Vol. 430 No. 6
11 Mr. J. Bruton asked the Minister for Social Welfare if his attention has been drawn to the fact that unemployed young people are being told that they would qualify for unemployment assistance if they were to buy a mobile home and live in it beside their parents rather than living in the house with their parents; and his views on this interpretation of the existing legislation in regard to benefit of board and lodging.
The value to a claimant of free board and lodgings occurs, in the main, in the assessment of the benefit accruing to a young person living at home and claiming unemployment assistance. It covers the value of accommodation, meals, support and maintenance as well as generally sharing in the standard of living of the household and the facilities which the household enjoys. Because the value of free board and lodgings depends on the household circumstances the amount of the assessment varies. The assessment achieves a degree of equity as between applicants in different household circumstances.
The current legislation allows an element of discretionary power to be conferred on the deciding officers dealing with the varied circumstances surrounding the assessment of benefit and privilege. In order to qualify for a payment without the assessment of board and lodgings, it must be evident that the claimant no longer enjoys the advantages accruing from the facilities of the parental home. While the situation referred to by the Deputy has not been brought to my attention, the extent to which board and lodgings would be assessed in such circumstances is dependent on the benefit accruing to the individual.
The underlying principle of relating the value of board and lodgings in any case to the income level of the household in which he or she accrues benefit is essentially a good one.
I am, however, concerned that improvements in the system should be made where possible.
In order to provide some measure of financial independence for unemployment assistance claimants subject to assessment of benefit and privilege, I introduced a minimum weekly payment of £5 in the 1991 budget. In this year's Social Welfare Bill, I provided for the disregarding of long term social welfare payments in the assessment of benefit and privilege.
Any further improvements will, of course, have to take account of their financial implications.
Would the Minister agree that some of these regulations are anti-family and have the practical effect of forcing children out of the family home? Would he agree that once the individual is forced out into private accommodation the subsequent cost to the State in rent allowances and supplementary welfare allowances could be much greater? Would he agree that there is a need for an overall study of the impact of some of the regulations on family?
The difficulty is a financial one. It has been estimated that the abolition of this clause would cost between £50 million and £53 million. That estimate is based on 1991 figures and relates mainly to young people in the circumstances the Deputy has mentioned. It also raises the issue of making payments to an individual irrespective of the general means in a household. In allocating money at budget time people on very low incomes are taken into account before adjustments of that sort are made. In this year's Social Welfare Act I provided that long term social welfare payments be disregarded in the assessment of benefit and privilege and that, I trust the Deputies will accept, is an important step.
Am I to understand that income from unemployment assistance will be treated differently from other income of the same amount? If that is so, does that concession on the part of the Minister not create a poverty trap? If a family were to cease to be unemployed, not only would the person getting the job not gain very much but a son or daughter living with him might find that their unemployment assistance is reduced. This is a further example of a poverty trap being created by a measure which I accept is designed to do good. Will the Minister agree that the cost of the £52 million he has quoted must be set against the saving in rent subsidies payable to young people, many of whom leave home and go into rented accommodation where they have to be subsidised, as Deputy Allen pointed out? The Minister should not quote a figure of £52 million without also giving a figure for the potential savings in rent subsidies. Will he agree that there is a case for having an overall look at the impact of the social welfare system on the family and that we should establish a commission on the family similar to the Commission on the Status of Women which has done a great deal of excellent work?
I am very concerned about the question of the family and I appreciate the Deputy's suggestion that there should be greater concentration on the needs of the family. I will give consideration to that matter. Particularly at European level, the Department of Social Welfare represents the Government at a number of conferences, discussions and deliberations in regard to the family and we will do all we can to promote the family.
In regard to the Deputy's question about costs, they are normally given as net costs. Where rent supplements apply elsewhere I could not guarantee that that would be a net cost. The cost involved is approximately £53 million.
Will the Minister give us the basis on which this estimate was made?
How many people are affected?
It is based on the benefit and privilege assessment. I can give the Deputy the figures afterwards. It will cost £17.5 million to pay full rates to those on reduced rates and £35.4 million to pay an estimated 13,000 additional claims that will come on line. Most, but not all, of those relate to young people. Deputies will appreciate that it would be a major change in the system to do away with benefit and privilege entirely.
The Minister did not answer the first part of my question in regard to the poverty trap.
We are giving a benefit to social welfare families on the lowest incomes. My function is that of Minister for Social Welfare and I am caring for people on social welfare who are dependent on us in the Department of Social Welfare.
The Minister also is responsible for the effects of his decisions.
I am aware of that. However, as Minister for Social Welfare I provided for the disregard of long term social welfare payments to the assessment of benefit and privilege in this year's Social Welfare Bill. That is a benefit to families who are dependent on long term social welfare payments and who are among the lowest income families in the State. The Deputy is suggesting that when the person goes to work they will lose their benefit and privilege, but that is inevitable in such circumstances.
That is a poverty trap.
That is not the point.
The point the Deputy is making is that it is a slight disincentive towards going back to work because the benefit and privilege aspect will be taken into consideration, whereas it will not if one is on long term unemployment assistance.
Even if they are on the same income.
Yes. Deputy Bruton should have been here for the Social Welfare Bill if he wanted to debate that matter. The point is, should we give benefits to anybody or relieve the position for anybody. That is a separate question. First, the main concern for those at work is that they should have adequate wages above the social welfare levels and, second, that their net take home pay is adequate and not significantly reduced. The problem does not lie with us providing an improvement in the income of those depending on social welfare. That is a separate issue.
Arising from the Minister's earlier response, can I take it that because he dwelt mainly on the cost implications he takes on board the principle that it is illogical that young people should be paid rates of £10 or £5? For example, a constituent of mine has two unemployed adult dependants at home who are being paid £10 and £5. Surely it would be better to give them the full rate rather than encourage them to leave the bosom of their family where they receive plenty of support. This is not a minor matter, because 91,000 people under 25 years are unemployed. That involves a large number of families. Would it not be sensible to consider the principle outlined in Deputy Bruton's question? This would have to be offset against the high and rising costs of rent subsidies which must be considered also.
The difficulty is that all those cases are means tested. There are two schemes in operation — a social security one depending on stamps or contributions and a means tested scheme. The means tested scheme is supported entirely by the taxpayer. It is a question of what further taxation is available to me as Minister for Social Welfare to improve any of those payments. I am sure the Deputy knows the position well in regard to taxation. I have made improvements this year, but one cannot make such improvements without having additional resources and imposing additional taxes. I am sure the Deputy is aware that her party would strongly support the reduction of taxes, but we must get the income from somewhere and that is where the difficulty lies. We have improved the position this year and we will continue to so.
We cannot continue to spend money on rent subsidies without having some control on it.
The total amount spent on rent supplements is approximately £20 million. The amount that would apply to the benefit and privilege in that regard would be relatively small. There is still a substantial amount of money available to make changes and we make those changes in the budget. We must get our priorities right in regard to social welfare payments and there is household income in the case of benefit and privilege. The entire social welfare system is based on the assessment of household income. There is a benefit from the £5 or £10 payment because it automatically makes a person eligible for social employment schemes, training schemes, FÁS schemes and so on and people are usually anxious to be eligible for such schemes. Therefore, that payment benefits some people and the lower limit is £5 compared to 50p, 90p and £1.20 which applied not long ago.
Will the Minister agree that his response is anti-family? Where I come from people move in from small rural towns to Limerick city, get the full amount of unemployment assistance and pay £25 to £30 to landlords. Surely that is a misplacement of funds. In relation to the £5 and £10 which a person is allowed based on household income and expenditure, will he agree that it is not fairly assessed because in many cases households which are classified as middle income families are struggling with mortgages and so on? As Deputy O'Donnell correctly said, the £5 and £10 payments are unjust?
I am anxious to get improvements in the allocations and I will be keen in future budgets to obtain additional resources to make those improvements. I wish to quote from a statement made by me, a copy of which I will make available to the Deputy. It refers to the new code of practice. I stated:
The new arrangements will come into effect at the end of the month and will replace the controversial guidelines which will be withdrawn.
It was in the Deputy's beloved Cork that I made that statement.
We do not know what the Minister is saying in shopping centres. He should make those statements in the House.
It was made at an exhibition on social security generally.
Because Billy Attley had made a statement.
No, it was entirely consistent——
Billy Attley was quite clear last Sunday.
Billy Attley has more power than we have.
In fact I pointed out that I was following what had been asked for by Deputies.
Deputy J. Bruton rose.
I am sorry, Deputy, there are other Deputies offering and I want to accommodate them. We cannot remain on this question indefinitely.
I tabled the question.
I ask for brevity from Deputies. I am not just asking that of Deputy Allen but of all Deputies. We cannot remain on this question for the remainder of the time.
In regard to the number of people disqualified from payment or who are receiving the minimum amount because of the implementation of this regulation, has the Minister's Department carried out any analysis of the subsequent payments made to people who have been debarred because of this regulation? Has it carried out any financial analysis of the implications of this regulation?
I mentioned the financial implications. It is estimated that there are——
Fifty three million pounds.
——approximately £52.9 million.
What is paid out to young people who subsequently leave home and claim supplementary welfare allowance? If they are in expensive accommodation they can get a mortgage subsidy or a payment towards their rent?
I thought the Deputy was present when I mentioned the rent subsidies. They were between £21 million and £22 million.
And the other?
The percentage applying to people in that situation is only a small proportion of that applying in rent supplements. In the other case it is estimated there are approximately 20,000 people assessed with benefit and privilege currently.
When the Minister was considering the introduction of a disregard of long term social welfare for the purposes of assessing benefit and privilege enjoyed by a dependant, did he consider the possibility of having a general disregard for all income received by a person whose total income is less than the amount of the equivalent long term social welfare for which they would qualify, so that there would be neutrality as between income received from work and income received from social welfare and, therefore, not a poverty trap? Did the Minister consider that variant which would not involve a poverty trap but would continue, as is proper, to target extra assistance for those on low incomes whether they be from social welfare or otherwise?
The cost of that would be considerably higher because in the case to which the Deputy referred we dealt specifically with people who are on long term unemployment payments, for instance, or other long term social welfare payments. There may be somebody with a long term invalidity pension, widow's pension or any of the long term payments. They would not all have the influence the Deputy mentioned because they would not be seeking employment.
They are not in the same situation.
If people on long term unemployment benefit go to work then the position would change. That would involve much greater cost.
How much?
If the Deputy tables a question I will have that examined. That was carried out in this year's Social Welfare Act to alleviate the position in the assessment of benefit and privilege for families where a person is, for instance, on long term unemployment benefit or is in receipt of another long term payment. It was a beneficial measure.
Nobody is denying that an advancement in assessment of means is beneficial but the Minister must ensure that we do not create new poverty traps. I tabled a question, which will not be reached now, on the integration of the tax and social welfare codes as a means of eliminating poverty traps and I should like the Minister to indicate whether any progress has been made in that regard? In relation to assessing a person for unemployment assistance, would the Minister consider having some regard for a single adult living at home with his or her parents? I am referring to adults, people in their twenties, thirties and forties, who receive no money, or very little money because their parents' income is taken into account. This is intolerable for the long term unemployed.
I would like to see this addressed in future budgets. Deputies have highlighted the difficulties involved but, ultimately, it is a matter of resources and their allocation. There has been an improvement in this regard this year and, perhaps, we can consider further improvements. We have spent a long time on this question.
I will permit a final supplementary question from Deputy Flaherty.
My patience is rewarded. In view of the general concern by all sides about the anti-family impact of this regulation would the Minister consider the issue raised by Deputy Allen, the position of young people in receipt of small amounts, for example, £5? Do those people end up on assistance and in rented accommodation six months later? The Minister said that most of those people were young, but what about people in their thirties, forties, and older, who are still treated as dependent on their parents, that must be a terrible indignity. In the preparation of this year's Social Welfare Bill did the Minister consider increasing the minimum payment?
I increased the minimum payment in 1991. I agree this matter must be considered further. The integration of the payments generally, and the relationship between work, payments, tax and incentives, is being examined by the Minister of State. Deputy Bruton's question will be addressed in those studies.
