Question:
133 Mr. Hayes asked the Minister for Social, Community and Family Affairs the plans he has to standardise the child dependant allowance; and if he will make a statement on the matter. [7341/01]
Written Answers. - 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 year, in line with a recommendation made by the commission on social welfare. The number of differ ent rates has been reduced from 36 at the time the commission reported in 1986, down to the current three.
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 successive Governments has, therefore, been to concentrate resources for child income support on child benefit, thus ensuring that the supports provided by the State are more neutral vis-à-vis the employment status of the parent or parents.
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. Before we came to office, expenditure on child benefit was £397 million annually. Our first three budgets increased this to £575 million, an increase of more than 40%. The increases I announced in budget 2001 constitute a full-year investment of £330 million in the child benefit scheme. This is only the first of three years of increases which will see investment in the payment rise by £1 billion by 2003.
By the end of this period, the higher rate of child benefit will be £146 per month, and the lower rate will be £117.50. A family with four children will, in 2003, receive £120 per week in child benefit. This means that we will have moved from a position in 1994 where 70% of child income support for a family claiming social welfare payments was in the form of CDAs to a position in 2003 where CDAs will account for less than 33% of child income support. While the relative importance of child dependant allowances has clearly declined and will continue to do so, support for children of those on social welfare payments has been greatly enhanced. The combined CDA and CB payments have increased by more than double the rate of inflation.
I believe that investment in the child benefit scheme is the correct approach and represents the most effective use of the resources available for child income support. The full year cost of paying all child dependant allowances at the highest rate currently paid is estimated to be in the region of £48 million per annum.