I move: "That the Bill be now read a Second Time."
In bringing this Bill before the House, I am taking another major step in the development of our social welfare support system.
The Bill provides for a significant additional allocation of resources to the less well off in our society at a time of economic difficulty. The Government have now provided almost £256 million extra over the last two years to those on low incomes. For a family with five children on long-term unemployment assistance, I have provided an increase of £29.10 in weekly income over two years. This is more than three times as much as was provided by the Coalition Government, £9.20, in their last two budgets.
Our policies represent a practical commitment to low-income families and children. We have ensured that resources are directed to those families with the greatest need. The cost of the extra provisions for children in this year's social welfare package is £42 million per annum. This includes the increases for children dependent on social welfare and for those whose parents are at work on low pay, both through the special childrelated tax exemption scheme and through the family income supplement.
This allocation of resources over the last two budgets is designed to tackle poverty as a priority. We are doing this not just through increases in social welfare payments, but also through the development of the system as a whole.
We have taken other important initiatives which extend and improve social welfare. This Bill provides for a new social assistance scheme for widowers and deserted husbands. We have abolished the lower rural rate of unemployment assistance by applying the higher urban rate throughout the country. We are extending occupational injuries cover to members of the Garda Síochána. We are imposing a liability on a deserting husband, or wife, to maintain the deserted wife, or husband, and children. I extended PRSI to the self-employed last April and the Government have now decided in principle to extend PRSI cover to public servants, following consultation with the public sector unions. We have radically streamlined and restructured social welfare payments. We have reduced the number of different rates for children from 36 to 12, and the number of rates of unemployment assistance from 17 to six, all within a two year time span. Other changes are being introduced without recourse to legislation. These include an option to use natural gas in the free schemes, allowing pensioners carry over unused units of electricity from one billing period to the next, and improvements in the free fuel scheme.
I will be examining other possible developments during the year and implementing them as appropriate. I am, for instance, considering the question of self-assessment for means test purposes. I have already introduced a limited form of self-assessment in unemployment assistance, through desk interviews. These have proved very successful. I am currently examining the question of extending self-assessment to other schemes.
I want a service for social welfare clients that is equal to the best the public or private sector can provide. I am satisfied that we are going the right way to achieve this. This Bill will further that development.
The Bill sets out to implement the significant social welfare improvements announced in this year's budget; to give effect to the new scheme for widowers and deserted husbands with dependent children; to abolish the lower rural rate of unemployment assistance; to extend the occupational injuries scheme to members of the Garda Síochána and to introduce a major innovation in the area of desertion. It makes deserting spouses liable for the maintenance of their families and enables the State to recover maintenance from them through the courts and offset it against its support for the deserted family. In addition, the Bill sets out to improve the effectiveness of the social welfare system through additional measures aimed at the elimination of fruad and abuse.
The general increase of 3 per cent in social welfare payments provided for in this Bill will more than maintain the position of all claimants, since the rate of inflation is just over 2 per cent. The special increases of 12 per cent for the longterm unemployed and 8 per cent for people on supplementary welfare allowance give those on the lowest payments a further substantial rise this year. These increases show the Government's continuing concern to improve the position of those dependent on social welfare. They more than meet our commitments in the Programme for National Recovery.
The main improvements in rates are : (1) a general increase of 3 per cent in widow's and old age pensions, unemployment and disability benefit and other weekly payments; (2) a 12 per cent increase in the personal rates of long-term unemployed on unemployment assistance and an 8 per cent increase for short-term unemployed and those on supplementary welfare allowance; (3) the abolition of the lower rural rate of unemployment assistance by increasing this rate, and consequently the rates of supplementary welfare allowance, to the higher urban rate. In future, therefore, the higher urban rate will apply throughout the country; (4) a streamlining of the rates of adult dependent allowance for unemployment payments to two rates — a long-term rate and a short-term rate — instead of five as at present; (5) an increase to a minimum of £10 per week in child dependent allowances payable with weekly social welfare payments. This mainly benefits families on unemployment assistance, supplementary welfare allowance and old age, non-contributory pension and (6) payment of the higher rate of monthly child benefit of £21.75 in respect of the fifth child and subsequent children.
From July next a family with three children and in receipt of unemployment benefit will receive an increase of £3.50 per week giving them a new rate of £105.80 per week. Pay-related benefit of up to £18.10 per week may also be payable bringing the total to £123.90. A couple on retirement or old age contributory pension will receive an increase of £3 per week giving them a new rate of £102.20 per week. A widow with four children and in receipt of a contributory pension will get an increase of £3.10 per week giving her a new rate of £110.90 per week.
This year the Government again approved a further special package aimed at the least well-off. We appreciate the special difficulties faced by the long-term unemployed and I have increased the long-term personal rate of unemployment assistance by a further £5 a week. I am aware that the assistance rate will now be higher than the basic benefit rate, but I am satisfied that this is necessary to help people cope with the extra needs where unemployment is of long duration.
The personal long-term rate of unemployment assistance will now be £47 per week. The personal rate for short-term unemployment assistance and supplementary welfare allowance will be £42 per week. A married couple bringing up three children on long-term unemployment assistance will get £8.20 extra per week bringing their total to £107. A similar family with five children will get an extra £11.40 per week bringing them to £127 per week. They will also get an increase in child benefit.
Taken together with the increases given last year, these payments have risen by almost 25 per cent since last July. They represent a very considerable improvement for those dependent on these social welfare payments.
In future there will only be two rates of adult dependant allowance for the unemployed, one long term and the other short term. In reducing the number of rates from five to two I am also giving special increases.
I am continuing to streamline the child dependant allowance rates as I did last year. A minimum rate of £10 a week for dependent children is being introduced. This represents a considerable increase for larger families and as a result, the number of rates of child dependant allowances is being reduced to 12 as against 36 rates up to last July.
The Bill also provides that the child dependant allowance for long-term recipients will be paid up to 19 years where the child continues in full-time education. The Government regard this as a first step towards eventually extending the period of payment of the child dependant allowances, where the child is in full-time education, to 21 years. This will be of particular benefit to families of the long-term unemployed, old age and invalidity pensioners. The provisions are contained in section 7 of the Bill.
Section 5 of the Bill provides that the higher rate of monthly child benefit of £21.75, which is currently payable in respect of the sixth child and subsequent children, will from next October be payable in respect of the fifth child and subsequent children. This measure is aimed at the special difficulties faced by larger families.
The Government are firmly committed to improving the position of families. We do this directly through the social welfare payments and through the family income supplement scheme for those at work on low incomes. Child benefit — children's allowances — on the other hand applies to all children and is paid directly to the mother. It has the further advantage that it does not create a disincentive to employment since it applies equally to the children of those at work and those on social welfare.
The one disadvantage of child benefit is that it is not possible at present to allocate extra increases to those who need them most through this system. We can go some way in this direction by giving extra increases to larger families as we did this year. To overcome this limitation in the child benefit scheme the Government decided to introduce the child-related tax exemption this year. This is a novel approach which directs additional resources to those with children where the parent is at work on low income. If in future we wish to use the child benefit scheme, not only for general across the board increases but also as a means of directing more resources to particular groups of children, then we will have to find a way to do this.
The extent to which we can do this will depend on our success in matching tax records with child benefit records so that we can identify the income level of recipients. To date we have matched approximately 70 per cent of our records and we are working on the balance. This matching exercise is very important for the future as it will enable us to use the child benefit system, not only to make payments to every mother, but also to direct additional resources to lower and middle income families.
A further element in the resources allocated to families is the family income supplement. In keeping with the Programme for National Recovery I arranged for a detailed study of the family income supplement scheme. The report is now to hand. It addresses the main policy issues in relation to the scheme, including the question of the rate of take-up.
In May 1988 there were 5,195 FIS cases in payment of which 3,799 were in the private sector and 1,396 in the public sector. In all 2,381 were labourers — 46 per cent — and a further 589 were agricultural or factory workers.
The report identified that the average supplement in February 1988 was £17.89. A main conclusion of the report is that the original estimates of take-up on the scheme were too high. A reassessment of the potential claimant pool revealed a maximum of 20,000 families who would be eligible. Allowing for take-up rates experienced internationally on such schemes, the report estimated that the maximum achievable number of clients is unlikely to be more than 12,000 families.
The following measures are recommended in the report: retention of the scheme subject to improvements in its structure with the aim of moving towards a family credit variant in due course; increases in the income limits for receipt of payment. The report does not recommend payment on the basis of net income; an increase in the maximum payments; additional payments to families with more than five children; and a reduction in the minimum hours of work required to benefit under the scheme. In the case of two parent families the hours worked by both spouses should be summed to obtain eligibility, improved distribution of information on FIS.
I am at present finalising my proposals for improvements in the scheme, which I will be announcing shortly. These will take into account the main recommendations of the report. The improvements will come into effect with the increases in rates of payment generally from July next. As already announced in the budget, there is an allocation of £1 million extra for the FIS scheme to cover these improvements. This 20 per cent increase will bring the total expenditure to over £6 million for 1989.
For some time, I have been very concerned at the difficulties faced by men on low incomes who are bringing up children on their own. While we have a number of different schemes for women in this situation there are no equivalent schemes for men. Widowers and deserted husbands with children, who are unable to take up paid employment due to their domestic responsibilities, find that the only social welfare payment available to them is supplementary welfare allowance — one of the lowest social welfare payments.
I have already announced my intention to correct this anomaly by providing a new social assistance scheme for widowers and deserted husbands. The legislative basis for the new scheme is contained in section 6 of the Bill. This section provides for payments to widowers and deserted husbands with dependent children on the same lines as the non-contributory widow's pension and deserted wife's allowance schemes.
Let me give some examples of how a widower will benefit under this new scheme. A widower with two children who is in receipt of supplementary welfare allowance currently gets £56.80 per week. Under the new scheme he will get £74.80, an increase of £18. Those with large families will gain even more. A man with five children would get £80.80 under the supplementary welfare allowance scheme. This will be increased to £115.30 under the new arrangements — a very substantial increase of £34.50 per week, This is in addition to the increase in child benefit for large families, which would increase the weekly gain to £36.05. It is an improvement that is long overdue. I estimate that 5,500 men will benefit from the new schemes.
The introduction of these new schemes also represents a major step in bringing about equality of treatment between men and women in this whole area.
I also consider that there is scope for rationalisation in this whole area. With the introduction of these new schemes there will now be six separate social assistance schemes providing income support to lone parents, and these schemes will also differentiate between men and women. Accordingly, my Department are examining the possibility of replacing these schemes by one lone parent allowance scheme which would apply to parents, whether male or female, who are bringing up children on their own. In this context, the position of lone parents who are separated or of fathers who are unmarried or who have been divorced in another jurisdiction and who may not come within the scope of the existing schemes is being examined. Complex legislative changes will be required to provide for such a scheme, but I hope to be in a position to bring forward proposals in the matter later in the year. In relation to the PRSI ceiling for employers, as is customary, the earnings ceiling up to which social insurance contributions are payable will be raised.
Section 8 provides for the increase in the ceiling for employees and employers and section 9 provides for the increase in respect of the self-employed. As a result of these increases from 6 April 1989 employees and the self-employed will pay PRSI contributions in resepct of earnings up to £16,700 instead of £16,200 at present. Employers will continue to pay contributions up to a ceiling of £18,000 in respect of employees who have these higher earnings. The extra cost to employers in 1989 will be £4 million. At the same time employers will save an estimated £7.5 million in 1989 as a result of the reduction in their contribution to the redundancy fund.
Irish employers pay one of the lowest rates of PRSI in the European Community. In the United Kingdom, there is no ceiling for employers in respect of which contributions are payable. The higher ceiling will reduce the burden on the general taxpayer of maintaining the Social Insurance Fund. In relation to pay-related benefit section 10 of the Bill provides for an increase from £66 to £69 in the amount of weekly earnings disregarded in calculating the rate of pay-related benefit. 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 flat rate benefits. The purpose of the disregard is to ensure that the amount of personal flat rate benefit is taken into account in determining the amount of the pay-related element. The change will effect new claims from 3 April.
In relation to the increase in the rural rate of unemployment assistance, section 11 of the Bill provides that the rural rate of unemployment assistance will be raised to the higher rate applying in urban areas. As Deputies will be aware, this differential dates back to 1934 when the unemployment assistance schemes was introduced. Clearly, however, such a differential is now outmoded. People in rural Ireland face the same cost of living as urban dwellers and furthermore the present situation has led to serious anomalies in that many areas now accepted as urban are outside the urban classification. Claimants in parts of Tallaght, Blanchardstown, Clondalkin, Dún Laoghaire and Lucan are paid at the rural rate. Similar difficulties arise in other areas such as Cork, Limerick, Dundalk, Drogheda, Ballina and many other towns.
As part of the budget I undertook to review the position and the Government accepted my recommendation that the only logical approach was to abolish the rural rate. The supplementary welfare rate of payment which was the same as the short term rural rate, irrespective of where the claimant lived, will also be increased to the short term urban rate. The effect of this measure will be to give a total weekly increase of £5.70 to a couple on supplementary welfare allowance.
When I took up office there were 17 rates of payment in unemployment assistance alone. In just two years I have cut these down to six rates — a personal rate and an adult dependant rate for short term and for long term unemployment assistance and two child dependant rates. This is a substantial reform of the social welfare code by any measure.
The break-up of marriage through desertion is an increasing problem in our society today. In 1978 there were 5,237 women in receipt of deserted wife's benefit or allowance. This grew to 13,617 for 1988. This represents an increase of 8,380 or 160 per cent in a ten year period. Expenditure has shown a corresponding increase rising from £5.6 million in 1978 to £52 million in 1988. The State has always shown concern for deserted wives and will continue to do so. They are paid at the same rate as widows.
Except in the case of supplementary welfare, no provision has been made up to now to require a deserting spouse to contribute towards the payments being made under the social welfare code for the maintenance of his or her family. In the case of social welfare payments to the deserted spouse, responsibility for seeking income support from their spouse has been left to the claimant. Entitlement to the payments is conditional on the claimant making and continuing to make reasonable efforts to obtain such support. The only sanction my Department had, in cases where they were not satisfied with those efforts, was to reject the claim or to withdraw payment in cases where it was already in payment.
My Department also had to have regard to the personal trauma being experienced by the family and their need for time to adjust to the situation created by the departure of the other spouse and to try to build a new life. Pressure on the spouse to seek maintenance adds to these problems. It could also be counterproductive in that it could serve to reduce any possibility that might remain for reconciliation.
However, it is clear that too many spouses are just walking away from their responsibilities towards their families and leaving it to the taxpayer — through the State — to pick up the burden. This is not good enough. What we are setting out to do through this Bill is to impose a liability on a husband to maintain his wife and family and, likewise, to impose the same liability on a wife to maintain her husband and family. The new measures proposed in this Bill are designed to ensure that, as far as possible, adequate contributions are forthcoming from the deserting spouse.
This Bill provides that the competent authority — either the Minister for Social Welfare or a health board — can seek a maintenance order against a person who fails to maintain their family, and the District Court shall order that person to pay the maintenance to the competent authority. Where the persons concerned or their employers fail or refuse to supply social welfare officers, or the health boards as the case may be, with any information or documents required for the purposes of any investigation related to the award of benefits or allowances under these schemes, they shall be guilty of an offence and subject on conviction to substantial fines. In this way, the State can recoup some of the cost of supporting the deserted family. Where the maintenance is paid to a deserted spouse, that person, if receiving an allowance from my Department or from the health board by way of supplementary welfare allowance, shall be liable to transfer the maintenance to the competent authority.
A practice has grown up in the courts, when dealing with maintenance orders, to limit maintenance to a topping up of the payments received from social welfare. The effect of this is to cause the State to bear the responsibility of supporting the family, rather than placing that responsibility firmly and fairly on the shoulders of the deserting spouse. Section 13 of the Bill provides for amendments to the Family Law (Maintenance of Spouses and Children) Act, 1976, to exclude social welfare payments from the benefits that a court can take into account in determining maintenance orders.
Special provision has been made to protect the income position of claimants who are currently receiving payments under the social welfare code as deserted wives. Those claimants will not be required to transfer any payments they are or will be receiving on foot of maintenance orders obtained prior to the coming into force of these provisions. Where those claimants obtain maintenance orders after the date of commencement of these provisions, only the amount of payments in excess of amounts awarded under the original orders will be transferable by them.
This new section on liability to maintain contains a clear, comprehensive and coherent set of provisions. They will enable my Department or the appropriate health board to obtain contributions from deserting spouses. The contributions obtained will help to ease the burden on PRSI contributors and taxpayers generally of financing these payments.
At present a person who has exhausted entitlement to unemplyment benefit can requalify for benefit after having worked and paid contributions for 13 weeks. This proved to be a significant incentive for people to take up insurable employment of short duration. While entitled to or in receipt of unemployment benefit a person was not entitled to receive unemployment assistance. This does not pose any problem where the rate of benefit exceeds the rate of assistance. However, following the improvements I have already announced, the rate of unemployment assistance is now higher than the rate of unemployment benefit, and so there could be a disincentive to an unemployed person to take up employment of short duration. Because of this, section 14 of the Bill provides power to enable me, by regulation, subject to the sanction of the Minister for Finance, to allow an unemployed person the option of claiming either unemployment benefit or unemployment assistance, whichever is the more favourable. This reflects my determination to ensure that the social welfare system is as flexible and responsive as possible to the needs of today.
Deputies will be aware that in recent years I have promoted a number of initiatives to increase flexibility in the unemployment payments system, and facilitate the unemployed in their efforts to find a foothold in the jobs market. These initiatives cover facilities to pursue educational courses, to take up part-time work, and to engage in voluntary work of benefit to the community.
I introduced the part-time education initiative to encourage the unemployed to exploit the considerable amount of flexibility in the unemployment payments system, which would allow participation in part-time courses without infringing the availability for work criteria. The initiative takes the form of guidelines issued to deciding officers to assist them in the determination of entitlement to unemployment payments in cases where the participant wishes to engage in education courses.
Section 15 of the Bill provides for the exemption of fostering allowances from the assessment of means for unemployment assistance, old age and widow's pensions and supplementary welfare allowance schemes. Fostering allowances are payable under section 55 of the Health Act, 1953.
Current social welfare legislation in relation to the assessment of means requires that all cash income which the claimant may reasonably expect to receive shall be taken into account. Certain cash payments are, however, excluded from this assessment, for example, income from charitable organisations, benevolent societies and certain health board payments. The Bill proposes to add fostering allowances to the list of exempted payments.
The health boards have experienced considerable difficulties in recruiting foster parents in recent years. As Deputies are aware, there has been a move away from residential care and efforts are being made to place more children in foster homes where they can enjoy the benefits of normal family life. The health boards regard the fostering allowance, currently £34.50 per week, as a payment for the maintenance of the child. The fact that it is payable irrespective of the foster parents' circumstances allows the financial circumstances of potential foster parents to be disregarded when their suitability as foster parents is being considered. By excluding the assessment of fostering allowances from the social welfare means test, this section removes what could be seen as a disincentive to potential foster parents. I am sure Deputies will be supportive of this very worth-while measure.
Under the Social Welfare (Consolidation) Act, 1981, regulations have been made which allow the payment of the allowances for adult and child dependants to be made directly to the spouse of a claimant, in cases where the claimant does not provide the spouse with sufficient money for ordinary household expenditure. The claimant, usually the husband, continues to receive the personal rate. This arises where there are problems such as gambling, alcoholism or drug addiction. Women in receipt of separate payments are in a difficult financial position. The income which they receive consists of increases for dependants only and is often insufficient to meet their needs and those of their children.
Section 16 of the Bill is designed to remove the restriction whereby only the dependant's element of a payment may be paid direct to the spouse in such cases. The section provides that regulations may allow such amount of the social welfare payment as is reasonable in the circumstances to be paid direct to the spouse. The claimant will be paid at least the value of the adult dependant allowance. I am sure this new provision will be welcomed by those who are currently surviving on separate payments.
With regard to insurability of sub-postmasters, section 17 of the Bill is designed to confirm the current insurability of sub-postmasters as employees, by specifically including such employment in the list of insurable employments contained in Part I of the First Schedule to the Social Welfare (Consolidation) Act, 1981.
Arising from a recent High Court judgment, it was considered that there was a possibility that subpostmasters might be regarded as being under a contract for service as distinct from a contract of service. In that case they would no longer be insurable as employees. This provision is intended to safeguard their current position under the Social Welfare Acts.
I am providing in this Bill for the extension of occupational injuries benefits to members of An Garda Síochána. Section 18 of the Bill provides the means for including gardaí in the occupational injuries scheme. At present the Garda have no entitlements under this scheme. In the case of malicious injuries or death, a Garda or his representatives may apply for compensation under the Garda Síochána (Compensation) Acts. However, other injuries received or diseases contracted accidentally in the course of duty are not covered by this legislation. It is now proposed to fill this gap in their coverage by bringing gardaí within the scope of the occupational injuries scheme. Gardaí will be covered on the same basis as other civil servants. They will be entitled to disablement benefit starting 26 weeks after the occupational accident occurs or the disease is contracted. They will also be covered for survivors' benefits.
It is proposed that the rate of disablement benefit for gardaí will be half the ordinary rate, in line with civil servants entitlements, although full adult and child dependant increases will be payable. At present, if a garda is injured while on duty or in the course of duty, he may receive full salary for the duration of absence caused by that injury.
Survivors' benefits for which members of the Garda will be covered include widow's pension, dependent widower's pension or gratuity, orphan's pension, dependent parent's pension and funeral grant. A reduced rate of occupational injuries contribution will be paid on behalf of the Garda in line with the limited benefits for which they will be covered.
The section also provides that any benefits payable to the gardaí or their survivors under the scheme will be taken into account in the assessment of damages under the Garda Síochána (Compensation) Acts. This is in line with similar arranagements in assessing damages for the purposes of the Civil Liability (Amendment) Act, 1964.
The details of coverage and the contributions payable will be set out in regulations following this legislation. Coverage under the occupational injuries scheme will represent a considerable improvement in their employment conditions for the Garda. I am sure that Deputies will support me in acknowledging the good work done by An Garda Síochána and I am sure that this measure will have the support of the House.
Over the past two years I have placed great emphasis on the effective managment of the resources devoted to social welfare. As a result, I have put in place a range of measures to eliminate fraud and control abuse of our schemes. Expenditure on social welfare is one of the highest spending areas of Government activity and it is vital that money is paid out only to those who are entitled to receive it. I intend to continue to pursue these measures vigorously and improve them as the need arises. Consequently, there are a number of measures in this Bill aimed at improving the effectivenesss of the various measures I have brought in.
With regard to sub-contractors from the start of this year, employers in the construction, contract cleaning, forestry and security industries are required to notify my Department when they take on new employees. So far, from the preliminary returns for January, it appears that well over 500 employees have been notified to my Department.
I am aware from discussions with the trade unions and from other sources that there has been an increasing recourse to the employment of sub-contractors in these industries. It is also clear from investigations carried out by my Department that many sub-contractors are not fulfilling their responsibilities in terms of tax and PRSI. Accordingly, I am amending the legislation to provide for the notification to me by any employer, in the designated industries, of the employment by them or any sub-contractor. In addition, each sub-contactor will also have to notify me of any person engaged by him or her or working with him or her. This will greatly assist in the control of those "cowboy" operators who set out to cheat the taxpayer and their competitors.
On the question of court proceedings, section 20 provides that, in any proceedings for an offence under the Social Welfare Acts, a certificate, signed by an officer and certifying facts recorded on computer or on microfilm will, in the absence of the original document, be prima facie evidence of the facts so certified. This provision is required because of the increasing extent to which records of the Department are held on computer and microfilm instead of on paper. The provision also extends to organisations with which the Department conduct their business. For example, An Post proposes to microfilm cashed social welfare pension orders.
Section 21 provides that records relating to earnings and periods of employment maintained by an employer shall be regarded as prima facie evidence of these matters. This is intended to simplify the current arrangements whereby, in cases involving large companies, a number of company staff would be required to give evidence to prove that a person was, in fact, employed in a particular period and that wages were paid to him in respect of such employment.
Section 22 provides that, where an employer who colludes with an employee in fraudulently obtaining any social welfare payment is convicted of certain offences, that employer will be liable for the repayment on demand, as a civil debt, of the amount irregularly received by the employee as a result of that collusion, while in his employment.
Under the legislation enacted last year relating to self-employed contributors, a self-employed person was required to have discharged his full liability before he could be regarded as having paid his PRSI contribution. Because of the way the tax system works, this requirement for full discharge is giving rise to serious problems as tax assessments are reviewed and revised. The provisions allow contributions which have not been paid to be treated as having been paid, in certain circumstances.
The Bill provides for substantial improvements for the proposed pre-retirement allowance scheme. The legislative basis for this scheme was contained in last year's Social Welfare Act and regulations are required to implement it. Following the amendments in this Bill, I propose to make regulations providing for the new improved scheme as soon as the administrative arrangements are in place.
The pre-retirement allowance scheme is intended to provide more flexible arrangements for unemployed people in the over-60 age group, many of whom regard themselves as semi-retired and not really members of the labour force. At present, these people are required to sign on each week at their local office, where they receive their cash payments. The new scheme will relieve certain persons of the need to attend the local office, while at the same time providing them with alternative arrangements for receiving their basic entitlements. It is intended that payment will be made by way of orders cashable at post offices.
Under the 1988 legislation, to be eligible for the scheme a person must: have attained the specified age; have been in receipt of unemployment payments for at least 390 days; satisfy a means test; be otherwise entitled to unemployment assistance at the maximum rate.
The main effect of the amendments included in this Bill is to remove the requirement that an applicant be otherwise entitled to unemployment assistance. This will enable the allowance to continue to be paid to retired persons who, for example, fall ill and would, therefore, not fulfil the conditions for unemployment assistance. The Bill also provides for the inclusion of the pre-retirement allowance as a separate allowance in the list of social assistance payments contained in the Fourth Schedule to the Act. This will give greater flexibility in regard to determining reduced rates of allowance as the rates will no longer be tied to the rates of unemployment assistance.
On pro-rata pensions, section 30 of the Social Welfare Act, 1988, provided powers to make regulations giving entitlement to pensions to certain persons who came back into insurance on the abolition of the earnings limit for liability for social insurance contributions in April, 1974. The provision was intended to cater for those who, having paid a contribution covering them for old age contributory pension, failed to qualify for a pension because of gaps in their insurance record prior to 1974.
These gaps occurred because, prior to April 1974, social insurance coverage for non-manual workers only applied if their earnings were below a certain limit. This limit was increased from time to time and, as a result, some persons found themselves in and out of insurance, thus causing gaps in their insurance records. To qualify for an old age (contributory) pension, a minimum yearly average of 20 contributions is required over a person's working life. Some people with gaps in their insurance record before 1974 could not achieve this minimum average and so failed to qualify for pensions.
Many Deputies will be familiar with this problem. It was always considered to be particularly inequitable because employees who became compulsorily insured for the first time in April 1974 were able to build up an entitlement to a minimum old age contributory pension after a relatively short number of years. Others, with a similar record of insurance after 1974, failed to get a pension because of the effect that the pre-1974 gaps had on their yearly average of contributions.
It has since emerged that the enabling legislation and regulations made under it in 1988 gave entitlement to pro rata pensions to categories of insured persons other than those for whom they were intended. The wording of the legislation also gave entitlement to persons who came back into insurance in 1974, but at a modified rate which did not include cover for old age (contributory) pension. Persons in this situation are part of what is known as the “mixed insurance” category and there are particular problems associated with their situation. The problems of “mixed insurance” and its effects on pension entitlements are being examined at present by the National Pensions Board as part of their review of State, semi-State and private occupational arrangements.
Section 25 is intended to remedy the defect in the primary legislation. The effect of the amendment is to confirm that, under any regulations made, entitlement to pensions will be confined to those affected by the insurable limit as originally intended: persons who again became compulsorily insured at the full rate of contribution in April 1974 following the abolition of the insurable limit. Sections 26 and 27 are designed to remedy potential defects identified in existing legislation and ensure that the provisions covered endure and are correct.
Since the Government took office two years ago, we have introduced some of the most far-reaching improvements in the social welfare system for many years. We identified problems and anomalies which were the cause of hardship to those relying on our schemes and took steps to solve them. At the same time, I have concentrated resources on ensuring that the system is managed effectively and that fraud and abuse are controlled. We have succeeded in this and the improvements outlined in this Bill have been facilitated by better control of social welfare expenditure.
The Bill, therefore, implements the measures we introduced in the budget and directs additional resources to those on the lowest incomes. That was the policy we adopted last year and which we are continuing this year. As a result, those on long term unemployment assistance over the two years will have received an increase of almost 25 per cent in the period and the Government have allocated almost £256 million to those on social welfare. This is a very substantial transfer of resources and a clear sign of the Government's determination to tackle the problems faced by those on low incomes, particularly those dependent on social welfare.
I commend this Bill to the House.
