Paul McGrath
Question:17 Mr. McGrath asked the Minister for Social, Community and Family Affairs if he has reviewed the possibility of paying a uniform rate of child dependant allowance; and when this uniform rate will be implemented. [6205/00]
Priority Questions. - Social Welfare Benefits.
There are currently three different rates of child dependant allowances payable to social welfare recipients, ranging from £13.20 per week to £17 per week. The reasons for this are largely historical. There has been considerable rationalisation of rates over the years, in line with a recommendation made by the Commission on Social Welfare. The number of different rates has been reduced from 36 at the time the commission reported in 1986 to the current three. Further rationalisation would be extremely costly. The full year cost of paying all child dependant allowances at the highest rate currently paid is estimated to be in the region of £44.5 million per annum.
The Deputy will be aware that the loss of child dependant allowances by social welfare recipients on taking up employment can act as a disincentive to taking up available work opportunities. The policy direction followed by the Government has, therefore, been to concentrate resources for child income support on child benefit – this is no different from the policy of previous Governments. Unlike child dependant allowances, child benefit does not contribute to poverty traps or work disincentives, as it is a universal payment which is not subject to a means test.
The value of the child benefit scheme as an effective mechanism for the provision of child income support is reflected in the substantial investment which the Government makes in the scheme. The 1999 budget provided for a full year investment of over £40 million in the scheme, while the 2000 budget provides for a full year investment of almost £106 million, which will bring the total investment in the scheme up to £575 million. Investment in the child benefit scheme represents the most effective use of the resources available for child income support.
A child dependant of a widow in receipt of a contributory pension receives £17 per week, a child dependant of a one-parent family in receipt of social welfare payments receives £15.20 and a child dependant of someone in receipt of unemployment assistance or benefit receives £13 per week. Does the Minister agree it is ridiculous that children in the same category receive different rates of child dependant allowance? The child dependant allowance rates have not changed since 1994, unlike all other social welfare payments which have been substantially increased. Does the Minister agree it is unreasonable and unfair to have different rates of payment which have not increased as have other benefits?
No one likes to see different rates of social welfare payments, which is one of the reasons previous Governments of various hues have tried to reduce the number of rates in this area. Deputy McGrath is right that the payments have not changed since 1994. This is because the then Government, of one of whose parties the Deputy was a member, decided it would be better to freeze the allowance and invest available money in child benefit. When I entered office I looked at this and decided in my first budget, and successive ones, that this was a correct policy on the basis that the loss of child dependant allowance acts as a gross disincentive for people to take up employment. Investing in child benefit means people do not lose it, irrespective of whether they work. It would cost £45 million to bring all the payments up to one rate. This would be better invested in increased child benefit.
The Minister is saying he is not prepared to spend £44 million on the child dependant allowance, notwithstanding the fact that we have the highest level of child poverty in Europe. Increasing the child dependant allowance would go a long way towards changing this. This issue revolves around the fact that the Minister is not prepared to spend £44 million in increasing the rate of £13.20 to £17. It is reasonable that a rate which has remained constant since 1994 should be increased.
The Government spent £106 million in the last budget, a 25% increase in the overall budget for child benefit. That was the highest spend on child-related payments in the history of the State.
Some £2 per week from September.
This is compared to expenditure of only £28 million, if my memory serves me correctly, by the Government of whose parties the Deputies were members. This was in 1997, only three years ago.
The Minister is confusing the fact that child benefit—
I am not confusing anything.
—is also payable to those who work.
We are moving on to Question No. 18 in the name of Deputy O'Sullivan.
That is the point.
I ask the Minister to take Question No. 18.
If they go to work, they lose the allowance. That is why it would not be the correct policy to increase it, as was the position of the previous Government.