I move "That the Bill be now read a Second Time."
The main purpose of this Bill is to give effect to the various increases in social welfare payments which were announced in the budget. The Bill also contains provisions for the introduction of a new family income supplement scheme as well as for a number of other changes in social welfare schemes. The contents of the Bill are explained in the accompanying memorandum and I trust that this has helped Deputies in their consideration of the various measures proposed.
This Bill provides for an increase of 7 per cent in rates of social insurance and social assistance from the beginning of July next, with consequential increases in rates of occupational injuries benefits. Children's allowances, likewise, will be increased by 7 per cent from August. When this Government came into office they gave a firm commitment, despite the gravity of the recession and its impact on social welfare expenditure, to endeavour to maintain the living standards of people who depend on social welfare for their needs.
The increase in flat-rate payments this year, as well as those in 1983, will ensure that this policy is being implemented within the most severe limitations of Exchequer resources. The real value of pensions, benefits and allowances will be maintained until well into 1985 and, in fact, overall expenditure on social welfare will rise by over 13 per cent in 1984 relative to 1983. Included in this expenditure is a provision of some £65.5 million for the cost of rates increases this year. This significant extra cost, which is essential to maintain the value of social welfare services, is being fully borne by the Exchequer. PRSI contributors — employees and employers — will not be asked to make any direct extra contribution to social insurance this year. There is a small increase on the occupational injuries contribution for employers which I will refer to later.
I would like to say a few words about public attitudes to social welfare provision. In recessionary times, there is a well orchestrated campaign to divert the resources needed for social support to what some people might consider to be more `productive' use in the economy. Indeed, social welfare recipients are less well placed to plead their case than other more vocal groups in society. There is a tendency on the part of some people, who are usually relatively well off, to lay the blame for the country's financial ills at the door of the underprivileged and the poor. We hear a lot about the unfair burden of tax but very little about the acute problems of people trying to bring up their families on low incomes.
In recent years the bulk of the working population have come to appreciate that unemployment could happen to them. Yet a section of the population is still reluctant to see money go to people without work. There is a superficial suspicion that some unemployed people could get a job if they really wanted to, that some are living on the backs of other people. There are also occasional allegations that large numbers of people are receiving benefits while at the same time working in the "black economy".
Ill-informed comment on these lines is extremely damaging for popular support and willingness to subscribe to social security. My Department have taken reasonable and effective steps to ensure that social welfare funds are not misused by a minority at the expense of the vast majority in genuine need and of the working population who provide the benefits through PRSI contributions and general taxation. In this connection, I would like to commend the trade union movement and the voluntary organisations for their unselfish efforts over the years in defending and publicising the legitimate rights of the people who are victims, through no fault of their own, of our economic and social systems. In this context also I must again stress that the single most important incentive to work is the prospect of employment not reductions in unemployment benefit.
It is a Government's duty on behalf of the community to give the most deprived sections of the population the priority they are entitled to in any recession. Despite the difficulties of the current economic and financial situation this Government will not allow the weaker sections of our community who are dependent on social welfare to suffer a drop in the purchasing power of their incomes.
We are now hopefully facing into a period of economic growth and moderate inflation, but even in that more optimistic context the scale of social welfare spending presents a daunting challenge to any Government to maintain and improve the living standards of recipients. This challenge is compounded by the need to consider the capacity of the community at large to meet the cost of social welfare support. Gross expenditure on social welfare in 1984 will amount to £2,156 million, or nearly £6 million each day of the year. This enormous sum represents a commitment to social welfare of almost exactly £1,000 a year by every man and woman in the labour force.
It is important to put on the record that the recipients of transfer payments on the scale I have outlined should not in any way feel apologetic for their inability to support themselves. The vast majority of recipients have over the years made substantial contributions as taxpayers and insured persons and they have, accordingly, a right to income maintenance payments from the State. I believe it is also important to remember that the money transferred to people in need has an economic, as well as a social, value. Unlike some other sections of the community, social welfare recipients spend nearly all of their income on basic goods and services, the necessities of life, Their money is spent immediately on receipt and is circulated largely within the domestic economy, creating additional economic demand and, indeed, making a significant contribution towards sustaining Irish jobs. Social welfare recipients also make their own contribution to the Exchequer through direct and indirect taxes. Those that choose to criticise what they see as excessive levels of social support should be mindful of the economic worth of social services, as well as the merit of increased community well-being that results from the redistribution of resources in this way.
Part of the large increase in social welfare expenditure this year is due to the growing burden of unemployment. Unemployment expenditure will amount to about £580 million this year, equivalent to over a quarter of all expenditure on social welfare.
The scale of support needed, however large, cannot be judged on mere expenditure figures. The amount of personal hardship, waste of human skills and, indeed, the social upheaval caused by unemployment is a truer, and more disturbing, measure of the real effects of this serious problem.
The Government place, as they must do, a major priority on action to correct the employment situation. My most immediate responsibility, however, is to ensure that the personal hardship experienced by all those who are unemployed, but particularly by those whose unemployment has been prolonged, is tackled and reduced through effective social welfare support.
Deputies will be aware of the special 5 per cent increase which I introduced last October for people in receipt of unemployment assistance who have been unemployed for 15 months or more. I am glad to say that the Government have managed to provide a special 8 per cent increase for this group from the beginning of next July. The aggregate increase in the rates of payment for the long-term unemployed next July will amount to 13.5 per cent relative to July 1983. About 75,000 people and their 164,000 dependants will gain extra support through this increase in the long-term unemployment assistance rates.
I should now like to deal with the effect of the increases on individual payments. The increases in social insurance and occupational injuries benefits are provided in section 3 of the Bill.
A contributory old age pensioner under 80 years of age will receive an additional £3.15 a week bringing his rate of payment to £48.25 a week. If he is married with a wife under age 66 he will get a total increase of £5.15 bringing the pension to £79.05 a week. A married couple both over pensionable age will get £84.25 compared with £78.75 at present. Higher increases are paid for pensioners over 80. Additional payments are also made for persons living alone.
The personal rate of widow's contributory pension is being increased by £2.85 a week to £43.45. Widows over 66 receive higher payments. A widow with, for example, three dependent children will receive £80.70 a week which is an increase of £5.30.
The personal rate of invalidity pension goes up from £39.75 to £42.55 for a person under pensionable age and a married couple with two children will receive £90.75, an increase of £5.95.
A person in receipt of disability or unemployment benefit will have a new personal rate of £37.25 a week, an increase of £2.45. Where the recipient is married the increase will be £4.05 a week. Maternity allowance is also being increased to £37.25.
Practice in other countries is one of the bench marks against which the standard of social welfare provision here can be evaluated. Deputies will be interested to know that the rates of social insurance benefits in this country can be compared favourably with those payable in Great Britain and Northern Ireland. For example, the standard rate of unemployment benefit in the United Kingdom is now £27.05 sterling for a single person and £43.75 for a married couple. These payments, at current exchange rates, are equivalent to £33.41 and £54.04 in Irish money terms. The corresponding Irish payments from July are £37.25 and £61.40. Also, the United Kingdom unemployment and sickness benefits are flat-rates only, the earnings-related supplement having been withdrawn in 1982. Another difference is that the duration of unemployment benefit is 15 months in this country as against 12 months in Britain and Northern Ireland. The basic rate of retirement pension in the UK is £34.65 sterling equivalent to £42.80 in Irish currency compared with the new Irish retirement pension of £48.25 from July next.
The new rates of social assistance payments are provided in section 4 of the Bill. The maximum personal rate of non-contributory old age pension for a pensioner under 80 years of age goes from £38.60 a week at present to £41.30 a week. It will go up to £44.30 for persons aged 80 or over. The overall maximum payment for a pensioner under 80 with a dependent spouse under 66 will increase by £4.05 to £62.05. The allowance payable in respect of a prescribed relative giving full-time care and attention to an incapacitated pensioner is being raised to £23.10.
Widows receiving non-contributory widow's pensions at the present rate of £37.85 will get an increase of £2.65 a week. A widow with two dependent children will get £62.65, an increase of £4.10 a week. Similar increases will apply to deserted wives, unmarried mothers and prisoners' wives.
Those receiving short-duration unemployment assistance in urban areas will get an increase of £2 a week in their maximum personal rate. In rural areas the increase will be £1.95 a week. There are also increases in respect of dependants. An applicant in an urban area who has a wife and two dependent children will get an increase of £4.50 a week on the present rate of £65.15. The special rates of unemployment assistance payable to smallholders in certain areas with land under £20 valuation whose means are still assessed by reference to land valuation are being maintained at their existing levels. Deputies will be aware that the system of assessment of means on the basis of land valuation is being phased out.
The rates of unemployment assistance for long-duration recipients of unemployment assistance are higher. For example, a man and wife with two children in an urban area will get £73.90 which is £4.25 more than the corresponding short-duration rate.
The maximum rate of supplementary welfare allowance for a married couple goes from £48.35 to £51.70 with additional payments for children.
It is noteworthy that the standard cash payments to social welfare recipients are in many cases supplemented by the provision of various non-cash benefits. All pensioners over age 66 are entitled to free travel and in addition they may qualify for fuel vouchers. For pensioners living alone, there is free electricity, free telephone rental and free TV licence. All of these services add considerably to the value of welfare support for the aged and they automatically retain their value in the face of increases in the prices of the services provided. They are also free of income tax.
Section 5 of the Bill makes a technical amendment to the Social Welfare (Consolidation) Act, 1981, to allow for certain expenses in relation to the administration of the social insurance and occupational injuries schemes to be paid to An Post rather than to the Minister for Posts and Telegraphs as was formerly the case.
I now come to section 6 of the Bill. Expenditure out of the Occupational Injuries Fund is met entirely by employer contributions and by fund investments. In order to maintain the solvency of the fund, the rate of employer contribution is being increased by 0.1 per cent to 0.4 per cent of employees reckonable earnings, subject to the £13,000 ceiling. The special rate of occupational injuries contribution payable in respect of certain public servants is being correspondingly increased.
I wish to make a general comment here in relation to employer support for social insurance. There has been criticism recently about the extent to which employer PRSI contributions add unduly to overall labour costs. It is important to remember, however, that employer contributions to social insurance reflect a fundamental purpose of the welfare system. This purpose is to provide comprehensive occupational protection for workers and their families and to ensure the widest community support for people who cannot meet their needs through their own resources. Contributions by employers are very much an integral part of the welfare system, reflecting their social obligations as part of the community. This social dimension of employer contributions should be recognised, accordingly, and the contribution system should not be seen simply as a tax which might deter employers from taking on workers.
Section 7 of the Bill provides for an increase of £7 in the earnings disregard, or "floor", for pay-related benefit purposes. This change will affect new claims only from the beginning of April next where entitlement to pay-related benefit is involved.
Since the introduction of the pay-related benefit scheme in April 1974 a proportion of reckonable earnings has always been disregarded in calculating the amount of pay-related benefit payable in addition to disability, unemployment, maternity and injury benefits. In 1974 this disregard was £14, over twice the prevailing rate of flat-rate benefit. The floor was not increased until 1981, even though the level of flat-rate benefit rose significantly in that time.
The latest increase in the floor continues the policy that has applied over the last three years of progressively raising its level. However, if the floor had been maintained at the same relation to the flat-rate benefit as it had in April 1974, it would now stand at £74 instead of the £43 proposed in this Bill.
Section 8 of the Bill provides for the making of regulations to enable pay-related benefit payable with unemployment benefit to be paid in a lump sum in connection with the Enterprise Allowance Scheme. The Enterprise Allowance Scheme was introduced by the Government at the end of last year to provide financial support for unemployed people who wished to start up their own business. As an alternative to unemployment payments, people who qualify under the scheme can receive a weekly allowance of £30 if single, or £50 if they are married. There has been a very encouraging response to this scheme by unemployed people who are prepared to set up their own business to secure their future. The scheme is administered by the Department of Labour.
To increase the flexibility of State support under this scheme, the Government have decided that any pay-related benefit to which scheme applicants would be entitled if they had remained unemployed can now be paid to them as a lump-sum. This lump-sum will be equivalent to the amount of pay-related benefit that an applicant would otherwise have received in respect of the unexpired portion of the relevant period of interruption of employment subject to a maximum of 26 weeks. The lump-sum should provide a useful extra capital float at the start of a business, when credit can often be difficult to obtain.
The current unemployment situation demands that as much flexibility as possible be provided through State intervention and support. It is the international experience that there is no one answer to reducing unemployment, but rather that a range of measures be available, which suit individual needs and situations. It is the Government's task to ensure that these measures are provided in an effective and responsive way, while not stifling the economic growth that is necessary for our longer-term prosperity. I believe that the Enterprise Allowance Scheme, and the improvements to it contained in this Bill, is an important input to the alleviation of our unemployment problem.
Under section 9 of the Bill the assessment of the income from the leasing of land for long periods is being changed. For means assessment purposes at present, the capital value of land is used where it is being leased for a number of years. The land in such cases is deemed not to be personally used or enjoyed by the owner. On the other hand, land let on a short-term basis — for example, the conacre or 11-month system — is taken to remain in the occupation and use of the owner and means for pension and other purposes are calculated on the basis of the profits from the letting. The existing methods of assessing means favour persons engaged in short-term lettings of their land. The adverse effect of a long-term leasing arrangement on subsequent social assistance entitlement can often discourage farmers — particularly more elderly land-owners — from considering the long-term option rather than the less efficient 11-month system. This can in turn hinder the access to land of younger and possibly more progressive farmers.
The Government are anxious to encourage greater of land leasing as part of their land policy in relation to farming and section 9 of the Bill provides accordingly that where farm land has been leased with the approval of the Land Commission the lessor's means for social assistance purposes will be calculated by reference to the profits from the lease rather than to the capital value of the holding.
I have already referred to the 7 per cent increase in rates of children's allowances which will apply from the beginning of next August. Sections 10 and 11 of the Bill make a couple of minor changes to the scheme itself. At present, children's allowance in respect of a child resident outside the State can be paid to the father while he is working abroad for the Government, the State, or an international organisation. Section 10 extends this provision to a qualified person other than the father — in other words, the mother.
Section 11 extends the validity of the orders in children's allowance books from three to six months. This measure will reduce the amount of payable orders issued by my Department in respect of children's allowance book orders which become out of date.
Following a recommendation in the Report on the Inquiry into the Cost and Methods of Providing Motor Insurance the Government have decided that the amount of disability benefit, associated pay-related benefit or invalidity pension payable for up to a period of five years to a person arising from injuries received as the result of a road traffic accident shall be taken into account in assessing damages for those injuries. Section 12 of the Bill makes provision for this in line with similar arrangements which already exist in relation to occupational injuries benefits.
I would now like to turn to the new scheme which is being provided for in Part 3 of this Bill. The Family Income Supplement Scheme is designed to provide cash support for employees on low earnings with families.
In many cases such workers may be only marginally better off than if they were claiming disability or unemployment benefits. This situation arises partly from the structure of the benefit schemes themselves, which take account of family size, whereas earnings are paid regardless of marital or family status. It also arises through the significant real increases that have occurred in recent years in rates of benefit relative to net earnings. Even though workers on low earnings are often exempted from income tax or eligible for marginal relief, the so-called "poverty-trap" can be such as to reduce the incentive to work in some cases.
Apart from the poverty-trap consideration, I believe that it is important to redistribute resources towards the lower-paid by direct income support so that all sections of the community share to the greatest extent possible in the gradual improvement in our national prosperity. The capacity of the income tax system to achieve the level of redistribution and equity which the Government consider to be desirable is limited to some extent by its structure and the nature of tax allowances. Direct cash support has the advantage of being tailored to suit individual situations as well as providing more clearly-identifiable State assistance for the pressures that can arise through living on low incomes.
Sections 13 to 17 provide for the introduction of the family income supplement scheme and for consequential amendments to the social welfare code. The general details of the scheme are as follows. Weekly payments will be made to families with children where one or more parent is in full-time paid employment and where the income of the family is less than a specified amount. This amount will vary according to the number of children in the family. The supplement will be calculated as one-quarter of the difference between the family's actual income and the appropriate upper level of weekly income for the family size in question. If the family income is below a specified level then the full appropriate supplement will be payable.
The maximum family earnings up to which a supplement will be payable will be £95 in the case of a one-child family. An additional £15 earnings will be allowed for each subsequent child up to the fifth. At this family size, the maximum earnings allowable will be £155 a week. As this level of earnings will correspond to average male earnings in the transportable goods industries this year, I do not consider it appropriate to supplement incomes above this level. Accordingly, families with more than five children will all be assessed according to the income limits for a five-child family. Similarly, the lower income limits will vary from £63 in the case of a one-child family to £95 a week in the case of families with five or more children. The maximum family income supplement payable where earnings are at or below these limits will range from £8 to £15 a week, depending on family size.
Once the family entitlement has been determined, payment of the supplement will normally be made for 52 weeks before review. It will be payable to the principal wage earner in the family and the supplement will not be subject to income tax or PRSI. Section 15 of the Bill provides for the making of regulations to suspend payment of the supplement where the recipient ceases to work and draws unemployment benefit, unemployment assistance, disability benefit or retirement pension.
It is intended that the new scheme will be introduced from the beginning of November 1984. It will be administered centrally by my Department. The scheme will be of benefit to some 35,000 families, at a cost to the Exchequer of £2.2 million in 1984 and £13 million in a full year.
I have outlined these details of the proposed scheme to familiarise Deputies with the form and scale of individual support involved. My Department will of course be fully publicising the family income supplement scheme in due course. I do not claim that the scheme provided for in this Bill will solve all the problems faced by workers trying to provide for their families on low earnings. However, I consider that the family income supplement will provide a significant level of support for a section of the community whose needs could not be catered for adequately within the scope of the existing social welfare system or the taxation system as currently structured.
Part 4 of the Bill, covering sections 18 to 30, provides for the abolition of old age pension committees and the transfer of their funciton in deciding pension entitlement to deciding officers in my Department. Some consequential provisions are also included. The Old Age Pension Committees were first set up under the Old Age Pensions Act, 1908. They are appointed by county councils and county borough and borough councils to determine individual entitlement to old age, non-contributory, pensions. There are currently about 355 committees and sub-committees around the country.
Under the present system, each old age pension claim is investigated by a social welfare officer whose report to the old age pension committee, or sub-committee, shows the applicant's means from all sources and includes a recommendation as to the amount of pension entitlement in accordance with the relevant legislation. The claim must then await the next meeting of the committee for consideration.
The committees are voluntary and part-time and are required to meet once a month. Claims must await a meeting for consideration, often for longer periods than a month, frequently as much as three months. The committees, therefore, delay rather than expedite decisions. To counteract this problem, provision was made in 1978 to enable pensions recommended by the social welfare officer to be put into payment pending the committees' decisions. From the point of view of such claimants, therefore, the committees are totally irrelevant; the remainder, namely those not entitled to pension for one reason or another, must still wait until the committees meet to learn the outcome of their claims. There is, in fact, no guarantee that a claim will be decided at a particular meeting as decisions are sometimes deferred from meeting to meeting.
Committees may cause further delays and bring the whole adjudication process into disrepute when they award pensions which are not payable or which are clearly higher than those payable under the Acts or Regulations. This is a frequent occurence which necessitates appeals by social welfare officers against such decisions. These appeals are decided by statutorily appointed appeals officers.
What is now being provided for in this part of the Bill is that applications for old age non-contributory pensions would go through the same adjudication process as for other social welfare benefits and assistance claims. Applications will in future be decided by deciding officers — civil servants so appointed by the Minister of the day. The decision of these officers will also be subject to the statutory right of appeal to an appeals officer.
At this stage, I would like to pay tribute to the work of the local pension committees in fulfilling their statutory duties down through the years. The fact that I might not agree with the basic policy under which the committees were established and operated does not take from my appreciation of the contribution, commitment and dedication which individual voluntary members have brought to their work.
Section 19 of the Bill provides for the consequential abolition of the post of clerk to the old age pension committee or sub-committee and for the provision of appropriate compensation to the clerks in line with Civil Service practice. My remarks about the dedication and commitment of the committees apply with equal validity to the work of clerks to those committees over the years. Their role in co-ordinating the work of committees and in liaising with Department officials has ensured that the system of adjudication worked as efficiently as it could within the constraints which it faced.
Section 20 to 28 of the Bill make necessary consequential amendments to relevant sections of the Social Welfare (Consolidation) Act, 1981. It is my intention to bring these provisions into operation by regulation in the near future.
I referred at the start to the current magnitude of social welfare expenditure. It is the quality rather than the quantity of expenditure which is of importance, particularly in the social welfare area, where even marginal changes in provision can have a significant effect on people's lives and livelihood. I believe that the combination of measures provided for in this Bill refine the social welfare system while maintaining the level of support and improving both the scope of coverage and effectiveness of delivery.
I think it is an indication of the commitment of the Government to the support of social welfare recipients that the resources necessary to finance the improvements in this Bill have been provided, without undue extra sacrifice being asked of other sections of the community.
Before finishing, I would like to refer to two other developments in social welfare this year. The first relates to the provision in the Estimates of £0.5 million for various voluntary organisations who do invaluable work in giving individual social service. A similar amount was given to such organisations last year, and successfully funded a number of once-off projects in the social welfare area. I will be allocating this year's funds in due course.
The second development relates to the introduction of measures necessary to ensure equality of treatment between men and women in the social welfare code within the terms of the EEC Directive on this matter. I intend to bring legislation on this issue before the House later this year with a view to having the necessary provisions implemented before the end of the year.
I should like to put on record my appreciation, and thanks — I am sure on behalf of all Members but particularly on behalf of the Government — to the staff of the Department of Social Welfare. In the last 12 months they worked under enormous pressures with major unemployment-related problems facing them every day in the week at central and local level, and did outstanding work. They have been subjected, mainly in relation to the smallholders' allowance — particularly a number of officials in the west of Ireland — to wholly unwarranted criticism of a most unfortunate nature. I have repudiated that criticism which came from some Members of the Houses of the Oireachtas. The staff of the Department of Social Welfare have an enormous burden to bear. They are constrained enormously by the operations of the public service staff embargo and other necessary measures in relation to public service employment. In spite of that they have discharged their duties and work commitments with enormous dedication. I should like to thank the secretary, assistant secretaries, principal officers, and all staff of other grades for the co-operation I received during the last very difficult 12 months. I expect I will get the same co-operation in the implementation of the terms of the Bill. I commend the Bill to the House.
