Vol. 587 No. 2
74 Mr. McGinley asked the Minister for Social and Family Affairs her views on whether the free schemes package should be renamed, now that the schemes are no longer free; and if she will make a statement on the matter. [17657/04]
The household benefits package of schemes comprises the electricity, natural gas and bottled gas allowances, telephone allowance and free TV licence. Apart from the TV licence scheme which meets the full cost of the annual licence, the household benefit allowances have always represented contributions towards the cost of household utility bills, rather than full coverage of all costs. They are intended to meet the standing charges and a certain fixed amount of electricity consumption, gas consumption or telephone calls respectively. The extent to which these bills are met by the allowance depends on the individual household usage pattern.
This package of allowances is valued by social welfare clients as a significant contribution to their periodic household bills. The allowances are not, and were never, entirely free; the utility companies must be reimbursed by my Department on normal commercial terms for the allowances they apply as credits on eligible customer bills. There is a significant ongoing cost to the taxpayer, estimated at €280 million this year. My Department continually negotiates to obtain the best commercial terms and value for money for this very sizeable annual expenditure on the household benefits.
The qualifying conditions for the various individual allowances were harmonised in 2002 and renamed as the household benefits package. The purpose of this was to ensure that a customer who qualified for one allowance could qualify for all of them. The introduction of this package also meant that there would be just one application form to be filled out by a person wishing to avail of this scheme.
In October 2003 I introduced a further change to the telephone allowance which may be what the Deputy is referring to in this question. The structure of the allowance was changed to make it a cash credit on bills and not attributable to any particular component of the bill. Previously the allowance had covered the line and instrument rental charges specifically, along with a small element of call costs on each two-monthly client bill. The change I introduced makes it easier for eligible clients to switch from Eircom to another participating service provider if they so desire. If they so choose, the newly standardised allowance can be applied to phone bills from the service provider irrespective of the tariff components.
In conjunction with this change, a special "bundle rate", the Eircom social benefits scheme was negotiated with Eircom. It provides telephone allowance customers with line and equipment rental plus an enhanced call credit of up to €5.35 worth of free calls per two-month billing period. The cost of the bundle gave better value for money to my Department for the ongoing expenditure on these services. ComReg approved a price increase application from Eircom of 7.5% in line rental, effective from 4 February 2004. A lesser percentage increase was also applied to telephone instrument rental where applicable. Following detailed discussions between my Department and Eircom, it was agreed that the increase in the Eircom social benefits scheme would be limited to CPI of 1.9%.
Additional information not given on the floor of the House
Some technical restructuring was also introduced by Eircom which removed some additional call unit value. To offset this, Eircom offered to give low use customers up to €10.00 worth of calls free per two-month bill, by offering them its separate "low users" scheme in addition to the social benefit scheme.
The higher Eircom charges have resulted in an increase to the social welfare customer of 94 cent, including VAT, per two-monthly bill, less than 12 cent per week. This is much lower than the increase applicable to other households. The other revisions to call costs by Eircom should be broadly beneficial to welfare customers, particularly those who are low call users.
I raised this issue at our last meeting and it certainly arose on the doorsteps during the election campaign. The Minister for the Environment, Heritage and Local Government, Deputy Cullen, spoke yesterday about taking off his hard-line face and donning his softer face in his dealings with people.
That would be no bother to Deputy Ring; his face is impeccable.
The Minister, Deputy Cullen, always had a hard-line face but it is good that he got the hard-line message from the people on the ground this week. He told us yesterday that he will now take the softly, softly approach.
I want the Minister to return to her Department on this scheme. The principle of the scheme was that the service was free and people did not have to pay for the rental. Many people are now confused. The new charges are creating problems because people do not know what the extra charge is for. Some of them have not paid it because they think it is a mistake and the charge is building up. I urge the Minister to go back to her Department to find the small amount of money it would cost to leave this as a free scheme. She should not talk about ComReg or regulators. I am sick and tired of regulators because when I put a question to Ministers the usual reply is that the Minister has no responsibility for regulators.
I remind the Deputy that supplementary questions are limited to one minute. He has exceeded his minute.
I am almost finished. We always had free schemes. I do not wish to get annoyed with the Minister but I urge her to get her Department to simplify the issue and pay the extra money for the rental in order to avoid confusion among the elderly on the matter. It was good that we had the free scheme in the past and that people knew the rental was free. That is no longer the case and people now have to pay a charge every two months. I ask the Minister to rectify the situation and let that be the beginning of the new, caring, soft Government that got its message over the weekend.
I envy the Deputy his enthusiasm. We will see who gets to the wire in three years' time.
ComReg agreed a 7.5% increase in line charges. I negotiated with the Department to reduce that to 1.9% on the basis that we had introduced a number of changes. Many people on social welfare are low users of the scheme and this is why Eircom has provided a special package for people. It is called a "bundle" and costs €20.41 plus VAT per month, great value for money for those people who avail of it. The amount of money involved in the change is very small, 94 cent every two-monthly bill, which is just a few cent per week.
The scheme known as the household benefits scheme does not cover the entire costs. Whether we like regulation or not, I must provide for competition within the scheme and I have done that. On the basis of that competition we have negotiated not only with the main providers of telephone services but also with mobile phone providers to use that money specifically to provide the best deal that can be obtained for the customer. It is on that basis that the changes have taken place.
How much would it cost the Minister to pay that 94 cent?
I knew that off the top of my head but I am so tired today I cannot remember. I think it is approximately €1.5 million.
It is only small money.
Expenditure on the scheme this year has increased from €88.24 million to €92.2 million. I will get the figure for the Deputy.
It is only a small amount.
75 Mr. Rabbitte asked the Minister for Social and Family Affairs if she has received a response from the Irish Financial Services Regulatory Authority to her letter concerning protection for elderly persons in financial dealings; her views on whether anything can be done to protect the elderly from losing out on pension schemes by borrowing money against their homes; and if she will make a statement on the matter. [17705/04]
I wrote to the Irish Financial Services Regulatory Authority with regard to the situation of people who borrow against their home to free up equity and whose entitlement to a pension may be affected as a result. I was interested in particular in the issue of independent financial advice in such cases, including advice on the possible effects on pension entitlements. I have received a reply from the Irish Financial Services Regulations Authority and I am informed that the position is as follows.
There is currently no obligation or requirement on the financial institution to advise a customer to take independent financial advice on lifetime mortgages. However, the authority has informed me that it is currently developing codes of conduct for all financial services providers and has included in its consultation process issues with regard to the protection of financially vulnerable persons. It hopes to have this code finalised before the end of the year.
At present two companies offer equity release type products on the Irish market, known as home reversion schemes. Since these products involve selling part of a person's home, rather than taking out a loan, I am informed they do not fall within the remit of the financial services regulator. My colleague, the Minister for Finance, is aware of and considering this issue which was brought to his attention by the regulator.
I am aware from documentation received in my Department from one of the two companies that it does draw customers' attention to the possible effect on social welfare entitlements. I would also like to make clear that my Department has always set out its position in reply to any queries received over the years.
The issues raised overall in this regard in respect of consumer protection are of serious concern and I am awaiting the outcome of consideration by the Irish Financial Services Regulatory Authority and the Department of Finance in this regard.
The equity release type policies are a new phenomenon and many people could be vulnerable in this position. They may have bought their homes 30 years ago and are now in their 60s. Their home is now a significant appreciating asset against which they may be borrowing substantial sums. Codes of practice are all very well but there have been some fairly drastic revelations over the past six to 12 months regarding financial institutions advising people or not advising them. When all hell breaks loose, there is only one loser and it is the ordinary people who are left carrying the baby. The borrowers or the investors in the various financial institutions always seem to get off scot free. There are many harrowing tales of other people suffering. We do not wish to see a repeat of that in this type of new phenomenon. It is useful, provided the necessary protection is afforded to people.
I suggest that the Minister has a meeting with the Minister for Finance and IFSRA and that the code of conduct which is a voluntary code, should be put on a statutory footing to ensure that those elderly people in particular who might be vulnerable are clearly informed of their rights and their responsibilities and what may happen in the future. Independent advice regarding the legal situation and their pension entitlements should be proffered to them at each and every step. In particular, the impact on non-contributory pensions of borrowing substantial amounts of money should be explained. This could affect people's livelihoods and life experience for years.
I agree wholeheartedly with the Deputy. It was on the basis of my concerns that I raised this with IFSRA. We will continue to keep on eye on this matter. This matter was also raised in the United Kingdom and was the cause of serious concerns. A code of conduct and consultation process has been instituted there and we will monitor progress made as it is of interest to us. It is my intention to keep a very close eye on this issue. The Deputy is correct in saying that people do not realise capital means are being taken. They do not realise that they would be better off taking out a loan for such a short-term gain.
With the credit union.
They are not aware that this capital will be reassessed against them for any means-tested social welfare payment.
I wish to compliment The Sunday Business Post which reported the case of a couple who along with their daughter borrowed €250,000. Due to the fact that they had a Bank of Ireland Life loan they lost their weekly pension of €260. People have to be protected. We saw the code of practice which applies to banks. It is time the Minister and the Minister for Finance introduced the necessary legislation which includes plenty of penalties for banks if they do not obey the law of the land. Elderly and vulnerable people and everyone borrowing money from banks must be protected by the State because banks cannot be depended upon any longer.
Will the Minister accept that this is a problem affecting the elderly that goes beyond pensions and mortgage products which are being marketed? Will she agree there might be a role for MABS, given other press reports that some banks have encouraged elderly people with current accounts to take liquid assets out of safe investment products and put their savings into risky investment products? There is a need not only for a code of conduct but strong regulation in this area.
It was on the basis of my concerns that I raised it with the regulator and the Department of Finance. At present, credit is very much in your face. Despite all the supports and regulations and warnings to read the small print, people panic. MABS is at hand to give financial advice and people should obtain independent financial advice either from a professional or from the service provided by the Department. There are people who are not accustomed to dealing with red tape and do not realise the implications of what they are doing. It is my intention to pursue this matter vigorously and to ensure that people are aware of the implications of their decisions.
76 Mr. Hayes asked the Minister for Social and Family Affairs the number of refusals to date for supplementary welfare allowance for failure to meet criteria introduced by her Department in relation to accommodation needs; the amount her Department has saved from the introduction of this measure; and if she will make a statement on the matter. [17651/04]
94 Mr. Connaughton asked the Minister for Social and Family Affairs if she has received reports or observations from the community welfare service concerning the operation of Statutory Instrument 728 of 2003 regarding rent supplement. [17656/04]
99 Caoimhghín Ó Caoláin asked the Minister for Social and Family Affairs if she has monitored the impact of the recent changes that were introduced on eligibility criteria for the supplementary welfare allowance scheme. [17539/04]
611 Mr. Durkan asked the Minister for Social and Family Affairs the extent to which instructions have been given to community welfare officers arising from budgetary cuts in 2004; and if she will make a statement on the matter. [17878/04]
612 Mr. Durkan asked the Minister for Social and Family Affairs the number of persons who have been refused rent allowance in 2004; and if she will make a statement on the matter. [17879/04]
I propose to take Questions Nos. 76, 94, 99, 611 and 612 together.
The main objective of the measures I introduced to the supplementary welfare allowance scheme is to re-focus the scheme on its original objective which is to meet immediate short-term income maintenance needs as opposed to long-term needs. The principal changes relate to rent supplement Statutory Instrument 728 of 2003, which gives effect to the main rent supplement measures. As a result of these changes people applying for rent supplement will have their housing needs assessed by the local authorities in a systematic manner and this should increase their chances of getting social housing where appropriate. Subject to the normal means assessment and other qualifying criteria, a person who is assessed by a housing authority as having a housing need will qualify for rent supplement regardless of how long that person has been renting.
With certain very important exceptions, it is no longer possible for a person to become a tenant in the private rented sector with the support of rent supplement unless the local authority is satisfied that the person has a housing need. The impact of this and the other measures was fully assessed and the manner of their implementation was carefully designed to ensure that the interests of vulnerable groups such as the homeless, the elderly and disabled are fully protected. The six months prior renting requirement does not apply in their case. Community welfare officers who administer the schemes have been kept fully apprised of the changes. A circular was issued by my Department to the health boards last December in which the details of the changes to the SWA scheme were set out.
My Department has been in regular contact with the community welfare staff of the health boards both prior to and since the introduction of the measures in January. These contacts range from daily telephone and e-mail exchanges to informal meetings as well as more formal structured meetings at which the operation of the new measures has been discussed. In addition to the ongoing contacts between my Department and the health boards, a working group has been established under the Sustaining Progress agreement to facilitate engagement with the social partners in respect of monitoring the impact of the recent changes to the scheme. The working group, which is chaired by the Department of the Taoiseach, includes representatives from ICTU and the community and voluntary pillar as well as my Department and the Department of the Environment, Heritage and Local Government.
Details of rent supplement applications refused on grounds of failure to meet the new criteria are not maintained on my Department's computer system. However, my Department requested the health boards to examine a sample of applications for rent supplement which were refused since last January in order to monitor the impact of the changes. Of the 242 cases examined, 25 were refused on account of the new measures. It is not known how may of these cases appealed against the original decision or what the outcomes were in any such appeals. The savings arising from these measures derive from refusals of claims, where the applicant does not fulfil the new requirements, and also from instances where people do not submit a claim but make alternative arrangements to meet these needs. For that reason, it is not possible to state exactly how much has been saved so far this year as a result of the new rent supplement measures. The total savings for the year are estimated at €12 million.
My Department has not been made aware of any cases of hardship arising from the application of the new measures. None of the measures which I have introduced affect the discretion of a health board to provide assistance where a board considers that the circumstances of a particular case warrant treatment as an exceptional measure.
These cutbacks have been in place for the last six months. Has the Minister had a recent meeting with the community welfare officers and if she has, what was the feedback from that meeting? What concerns, if any, did they express and what are their reactions to the working of the new changes? Has the Minister had a meeting with the housing groups, the people who monitor the situation on a daily basis? When the Minister made this announcement, she met with a number of groups who came together and who were concerned about the cutbacks. Has the Minister had a meeting with those groups in the last six months and what is the feedback from those groups? Has the Minister a report for the House? She stated she would report back to the House on the effects of the cutbacks.
I have had ongoing discussions with many groups, both within and without Sustaining Progress. On the basis of those discussions, it was agreed to set up a monitoring group, the composition of which I alluded to earlier. My Department will be involved in the group which will be facilitated and chaired by the Department of the Taoiseach. We are, therefore, examining the implications and impact of these decisions not only in my Department but also under the auspices of Sustaining Progress. It is my intention to continue to keep in touch with people.
With regard to meeting community welfare officers and housing authorities, while I have not personally met representatives of the former group, formal and informal discussions are ongoing between my Department and officials and representative groups. Although the housing authorities do not fall under the auspices of the Department, we have been in touch and I have met the Minister of State with responsibility for housing on a number of occasions to progress our action plan. One of the greatest benefits of these contacts has been the current tremendous interaction between the health boards and housing officers in dealing with housing. In the majority of areas, the application form and information provided are uniform. The continuation of this co-operation and the implementation of the proposed action plan by my Department and the Minister of State with responsibility for housing will address many of the long-term issues which prevent people who are unfortunately reliant on long-term SWA rent supplement from receiving the best supports.
The Minister stated that her Department is not aware of increased hardship. I do not mean to insult her but she should talk to the groups involved in the housing issue, for example, the Simon Community, Threshold and the Society of St. Vincent de Paul. The reality is that the average cost of accommodation is €121 per week, which is above the cap. People are, therefore, conspiring with their landlords by dipping into their social welfare payments to pay for rent increases. The Minister must be aware of this problem from her clinics. An increasing number of people who come to me and other Deputies are using their social welfare, borrowing or being subsidised by their families to pay rents.
The latest report on Dublin by the Simon Community showed that not one person moved from transitional, temporary accommodation into social housing. Why is this? The reason is that housing is not being built and made available to those who need it. If the Department is not aware of increased hardship, it is living in a different world.
Will the Minister explain the reason community welfare officers are operating the practice whereby a mother with one child who has a subsequent child and claims child dependant allowance from the Department has her rent allowance reduced? This is illegal because the person in question does not receive a budget increase. Why is this happening?
Am I sleep-walking or is the Minister living in the land of Walter Mitty in stating there is no hardship?
It is crazy.
That is an unbelievable comment; of course there is hardship. The Minister stated that approximately €330 million has been diverted into this scheme. What meetings have been held with the Minister of State with responsibility for housing in the past five to six months to ensure that some transitory housing accommodation is made available to those who find themselves in hardship? In what cuckooland or ivory tower are people living or are we fools?
The Minister must be aware that the Simon Community in Dublin has stated that not only has there been an increase in the number of homeless individuals this year but that the number of homeless families has also increased. As the Minister who sits at the Cabinet table with responsibility for social and family affairs, how can she stand over that state of affairs?
Contrary to the buoyancy of Deputies opposite, I am aware of what is going on. It was on that basis that I met all the relevant organisations on a number of occasions and set up a special group under the Department of the Taoiseach to examine the implications of decisions. Moreover, I have had numerous meetings with the Minister of State with responsibility for housing — I do not have time to check them out — to examine the action plan to progress this issue.
As regards Deputy Durkan's question, having analysed every parliamentary question he has tabled to me, it is obvious he has a problem with the community welfare officer in Kildare because that seems to be the crux of the issue. With regard to his specific question, which I have answered three times, the woman in question had another child and, as a consequence, received an increase in child dependant allowance and one parent family allowance. Rent allowance is determined by income and the rent allowance of the woman in question was reduced because she received an increase in income. I have answered the question three times and if the Deputy is not happy, I would be delighted to give him the permutations on which such decisions are made.
That never happened before. It started on the Minister's watch and she knows it. It is disgraceful.
Written answers follow Adjournment Debate.
