution, 1 per cent youth employment levy, 1 per cent income levy, 0.3 per cent occupational injuries contribution and 0.01 per cent redundancy fund contribution. As mentioned already, the social insurance contribution rate has not been increased this year, the only change by comparison with last year being a raising of the earnings ceiling for contribution purposes from £9,500 to £13,000 from April 1983. The increase shown in contribution income from £655 million in 1982 to an estimated £797.5 million in 1983 is due largely, apart from the raising of the ceiling, to the general increase in earnings levels and to the impact of the 1982 rates of contributions for a full 12 months in 1983 as against three-quarters of 1982.
It is extremely difficult to estimate with complete accuracy what the income from social insurance contributions will be in any given year and it is only towards the end of the year that the out-turn can be predicted with any degree of certainty. The situation is complicated by the fact that contributions are collected on a tax year basis and must be converted to a financial year basis for Estimates purposes. The operation of the fund depends on a regular flow of income from contributions, such income being almost immediately used to fund the ongoing payment of social insurance benefits and pensions. Any disruption to the flow of contribution income would have serious consequences and could ultimately affect the ability to pay the benefits. The question of employers deferring payment of contributions has been the subject of much discussion in recent times and the extent to which this occurs within a year or between one year and the next obviously affects contribution income. Similarly any disruption of PRSI contributions collection by workers themselves would have very serious consequences.
There are many factors which affect contribution income and which cannot be foreseen and provided for. Increasing unemployment is obviously a major such factor affecting contribution income. It is the combination of the eventual income from social insurance contributions and the levels of expenditure on social insurance benefits throughout the year which determines the amount of the Exchequer subvention to the Social Insurance Fund at the end of the year, which ultimately must be borne by the taxpayer in one way or another. It is estimated that this year the Exchequer will bear some 21.5 per cent of total social insurance expenditure. Employers contributions will bear some 53 per cent of the cost and employee contributions some 25.5 per cent.
As I mentioned already the expenditure on social insurance benefits as shown in the Appendix to the Estimate includes the cost of the increases in rates of payment provided in the budget — 12 per cent in long-term payments and 10 per cent in short-term payments which will come into effect at the end of June. These increases, which are necessary to maintain to some degree the standard of living of social insurance recipients have the effect of increasing the expenditure of the fund by some £50 million in 1983. The reductions mainly in pay-related benefits which came into effect in April and which were designed to achieve a more equitable relationship between benefits and earnings have curtailed the overall costs of the services this year. However, I appreciate the burden which the financing of the services imposes on contributors and on taxpayers generally and the whole question of the financing of the social welfare services will, as I have said, be examined by the Commission on Social Welfare which I propose to set up.
The third main part of the Estimate comprises subheads G to P which provide for the cost of the assistance side of the social welfare services totalling some £787 million, which is borne in full by the Exchequer. A major feature of the development of the Department's services over the years has been the expansion of the social insurance system under which payments are made as of right subject to certain contribution conditions by the addition of schemes of contributory pensions and other benefits. As a consequence of this the scope of certain corresponding social assistance means-tested payments such as non-contributory old age and widows' pensions has diminished. These schemes however still account for very large expenditures in absolute terms. The trend towards greater reliance on non-means tested services is in line with developments in other countries. The eventual introduction of a national income-related pension scheme and of a scheme of social insurance for the self-employed who are not as yet covered by the social insurance system, will further reduce the scope of the social assistance pension schemes.
I have already referred to the level of expenditure on children's allowances. While the amount involved, £164.7 million, is a very sizeable sum, it represents only one aspect, though admittedly the most important aspect, of income support for families. Income support is provided also through the medium of child dependant increases under the various social welfare schemes and of child tax allowances under the income tax system.
The Family Income Supplement Scheme to which I have referred and for which a provision for this year of £5 million is made in subhead N of the Estimate will provide a further element of support for families. This scheme will benefit people at work on low incomes who receive little or no benefit from income tax allowances because they are below or just above the tax threshold and who do not qualify for social welfare payments because they are working. Apart from the disincentive aspect of this it is necessary on the grounds of equity to find some mechanism of channelling financial support to low income families and my proposals will be designed to achieve this within the limits of the resources available to me. I will be looking also, however, at the need for a more integrated system of family income support to ensure that the best possible use is made of available resources.
The provision for unemployment assistance in subhead I of the Estimate is over £226 million. As I stated earlier the total cost of the unemployment services as a whole, including unemployment benefit and pay-related benefit under the social insurance system, will be around £473 million this year. It is possible that the expenditure may be even higher than this, depending on the unemployment situation. The need to make provision for an additional £31 million to cater for the increased Live Register when the Government assumed office meant that the scope for improvements in benefits was restricted. Allowing for the restrictions on pay-related benefit from April the levels of payment under the social insurance system to persons becoming unemployed are quite reasonable. As I have said, however, I will be looking at the situation of the long-term unemployed who are dependent on unemployment assistance.
Progress in these areas will depend on the resources available to us to meet our fundamental commitment to maintain the standard of living of social welfare recipients and other commitments such as the full implementation of equality of treatment for men and women in the social welfare system. In relation to this latter commitment the EEC Directive of December 1978 requires that all discrimination as between men and women in the social security field be removed by the end of 1984. Despite the progress made in recent years there are a number of areas where discrimination exists in the social welfare code. Married women qualify for lower rates of certain benefits and unemployment benefit payable to married women is restricted to a maximum of 312 days as against 390 days generally. In general, unemployment assistance is not payable to married women. To give full equality of treatment in these areas only would cost in the region of £15 million in a full year.
The most difficult area in relation to equality of treatment however is that of increases of social welfare payments for dependants. The social welfare schemes generally were framed on the basis that the husband was the head of the household and the person to whom increases of benefits in respect of adult or child dependants should be payable.
This approach was undoubtedly relevant at a time when it was most exceptional for a married woman to take up employment outside the home. This however, is no longer the position and increasingly married women along with men and single women are taking their place in the labour force. They pay the same taxes, the same contributions and have the same obligations as other members of the work force. Apart altogether from the EEC Directive it is time therefore that they had the same rights in the matter of benefit entitlements.
Clearly however, to give dependency increases in all cases on the same basis as at present, so that, for example, a married couple both absent from work due to illness could each get disability benefit with increases for each other and for any child dependants, would be extremely costly and could not be justified. The application of equality of treatment in this area must, therefore, involve a reexamination of the criteria for payment of increases for dependants, taking account of the changing situation regarding the employment of married women. This area has been the subject of detailed examination and a number of approaches can be adopted. There are, however, serious cost implications and regard must be taken of this factor. No final decisions have yet been taken but I will be putting forward proposals to the Government in the near future.
The agreed Programme for Government contains a commitment to draw up and implement an anti-poverty plan within the context of national economic and social planning and for this purpose I intend to revive the Combat Poverty Organisation. There is also a commitment on the part of the Government to seek a new and comprehensive EEC poverty programme based on the findings and achievements of the 1975-1981 programme. For these activities a provision of £1.27 million has been provided in 1983 Estimates.
An anti-poverty programme featured prominently in the activities of the 1973-77 Coalition Government and it was largely due to the efforts of the then Parliamentary Secretary to the Minister for Social Welfare, Deputy Frank Cluskey, that the idea was taken up at EEC level. This programme lapsed in December 1980 but a new programme is now being formulated. On 10 December last the EEC Council considered a report from the Commission on the first programme of pilot schemes to combat poverty and concluded that in addition to policies at national level to deal with economic, social and employment problems more specific action at Community level is needed. This activity in the EEC is at the very early stages and preliminary discussions only at official level have taken place.
I attach the utmost importance to the need to develop effective approaches for dealing with the problems arising from poverty in our midst. There must be a coherent programme which will build upon the achievement of the first anti-poverty programme. A lot of useful experience was gained in the course of that programme and this will be of considerable assistance in what we are now undertaking.
I also attach the greatest importance to developing effective programmes in this field at EEC level. I will, therefore, be taking every initiative at my disposal to ensure that a Community Programme to Combat Poverty is given the priority attention that it needs at Community level. Ireland will hold the EEC Presidency in the six month period from July 1984 and if adequate Community programmes to deal with poverty have not been developed by then I will be doing all in my power to ensure that it is done within the period of the Irish Presidency.
The breakdown of the Estimate shows the great variety of social welfare services which we now have. Over the last 15 years or so, many new schemes have been brought into operation to cater for the needs of persons who prior to that were not covered by any of the existing categorical schemes such as deserted wives, unmarried mothers and prisoners' wives, The home assistance service was replaced by the supplementary welfare allowance scheme in 1977 with significant improvements on the old system, including the introduction of a uniform basic scale of payments. Another feature of the development of the services in recent years has been the growth of additional schemes for particular needs mainly of old people and invalids such as free travel, free electricity, free telephone rental, free bottled gas and the national fuel scheme. The introduction of these schemes in a piecemeal fashion and the developments in existing schemes over the years has meant that the social welfare system as a whole is now extremely complex. The Government programme provides for the setting up of a commission to review the social welfare system as a whole and I will be putting my proposals on this matter to the Government next week. This will be the first time since the Department was set up that a commission will examine and report on the whole system of social welfare and make recommendations to the Government on the effectiveness of the system as it has developed over the years. I would emphasise, as the Government programme points out, that the establishment of the commission will not preclude any immediate improvements and reforms which are considered necessary.
In that regard I would be prepared to have discussions with the Opposition spokesman, Deputy O'Hanlon and his colleagues, outside of the Estimate debate. We may not discuss social welfare again until early 1984, which is a long time, unless there is a Supplementary Estimate. This encompasses a Supplementary Estimate because the budgetary figure for 1983 is included in what we are discussing today. Some 18 per cent of total State expenditure encompasses the social welfare system. There is urgent need for Government and Opposition Deputies to have regular, detailed consultation with one another about the whole system of social welfare. It may well be that under the proposed reform of the House my colleague, Deputy Bruton, as Leader of the House together with the Chief Whip of Fianna Fáil, would be able to devise a system where we could have more intensive consultation in whatever form whether within the structures of the House or outside it at committee level. It is difficult within the context of an Estimate debate to have political discussion on the ramifications of all the issues we are likely to raise today.
In concluding these general remarks on the Estimate, I should like to refer again to the overall expenditure on social welfare services which I mentioned in the introduction. In 1983 we will spend approximately £1,870 million on social insurance and social assistance services. The search for more equitable systems of financing expenditure of this size must be pursued, while at the same time recognising that there is an increasing need to improve the effectiveness of social protection provided by social security schemes and to ensure that social welfare expenditure is directed in the most effective way possible to those who need it. The dilemma posed by the need to contain public expenditure, while at the same time providing an effective modern system of social protection, will present a great challenge to us in the years ahead. I look forward to hearing the comments of Deputies and I will try to deal constructively with any suggestions which are made.
I recommend this Estimate to the House.