The publication of the Estimates this year in early October is a further illustration of this Government's determination to take decisive action to tackle the problems facing the country.
Nobody at this stage should be in any doubt that the country is in a very serious economic situation, and strong and decisive leadership is required to redress this. Our enormous debt problem will put major constraints on us for a number of years ahead and must be solved if we are to have any prospect of sustained recovery and growth in the future. The cost of servicing the national debt is almost £2 billion a year which is roughly equal to the entire revenue from PAYE in a year and substantially more than the total cost of social welfare services to the taxpayer. There is no way we can continue to divert such a huge proportion of Government revenue to servicing a debt of this size. At the same time there is no easy way out of the problem and there are no instant solutions.
The broad thrust of the Government's strategy has been accepted by most economic commentators and by the major political parties. The framework outlined in the Estimates shows that the Government are committed to action to put the economy back on the road to recovery. The programme agreed with the national partners embraces a wide range of issues including pay, tax reform, employment and the social services. It represents a milestone on the road to national recovery. At the same time the Government have examined in detail every facet of public expenditure. Never before has such a detailed examination been undertaken. Never before has it been done with such determination and vigour. More importantly, never before has it been done by a Government who were prepared to take action, but this is a caring Government. It would have been easy for us to decide to wield the axe indiscriminately. That would have avoided the need for close examination and scrutiny. It would have avoided delving into and understanding the wide variety of services the State provides and why it provides them. Over the last few months we have carried out a careful, systematic review of expenditure and have taken firm decisions backed up by positive action. The caring approach of this Government can clearly be seen in my own area of social welfare. I would like to turn now to issues of importance in the social welfare area.
There will be a number of very major developments in the social welfare system during the period immediately ahead. Perhaps the most significant change will be the extension of social insurance cover to self-employed persons, including farmers. This is something which everybody accepts as necessary. It has been talked about for years but now it is being done. The inclusion of the self-employed in the social insurance system will bring about a much greater degree of equity in the way the system is financed. It will also reduce the burden on the Exchequer of financing non-contributory pensions which will be phased out with the extension of social insurance coverage to all of the working population.
The National Pensions Board at my request are at present considering the most appropriate scheme of social insurance coverage for the self-employed and will be reporting to me shortly. I do not want to pre-empt in any way what the board may say to me. Clearly the amount which we can pay out by way of pensions to the self-employed will depend on the amount which can be raised in contributions. My concern will be to achieve a system in which all self-employed people contribute towards the cost of social insurance in an equitable way based on their real ability to pay. I will be bringing my proposals to the Government in this matter before the end of the year.
Another major development which is being planned is the transfer of responsibility for short-term sickness payments to employers. This will reduce the duplication which exists at present where employees who are out sick are entitled to sick pay from their employers as well as disability benefit from the Department of Social Welfare. It will also enable the payments concerned to be taxed in the same way as other income and, by giving direct responsibility to employers, provide the scope for more effective control on absenteeism.
I would like to inform the House of a development that will be of particular concern to social welfare recipients in the next few weeks. As Deputies will remember, last November saw the full implementation of the EC directive on equal treatment for men and women in matters of social security. One effect of this was that certain families were adversely affected. The whole concept of dependency in the social welfare code was changed. As a result a woman could be regarded as dependent on her husband only if she was not in receipt of a social welfare payment, or was earning less than £50 per week from employment. People who were previously regarded as dependants were no longer so regarded and adult dependant increases were no longer payable for them. Similarly increases for children could only be paid at half rate if a person's spouse was in employment or on social welfare benefit.
Because of the hardship that was caused, alleviating payments were made in these circumstances. It was the intention of the previous Government that these payments would be for "a maximum period of one year" and would cease on 17 November this year. However, the Government are conscious of the hardship that would be caused to these families by ceasing the payments abruptly and have decided that these alleviating payments will continue beyond the middle of November next. I am seeking the best approach to phasing out these payments and the Government will be considering my proposals on this matter in the light of the financial situation. Meanwhile the alleviating payments will continue at their present rates until the end of the year.
Returning now to the actual Estimates for 1988, they contain a provision amounting to £1.61 billion in respect of social welfare, but this is not the complete picture. It does not reflect the full extent of the moneys distributed through the various social welfare schemes and services that have been built up over the years. Social welfare expenditure in 1988 will amount to over £2.64 billion when account is taken of the income collected by way of PRSI contributions from employers and employees. Expenditure on services for the elderly now stands at an estimated £752 million or 30 per cent of overall social welfare expenditure in 1988. Expenditure on unemployment services will be an estimated £704 million or 28 per cent of overall expenditure in 1988.
The Estimate represents a net increase of £12.7 million on the 1987 Estimate. This does not include any provision for increases in the rates of social welfare payments or any other improvements which the Government may decide to introduce next year. In a situation of restricted resources and economic difficulty, the task of developing the social welfare system is particulary formidable. However, the Government are committed to maintaining the overall value of social welfare benefits and will consider special increases for those receiving the lowest payments within the constraints of available resources.
The Estimates embody a number of changes which will help rationalise aspects of the social welfare system and tighten controls to prevent abuse. The social welfare system exists to help people who are in need. Our systems must be effective in meeting those needs. Any leakages out of the system through inefficiencies or abuse lessen the amounts that are available for distribution to those in need. Some of the measures that I will be taking are designed to ensure that the resources at my disposal are more effectively targeted to those genuinely in need. The important thing is, however, that the basic fabric of the social welfare system has been maintained, every scheme has been protected and some have been extended. Overall the Government have ensured that the burden of meeting our problems will not be laid on those who are dependent on social welfare payments.
The Estimates take account of the changes in schemes that have been announced in the past few weeks. The free fuel schemes have been rationalised and extended and 210,000 people now qualify for a free fuel allowance. This includes 30,000 recipients of unemployment assistance whom we have brought into the scheme for the first time. The estimated cost of the scheme in 1988 is £28.2 million.
Another development for which provision has been made in the Estimates and which can only be regarded as an historic achievement for the Government has been the extension of the treatment benefits scheme to dependent spouses of insured workers. From Monday this week the dependent spouses of insured workers are entitled to claim dental and optical benefits under the social welfare treatment benefits scheme on the same basis as insured persons. This extension of the scheme will benefit up to 330,000 people, mainly women working in the home. Over the last number of years there have been many calls for this vital service for women who work in the home. Many promises have been made over the years about this much needed service. We have delivered on our commitment and dependent spouses are now entitled to these benefits. From the reaction I have been getting it is clear that there is widespread support for this extension.
The opticians who provide optical services for insured workers have readily agreed to the extension and I must place on record my appreciation for their support. I wish also to place on record my appreciation of the dentists throughout the country who have agreed to treat dependent spouses despite the fact that there has been a campaign waged by the Irish Dental Association over the last few months to prevent them from doing so. This campaign is based on the mistaken belief that this extension is not good value for money because the Dental Association claim that it helps the better off. This is just not true.
The facts of the matter are that this is an insurance-based scheme, financed out of PRSI contributions. It should not be confused with means tested schemes operated by the health boards, funded entirely by the Exchequer. Entitlements are built up over a number of years by the payment of contributions. It is also a fact that while the scheme is not means tested it is largely availed of by those in the lower income groups. Ninety per cent of those who benefited from the scheme last year had incomes below the average industrial wage. Many of the new beneficiaries will be dependent spouses of unemployed persons, old age pensioners and those out of work through illness.
The Government have decided to continue the successful Jobsearch programme which has been operating on a nation-wide basis since April last. It is designed to assist the long-term unemployed in their search for work by providing advice and, in many cases, placement in a Manpower scheme, AnCO training scheme or Jobsearch course. Already, over 102,000 people have been interviewed, as part of the programme. So far almost 3,000 persons have got jobs; some 20,000 have been placed in Manpower schemes such as the social employment scheme or AnCO courses. Another 8,000 persons have left the register when offered the chance of a job or a place on a training course.
As Deputies will see, a substantial amount has been provided in the 1988 Estimates for the continuation of the pilot schemes for the unemployed which my Department have been operating for the past year, namely, the part-time job allowance and the educational opportunities schemes. In the face of the overwhelming problems that social welfare dependents are faced with today, particularly those who are unemployed, a positive and dynamic response is essential. What I am trying to ensure is that our social welfare system is more flexible and responsive to people's needs.
The educational opportunities scheme gives unemployed people over age 25 the opportunity to go back to school to complete a certificate type course. There have been many calls over the years for this type of "second chance" for older unemployed people, many of whom had to leave school early for various reasons. I am delighted with the success of the programme so far, since 9 or 18 per cent of the original participants are now in full-time jobs and another two are exploring the possibility of starting their own business. Another two participants are now self-employed on a part-time basis and hoping to build this into full-time employment.
I am convinced that all these jobs can be attributed to the confidence and discipline which participation in the course gave.
This quote, from a participant in the Limerick class, sums up the personal benefits he has gained from the course.
I no longer feel unemployed. My confidence is being restored and my self-esteem has risen. I have become more relaxed and I have a much more positive outlook on life. I can keep pace with my children's education and help them when I can.
I am convinced that a scheme on these lines is worthwhile and I am glad that we have been able to set aside the necessary resources to plan the continuation of this scheme next year. I hope to be announcing details of this in the near future.
Another scheme that I am particularly interested in is the part time job allowance scheme which allows unemployed persons to work up to 24 hours a week and still retain a basic income maintenance payment from my Department. This scheme operates in 17 different centres throughout the country. The Government have provided for the expansion of this scheme in 1988 and I expect to be announcing details in the near future.
The question of the abuse of social welfare schemes has been the subject of extensive media coverage in recent times. I am aware that there are areas of the social welfare system which are vulnerable to the risk of fraud. This is inevitable considering the enormous scale of the social welfare system. About £7 million is paid out every day.
We all accept that the vast majority of those claiming benefit are entitled to their payments and it is my responsibility to see that these legitimate claimants are provided with a speedy, accessible service, while at the same time ensuring that the service is not easily abused. This year special measures were directed towards suspect claims so that we could get best use out of our resources. The following are some examples of our successes in detecting abuse in the first half of the year: of 4,600 claimants called for special control interviews to review their entitlement to unemployment payments, 1,100 left the register, 600 of them voluntarily. Of 3,500 unemployment claims investigated by our special investigation unit following allegations by members of the public of working and drawing the dole, 1,062 were disallowed. Of 9,000 inquiries sent out to employers to check if the claimant was working or on holiday leave while claiming disability benefit, 700 cases of possible abuse were revealed. Of 60,000 disability benefit claimants referred to a medical referee 14,000 had their claims ended because they were found capable of work (12,000) or voluntarily ceased to claim. As a result of PRSI surveys of employers, arrears of £2.3 million have been reported to the Revenue Commissioners.
Due to the success of these measures the Government have decided to pursue an intensive campaign against fraud and abuse. I am taking a number of initiatives which will bring a new focus of attention on employers, and I will be seeking specific sanctions against employers who collude in social welfare abuse.
I will be focusing special attention on industries which we have found to be prone to social welfare fraud and abuse. These will include the security and building industries. I will also be insisting that where State and semi-State bodies or local authorities use commercial firms, they ensure that the employees of those firms are all registered and paid up for social welfare. I want to ensure that operatives on the ground are also in the books for PRSI.
My Department have power to instittute court proceedings against employers who fail to co-operate with or who obstruct social welfare officers in carrying out their investigations. I will be exercising these powers to the fullest extent.
Where other forms of abuse of social welfare schemes by employers are detected, such as collusion with employees in the fraudulent receipt of sickness and unemployment payments, my Department also have power to institute court proceedings against employers. I am determined that these powers will be vigorously used.
There are often technical difficulties in proving that the employers actions, or in many cases omissions, contributed to the frauds. I am arranging that these loopholes will be examined so that they can be closed off and that employers who are not operating the full PRSI system will not escape the consequences.
A number of changes to individual schemes are being made to help achieve better targeting of resources. In adopting these measures, the Government are conscious of the need to ensure that existing claimants are not adversely affected and, consequently any changes will only apply to new claimants from specified dates.
In the disability benefit area, two changes are being made, which are aimed at lessening potential abuse. First, claimants of disability benefit who have been in receipt of maternity allowance will be required to wait three days before entitlement to disability benefit commences. This is already the case in relation to people who have been in employment. Secondly, the number of paid contributions required for continued entitlement to disability benefit after 12 months will be increased from 208 to 260, with effect from January, 1988. This measure is designed to ensure that only those who have five years paid contributions will be entitled to long-term disability benefit.
In April, 1981, I introduced a new maternity allowance scheme for women in employment. The old general maternity allowance scheme was continued for those who did not qualify immediately under the new scheme. Two changes are now being made to the old scheme. From January 1988 entitlement under the old general scheme will be restricted to those women who have at least 13 paid contributions in the governing contribution year. This measure is designed to ensure that only women who have a recent attachment to the labour force will qualify for this benefit in future. Women in employment will still be entitled to the allowance on the same basis as heretofore. Pay-related benefit, which is paid as a supplement to maternity allowance is being discontinued under the old scheme as and from April, 1988. Women in employment will not be affected by this measure. Measures are also being taken to rationalise certain features of the social welfare system and to bring aspects of the system up to date. One area which is in particular need of rationalisation is that of means testing for social assistance schemes. I would expect proposals in this area to be ready early in 1988.
I am also taking a number of measures in the area of supplementary welfare allowances to rationalise and update the present arrangements. I have already taken steps to rationalise the footwear scheme which operates under the supplementary welfare allowance scheme. I am also examining the area of payments towards rent and mortgage under the scheme. At present people applying for rent supplements are required as a minimum to meet the first £1.50 of rent payments. This limit has applied since 1977 and clearly needs to be updated. The Government have decided therefore that the limit should now be raised to £3. This increase is considerably less than the increase in the CPI over the period since 1977. Furthermore the increase will only apply to new claimants for rent supplement and existing recipients will not be affected. The necessary regulations to give effect to the increase will be made shortly.
Another area where a review is being undertaken is the area of credited contributions under the social insurance system. Credits are awarded at present in a very wide variety of circumstances and can be a significant factor in determining entitlement to benefit. On the other hand the number of paid contributions required to qualify for payments can be quite low. The review which is being carried out will examine the whole relationship between paid and credited contributions under the social insurance system to remove anomalies and achieve a degree of rationalisation in this area.
I am also looking at areas of the system where there is duplication in entitlements. Apart from special circumstances it has always been a generally accepted principle that a person should not be entitled to receive more than one benefit or pension at the same time. There are at present a number of areas where overlaps of this kind can occur and these are being examined to see where changes should be made. Already the Government have decided that the present practice whereby a working widow who is not liable to pay PRSI, can receive in addition to her widow's pension, disability benefit at half rate if she goes out sick, should be discontinued. A similar overlap can occur as between widow's pension and unemployment benefit but unemployment benefit is of limited duration and the same considerations do not apply in that case. Accordingly, the payment of half rate unemployment benefit with widow's pension will continue. The ending of the overlap between widow's pension and disability benefit and of any other overlaps which may be identified, will only affect new claimants and existing claimants will not be affected.
It is not enough to have a wide variety of schemes catering for a wide variety of needs if they are not delivered to the client quickly, efficiently and with due regard to his or her dignity and rights.
I am pleased to say that we are well on the way to developing a whole system, particularly the strategy of localisation. A key element of that strategy is the facility which I have called the one stop shop. The object is to provide a comprehensive service to social welfare clients by bringing together the personnel and agencies involved to meet all the needs of the client quickly and in a more co-ordinated manner at the one location.
In addition I have recently introduced a nation-wide scheme for the payment of unemployment assistance without an immediate means test to certain categories of claimants. This frees the community welfare officer and the social welfare officer for those cases that need investigation.
Central to all of these developments is the continuing development of technology within my Department. We are developing and extending our computer network to meet our requirements.
The only major area of work not serviced by computer is the unemployment benefit and assistance payments system in the employment exchanges. The extension of computerisation to employment exchanges is a major task and one to which I will be devoting considerable resources in the future.
Another recent development which I would like to mention and which broke new ground for localised services was the introduction in the Cork Employment Exchange of a remote entry facility for medical certificates. As a result disability benefit claimants in the Cork area can have their medical certificates keyed into the computer system without the need to send them to headquarters. This, of course, greatly increases efficiency locally and cuts out delays and queries.
The whole thrust of policy in the social welfare area will be to make the system more effective and more efficient. My approach and that of the Government in the context of the Estimates campaign has been to ensure that the less well off are protected, to direct resources where they are most needed, to spread the burden of financing the system in the fairest way possible, to make the schemes more flexible in addressing the needs of clients, to improve efficiency in the delivery of services, to reduce the scope for abusing the schemes and to pursue those responsible for abusing them. I believe that the measures which have been taken represent a significant step towards a social welfare system which is in tune with the needs of our society today.
In conclusion, I would like to make it very clear that in providing £1.46 billion in these Estimates and a total of £2.64 billion when the income from PRSI is taken into consideration, the Government are maintaining all of our schemes and all of our systems. Indeed we are extending some of our schemes and at a time when in other countries these schemes are often contracting and being reduced.
As Minister for Social Welfare, I believe that these Estimates and the package that has been prepared by the Government truly reflect a caring approach on the part of the Government, an approach whereby the real positions and incomes of those on social welfare are being protected at this particularly difficult time.
In the course of the pre-budget discussions and eventually in the budget it will be our objective to target our resources in favour of those who are in greatest need within the full social welfare system. I am sure Deputies will recognise the need to do that. I hope that when we have considered the various possibilities in that direction they will be happy with the direction we are taking in strengthening particularly those people at the lowest level in our system.
We have a great challenge at this time because we do not have readily available the additional resources we might like to have. It is very easy to say we should have this extra scheme or that extra scheme, but it is quite an achievement just to maintain our schemes and to maintain the support which the elderly and unemployed have had in recent years and which in the plan for national recovery is guaranteed in the years ahead.
We have some major undertakings. We are bringing in the PRSI system for the self-employed which is a major undertaking involving much time and work as does the transfer of disability benefit. The Department is one that has a particularly high standard among its civil servants. I would like to give due credit to them at this time in connection with these Estimates. Their efficiency has been quite breathtaking. Their standard is of the very highest level for the public service or any other service. I am very glad that the beneficiaries of social welfare have serving them civil servants who are so dedicated, so competent and capable, so effective and efficient.
We all have a great deal more to do. I believe that once we have managed to computerise the employment exchanges, a task which we have already begun in Dublin, we will become considerably more efficient.
I recommend to the House the steps which have been taken by the Government. In noting the Estimates in total I would ask the House to note particularly how strongly and how carefully those in greatest need have been protected by the Government at this difficult time.
