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Dáil Éireann debate -
Thursday, 13 Oct 2011

Vol. 743 No. 3

Other Questions

Social Welfare Benefits

Michael McGrath

Question:

6 Deputy Michael McGrath asked the Minister for Social Protection the actions she has taken to alleviate pressure on those affected by the fuel allowance cuts since July 2011; and if she will make a statement on the matter. [29151/11]

Richard Boyd Barrett

Question:

12 Deputy Richard Boyd Barrett asked the Minister for Social Protection the way she will ensure there will be adequate heating for the elderly and vulnerable in view of the cuts to the fuel allowance and the household benefits package; and if she will make a statement on the matter. [29130/11]

Pádraig Mac Lochlainn

Question:

27 Deputy Pádraig Mac Lochlainn asked the Minister for Social Protection her response to the pre-budget submissions of Age Action and Social Justice Ireland both of which underline the threat posed by the recent households benefits package cuts to the health and well-being of older persons and those with disabilities and which call for the reversal of those cuts. [29054/11]

I propose to take Questions Nos. 6, 12 and 27 together.

My Department will spend over €530 million in 2011 on the fuel scheme and the telephone, gas and electricity elements of the household benefits package which will benefit some 390,000 people on household benefits and 375,000 on the fuel allowance. In 2005 there were 325,000 people on household benefits and 265,000 on the fuel allowance at a cost of €280 million. The costs have almost doubled in six years while the number of customers has risen by more than 20%.

The fuel allowance is paid for 32 weeks, beginning on 26 September. All customers will receive the standard rate of €20 per week, the rate previously received by the majority of customers, with no additional allowance for living in a smokeless area. The number of free units provided under the electricity and gas allowance were reduced from 2,400 to 1,800 with a view to generating savings of €17 million in 2011 and €65 million annually.

The House should be aware that my Department will cover the cost of the price increases in electricity which came into effect from 1 October and maintain the value of these allowances at 1,800 units. In other words, the price increases will not have an impact on the customers who benefit from this support. The electricity allowance, which was €35.80 per month, will increase to €39.40. The price increases recently announced will cost the Department over €4 million in 2011 and €17.3 million in a full year.

I am aware that some of the reductions may affect some people but it is important to remember that with the plus 20% increase in energy prices the Department will fully cover people who have the fuel allowance for all of those price increases. I am anxious that elderly people in particular would not be worried that the increases in fuel costs will not be covered by their allowance. It will be absorbed by the Department at a cost of up to €17 million per year.

I thank the Minister for her detailed answer. We know these cuts will start impinging greatly on the elderly. The cuts in the benefits package for fuel allowance will reduce payments to pensioners and other social welfare recipients by €20 a month and up to €35 in the winter months.

I welcome the Minister's comment that the price increase in electricity is to be absorbed by the Department and will not affect the household benefits package. However, she also stated that the cost of that in the past five years alone has doubled which means the benefit to the providers has also doubled; the suppliers' incomes and profits have doubled.

When these cuts came into effect some months ago we spoke about the Department's continued negotiations with the providers to get a discount and while that might be clouded by virtue of the increase not being passed on it should go even further. There should be a discount to this State for the amount of funding being put into that sector and it is only right and proper that they come back to us with a recommendation in that regard.

I thank the Deputy for his support on this because the Department is a major purchaser of fuel in the sense of paying for people's fuel, electricity and gas bills but we do not get discounts. The view was taken quite a long time ago by the Competition Authority that the Department did not have status in regard to negotiation. We are currently negotiating it. However, it may be necessary to put it out to tender and in that way achieve a reduction because given all of the reductions other businesses have made, it is more than appropriate that the big utility companies should recognise the difficulty of the economic position the country finds itself in, step up to the plate and offer saving measures to the Department. It must be remembered that when we pay the fuel allowances, ESB bills and so on there is no bad debt experience. The big utility companies are in the newspapers every other week regarding their difficulty with bad debts. They do not experience that with the Department.

Three questions were tabled. I will come back to Deputy Cowen.

Is it not the case that the cuts to the fuel allowance the Minister is proposing and the cuts she has already indicated to the household benefits package are the sharp edge of an obscene attack on the most vulnerable sectors of our society and that despite soothing words about covering the cost of electricity and gas price increases the reality of these cuts is a matter of life and death for people? Is the Minister aware — I am sure she is — that there were 2,000 winter related deaths among elderly people, most of them pneumonia, colds and other winter related ailments? Is it not a fact that these cuts mean more people will die?

Thank you, Deputy.

How can that be justified when Ministers are earning €140,000 a year, gas company executives are earning €400,000 a year and ESB executives are earning €650,00 a year when we are talking about equality of pain? None of them will die because of any increased taxes but elderly people may die as a result of these cuts.

Thank you, Deputy.

I urge the Minister to reverse these cuts and any thought of imposing cuts on fuel allowance.

Other Deputies wish to ask questions.

The Deputy would be aware that in addition to the household benefits package and the fuel allowance, we have 1,000 community welfare officers employed whose job is to assist people who may have exceptional needs in regard to fuel payments. We employ 1,000 people to do that at very significant cost to the taxpayer and it surprises me that the Deputy would not acknowledge the work the community welfare officers do to assist very vulnerable people who may have exceptional needs.

If an elderly person has an illness such as pneumonia and is hospitalised I would seriously hope that a Deputy like Deputy Boyd Barrett would be aware of the work of the community welfare officers at local level because in the event of anybody who is dependent on social welfare becoming very ill it might be that they would need additional assistance in respect of fuel. As I stated earlier, however, the best way we can all help older people is to ensure that their houses are better insulated because many older people's houses suffer extreme heat loss. In addition, the utility companies should be giving us a discount. Eircom did that in that it no longer charges for the rental of the telephone.

A Cheann Comhairle——

Deputy Ó Snodaigh tabled a question. He is perfectly entitled to ask a question. We have very limited time.

I wish to ask two brief questions. First, given that this is a life and death issue — nearly 2,000 people died from cold last year — would the Minister not agree that before any cut was contemplated in the fuel allowance and the household benefits package the discount route should have been rigorously pursued? Second, is the Minister aware that a realisable discount of only 14% is all that is needed to cover the cost? That is realisable and it should have been the first route before any cut came in or was even contemplated.

I very much share the Deputy's sentiments. I was in a particular difficulty in that a number of measures or savings in 2011 and future years were specified as part of budget 2011 but were not announced by the then Fianna Fáil Government at the time. They were specified and laid down when I came into office. They included a saving of €30 million in the energy and telephone elements of the household benefits package in 2011 and subsequent years. The specific way in which the saving was to be made was not specified. They also included the abolition of the smokeless fuel allowance with a saving of €7.7 million in 2011 and €17.5 million in subsequent years.

The numbers receiving fuel allowances are greater this year than was foreseen by Fianna Fáil when in Government last year. In addition, fuel prices have risen by 22%. I believe the discount route is the appropriate route to take. We may have to take other action because of legal difficulties but I have been working continuously on this issue. Eircom has given us some discount, by no longer charging the Department €2 per month in perpetuity for the rent of the telephone.

Will the Minister reverse the cuts if the Department gets the discount?

I am running out of time. I want three brief questions from Deputies Cowen, Boyd Barrett and Ó Snodaigh.

The Minister said that the Competition Authority had problems with the issue of discounting. She repeated that there were legal difficulties in pursuing it. What had the Competition Authority to say about Eircom's acquiescence to the State's request? As Deputy Ó Snodaigh said, and I said it earlier, we asked the Minister to pursue this line some months ago and we want to see results in order to alleviate the threats that elderly people experience by virtue of these cuts.

How can the Minister use the work of community welfare officers as a smokescreen for the substantial question that is being asked of her? If we have already had 2,000 winter related deaths, is it because the funds to procure fuel and electricity to provide warmth for elderly and vulnerable citizens are inadequate? Many of them would not have the confidence, knowledge or ability to contact a community welfare officer. The reality is that an unacceptable situation is now going to be made worse because of cuts to fuel allowance and household benefits package. More elderly and vulnerable people will die if we continue to cut the fuel allowance and other vital allowance for electricity and gas. That is not acceptable and I do not know how the Minister can justify it. Surely we can look to the well paid and the wealthy to bear this burden instead of putting it on the most vulnerable and elderly sections of our society where it will result in deaths.

I welcome the Minister's answer. Will she reverse the cuts if she achieves the discount? Will she change the law if there is a problem from the Competition Authority to allow the discount route to be pursued? We on this side of the House will support any measure that ensures that Government spending is effective and efficient and that the Department can gain the same benefits that other purchasers gain.

On the energy side, the negotiations with the ESB are continuing. There were difficulties with the Competition Authority for a number of years. The core of the difficulty is that the Department is not recognised as a bulk purchaser. The contract for fuel supplies is deemed to be between the individual social welfare client, the pensioner or whoever, and the energy company. If a view is taken that we are bulk purchasers and that we pay in bulk, there is the possibility of a discount. In regard to the charge for the telephone, it is a charge for an actual appliance but I am very grateful that Eircom recognised our argument. The legal route to avail of a discount may be to put the benefits out to tender and have a tender price that is negotiated downwards. If there is a benefit from that, it will be reflected ultimately in a better quality of service.

I wish to stress to Deputy Boyd Barrett that throughout the country, particularly in older local authority housing estates, insulating older houses and farm properties saves money and improves the quality of life. That is the reason that in the Jobs Initiative, my ministerial colleague, Deputy Pat Rabbitte has emphasised this.

We all agree with that idea but it does not justify the cuts.

It is the most important thing that we should do but it will take time.

Departmental Expenditure

Michael Moynihan

Question:

7 Deputy Michael Moynihan asked the Minister for Social Protection the areas she identified for potential reductions in the comprehensive spending review in view of the Taoiseach’s refusal to clarify the details of same; and if she will make a statement on the matter. [29155/11]

Sustainable public finances are a pre-requisite for maintaining an adequate system of social protection as well as achieving future economic stability and growth. For these reasons, the State must pursue a determined deficit reduction strategy. Accordingly, there will be an on-going requirement to curtail expenditure in my Department and in all other Departments, in 2012 and in later years. All Departments are aware that the Government has to bring forward major savings across the full range of public expenditure and to prioritise resources very carefully. The purpose of the Comprehensive Review of Expenditure is to assess the effectiveness and value for money of spending programmes across all Departments and agencies.

The appropriate level of overall expenditure by my Department in the years ahead will be considered in the context of budget 2012 and subsequent budgets. All considerations will be informed by the commitment in the Programme for Government to maintain social welfare rates and by the Comprehensive Review of Expenditure. My Department has forwarded preliminary savings options to the Department of Public Expenditure and Reform as part of the Comprehensive Review of Expenditure. My officials continue to engage with the Department on the options outlined in the review, with a view to preparing material for the Economic Management Council and the Government.

All decisions arising from the review will be decided in the final instance by Government. As is the norm during the initial stage of the budgetary process, details will not be released in advance of Government decisions. My ministerial colleague, Deputy Howlin, has already indicated that he intends to publish the reports submitted as part of the review process following the finalisation of the budgetary process later this year.

I thank the Minister for her reply. I am glad to see that she remains consistent in this regard, in spite of repeated questions from myself and others throughout the course of the year. The problem is that the Tánaiste is also consistent.

One hears members of the Government refer to the Memorandum of Understanding. Some are set in stone and some are not. The agreement was made against the background of the necessary austerity that was required because of the interest rate that was struck at that time, but subsequently the interest rate has been reduced, not necessarily by design, by accident. The savings the State will make on foot of the interest rate reduction have been bandied about as €1 billion per annum. In the discussions of our finance spokesperson with the troika, it was stated that any austerity measures should not impinge on the less well off or those most in need.

Meetings are taking place this week with the relevant authorities and the troika. Could the Minister have asked those who are negotiating on our behalf to secure a condition from the troika that due to the savings, there is wriggle room for the Minister to honour the commitments that she and her partners in Government made?

The most effective way of reducing the cost of social welfare expenditure is to get people back to work. The difficulty that the budget labours under is that when the then Government made the forecasts this time last year and signed off on the Memorandum of Understanding, it estimated a higher growth rate but more importantly from the point of view of the Department, that only 405000 people would be unemployed, whereas unemployment figures are higher and are running at 45,000 ahead of what was estimated. To try to reduce expenditure we have to focus on getting people back to work, something I have emphasised.

The IMF, because of its experience in other countries, is very conscious of the role played by social expenditure and social welfare expenditure in demand in domestic economies. Therefore, it has emphasised its understanding of that. The ECB, as part of the troika, is very interested in seeing moneys it has set aside for Ireland being secured as quickly as possible.

The Department of Social Protection offers every alternative option and support system to people to get them back to work, the area which is relevant. There were outlandish predictions made by the Minister's partners in government allied to the NewERA project and the number of jobs it was going to create. It has become more realistic in recent months. Funding for it is up in the air. If the proposed sale of assets is to yield funds will they be used for NewERA or to pay the debt? I ask the same question in regard to rate reduction. This week's negotiations could yield a dividend for the State of by virtue of job creation and the rates which the Minister and Government have continuously asked to supplement.

In the regard to the memorandum of understanding and the deal with the troika we have to balance two concerns. We have been doing well. We were told renegotiation of the interest rate was impossible by Fianna Fáil when it was in government. I predicted it could be done and it has been done. We now need to negotiate the structure of the promissory note to Anglo Irish Bank which totals €3 billion a year plus interest of, I understand, 8%. It is very expensive for us as a country.

The troika, in particular the IMF, was conscious that the best way of meeting targets is to have growth and job creation in the economy. Every person who returns to work comes off social welfare and starts to pay income tax, as well as beginning to spend money. It is probably worth between €15,000 and €20,000 to the economy. It is important that we pursue a twin track strategy and deal with the debt and deficit, as well as getting people back to work.

I presume, based on the Minister's comments, rent supplement and RAS have been identified as part of her Department's budget cuts under the spending review. Would the Minister agree transferring people from the rent supplement scheme to RAS is like moving the deck chairs on the Titanic?

Has any consideration being given to front-loading rent supplement to local authorities, along with asking the Minister for Finance or NAMA to transfer properties? Such a change would allow local authorities to get people off rent supplement and the RAS scheme, which would result in longer term savings. It would be a more sustainable review of spending than an overnight cut which has been contemplated.

I gave my view earlier. Rent supplement should be transferred to local authorities. It was meant as a temporary housing support for people in rented accommodation who lost their jobs. It has become a permanent feature of the system, encompassing 95,000 people and costing approximately €500 million this year. The other major problem with rent supplement is that it can constitute a severe employment trap, particularly for a couple with two or more children. To rent a house for such a family in many Dublin areas would cost €1,000. Somebody moving to work from rent supplement could lose €12,000 a year, whereas if he or she was on a local authority differential rent he or she would be able to predict roughly the level of rent proportional to his or her income. It is an important reason to reform the system and move it from social welfare to local authorities.

Back to Education Allowance

Billy Kelleher

Question:

8 Deputy Billy Kelleher asked the Minister for Social Protection if she will review the criteria for the back to education allowance to ensure that it is sufficiently flexible to accommodate those who need same; and if she will make a statement on the matter. [29143/11]

The back to education allowance, BTEA, scheme is a second chance education opportunities scheme designed to remove the barriers to participation in second and third level education by enabling eligible people on certain social welfare payments to continue to receive a payment while pursuing an approved full-time education course that leads to a higher qualification than that already held.

The number of participants engaged with BTEA has grown steadily in recent years. In the 2010-11 academic year there were 25,032 participants, an increase of 20.3% on the previous year, which comprised 20,808 participants. The 2009-10 academic year saw a dramatic increase of 79% on the previous year. As of 30 September 2011, there were 18,440 participants availing of the scheme. Final figures for the current academic year are not yet available as claims are still being processed. However, it is expected that participation levels will increase this year. Significant resources have been devoted to BTEA. Some €519 million has been allocated over the lifetime of the National Development Plan 2007-13. The budget for BTEA in 2011 is €198.8 million, which represents over 10% of an increase on 2010 expenditure.

A person wishing to pursue BTEA will have to satisfy certain conditions, such as being a certain age, in receipt of a prescribed social welfare payment for a specified time period, pursuing a full time course of study leading to a recognised qualification in a recognised college and progressing in the level of education held by the client with reference to the national framework of qualifications, among others.

Additional information not given on the floor of the House

In general, a BTEA applicant must be in receipt of a relevant social welfare payment and be at least 21 years of age or 24 years for postgraduate courses, prior to commencing an approved course of study. However, lone parents and persons in receipt of jobseeker's payments can qualify at 18 years of age provided they are out of formal education for at least two years. An age criterion is necessary as BTEA was never intended to be an alternative form of funding for people entering or re-entering the education system.

A waiting period prior to entitlement is considered essential to enable people to engage in job search and consider options available to them. BTEA confers entitlement to income support for an extended period and a waiting period avoids establishing a pull factor to the live register for the purpose of accessing schemes of this nature. The qualifying period for the second level option is three months in recognition of the need for more urgent intervention for this cohort, while the qualifying period for third level courses is nine months having been reduced from 12 months only last year. A person awarded statutory redundancy may access BTEA immediately, provided an entitlement to a relevant social welfare payment is established.

State support for education purposes is grounded on a student progressing from one qualification level to a higher one and BTEA mirrors this fundamental principle which is necessary to ensure displacement does not occur. With effect from 19th July 2010, changes were introduced to the qualifying conditions of the scheme to reflect a deteriorating economic situation which built on other enhancements made to the scheme in recent years. Changes included allowing BTEA in cases where applicants were resuming studies having previously dropped out, had been granted exemptions for previous studies and allowing courses started on a part time basis to be completed full time under BTEA.

The BTEA is an administrative scheme and scheme guidelines are evaluated on a continuous basis to ensure scarce resources remain focused on those with the greatest need who are furthest from the labour market. The BTEA, in conjunction with other employment support schemes, will continue to be monitored on an ongoing basis to ensure it continues to meet its objectives.

I thank the Minister for the detailed response. I acknowledge an increase was given this year by the previous Government. There has been an increase in applications which is to be welcomed and expected, given the predicament in which we find ourselves. It is something we have to promote and improve.

Education is one of the primary ways out of the situation in which those whom we represent find themselves. I ask the Minister to be open to suggestions from all Deputies on gaps in the current scheme. Some people cannot access it through no fault of their own. Some people have returned from abroad and wish to avail of opportunities to further their education in order to make themselves more accessible to the employment market.

There is a grey area in the adjudication system on one moving a grade above what one has already achieved. I ask the Minister to allow us to make suggestions in that regard. I know of a woman who has a primary degree, a higher diploma and a masters degree. She wished to study a further higher diploma to avail of a teaching opportunity but unfortunately could not access a grant. If she wants to pursue further study it will be at great cost to her. In these times such people are the very ones we have to congratulate and help.

The short answer is that it is a fundamental rule that educational progression is upwards. As the Deputy probably knows, many people availing of the BTEA are returning to second level education because they did not complete it. If somebody has already completed a high level of education such as a masters degree it is difficult to deprive someone in second level who is completing his or her education of funding. A number of Deputies have raised this issue. In the current financial situation it is difficult to find extra resources to allow people to step back in terms of qualification. I am certainly open to a more detailed discussion on this with the committee or to bringing in some people who are qualified to comment on this. The back to education allowance, which we are spending €200 million on, is money that is well worth spending. The best chance of getting a job as the recession starts to lift is to have appropriate qualifications.

I thank the Minister and take on board her suggestion about bringing this to the attention of the relevant committee. We must recognise, and many young people do recognise, that despite the level of qualifications they may have achieved in these straitened times, there is a need to go beyond that. They must be complimented on that and rewarded in whatever way we can. To that end, I expect we will bring this to the attention of the committee and seek ways and means to support everyone who wishes to improve their education, be it at second or third level or beyond even a primary degree.

I have had a lot of calls about this. A simple criterion should apply; if someone wants to go back to education or to further their education, he should not be put in a position where he must stay on the dole for another six months before qualifying. It is an extraordinary situation. One young woman approached me recently. She decided not to sign on after having been away because she did not want to be a drain on the State. She was forced to sign on somewhat later and was subsequently refused the back to education allowance because she had not signed on earlier. When she put it to the social welfare office that she had not signed on because she did not want to do so unnecessarily and be a drain on the State, she was told she should have signed on, been a drain on the State and she would then have qualified. It is crazy. If people show the energy and dynamism of wanting to improve their education and not be forced into dependency on social welfare, we must deal with the anomalies that would people in that position and I would urge the Minister to do that.

If someone is unemployed in February, most of the third level opportunities start in September. That is a problem because we are then asking those people to spend another 12 months on the dole. Can that nine month figure be reduced to five months or can the criteria be totally changed so a full assessment is done?

Many people have achieved level 8, the highest a person can go, and were previously employed but now need to do another level 8 course but they are not allowed to do an equivalent. They are not going higher, they are changing tack, particularly those who have been in employment for a long time. Those aged 40 or 50, or even younger, who wish to transfer to a totally different career should be able to achieve the equivalent level.

The points being made are reasonable and understandable. The qualifying period for the second level option is three months. Those who become unemployed in February face a problem but it takes people a while to identify the courses they want to do. It is a principle of the scheme that there should be upward progression, although I recognise that where someone wants to change career, there may be a reason to look at it. We should bear in mind, however, that the previous period for third level courses was 12 months but has now been reduced to nine. I will gladly keep the matter under review but being honest, the financial leeway I have in a budgetary context is limited and I must ensure we keep within spending limits.

Written Answers follow Adjournment.

The Dáil adjourned at 5.45 p.m. until 2 p.m. on Tuesday, 18 October 2011.
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