Dáil Éireann debate -
Tuesday, 12 Mar 1985

Vol. 356 No. 10

Social Welfare Bill, 1985: Second Stage.

Minister for Social Welfare (Mr. B. Desmond)

I move:

"That the Bill be now read a Second Time."

This Bill has two main objectives. First, it provides for increases in the various rates of social welfare payments which were announced in the budget. This is in line with the Government's firm commitment to protect the living standards of those who through no fault of their own have no other source of income for their livelihood.

The second objective of the Bill is to give practical effect to the Government's equally firm resolve to stamp out abuses of the social welfare code which was clearly stated in the economic plan published a few months ago. Section 12 provides for substantial increases in the fines which the courts may impose on persons found guilty of this type of fraud and section 13 strengthens the powers of inspectors of my Department. Before coming to the details of the Bill I would like to outline the general policy considerations which are reflected in the main provisions of the Bill.

The Government's social welfare strategy is set out in very specific terms in the plan. A central objective of the strategy is to ensure that, even in the face of scarce resources, social welfare services will continue to be developed by:

—maintaining long term payments at least in line with inflation and short term unemployment and disability payments in line with take home pay;

—channelling income maintenance expenditure to those in need instead of using generalised measures which help both rich and poor alike,

—proper and rigorous enforcement of the social welfare code;

—increasing the efficiency and costeffectiveness of the administration of our social welfare services and

—the abandonment of structures and services which are no longer appropriate to current needs.

I should like to refer to the magnitude of social welfare expenditure. Any policy statement in the social welfare area must, if it is to be realistic, take account of two facts of life. The first is the enormous size of the existing social welfare budget. The second is that the demographic and economic pressures which have driven that budget up dramatically over the past five years will remain with us for the forseeable future. The total number of people and their dependents receiving social welfare payments of various kinds each week, including children's allowances, is now about 1.4 million or 35 per cent of the total population of the country. This year, taking account of the new rates of benefits set out in this Bill, total expenditure on social welfare will amount to over £2¼ billion of which the Exchequer will provide over £1.3 billion. The overall annual spending is equivalent to over £6 million for each day of the year. Expenditure on social welfare is the largest single bloc of all Government expenditures and is now running at some 25 per cent of total gross current expenditure. Social welfare expenditure is also taking an increasing share of the country's output — ten years ago about 10 per cent of GNP was devoted to social welfare but in 1985 it will approach 15 per cent.

I will now deal with constraints on social welfare progress. Even without any expansion of the range of social welfare services or any real improvement in levels of benefit the social welfare budget will continue to grow in real terms in the coming years. About 41 per cent of our total population is in the dependent age groups, that is either under 15 years or over 65 years. We have had also a very high rate of population increase — between 1961 and 1983 the total population increased by about 25 per cent. To the effects of a growing population we must add the high level of unemployment. Taking demographic and other factors together, between 1974 and 1984 the total number of beneficiaries increased by roughly 30 per cent. The overall number is expected to grow by a further 4 per cent over the next three years.

So the scope of the social welfare system has been and will continue to widen and the factors which have led to that widening have also led to a severe reduction in the rate at which additional resources can be made available to the system. Unemployment reduces the number who through the PRSI system help finance the social insurance scheme. Low growth generally in the economy and the need to increase both direct and indirect taxes in order to get the budget deficit under control have all be eliminated the increment of resources from which increased social welfare expenditure could be financed without cutting into living standards. This two-fold impact of the recession has in turn reduced the willingness of taxpayers generally to accept further tax increases in order to fund the social welfare system.

For those reasons Governments must nowadays seek a difficult balance in allocating additional resources to the social welfare system. They must maintain and, where possible, improve the living standards of those hundreds of thousands of households in real and pressing need while ensuring that misuse of the system is tackled effectively and unremittingly to the extent that manpower, technical and law enforcement resources permit. As I said at the beginning, those two elements of a balanced approach to social welfare provision are the main features of the Bill now before this House.

The Bill provides for increases of 6½ per cent in the weekly rates of long term and 6 per cent in the weekly rate of short term payments with effect from the second week of July next. The real value of pensions, benefits and allowances will be maintained until well into 1986 and overall expenditure on social welfare will rise by 9 per cent in 1985 compared to 1984. Since the Government came into office and including the increases in the Bill, short term payments have been increased by 25 per cent compound, long term payments by 28 per cent and the long term unemployed received the highest increase of all, 33 per cent.

In the period mid-1983 to mid-1986 the consumer Price Index is expected to increase by some 20 per cent compound while the increase in net take-home pay is expected to average about 23 per cent. This real improvement in the purchasing power of social welfare recipients has been achieved by the Government in the fact of the most severe budgetary constraints facing any Government during the life-time of the Members of this House.

I should like to refer to selective help for particular groups. The rise in the numbers of the long term unemployed is a cause of major concern. There are now 94,600, including 17,000 smallholders, drawing unemployment assistance and who have been out of work for over 15 months. In response to this, special permanent increases for the long term unemployed were provided in October 1983, an extra 5 per cent, and in July 1984, an extra 1 per cent. Again from July next the long term unemployed will receive a 6.5 per cent increase in their weekly payments compared to 6 per cent for persons who have become unemployed more recently and who may also be entitled to pay-related benefit.

I should mention here that unemployment related expenditure now accounts for 27 per cent of the total budget of the Department of Social Welfare and is the biggest element of overall social welfare expenditure. In 1985 provision has been made for expenditure of £579 million, an increase of 11.5 per cent over 1984 and this takes account of the increased rates of payment, the anticipated increase in numbers of claimants and also the likely impact of the social employment scheme and the alternance scheme.

I now turn to the second main element of the Bill. The Government are determined to ensure that social welfare funds are not misused by a minority at the expense of the vast majority who are in genuine need and of the working population who provide the benefits through PRSI contributions and general taxation. The social welfare system is all about redistribution to the less well off from the better off. If that redistribution is to be effective, leakage from the system to those who are not genuinely entitled to benefit from it must be minimised. There has been quite an amount of recent speculation about the extent of social welfare fraud and in order to inform and reassure the general public I would like to give the House some details of the problem and outline measures which have already been taken to combat abuse and my Department's plans to further tighten up the system.

I should like to deal with the extent of fraud. In 1983 the amount attributed to known fraud was £2.3 million — just over one-eighth of 1 per cent of total expenditure. The figure for 1984 is not yet available but the indications are that it will show an increase. The biggest components of the 1983 figure were—

	£m	Nos. of cases
Unemployment benefit, disability benefit and pay-related benefit	0.6	4,300
Unemployment assistance	0.4	1,000
Social assistance allowance for unmarried mothers	0.6	500

A large amount of potential misuse of the system was directly prevented by the control measures operated by my Department. For example, in 1984 it was estimated that some £6.4 million in unemployment payments was saved as a result of people "signing-off" the unemployed register following special interviewing of claimants by officers of my Department. However, in many cases there was no hard evidence of fraud at the time of the interview, so it is difficult to assess the precise amount which was being drawn unlawfully.

Misuse of the social welfare code is not confined to the recipients of benefits. Abuse also occurs where employers fail to pay or delay in paying social insurance contributions in respect of their employees. The practice of some employers of avoiding or holding off remittances of PRSI for as long as possible is simply not acceptable — arrears outstanding at the 31 May 1984 amounted to some £58 million which represented only actual underpayments established and does not include demands made on the basis of amounts estimated to be due.

Now I deal with types of fraud. On the unemployment side the greatest incidence of cases related to concurrent working and drawing benefit and there was also large numbers detected claiming while they were either unavailable for or incapable of work. Although the scale of fraud on disability benefit is lower, there is disturbing evidence of the involvement of organised criminals. For instance, in Dublin a number of persons using PRSI numbers which were known to them but without the knowledge of the insured person to whom the numbers belonged, submitted false information and medical certificates and disability benefit cheques amounting in total to a large five figure sum were issued to convenience addresses. Due to the combined efforts of staff of my Department and the Garda the fraud was uncovered. So far the Garda have charged nine individuals and their investigations are continuing. There is also evidence of fraudulent claiming in other schemes.

With regard to employers defaulting on PRSI contributions, cases have arisen where considerable arrears of PAYE-PRSI are revealed when a company goes into liquidation with perhaps large debts and very few assets. Fundamental trading difficulties and cash flow problems in the business cannot be solved by abuse of the social security system.

I now come to measures taken to combat abuse. Measures to curb misuse have been taken on two broad fronts. First, changes in the structure of the benefits payable to persons during sickness and unemployment were made in 1983 and last year which have achieved a more realistic relationship between the level of overall benefit and the person's normal take-home pay. A critical examination of the levels of benefit payable had indicated that the previous levels constituted a disincentive to work in a number of cases and in certain circumstances provided opportunities to exploit the social welfare system. The introduction of the family income supplement as a top-up to take-home pay further increased the incentive to work for low-paid workers with families. I am now satisfied that the levels of the short term benefits are not out of line with wages generally and there is little or no scope for further action on this front.

An extensive range of administrative measures have also been brought into force or improved over recent years. These include control measures at local offices to ensure that recipients of unemployment benefit and assistance continue to satisfy the statutory requirement of the schemes have been tightened up. The general cadre of the social welfare officers has been strengthened so as to increase their role in the anti-fraud campaign — there are now 248 officers based at 94 different locations throughout the State.

The size of my Department's special investigation unit has been doubled and there are now 30 officers at 18 centres engaged full-time in the investigation of abuses and irregularities. The main role of the unit is in relation to the abuse of working and "signing-on" and they carry out special investigations in areas where fraud is suspected.

There is the development of much closer liaison between the National Manpower Service and the local offices of my Department. The National Manpower Service are giving priority to the registered employed in filling vacancies. The closer liaison makes it possible to identify persons who are not interested in finding work or who may, in fact, already have a job.

Increased numbers of disability benefit claimants are being referred to my Department's panel of medical referees for a second opinion, to ensure that only those who are genuinely ill are, in fact, paid disability benefit. The recent experience is that in the region of 35 per cent of those called for medical examination do not attend and about 26 per cent of all claimants examined are found to be capable of work. The panel of Medical Referees has been increased by four to 18.

Improved selection procedures have been introduced in the type of cases referred for examination to ensure that the appropriate cases are submitted promptly for examination. Claimants for disability benefit are also visited in their own homes by the Department's sickness visitors who express a lay person's opinion on the claimants inability to work. Doubtful cases are referred to the panel of medical referees. A large number of claimants are absent from home when the sickness visitor calls and these are also normally referred for medical referee examination.

Regulations which require a claimant for disability benefit to notify the Department within seven days of the commencement of incapacity are strictly enforced. This curbs false claims for past periods which would otherwise not be amenable to checking by visits by sickness visitors or second opinions by medical referees.

Securing prosecutions against persons who fraudently claim social welfare payments is a very important feature in my Department's drive against abuses of the schemes. All fraudulent cases coming to light are considered for prosecution where sufficient evidence is available. The Department's powers to prosecute for offences were strengthened and clarified in 1983 following the advice of the Attorney General in relation to certain defects in the existing legislation.

These measures should leave nobody in doubt that effective and reasonable action is being taken by my Department to eliminate unwarranted resourse to social welfare benefits. As regards enforcement of the collection of PRSI contributions, which is now undertaken by the Revenue Commissioners with the PAYE collection, Deputies will be aware that the Minister for Finance has set up a working group to make recommendations to Government for substantial improvements in the enforcement process.

Regarding the role of the public, my Department's work in the control of abuse is, of course, greatly helped by reports of abuse received from members of the public and from various other sources, including employers, the Garda and officials in other Government agencies and in local authorities and health boards. Indeed, I would like to pay a special tribute to the Garda and the other agencies for their co-operation in this regard.

The most effective approach to unemployment is, of course, to provide jobs and the Government's policies and resources are being mobilised to that end. With regard to absenteeism, there is a widespread view, which I share, that the key to tackling absenteeism is through effective management action at the level of the individual firm. In this connection, I would also like to commend the Federated Union of Employers and the Irish Productivity Centre for their initiative in producing booklets for employers on absenteeism control. The Irish Management Institute run a number of courses for managers on the subject of absenteeism and have launched a comprehensive absenteeism control programme for member companies.

I want to refer now to increased efficiency through computerisation. I mentioned earlier on that it is necessary to balance the need for adequate controls with the objective of meeting genuine needs efficiently and effectively. The scale of the activities of the Department of Social Welfare makes that an enormous task. Each week it makes some 1.4 million payments and processes some 25,000 new claims. There has been a huge growth in the workload, due to the effects of the recession at a time when the Government's policy on civil service manning levels has been and continues to be extremely restrictive. However, I am glad to say that the Department's computerisation programme is resulting in significant administrative savings and substantially higher productivity. This was acknowledged in the 1983 Report of the Department of the Public Service which acknowledged that:

Due to computerisation, staff numbers engaged on social welfare system at the time of the report had been contained in the previous decade despite a 40 per cent increase in claim load and additional complexities in the system due to pay-related benefit; overtime was also reduced.

The computerisation of payments systems provides a very powerful capacity to monitor and check expenditure and to provide better and quicker management information. My Department are pressing ahead with further computerisation to the extent that manpower and financial resources permit. This will gradually make more staff available to improve the overall level of service to the public, which has tended to suffer in some respects due to the sheer volume of claims to be dealt with, and to maintain full and effective control procedures. It is also part of our strategy that the social welfare system in the coming years be made as simple as possible — the complexities in the present system do not facilitate efficient administration and often create problems of understanding for our clients. The new child benefit scheme will, I hope, be the first major step along the road to simplification.

The increased productivity which has been achieved in recent years in my Department is a tribute to the staff and management. The cost of administering the social welfare system has been falling in relative terms and this year it is £89 million or 4.07 per cent of total expenditure. Of this the cost of the Department's own staff is less than £37 million or 1.7 per cent of the total expenditure. This compares more than favourably with any private sector organisation doing similar high volume work and I might add that the administration costs of the UK Department of Health and Social Security are around 4.5 per cent of expenditure. By any standards the Department of Social Welfare are providing excellent value for money.

I have described the policy which has shaped the main objectives of this Bill and I will now deal briefly with the detailed provisions. I trust that Deputies will have found the explanatory memorandum which accompanies the Bill helpful in their consideration of this piece of legislation. Deputies will be aware, of course, that there is a Bill currently before the House to provide for equality of treatment as between men and women in matters of social security arising from the EC Directive on this matter. That Bill will be amended to incorporate the new rates of payments being provided in the Bill we are now discussing.

The overall cost of the social insurance and social assistance rate increases being provided in this Bill is £56.9 million. This will come to about £118.4 million in a full year. The extra social insurance expenditure, £33.5 million, falls to be met out of the Social Insurance Fund which will benefit from the yield from the PRSI ceiling increases — about £2 million — and from the £2 million savings arising from the increase in the pay-related benefit floor.

The increases in social insurance and occupational injuries benefits are provided in section 2 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 £51.40 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 £84.20 a week. A married couple both over pensionable age will get £89.75 compared to £84.25 at present. Higher increases are paid for pensioners over 80 years. Additional payments are also made for persons living alone.

The personal rate of widow's contributory pension is being increased by £2.80 a week to £46-25. Widows over 66 years receive higher payments. A widow with, for example, three dependent children will receive £85.95 a week which is an increase of £5.25. The personal rate of invalidity pension goes up from £42.55 to £45.30 for a person under pensionable age and a married couple with two children will receive £96.65, and increase of £5.90. A person in receipt of disability or unemployment benefit will have a new personal rate of £39.50 a week, an increase of £2.25. Where the recipient is married the increase will be £3.70 a week. Maternity allowance is also being increased to £39.50.

The new rates of social assistance payments are provided in section 3 of the Bill. The maximum personal rate of non-contributory old age pension for a pensioner under 80 years of age goes from £41.30 a week at present to £44.00 a week. It will go up to £47.20 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 £66.10. The allowance payable in respect of a prescribed relative giving full-time care and attention to an incapacitated pensioner is being raised to £24.60. Widows receiving non-contributory widow's pensions at the present rate of £40.50 will get an increase of £2.65 a week. A widow with two dependent children will get £66.75, 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 £1.85 a week in their maximum personal rate. In rural areas the increase will be £1.80 a week. There are also increases in respect of dependents. An applicant in an urban area who has a wife and two dependent children will get an increase of £4.20 a week in the present rate of £69.65. 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 £78.75 which is £4.90 more than the corresponding short-duration rate. The maximum rate of supplementary welfare allowance for a married couple goes from £51.70 to £54.80 with additional payments for children.

Section 4 of the Bill provides for adjustment in the income limits up to which family income supplement is payable and for increases in the maximum amounts payable under the scheme. These changes follow from improvements in personal income taxation announced in the Budget Statement and from the increases in the rates of short-term social insurance benefits provided for in the Bill.

The levels of weekly income up to which a supplement is payable will be increased from £95 to £100 for a family with one child and by a further £18 per week for each additional child, up to and including the fifth child. The income levels at which the maximum supplement is payable are also being adjusted, for example, from £63 to £68 per week for a one-child family.

These changes will take effect from 11 July 1985 and will apply to claims made on or after that date. Claims in payment prior to July will receive the benefit of the revised income limits when they reapply in the normal way at the end of 12 months.

Section 5 provides for an increase from £43 to £49 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 benefit. In 1974, this disregard or floor 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 level in relation to the flat-rate benefit as it had in April 1974, it would now stand at £79 instead of £49 as is proposed in this Bill.

Section 6 provides that the earnings ceiling for PRSI contribution purposes be raised from £13,000 to £13,800 with effect from 6 April 1985. For the third successive year there is no increase in the actual rates of social insurance contributions. However, there will be a small extra contribution of 0.1 per cent levied on employers, following the establishment of the Redundancy and Employers Insolvency Fund in place of the previous Redundancy Fund. This fund is operated by the Department of Labour.

With regard to the extension of social insurance coverage to certain members of the Labour Court and the Defence Forces sections 7, 8 and 9 make provision for social insurance cover to be extended to members of the Labour Court. Members of the court, including the chairman and deputy chairman, are appointed by the Minister for Labour for a fixed duration of up to five years which may be renewed. Their employment, up to this has been held to be not insurable because it is not employment under a contract of service. Section 7 provides that the employment in question will be added to the existing list of insurable employments.

In general, employment which is not subject to a contract of service is not insurable for the full range of social insurance benefits. The effect of section 8 is to enable the provisions of the Act to be modified by regulations in respect of employment in the Labour Court.

Section 9 is a consequential amendment excluding members of the Labour Court from occupational injuries insurance because they are not employed under a contract of service.

Section 10 provides for the extension of social insurance coverage to commissioned officers employed as doctors and dentists in the Defence Forces. They will be insured on the same basis as their fellow non-medical commissioned officers at the modified Class C contribution rate which provides cover for widows and orphans pensions and deserted wife's benefit. They will not be covered for occupational injuries benefits because members of the Defence Forces in general are specifically excluded from such cover.

I consider that the continued general exclusion of doctors and dentists from social insurance can no longer be justified and this is a matter which I will be putting before the Government in the near future.

Sections 11 and 13 provide for changes in the unemployment assistance scheme. Section 11 of the Bill enables long term unemployed persons who have participated in either the social employment scheme, the enterprise allowance scheme, the alternance scheme or AnCO approved courses for up to one year to resume their entitlement to unemployment assistance at the long term rate of payment and without serving a three day waiting period. At present long term unemployment assistance claimants who resume signing-on after attending AnCO courses of over 20 weeks duration are obliged to serve a three day waiting period as if their claim was a new one. In addition such persons have to revert to the lower rate of assistance because the link with the previous "long-term" claim is technically broken where attendance at a training course lasted for 20 weeks. The effect of the proposed amendment is that periods of up to one year's participation in approved training schemes or social employment schemes will be disregarded in determining whether periods of unemployment can be linked for unemployment assistance purposes.

Section 13 of the Bill provides for the clarification and strengthening of the powers and duties of social welfare officers in relation to the unemployment assistance scheme in particular in the area of combatting abuse. It includes a specific provision governing the investigation of unemployment assistance claims by social welfare officers on similar lines to that which exists at present for social insurance purposes.

Section 12 provides for increased penalties for social welfare offences in line with commitment in paragraph 5.68 of the Government's plan Building on Reality 1985-1987. At present a maximum fine of £500 or 12 months imprisonment, or both, can be imposed on summary conviction of a person found guilty of a prescribed offence in respect of the various social insurance and assistance schemes. In exceptionally serious cases where conviction on indictment is obtained the maximum fine is £2,000 or two years imprisonment, or both. This section will increase the maximum fines to £1,000 and £3,000 respectively.

Section 14 provides that volunteer workers employed in a developing country will not have their occupational injuries benefit entitlement reduced by reference to their earnings from employment abroad. Under existing legislation the amount of occupational injuries benefits are limited by reference to the pre-accident earnings of the insured person. It is proposed that this limitation should not apply in the case of volunteer development workers, who might receive nominal amounts of benefit because of their low earnings from employment abroad.

It is part of Government policy in regard to development co-operation to encourage and facilitate as far as possible the participation of Irish individuals and organisations in the Third World. In this context the various issues involved in protecting the interests of development workers are kept under continuing review.

The lack of social insurance cover for returned workers has been identified as a source of concern to many such workers and the Government have therefore decided that continuity of social insurance cover will be provided for those development workers who are paid pocket money rather than a wage so that they can avail of the relevant social insurance benefits on their return.

Broadly speaking, the volunteer workers fall into two categories: those who have no history of employment before their departure and consequently no social insurance entitlements; those who have an employment history and social insurance entitlements prior to going abroad, but who at present lose those entitlements because they are not entitled to credited contributions while abroad.

Arrangements will be made to safeguard the position of each of those two groups, and consultations are taking place currently with the different bodies who have an interest in the problem. I will shortly be making regulations to deal with this particular issue.

This move has been welcomed as a practical demonstration of the Government's desire to encourage and facilitate as far as possible the participation of Irish individuals in volunteer development work in the Third World.

While on this topic I would also like to mention that a draft EC Recommendation on the Provision of Social Security for Volunteer Development Workers who operate in Third World Countries and are paid wages at a rate similar to local conditions is being urgently discussed. This recommendation proposed that various member states should recognise the achievement of social security cover for volunteer development workers as one of the objectives of their social policy. It sets down the broad principles which member states should aspire to and lays down various ways in which these principles might be implemented. The regulations which I will be making shortly will reflect the principles enshrined in the recommendation.

I would now like to refer to a number of social welfare improvements which do not require legislation, as such. This year's budget saw a number of innovative measures designed to improve the level of service being given on extending existing services to priority groups to the extent that the very limited resources permit. One of these is an important extension of the existing treatment benefit scheme from July next. This scheme at present provides optical, dental and medical and surgical benefits to qualified insured workers. These benefits will be extended from July next to the expectant wives of such workers. In practical terms this means for example, that all basic dental treatment such as examination, fillings, scaling and polishing, extractions and root treatment and, on the optical side, sight tests will be available free of charge.

This extension, will increase the potential catchment of the scheme by up to 30,000 married women per annum. It is a response, albeit a modest one, to the repeated demands which have been made over the years to have the benefits available under the scheme extended to all spouses of qualified insured workers. However, as I said on a number of occasions the cost of such an extension would be prohibitive being of the order of £6¾ million per annum and the Government have, therefore, decided that as pregnant wives can be regarded a priority group to extend the scheme to them initially. I was conscious of the review of the State funded dental services which is in progress at the moment and I was anxious that this review could proceed without major structural changes in the existing schemes.

I have already met the relevant professional bodies with a view to seeking the co-operation of their members in the implementation of the extended scheme. The details of the extension are being worked out at present and will shortly be brought into law by means of amending regulations. As soon as these have been made, appropriate publicity will be arranged.

Proposals for a second EC poverty programme have now been approved by the Council of Ministers and will come into effect in 1985. The programme will run for four years and under the programme Community financial assistance will be provided for action research projects in the poverty field.

Projects selected for the programme would receive financial assistance from Community Funds up to a maximum of 50 per cent of the overall costs (55 per cent in exceptional cases).

To qualify for funding under the programme projects will have to comply with certain criteria set down by the EC Commission relating mainly to evaluation, co-ordination between projects on similar themes and the dissemination of project results. The overall amount of Community funding available for this programme is 25 million ECU of which some 20 million ECU — £14 million approximately — would be available for action-research projects.

Interested organisations and groups have been invited through newspaper advertisements to suggest projects for inclusion in the programme. Applications were to be submitted to the Department before 28 February. Applications will be examined by the interim board of the combat poverty organisation which will advise on the projects to be forwarded to the Commission for inclusion in the programme.

Legislation to establish the new Combat Poverty Agency has now been circulated and will shortly be debated in the Oireachtas. The new agency will be set up as soon as possible after the legislation is passed. A sum of £1 million is provided in 1985 for the anti-poverty programme.

In 1983 and last year £0.5 million was provided for various voluntary organisations who do invaluable work in the social services area. The grants are mainly for once off projects and are payable in addition to any grants made by health boards. This year an increased sum of £650,000 is being made available.

An advertisement has been placed in the national press inviting interested organisations to complete an application form and submit it to the Department before 29 March 1985. The health boards will then be consulted and the grants will be paid to the approved bodies as soon as possible afterwards. Some 103 organisations benefited from grants under this heading in 1984. The following is a cross-section of the type of work which these agencies carry out: day care centres for the old; meals on wheels; services for the physically handicapped; youth club facilities; day care centres for the homeless; help for unmarried mothers.

The value of the fuel vouchers under the national and urban fuel schemes are being increased from next October from £4 to £5 a week. This will benefit some 168,000 people at a cost of £5.9 million in a full year.

Since this Government came into office, three important Social Welfare Bills were brought before this House. Today there are three more separate Social Welfare Bills going through the Houses of the Oireachtas. The proposed child benefit scheme is due to come into operation next year and a framework for a national pension scheme will be published later this year. The improvements and policy developments contained in these Bills and the further measures to come are an indication of the Government's commitment to the progressive improvement of our social security system.

I commend the Bill to the House for favourable consideration.

Dr. McCarthy

I listened to the Minister with great interest, anticipation and hope. We are all aware of the miserable increase granted during the current year to social welfare recipients, although the increased payments do not come into effect until July, which is a long way off. In the interim increased costs on essential goods are biting deeply into the miserable income of those whose sole source of income is social welfare payments.

The die is cast for 1985, but I had hoped that a little humanity, Christian charity and goodness would find their way into the heart of this unscrupulous, mean, inhuman and miserly Government. However, I hoped in vain. I also hoped that when the Minister introduced this inglorious Bill he would tell us we had reached the end of the bad old days of the policies of miserly economic scroogery, particularly as far as social welfare recipients are concerned.

For two years in succession the Government have treated the most vulnerable and least well off section of our community with disdain and inhumanity. I thought that after this year the worst off sections of the community would not be asked to pay the penalty in future for failed Government economic policies, as they are doing at present. Unfortunately, I was wrong in hoping and believing that things would change. My hopes, and those of hundreds of thousands of citizens, were dashed. The old, sick, unemployed and the poor are being treated almost as social outcasts; and all the indications are that they will continue to be so treated by the Government during whatever period of time remains before they get the out, out, out decision from the electorate. The public, especially those receiving social welfare payments, are just waiting for the opportunity to change the Government. I do not think anybody is under any illusions as to what the outcome will be.

In his Budget Statement the Minister for Finance had the audacity to attempt to make a big play of the Government's performance in respect of social welfare increases from 1983 to 1985. He implied that, taking into account the increases granted in the years 1983 and 1984, long-term increases in social welfare payments of approximately 19 per cent have been achieved and that this increase had more than met the Government's commitment to keep pace with inflation in this regard.

But the Minister and the Government omitted conveniently to inform the people that the increases in each of those years related to nine months in each instance. In these circumstances it was dishonest, deceitful and a form of fiddling politics at its lowest for the Minister to have endeavoured to mislead the people in that way. Again this year the Minister for Finance and the Government continue to engage in this policy of public deception. The meagre increases in social welfare payments will not become effective this year until 11 July. Is it not strange that the date on which the increases come into operation is being extended each year? Last year the effective date was during the first week in July but this year it is later. In the interim the poor, the old, the sick, the unemployed and the widows will not be able to enjoy any of the increases which the Government are claiming are of the order of 6 to 6½ per cent and which according to them are in keeping with the rate of inflation. The increases are being granted for eight and a half months of the year. This gives a real increase of only 4 per cent. That will be far less than the inflation rate for the year.

In the meantime all those who must rely on social welfare benefits, people who are deserving of the greatest support possible from the State, must pay increased VAT on clothes, on fuel and on footwear, increases respectively of from 8 to 10 per cent, 5 to 10 per cent and 0 to 10 per cent. The Government have made no attempt to cushion social welfare beneficiaries against the effects of these increases.

Could the Minister or anyone else say that any of these people will be better off because of the budgetary changes? We might ask, too, how much less in terms of disposable income these people will have after 11 July this year. Do the Government recognise that the various items to which the VAT increases apply are essential items in order to allow families enjoy a normal decent standard of living?

The Minister for Social Welfare has had the rather dubious privilege of presenting this Bill to the House. He has endeavoured to put the best face possible on it but as a member of the Labour Party he must be very embarrassed to have to try to sell the Bill to the House and it will be even more difficult for him to sell it to the public. To some extent I sympathise with the Minister but if one makes one's bed one must be prepared to lie on it.

Neither this Minister nor the Labour Party in general can in any way disassociate themselves from the Bill. Unfortunately, the Bill is another factor in the price of power, another factor which the `mercs' and perks party, otherwise known as Labour, have had to pay for joining the unholy alliance with Fine Gael.

In the past the Minister for Social Welfare has enunciated views that would be totally at variance with the miserly increases being offered to social welfare beneficiaries at this difficult time. The Minister has stressed some figures in terms of increases in certain areas of social welfare and he does so as if these increases were really worthwhile pennies from heaven. This is not the case, as the Minister is well aware. The increases are a total insult to those most in need. In the past social welfare increases applied from April but that is no longer the case as I have outlined. If the trend in that respect continues, and if the Government continue in office for much longer, the effective operative date for the increases will be somewhere near Christmas Day.

It is only fair that we consider honestly and constructively the increases being offered. A widow with two children and on a contributory pension is to receive an increase of £4.40 per week, bringing her total income to £72.30. A couple in receipt of contributory old age pension and both of whom are between 60 and 80 will receive an increase of £5.50 bringing their total income to £89.75. In the case of the long-term unemployed the increase is to be 6½ per cent. This means that a man in this category and with two children will receive an increase from £73.90 to £79.75. The increase in respect of short term payments will be 6.3 per cent. This will relate to unemployment, disability, maternity, and invalidity benefits. A man with a dependent wife and two children will receive £88.50 if he is in receipt of unemployment or disability benefit. Surely then the increases are an insult in terms of increased costs. It is obvious that the unfortunate families depending on social welfare will have far less money available to them in real terms after 11 July this year.

Thee meagre increases being granted by the Coalition compare very poorly with the real increases given by successive Fianna Fáil Governments, Governments who recognised the needs of those people and who cared for them. The record of this Government is appalling in respect of caring for those families who must have recourse to social welfare payments. In the three years they have been in office they gave a 12 per cent increase in long term payments in 1983 and a 10 per cent increase in short term payments, all increases operative from the end of June. In 1984 they gave an 8 per cent increase to those on long term unemployment assistance and all other benefits were increased by 7 per cent. These increases were paid in the first week of July. This year the increase is reduced to 6½ per cent in respect of long term payments and 6 per cent for short term payments, payable from 11 July 1985.

This should be contrasted with the Fianna Fáil record. In 1980 and 1981 Fianna Fáil granted an increase of 25 per cent in respect of long term payments and 20 per cent for short term payments, payable in April of those years. In 1982 we granted an across-the-board increase of 25 per cent to all social welfare recipients payable in April, a total 75 per cent increase in three successive years. Clearly, the performance of the Coalition pales sadly in comparison with our achievements of which we are justly proud and which we hope to repeat at the earliest possible opportunity and thus give the poor unfortunate people a decent standard of living.

Once again this Government decided this year not to grant any increases in children's allowances. I regard that decision as cruel and insensitive, as a specific anti-family measure which is part and parcel of the kind of policies that are pursued relentlessly by this Government. I do not have to remind the House of the history of the children's allowance scheme which was introduced in 1944 as a support particularly for larger families. Initially it applied only where there were three or more children in a family but since 1963 the scheme was extended to cover all children and it now applies to all children up to 16 years or 18 years where the child is in full time education or is incapacitated. The children's allowance scheme has become a traditional family income supplement and in most cases it has been used assiduously and conscientiously by the mothers of families to supplement basic family needs from time to time and for special occasions. It gave a mother a small hidden reservoir of cash from which she could draw at crucial times.

Almost 500,000 families benefit from the scheme but they were not granted any increase this year. Last year children's allowances were increased by a miserable 7 per cent from 7 August and in 1983 the Government did not give any increase in respect of the scheme. It is an appalling and disgusting anti-family policy that in three years there has been just one increase of 7 per cent that operated from 7 August and that meant an increase in real terms of only 4 per cent in that year. Since this Government took office in December 1982 they have increased children's allowance by just 4 per cent over a three year period. Surely there could not be a more miserable policy in relation to children's allowances. The policies of this Government in this area cry out for vengeance. There is no doubt that the families who receive children's allowance payments know that this Government have failed them badly.

The Archbishop of Dublin, Dr. Kevin McNamara, who was formerly Bishop of Kerry put the matter of children's allowances clearly and succinctly in perspective in his Lenten Pastoral in 1984. I quote from The Cork Examiner dated 29 March 1984 as follows:

In a Lenten Pastoral entitled "The Christian Family" the Bishop of Kerry, Dr. Kevin McNamara, criticised meagre children's allowances paid out by successive Governments.

For a country that rightly prides itself on its strong family traditions it is puzzling, he said, how we should accept payments that compare very unfavourably with European rates. In the last few years, the bishop states, families have become increasingly beset by economic difficulties arising from unemployment and increased living costs. Many families were under pressure to keep a home, to dress and educate children on low wages or social welfare benefits. There was pressure on wives to leave home against their will to supplement the family income. The remedy here must surely be greater financial support for families from the State and voluntary bodies, he suggests.

Dr. McNamara states that if children's allowances cannot be raised for all social categories, then they should at least be increased for families on social welfare payments or who are otherwise hard-pressed.

I agree that the then Bishop of Kerry put the whole matter of children's allowances as they related to poorer families in full and proper perspective. In this House during the debate on the Social Welfare Bill on 9 March 1983, the Minister stated:

I regret very much that in present financial circumstances it was not possible to provide a significant real improvement in the level of social welfare payments. I fully appreciate that many persons dependent on social welfare payments — the sick, the unemployed, the widowed and the retired — are finding it extremely difficult to make ends meet in this severe and prolonged recession. It is unfortunate that at a time like this when the need for income maintenance services, particularly unemployment benefits, is greatest, that the State's ability to make an adequate response is limited because of the critical position of the public finances. However, I can assure Members of the House that as soon as circumstances permit, hopefully by next year's budget, it is my firm intention to secure further real improvements in social welfare payments.

How little has been achieved since then. From this one can see very clearly that the present Minister was unhappy at that time with the percentage increases being offered to social welfare recipients. If he was unhappy then he must be much more unhappy now.

With a blare of trumpets this Government introduced their document, Building on Reality towards the end of 1984. In retrospect it might have been more correct if they had called it “Building on Unreality”. This document went in some depth into attempting to explain the gravity of the unemployment problem. They attempted to quantify it and explained how this problem could be dealt with and what it would cost during the reign of this Government. The Government said that about 220,000 persons would be unemployed by the end of 1984, but now they must shamefully admit that that figure was fudged because the real figure was 234,000, and this is increasing all the time. Unless policies change, this figure will continue to increase.

The Government, like everybody else, know that unemployment benefit and assistance payments are the fastest growing elements in terms of costing in the Social Welfare Estimates and that unemployment payments have increased from £345 million in 1982 to £526 million at the end of 1984, or by a rate of approximately £10 million a week during that period. We all know that until the unemployment problem is solved ever-increasing charges will be placed on the Exchequer. For example, for every 1,000 people who become registered as unemployed the cost to the Exchequer will be £2½ million in State benefits. Surely the Government cannot allow the unemployment figures to rise any higher? Surely the responsibility is on them to at least try to arrest the huge rise in the numbers joining the queues at unemployment exchanges all over the country.

Unemployment is the biggest problem facing this country and this Government must come to grips with it. They must create an economic climate which is attractive to industrial development and employment in general and they must improve incentives for workers and employers. This can only be done by real changes in our taxation system which is crippling the community. At present there is little or no incentive to either expand a business, if one is an employer, or to work harder, if one is an employee, because of the cruel crippling effects of our taxation.

At page 23 of Building on Reality it says:

A key element in the Government's strategy for income maintenance will be to provide adequately for the welfare of children in needy families. In recent times, resources being devoted to child support were not at all well targeted to the groups most in need. A particular weakness was in respect of families where the head of household was an employee at work, but at low pay. The State tax and social welfare system gave much less to such people to help with the cost of feeding and clothing extra children than it gave, not only to social welfare beneficiaries, but also to well-off families.

This was the basis on which the family income supplement scheme was introduced. It was supposed to be this Government's solution to the problems of the lower paid workers. I can state clearly without fear of contradiction by anyone on the other side of the House that this scheme has been a complete and abject failure.

The family income supplement scheme was introduced at a very sensitive time in the history of this Government when Labour and Fine Gael were struggling and fighting among themselves. When the scheme was announced it was stated that up to 35,000 families would qualify for payments under this scheme. A great deal of play was made out of the fact that the scheme would be backdated to 1 September. This move appeared to be an essential ingredient to accommodate some of the more reluctant elements in the Labour Party who were finding the 50 per cent reduction in food subsidies to be almost totally unpalatable for them politically. I refer particularly to Deputy Bell.

In retrospect I can see that it was very easy to appease these reluctant elements in the Labour Party because we all know that this scheme has been a failure. Up to 7 February 1985, out of the supposed 35,000 families who would benefit, there were only 9,300 applications received by the Department, and of them, approximately 4,400 families had been granted the family income supplement. We should ask ourselves why this scheme has failed and why the Government are still making much ado about nothing since it is obvious that they have not satisfied the demands of the people. In the abridged 1985 estimates column one can see that £30 million has been allocated for the family income supplement scheme, but from the most recent information available to the Department one can see that a saving of £2.5 million will result from the non-take up of this scheme.

The Minister had the audacity to present the family income supplement scheme — which was to be introduced on 1 November but was backdated to 1 September — with a blaze of triumphalism. I will quote from The Irish Times, 12 September 1984, under the heading “Backdating of Family Supplement Welcomed”. It says:

The low income families eligible for the family income supplement scheme who are caught in what the Minister for Health and Social Welfare, Mr. Desmond, has described as the wage poverty trap will get between £10 and £120 of an unexpected bonus in back money because of the Government's decision.

The article also said that a reduction in food subsidies in the previous month had further eroded the rapidly declining value of family income, adding up to £5 to the weekly food bill in some cases, and that the week before many families had difficulty in meeting the cost of books and clothes when their children returned to school after the summer holidays. In the same paper there was a statement attributed to Deputy Liam Skelly. The article said that Deputy Skelly represented the sprawling constituency of Dublin West with a population of 120,000 people, ranging from the very rich to the very poor, and that he regularly met at his clinics the families who would benefit from this scheme. Deputy Skelly is reported as saying that many of the people he knows are not eating properly and that he knew of one family who did not send their children back to school because they could not meet the £150 bill for clothes. The article said:

A strong critic of some Government policies said last night that the earlier introduction of a supplement will help alleviate the distress caused by the reductions in food subsidies ... But a lot of unnecessary pain could have been avoided for those families if both decisions were made at the same time.

The article also says that the scheme would benefit 35,000 families and would cost about £13 million. It said that the scheme had been promised by the Government 18 months previously and that when the back money was paid families would benefit by up to £15 per week depending on their income and the number of children.

This scheme has been ignored by the public and has not fulfilled what the Government said it would. This is a classic example of the Government braying their wares in a shameful fashion. They have been pretending to have been doing what they are not doing and they were pretending to provide what they were not providing. The Government have been making much ado about nothing, since so few people have availed of the scheme. When one compares the numbers deemed ineligible with those who applied for benefit under the scheme one wonders if they were deemed ineligible because of the failure of the administration to process the scheme properly. I know of one family who sent in two applications to the Department of Social Welfare and who inquired by telephone when nothing happened to be told that neither application form had been received in the Department. Is this another ploy to deprive people of their rights?

When we got the details of the budget most of us were concerned by changes in non-capital expenditure. The revised table and the published estimates showed that in relation to social welfare under subhead E the Social Insurance Fund, there would be a saving of £1,618 million on a published estimate of approximately £316.422 million, under subhead G non-contributory old age pensions, there would be a saving of £1,250 million on a published estimate of £9,430 million; under subhead N, Family Income Supplement, there would be a saving of £2½ million on a published estimate of £13 million. We hoped that these reductions were not being made because of a concerted effort by the Government to achieve savings at any cost. I hope there is a logical explanation for this, particularly in relation to the estimated savings of approximately £2 million on non-contributory old age pensions. In answer to a question we were told that the savings were included in the overall reduction of £7.368 million on the public Social Welfare Estimates and that they arose because the latest information showed that a slightly lower number of pensions were in payment and that a slightly lower average rate of payments than were assumed in the published estimated would be paid.

I would be grateful if the Minister in his reply would explain why there is a reduced number of pensions being granted and why is there a slightly lower average rate of payments than was assumed in the published estimates? Has the Minister and the Government indulged in a policy of making savings at the cost of old age pensioners? If this is so it is a national disgrace. I would remind the Government of another Government who reduced the old age pension by a shilling many years ago. I do not believe the Minister not any member of the Government would like to be remembered in that fashion.

We are aware of the increasing burden of PRSI payments on the meagre wages of workers. I wonder if the PRSI system is fair or equitable. Is it just another form of taxation? If it is unfair we have an obligation to do something about it. Unfortunately the ceiling for contributions was raised by this Government. The present Minister, under section 4 of the 1983 Social Welfare Act, raised the contribution ceiling from £9,000 to £13,000. Effectively, workers have been paying much more in social welfare contributions. The same applies to the 1 per cent levy introduced two years ago. This now takes 1½ per cent out of workers' pockets. Once again the Government have maintained their set pattern of increasing the ceiling. This year it has been raised from £13,000 to £13,800. The ceiling for the health contribution levy has been raised from £12,000 to £13,000, and this, together with the higher ceiling for health services, cuts a further £445 from workers. In other words, it will cost workers another £1 per week. The additional yield to the insurance fund will be £13 million this year, affecting 130,000 workers. The time has come to call a halt to these consistent increases in the demands on workers. The Government must decide that workers cannot pay any more or their families will be left hungry and only semi-clothed. The Government must realise that the basic essentials of life have to be paid for and if that is to be possible the Government must stop taking such an alarming slice of the cake.

How many people listening to the Minister for Finance delivering his budget speech realised they were being misled by the budgetary strategy? Once again the Government played their characteristic three-card trick, taking from the workers with one hand and giving with the other. Any increases the workers appear to have gained have been more than taken back by increased costs.

In 1984 people on pay-related benefits were reduced to £43 in the amount of weekly earnings to be disregarded in calculating the rates of benefits. We opposed that because we decided it would reduce the amounts payable to those on unemployment benefits and maternity awards. This year the Minister went further and he increased the amount of weekly earnings to be calculated from £42 per week. The maximum will be £44.25 this year compared with £42.75. This represents a saving of £2 million, a trick the Government are very successful at.

Though it does not come under this Bill, it is only fair to say that we should be aware that we will soon be faced with a Bill to implement an EC equality directive, and there is no doubt that when that will be implemented many families will lose up to £30 or £40 per week in social welfare payments. Members on this side are not opposed to equal rights for women or for the need for a change in their status but we do not think this should be achieved at the expense of the entire family unit. I implore the Minister, when he is introducing the new Bill, to ensure that no families on social welfare payments will lose income as a result. In many cases where the head of the house is ill or unemployed and the wife works part time on a small wage the family will lose enormously unless the Minister builds in safeguards to the EC Bill to ensure that no family will lose. One begins to wonder if the intention to introduce the equality of status Bill is an excuse for the Government savagely to cut the incomes of working class families. The kernel of the problem is that in an attempt to solve the matter of equality and status no cognisance is taken of the fact that women's earnings are only two-thirds of those of men and therefore to achieve equality of earnings will cause severe hardship to many families.

Many people question whether the administration of the Department of Social Welfare is as good as it should be. I am being extremely kind in my verbiage, but many people are beginning to wonder whether the operations of the Department of Social Welfare have broken down almost completely. Apparently, for some reason we do not understand, it takes unbelievably long periods to process applications, particularly in regard to claims for unemployment benefits or assistance, disability benefits and non-contributory old age pensions. Unfortunate applicants have to wait for weeks without incomes of any kind. Those of us who have a better opportunity to ascertain the facts are aware that supplementary welfare benefits may be paid while people are awaiting the processing of their applications. Many unfortunate applicants for social welfare payments are not aware that while awaiting a decision by a deciding officer they can avail of the supplementary welfare scheme. Consequently, they do not claim and live in dire financial straits during those weeks. The bills mount up, food supplies diminish and they have a poor standard of living.

There must be a better way to process such claims expeditiously to determine eligibility, or is it that staff numbers have been so reduced that the Department cannot function efficiently and properly? The appeals system has almost totally broken down especially in regard to appeals against decisions of medical referees who may decide that applicants on disability benefit are fit for work. If the recipient's doctor decides otherwise the matter is sent for appeal and, for some reason or other, it now takes an unbelievable amount of time before that appeal is heard. That denies workers a fundamental right, the right of access to a proper appeal system where appeals are dealt with expeditiously. It has been suggested — I do not wish to indulge in hearsay but since the matter has been raised it is only fair that I should invite the Minister to reply to it — that one of the reasons why appeals are delayed is as a consequence of an unprecedented number of appeals officers being ill. It appears that a hard line is being adopted in assessing the backlog of cases. In adopting that attitude people are being discouraged from proceeding with appeals.

I accept that evaluating the appeals can be difficult and that they must be dealt with in the light of conflicting written medical evidence, the report of the medical referee and the report of the applicant's doctor. However, extra staff should be recruited to clear the backlog of appeals that are causing concern to so many people. There is much concern about the means testing of recipients of social welfare payments. It is felt that this has led to many old people, especially along the western seaboard, hoarding money rather than investing it in banking institutions. People are hiding their money in their beds, in their matresses, under the carpet or under the thatch because they feel that if they invest it in the banks they will be considered ineligible for old age pensions or benefits they may apply for. We are all aware of the traditions of our people and the independence that many old people have. We are all aware that many old people consider it important to put money aside to ensure that they get a proper and respectable funeral when they depart this life. I do not think there is anything ignoble about that. Many people save because they do not wish to be an encumbrance on their family.

Many old people will not invest their money because of a fear that they may lose social welfare benefits. Instead they keep their money at home thereby creating an incentive for criminals to attack and rob them or, as happened last weekend, burn down their house. If criminals were aware that it was unlikely that money would be available in rural homes they would not bother old people. The Minister, and the Government, must take steps to deal with this. If old people are under a misapprehension about the means test that should be cleared up. Old people should be told if they can invest money in the banking institutions happy in the knowledge that they will not be depriving themselves of their social welfare benefits and that it is not necessary for them to keep their money at home.

The Minister should spell out the conditions clearly. I hope he clarifies the matter when replying.

I am glad that Deputy O'Sullivan is here because he is quoted according to The Cork Examiner dated 21 January 1985, under the heading “Means test is immoral, said TD” as follows:

Cork Labour T.D., Toddy O'Sullivan said yesterday that the means testing of recipients of redundancy payments was unjust and it must end.

He said that he considered the matter to be "immoral" and he would be raising it with the Health and Social Welfare Minister, Mr. Barry Desmond, in Dublin this week.

Last week, the Examiner reported that dole payments to redundant Dunlop workers were held up by red tape.

It was also stated in the article "that many redundant workers in Cork had found themselves in the same `trap' as the Dunlop workers. But the Dunlop situation had brought matters to a head".

Deputy O'Sullivan is further quoted as stating that it was "a harsh measure to penalise people who already paid their PAYE in full and their PRSI". The article continues:

He said that redundant workers in Lunhams and the Eagle Printing Company had already come up against this problem. At the moment it was the Dunlop workers; next it would be Ford and Verolme workers.

It is time to call a halt. I will be telling this to the Minister when I meet him and will be raising the matter at the parliamentary party meeting.

If a respected member of the Labour Party sees fit to speak so vociferously on this subject there must be something seriously wrong. I hope that the Minister listened carefully and attentively to his colleague when he brought the matter to the Minister's attention.

Another item which concerns us is that we must sympathise with the problems of single people who because they are unemployed are forced to live with their parents. Because they live with their parents they are considered to be receiving the equivalent of £28.85 per week because they are housed and fed by the family. Yet, that family cannot claim any allowance on behalf of the single person. Since the single unemployed man is now entitled to £29.40 per week in unemployment assistance, he receives just 55p from the State per week. That is hardly enough to buy himself half a pint of beer, if he feels himself entitled to such a luxury. Surely a case must be made here for examining assessment of means in these cases.

Increasing emphasis is now being placed on two elements which are becoming matters of grave concern in our society. These are the unemployment and the poverty traps. The term "unemployment trap" is used to describe the position of an unemployed person who will be no better off by becoming employed because the level of unemployed payments is close to net income from working. Some people — and I emphasise "some"— assess the unemployment trap here as being largely due to the fact that, unlike income from work, unemployment payments are linked to the number of children a claimant has. As a consequence, the earnings from unemployment payments may be on a par with earnings of a low paid ordinary worker. The family income supplement was designed to boost the income of such low paid workers, to remedy this anomaly. It has failed miserably to achieve this. Despite some people's assessment of how the unemployment trap is created, I have no doubt that its real basis in our society is the cruel, insensitive and savage system of taxation being imposed on PAYE workers. Until this is remedied, the so-called unemployment trap will continue and the position will even deteriorate.

The term "poverty trap" was developed in the early seventies in Britain to describe the situation where persons at work could find themselves unable to increase their final income after tax even if their gross earnings before tax increased. This was primarily due to the imposition of taxes and the withdrawal of benefits as the income increased. Families could lose many benefits even though the wage earner obtains an apparent increase in wages because of increased taxation and the withdrawal of certain entitlements under their previous earnings, such as category 1 general medical card eligibility. Local authority rents are based on the differential rent system and when their earnings increased, their rents rose accordingly. Also, their effective PRSI payments increased as a result of their increased earnings. This family have now got themselves into the so-called poverty trap.

This anomaly exists because, for example, the issuing of medical cards and taxation are dealt with by different administrations within Government Departments. It appears that very little attention has been paid to the subject of the poverty trap. This is mainly because the means testing schemes are spread through many different Government Departments. I hope the Minister and the Government will bear in mind some of the comments I have made on the evergrowing problems which are arising as a result of this.

Mr. O'Sullivan

I was hoping Deputy McCarthy would end on a high note. He quoted from The Cork Examiner in relation to my criticism of a section of the social welfare code. I was critical. The day I cease to be critical and concerned about the people we are now speaking about — namely, those in receipt of social welfare benefits — will be the day I will have outlived my usefulness as a Deputy in this House. It is the task of a Labour representative to continue to press on behalf of the under-privileged.

I have other criticisms to offer which I will make in a constructive way and I hope they will be of help to the Minister and his officials in providing a more humane system. That was absent from Deputy McCarthy's contribution. The predictable clichés were trotted out again and again. We had a reference to the shilling which was taken off the pension many years ago. At the rate he was going I thought he would question why Brian Boru's wife did not get a widow's and orphan's pension after the Battle of Clontarf. His whole approach was negative. This is a serious problem.

Deputy McCarthy reserved some of his harshest comments for the Labour Party. The Labour Party are acceptable in this House provided that they sit on the back-benches, but woe betide them if a few of them occupy a seat in Government or have a Mercedes to which he referred in his "mercs and perks" remark. I was disappointed at his subservient approach in relying on the Thatcherite quotation, out, out, out. It is not becoming for somebody who calls himself a republican to resort to that type of cheap gimmickry.

He also expressed his concern for the status of women. That concern did not manifest itself some weeks ago when the same Minister was trying to introduce the Health (Family Planning) Bill which affected women more than men. There was a notable absence of concern on that occasion. I regret that Deputy McCarthy has left the Chamber because I feel a little guilty about attacking him in his absence. Nevertheless I am compelled to say that his whole grasp of the social welfare code is akin to the understanding he demonstrated recently when he spoke about wet time payments and completely misread them.

I should like to offer some comments on the Minister's speech. I want to help him to make the system more acceptable. There are many anomalies in it. Because of lack of activity down through the years, people are now suffering. I am not suggesting this was done on purpose. In the lifetime of this Government and within the framework of the national plan, I hope we will eliminate some of the anomalies which now exist. I appreciate that in this Bill the Minister is trying to hold the level of payments in line with inflation. That is praiseworthy. On 22 February we had 223,909 people unemployed. They have 200,000 dependent children. Our dwindling workforce have to provide support for them.

The Minister said the Bill provides for increases in the various rates of social welfare payments. He said the second objective of the Bill is to give practical effect to the Government's equally firm resolve to stamp out abuses of the social welfare code which was clearly stated in the economic plan published a few months ago. I welcome that because in no way will I condone abuses which take their full entitlement from those who are really deserving. The Minister said unemployment reduced the number who through the PRSI system help to finance the social insurance scheme. The numbers employed are dwindling. This is unfortunate. I hope the national plan will help to resolve this major problem which now confronts the nation.

I fully accept the problem which confronted the Minister. He had to fight extremely hard to hold these payments in line with inflation. Most other Departments suffered cutbacks; but the Minister, Deputy Desmond, fought hard to ensure that those levels of payment were maintained. I am critical of the recent budget. If we are to tackle those who abuse the social welfare system, we must also attack with the same vigour those who are evading tax. This could be achieved by lifting the embargo on employment in the public sector. There is widespread evasion because there are not sufficient tax inspectors in the field. The Minister referred to the leakage in the system. I hope that with more people in the field he will be able to stamp out this leakage, which is extremely serious.

I am a little concerned about those who are referred to as sickness visitors. I am not suggesting that the people who are engaged in this activity would abuse the system on purpose. To give people power to say to a doctor: "In my opinion such a person is fit for work" could be embarrassing in many cases and extremely damaging. I ask the Minister to have a further look at that. I am a little puzzled at the Minister's reference to absenteeism. I would have thought this would be in the area of the Department of Labour. However, any contribution which can improve this situation is welcome.

I was fascinated by Deputy McCarthy's criticism of the backlog in the system. The Minister referred to computerisation within the Department of Social Welfare. The Deputy contended that there was a massive delay in effecting payments. It is no worse than it was when Deputy Woods was Minister for Health and Social Welfare when it was commonly acknowledged that if one was a Dublin Deputy one received preferential treatment. Indeed, they even went so far then as to stop the computer, stacking it by hand, to investigate complaints made by Fianna Fáil Deputies. That is not happening now and we are all being treated equally. I hope that the streamlining of this service will eliminate such delays about which all Members have had to complain in the past. Problems arise from time to time about which we must make representations but they are not nearly so prevalent as they were under the previous Government.

In the course of his remarks the Minister dealt with voluntary workers in developing countries. The regulations he proposes introducing are indeed to be welcomed and are long overdue. There have been many young girls and boys who gave of their time and skills helping those in developing countries to return home only to discover they had no social insurance entitlements. The fact that the Minister has recognised that problem and that discussions are continuing is to be welcomed and is something on which he should be complimented.

There is reference also to the Combat Poverty Agency, the pilot scheme in respect of which was established by the then Minister of State at the Department of Social Welfare, Deputy Frank Cluskey, between the years 1973 and 1977. Their report was published in 1978-79. I regard this agency as a natural follow-through of that pilot scheme. Some of the then projects created problems, drawing reaction on the part of the authorities which indicated to me that the people assigned to investigation of these problems had discovered some of the things which were not right and which embarrassed some people. The purpose of that scheme was to investigate and, where necessary, remedy any faults found within the various State agencies. They taught people how to come to grips with the bureaucracy. I am happy to note that the relevant Bill has now been circulated for discussion in the Seanad and I hope it will be before this House before very long.

I note an increased sum of £650,000 is being made available in respect of grants to voluntary organisations this year. Of all the budgetary expenditure this is where there will be greatest value had for money. The amount of work achieved and the projects aided by the small amounts of money allocated to date have to be witnessed to be believed. Before the expiry of the lifetime of this Government I would hope we would see greater expenditure in this area.

I have reservations about some sections of this Bill and about the social welfare code generally. I shall refer to these reservations and to redundancy payments — also referred to by Deputy McCarthy — which constitute a major problem in my constituency. As the House will be aware there have been many redundancies in the Cork region in recent years with major labour intensive industries having gone to the wall. I might refer in particular to Fords, Dunlops, Verolme (Cork) Dockyard, the Eagle Printing Works employing over 200 people, likewise Lunhams bacon factory. Problems now arise as a result of redundancy payments received. If Deputy McCarthy thought he was embarrassing me in this respect he would be mistaken because the very nature of the Labour Party is that we allow open discussion in a civilised manner. Therefore, it is quite legitimate for me to question the Minister in regard to this problem. I have already discussed the matter with him. Although we have not reached full agreement, I hope he will accept the point of view I put to him. I accept that it is difficult to differentiate between capital earned on redundancy payments and that earned from other sources. But in this case there are not 100 or 200 but in excess of 2,000 people now affected by these redundancy payments, people who probably will never again work in the course of their lifetime.

That is a measure of the problem. These are people who in many cases for up to 40 years contributed to the social welfare system who never once made a claim against the State for unemployment or similar benefits. They now find themselves for the first time having to come to grips with the intricacies of the situation. The Minister may make the point that the method employed by his Department in assessing income from capital at less than 10 per cent — the system now obtaining — is more favourable to an applicant than that financial institutions currently pay on sizeable deposits, that is, 15 per cent or more.

I would respectfully suggest to the Minister that there is no comparison whatsoever between the financial institutions and people now finding themselves unemployed as a result of having been made redundant. Such people are now whittling away their capital — acquired for the first time in their lives in many cases — and will continue to do so until they are penniless when they will then benefit. If ever there was a recipe for unrest it is this. Rather would I prefer to tackle the problem now saying: we will create a situation in which your statutory redundancy entitlement will be completely ignored and in respect of anything above those entitlements a case can be made so that there would be a threshold figure introducing the 10 per cent. I would suggest that the statutory entitlement be doubled, that the 10 per cent then be hived off or, if you like, penalise at that rate. But to treat such people in the same way as financial institutions is not at all acceptable. These people daily encounter tremendous problems and the method of assessment creates much embarrassment. For example, people are being asked for receipts in respect of items they have purchased. In many cases they do not possess such receipts, rendering them unable to claim unemployment benefit because there cannot be a proper assessment of their income undertaken. In a communication from the Minister he says that it would be better to use the additional funds available for the benefit of those people with no means and particularly for the benefit of the long term unemployed. That may be a sensible approach but I would contend that there are other sources from which the money could be got.

I referred earlier to tax evasion and I do so again because such yields would constitute a means of providing the necessary finance for benefits. Perhaps the Minister and his officials would reexamine the position, coming up with an effective package in this respect because it constitutes a grave injustice. Despite Deputy McCarthy's attempted exploitation of my statement I adhere to the same view and shall not change. I very much regret that I must be at variance with the Minister in this respect. The Government have a duty and it would be remiss of me if I did not bring that to their attention. I would be failing in my duty as a Deputy, representing what is by far the part of the country most ravaged by unemployment, if I did not do so.

There are many areas of the present system warranting some adjustment because the system as it obtains does not favour many applicants. In many cases anomalies could be eliminated without extra cost while, in others it could be done at little cost.

I wish to express concern about young married couples and single people who are in receipt of unemployment assistance. Single people in receipt of disability or unemployment benefit who now get £37.25 per week will receive an increase to £39.50 per week. They will barely survive on that money. If you do not have any insurance entitlement and are in receipt of unemployment assistance, the picture is not very bright. The rate for a single person goes from £30.90 per week to £32.75 per week.

I agree with Deputy McCarthy's remarks about single people living with their parents. A single person who applies for unemployment assistance is means tested on the income coming into the house. This is an unjust system; adults are entitled to stand on their own two feet and to a dignified way of living whether they live with their family or on their own and I ask the Minister to investigate this.

Single people under the age of 66, living alone, seem to be the forgotten people. Those in receipt of unemployment assistance will now receive £32.75 per week which is not sufficient to live on in a dignified manner. Unlike Deputy McCarthy, I will try to offer a solution which the Minister might accept. The minimum entitlement should be brought up to the level of the non-contributory old age pension, the new rate of £44 per week. There is justification for this because we should not penalise people who live alone, bearing in mind that they do not qualify for some other benefits. I know there is a problem financially in keeping the system ticking over but the sum of £44 should be given to these people. Young persons living alone should also qualify for this amount.

The widows' and orphans' non-contributory pension scheme should be rounded up to the non-contributory old age pension rate of £44 as I fail to see why we should differentiate between the two rates. There is also an anomaly with regard to widows under the age of 66 years. In the case of a married couple, when the husband over the age of 66 years dies, if his widow is under that age her free television licence and electricity allowance will be withdrawn. This is indefensible and to claw back this benefit from bereaved persons is very harsh. Death deals a savage blow to any family and withdrawing these facilities denotes a lack of compassion. In many cases the difference in age between married persons is not great and I do not think it would cost a great deal to continue the benefits to the widow or widower.

I should also like the Minister to consider the plight of married couples living on unemployment allowances; they should also be brought up to the rate of the non-contributory old age pension, £44 per week, with a proportionate increase for dependent children. We should not discriminate against any section of the community. I should also like to draw attention to the duration of unemployment assistance. There is a long term and a short term duration and I do not know the reason for the differentiation between the two. However, it will be a disincentive to work on a short term basis if this system is continued. If a person in receipt of long term duration unemployment assistance secures employment for a period of six months, he or she would, on cessation of employment, revert to unemployment assistance of short term duration rate which penalises those at work. After 156 days, a person who goes off long term benefit reverts to special rate unemployment benefit which is less than the maximum rate of unemployment assistance. We have already spoken about disincentives to work but this is by far the greatest. The amounts involved are not great, perhaps £1 or £2, but, as a colleague aptly described it, the sum of £1 or £2 could be the difference between eating on Wednesday or waiting until the following day when the assistance is due. This matter could easily be remedied and the cost would not be outlandish.

There is no mention in the Bill in regard to free travel but I wish to make a few comments on that matter. The list of eligible persons for free travel mentions persons receiving invalidity pensions, disabled person's maintenance allowance, blind persons aged 18 years and over and all persons aged 66 years and over residing within the State. In the case of a married couple, spouses ineligible for free travel in their own right can accompany their partner. However, there are those who do not have a husband or wife but, nevertheless require a travelling companion. This applies particularly to mentally and physically handicapped children. They cannot travel alone and a parent or guardian must accompany them.

People who are unmarried and who are in receipt of disabled person's benefit should be afforded the same treatment as people who are in receipt of old age pension. That is a fair request and I am asking the Minister to consider it seriously. Likewise, blind persons of 18 and over are entitled to free travel but they are not always in a position to travel on their own. They are able to travel on their own in surroundings that are familiar but train or bus journeys to places not familiar to them would present problems because blind people would become disorientated in strange surroundings. They would not be able to gauge the distance travelled.

The same applies to disabled persons. They may be well able to go from one place to another in their wheelchairs but have difficulty in entering or leaving buses. Bus conductors and, in the case of a one-man bus, drivers, are not allowed time to cope with the problems of the disabled in regard to transport and consequently it is necessary that the disabled person be accompanied while travelling. These difficulties should have been resolved long ago.

Another anomaly in the area of free travel relates to the position of former employees of the State who must retire early on health grounds and who, within the terms of their employment, were not required to make insurance contributions. They do not qualify for free travel or for the many other entitlements that would apply in the case of those who were contributing to the insurance scheme. I am not suggesting that the Minister is responsible for this in any way but something should be done about it because it is discriminatory. The number of people involved would not be very big and the cost to the State would be negligible.

There have been many suggestions regarding ways of solving our unemployment problem. Greater mobility of the work force has been advocated by many speakers but that is merely a euphemism for emigration. Those of us who grew up in the fifties are well aware of the unhappiness caused in those times by emigration, when most of the traffic was in the one direction. Many of our friends had to go away with the consequent upheaval this caused in many homes. That is not the type of mobility I would welcome. However, in recent years there has been a demand abroad for the skills that some of our workforce can provide on a short term contract basis. Usually these contracts include regular, perhaps bi-monthly, trips home. The contracts can prove lucrative for the individual, for his family and for the State. However, my cause for concern in this area relates to the difficulties experienced by these people after their contracts have expired and they return home. Recently I was made aware of the case of a man who worked for three years in Germany but who has not received any unemployment benefit since his return home in October last. The reason for this is that in order to be eligible for benefit he needs one stamp or, in other words, to be employed for a week. As there is no demand here for his skill, it is difficult for him to fulfil that requirement. I appreciate that the problem in this regard arises from EC Directive 148 of 1971 relating to the payment of unemployment benefit to migrant workers. The regulation came into force on 1 April 1973 and is within the terms of Article 67 of the Treaty. In order to rectify the matter, I realise that we would have to go beyond this House but we should consider taking steps in that direction because the regulation is creating serious problems for those who have had to go away to seek work but who have now returned. It is not right that they should be penalised on their return.

On the question of appeals, I accept the figures given by the Minister regarding the number of people who were examined medically recently and found to be fit for work. There is a serious hold up in this whole system and the delays are related to the method of appeal. If a person is examined by a medical referee and deemed fit for work, many problems can arise if he challenges that decision. In many cases there is conflict between the evidence offered by the applicant's GP and the Department's doctor. The appeal is made to non-medical persons. I trust that some effort will be made to speed up the process.

Another area that needs investigating is the area of transfer to invalidity pension. A person who had been in receipt of disability benefit for 12 months can apply for invalidity pension but unlike the case of other pensions, it is not possible for an applicant to obtain the appropriate application form at a post office. Usually the applicant approaches his local TD or councillor asking the public representative to make representations on his behalf. I do not think anyone here would be reluctant to make such representation but there should be no difficulty in having the application forms available readily for those who require them.

In the event of an applicant being refused transfer from disability to invalidity pension, the waiting period is about six months before he can reapply. I have known people to be in receipt of invalidity pension for seven years and to have been told on three separate occasions to reapply within a period of six months. I do not think any doctor worthy of calling himself a doctor would allow a person continue on disability benefit for seven years if he considered that person to be fit for work. This is an area needing urgent investigation because it is giving rise to many problems. I trust that my criticism has been constructive and that it will help to bring about a system that is a little more efficient and humane. That is the purpose of my criticism.

I was a little amused, if one could be amused in such a serious debate, by some of the statistics trotted out by Deputy McCarthy in his speech. In respect of the introductory dates for some of the benefits — 1 July and 4 July in some cases — he adopted the attitude that even yesterday was too late for some of the payments. He picked out the years 1980, 1981 and 1982 when he told us Fianna Fáil introduced benefits in April. I should like somebody to do some research and find out who first deferred the date of introduction of benefits. It certainly was not a Labour Party Minister. It was most unjust and it was a deliberate effort by the Deputy to distort what the Minister was trying to do against a background of scarce finances.

I ask the Minister to consider the points I have raised, particularly those concerning the reckoning of redundancy payments as they affect unemployment assistance. This matter is creating hardship and it will cause major problems not only in Cork but throughout the country. I do not think the Government should have to depend on the money they will save by reducing the entitlement of people. This matter needs compassionate consideration.

Mr. L. Fitzgerald

I am very glad to have the opportunity to speak on this Bill and to attempt to set the record straight regarding the extraordinary nature and content of a number of statements of members of the Cabinet in recent days regarding the provisions in the budget as set out in this Bill which were presumed to cater adequately for the least privileged. I listened intently to Deputy O'Sullivan and I must compliment him for his frankness and his honesty in facing up to a number of anomalies. I am not saying that all of the anomalies have crept into the social welfare code in recent days but they are there and they need to be addressed by the Minister of the day. There is little point in talking about what happened five or six years ago in relation to anomalies and inequities. If a system is wrong it is wrong and it should be tackled by the person at whose desk the buck stops.

When the Taoiseach spoke in the budget debate on 7 February referring to social welfare provisions he said:

The budget itself represents a watershed. It marks the end of a period of rising taxation and falling living standards.

Can the Taoiseach be serious? Does he really believe what he said on that occasion? Does he think that the provisions of this Bill will halt the falling living standards of the hundreds of thousands of people in receipt of unemployment benefit, unemployment assistance, disability pension or old age pension? If that is so, he is living in cloud cuckoo land and it is time somebody brought him down to earth. It is time somebody pointed out to him the reality of the situation.

However, I am more inclined to the view that the Government are fully aware of the situation, are fully aware of the plight of the poor, the sick, the unemployed and the aged but they choose cynically to disregard it. Either way, the statement by the Taoiseach is extraordinary in that it proposes to represent the reality when it does not do that. The Taoiseach, the Tánaiste, the Minister for Finance and the Minister for Social Welfare have said in the past few months, with tongue in check, that they were catering adequately for social welfare recipients this year. Yet, the rates are among the lowest on record and payments are again deferred for more than half a year. The processing work of the Department in respect of new claims and appeals for means-related benefit is taking an inordinate amount of time. The supplementary benefit scheme was dismantled to a considerable degree last year and the previous year by the Minister and it appears that the scheme is getting a further bashing this year, if my interpretation of the provisions of this Bill is correct.

The Bill does not take adequate account of the wholesale diminution of services in the past two years by the Minister and the Government. Their record is one of disaster and is an absolute disgrace when I take account of all my contacts with my constituents. I contend that my experience is reasonably typical of what obtains in the Dublin area. The Minister's bland statement today in this House will do nothing to save him or his party from what I believe is the deep-rooted wrath of the public which they will express when they get the opportunity to do so in an election.

Now that the dust is beginning to settle on the diversionary tactics that were operated recently by the Government, there is a growing realisation among the public that the brunt of this year's budget is being carried by social welfare recipients. The Minister's party in Government are prepared to abandon their own people as the price for holding on to power. I can see no other reason for their taking decisions that were extremely unpopular and that created enormous hostility among the public. There can be no other logical or reasonable explanation for what they are doing or for the measures they have agreed to so readily. Even at this late stage we ask them to tell their Minister that this Bill is an insult to those whom he and his party pretend to represent.

This Bill is an integral part of budgetary policy and strategy. It is not possible to take the social welfare element and divorce it from the others. All are part of the overall arithmetic of the budget. The degree of realism in the budget is affected by the degree of realism of the arithmetic of each of its constituent parts. Likewise, each of the parts is affected in some way by the rest.

In the budgetary framework an average figure of 217,000 recipients of unemployment benefit and unemployment assistance were assumed for the next 12 months. That was stated quite clearly by the Taoiseach in this House on the day the budget was presented. That assumption was made against a background of 223,000 then unemployed, a figure that has subsequently increased considerably to 234,000. There was no evidence towards the end of 1984 that the rate of increase in unemployment had slowed down to such an extent as to suggest that there would be a substantial reduction in the total unemployment figure at the end of this year or early 1986. If the figure of 217,000 has been taken as the average and this social welfare Bill is supposed to be catering for that, its relevance must be judged in terms of the accuracy with which it forecasts the extent of the services that will be required and the degree to which it commits itself to provide that service. One must immediately ask if an assumed average of 217,000 on unemployment benefit and assistance for the period in question is realistic. If one starts from the position of 234,000 unemployed with a net increase in unemployment of 8,000 to 9,000 per month, how does one arrive at an average of 217,000 over a 12 month period? Surely it must assume a massive net monthly increase in employment for some part of that period.

Debate adjourned.