Vol. 456 No. 4
21 Mr. Sargent asked the Minister for Social Welfare if he sees the guaranteed basic income scheme for children as a first step in introducing the unconditional payment to the population at large recommended by the Conference of Religious of Ireland; and if he will report on the feasibility of this wider proposal. [13958/95]
Basic income, in its purest sense, involves the payment of an unconditional basic payment to everyone. The payment would be at a high enough level to replace social welfare payments. It would be paid automatically, regardless of the person's labour force status or family circumstances, and would be free of tax.
The idea of basic income is attractive. It would greatly simplify the tax and social welfare systems. It would remove the poverty traps associated with means tested social welfare payments. It would deal with the problem of low take-up of some payments. The major drawback of basic income is its cost.
This has led to some interest in developing more limited versions of basic income. One such option is to pay a basic income to all children. A particular attraction of a basic income for children is that it could help to address the disincentives and poverty traps caused by the existing range of income supports for children, such as the payment of child dependant allowances with unemployment payments.
The Programme for Government contains a commitment to work towards a basic income for children by systematic improvements in child benefit and the creation of a child benefit supplement payable to all social welfare recipients and low and middle income families with children. This year, we took the first step towards this by increasing child benefit substantially. The increase of £7 per month represented an increase of 35 per cent for the first two children and an increase of 28 per cent for the third and subsequent children. The full year cost of this was £103 million. The next steps will be considered in the context of next year's budget.
The general idea of basic income is being examined by the Expert Working Group on the Integration of the Tax and Social Welfare Systems as part of its overall study of how to get rid of dis-incentives and poverty traps in the existing system. The working group was set up to identify the problems arising from the interaction of the tax and social welfare systems and the steps necessary to achieve greater co-ordination-integration of the two systems. The group is expected to furnish its report within the next few months.
