Derek McDowell
Question:52 Mr. McDowell asked the Minister for Social, Community and Family Affairs the proposals, if any, he will make on the individualisation of all adult social welfare payments. [10353/99]
Written Answers. - Social Welfare Benefits.
John Bruton
Question:70 Mr. J. Bruton asked the Minister for Social, Community and Family Affairs if he will update the calculation by the Joint Committee on the Family in September 1996 which showed that a couple with one earner living apart with children would be financially worse off by £76 per week if they married, a couple on social welfare in the same circumstances who marry would be financially worse off by £27.50 per week and a couple with both earning would be financially worse off by £87.35 per week; and the steps, if any, the Government will take to remedy any ongoing anomalies in this area. [8481/99]
I propose to take Questions Nos. 52 and 70 together.
The design of the social welfare system is based on the assumption that there are economies of scale where a couple live together, whether married or cohabiting. This means that, generally, in means-tested arrangements there will be a reduction in the overall social welfare income of a couple compared to the situation where each lived separately. In the case of a lone parent the reduction in income can be greater than in the case of an unemployed couple due to the more generous means-testing arrangements in respect of one parent family payment. This arises from the desire to have a strong incentive to work built into the one parent family payment arrangements.
There is a demand for individualisation of all social welfare payments to address the scenarios outlined in the report to which the Deputy refers. However, this is a very complex issue as there can be many different forms of individualisation. At one level it could involve paying half the appropriate social welfare payment for a couple to each of the couple to more complex forms involving individual means testing and payments to spouses or partners in their own right.
The same issue does not arise in respect of social insurance payments as, where each of a couple has an entitlement in his/her own right, a personal rate payment will be awarded to both. Therefore, with more people entering social insurance, which is the current trend, the reliance on means-tested payments will be reduced.
On the tax side there is individualisation of treatment in that all couples can elect to be assessed as two single people. However, in the majority of cases where the taxable incomes of each of the married couple differ, joint assessment is the better option due to the transferability of rate bands and allowances. Such transferability is not allowed in the case of cohabiting couples.
The independent operation of the social welfare and the tax systems and their subsequent interaction can lead to significant reductions in the income of a couple versus two people living apart.
In relation to updating the figures in the report as requested by the Deputy, the present position is that a couple with a child where one is earning will experience a weekly reduction of £76.29 in overall income if they marry. Where they are both receiving social welfare the reduction will be £32.60 and where they are both earning it will be £98.26. The reductions in income are, in the main, a result of the loss of the one parent family payment where a lone parent marries or cohabits.
The change in income is less dramatic for social welfare recipients as the loss of the one parent family payment is to some extent compensated for by the payment of a qualified adult allowance. At present this stands at about 60 per cent of the full personal rate which is in line with the recommendations of the Commission on Social Welfare 1986 and which, as already stated, reflects the economies of scale which are considered to exist where two people are living together.
The one parent family payment is designed to support a lone parent who is rearing children without the support of a partner. I am anxious to encourage and to facilitate lone parents becoming involved in long-term stable relationships and to eliminate any disincentives to this which might exist in the system. However, given the rationale behind the one parent family payment and the assumptions underlying the payment of qualified adult allowances achieving this without reductions in income poses many difficult and complex problems for both the tax and social welfare systems.
This is also part of a wider agenda to do with the manner in which single parent, married and co-habiting couples are dealt with under both systems.
In this regard an interdepartmental group, chaired by my Department, is currently examining the treatment of different types of households under both the tax and social welfare systems. The group is, amongst other things, charged with identifying and costing ways of ensuring consistent and equitable treatment of different types of household under both systems. The establishment of this group also marks the first stage in meeting the commitment in the national anti-poverty strategy to examine the individualisation of social welfare payments.
The group will complete its work in the next couple of months.