asked the Minister for Social Welfare if he will review the levels of disregard/allowance for means test purposes and bring them into line with the percentage of social welfare payments which was accepted in 1975; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Means Tests.
7.
At present weekly claimants with means of up to £6 can qualify for the maximum old age or widow's pension. This also applies in the case of allowances for deserted wives, prisoners wives and unmarried mothers. In practice this means that a recipient can have £6 a week cash income or the following in savings or investments: £5,400; if a widow, deserted wife, prisoner's wife or unmarried mother; £2,987.50 if a single old age pensioner; or £5,975 if a married old age pensioner, and still receive the full rate pension or allowance. The main priority at present is to increase the lowest levels of payment. Increasing the levels of disregards and allowances would be contrary to this at it would mainly benefit the better off who have means. For example, at the end of December 1988, 70 per cent of old age pensioners, 65 per cent of widows and over 90 per cent of claimants receiving allowances as deserted wives, prisoners wives and unmarried mothers were in receipt of maximum payments. Accordingly, only a minority of recipients have means in excess of £6 and in the case of recipients with children this is a very small minority.
The most effective way of channelling resources to those in greatest need is through increasing basic rates of payment which benefit all claimants and this approach is being adopted by the Government as announced in yesterday's Budget Statement.
Will the Minister agree that the £6 he has referred to has remained static since 1975? Will he agree that if the £6 had kept pace with inflation the disregard/allowance now would be £22.50? Will he agree that if the amount had kept its value as a percentage of basic social welfare payments it would now be £30? Will the Minister agree that in that case the advantage for pensioners, and other claimants, would be that they could hold savings or take up part-time employment which would improve their overall financial position?
If the disregard/allowance had been increased in line with the increases in the CPI it would now be £22 per week. However, I should like to point out that to increase the £6 disregard would have major cost implications. The estimated full year cost of each £2 increase in the limit is £4 million. If there was an increase up to £30, as suggested by one welfare rights group, the cost would be £96 million. When there is an amount of money available, particularly in current circumstances, I try to give as much as possible to those on the lowest incomes. There may be other ways of dealing with this from the point of view of the old age pensioner who wants to do some work or those in receipt of pre-retirement allowances. Since 1975 Ministers have devoted as much as possible to increasing the rates. That has meant that where there is a sliding scale the rates are improved also.
Will the Minister agree that the effect of not increasing the disregard is to keep the most vulnerable sections of our society poor? I am referring to the very poor, pensioners, widows and so on. One of the effects of this is that such people keep their savings at home. They feel that if they put their savings into the Post Office, or the banks they will lose out. Will the Minister agree that they are prevented from getting any type of part-time employment and, as a result, the overall effect is to keep the poor poor?
As far as savings are concerned a single person on the old age non-contributory pension can have capital up to £26,907 in value while a married couple can have capital up to £53,814 and still qualify for a minimum pension. There is a sliding scale.
What is the amount of the minimum pension the Minister referred to?
It is the minimum pension on the scale. The Deputy will have to get the book and look at the minimum rate on the scale.
Is the position not worse in the sense that an applicant for a pension cannot in actual terms have £6 per week which is to be disregarded because of the artificial way their money in the bank, or their investments, are valued at 10 per cent? Will the Minister agree that with present rates of interest — 3 per cent after retention tax — after £2 per week they would be moved out of entitlement to maximum pension? Is that not a worse anomaly? Will the Minister agree that because of the 10 per cent rule their actual income might only be £2 per week but they will be assessed as having £6 per week?
The way the capital works is that the first £200 is ignored, then 5 per cent of the next £375 and 10 per cent of the balance. The yearly value is divided by 52 to give a weekly value and the weekly value reduces on a £ for £ basis. In fact, I brought that down from £1.40 to £1.20 and then to £ for £.
Are they assessed at 10 per cent?
Yes.
And they might only be getting 3 per cent?
There is a standard rate.
Clearly, the Minister is familiar with the submission from the Dublin Welfare Rights Group based in the Coolock Community Law Centre, and I should like to know if he is aware that they have prepared a detailed submission on this issue. Does he not consider that he could learn something from that submission? As a result of it has he not given consideration to reviewing the levels of disregard/allowance which has not changed since 1975?
The basic principle applies, if there is a certain amount of money available what should one do with it? Should we give it to people who have resources or should we add it to the basic rates? My policy has been to increase the rates by as much as possible and that has been the policy of successive Ministers since 1975. When the rates are at a level that can be regarded as satisfactory we can look at other problems but in the meantime it is better to spend the money on those who have least. That happens to be the biggest proportion of the claimants. Up to 92 per cent of those claiming deserted wife's allowance do not have any means as neither do 94 per cent of prisoners, 95 per cent of unmarried mothers and 70 per cent of old age pensioners.