I thank the Chairman and members of this committee for the invitation extended to me to appear before the committee to consider further the social protection Vote for 2014, to review the mid-year position and to look ahead to budget 2015. My officials have provided members with briefing material which I hope will assist us in our deliberations today. I propose to give a brief overview of some of the structural reforms to the Department since I became Minister and to quickly go through the key points in the briefing in order to inform and begin our discussions. I welcome the views of members and and look forward to their engagement and our discussion.
The service traditionally provided by the Department of Social Protection in providing income supports has continued and, despite the need to stabilise Government finances, the welfare system continues to play a very positive role in protecting those who need our support. I will return to this aspect later. One of my main priorities since becoming Minister has been to transform the Department from the passive benefits provider of old to one that is actively assisting jobseekers to return to work, including engagement with employers to help them get the employees they need.
Under Pathways to Work, the Government has set out a comprehensive reform of the State's approach to helping unemployed jobseekers return to work. Since its launch, the programme of work has seen the roll-out of 44 Intreo one-stop-shop centres throughout the country; the introduction of group engagement whereby all new jobseekers are briefed on the services available to them; the profiling of every client on the live register to help prioritise and direct interventions; the introduction of a case management system whereby jobseekers receive scheduled one-to-one interviews with case officers based on their profile; the introduction of a social contract of rights and responsibilities between jobseekers and the State through the record of mutual commitment; the creation of an employer engagement unit in the Department to start the process of building effective relationships with employers; and the formation of the labour market council.
Signs of economic recovery are becoming tangible. The most recent live register figures published by the CSO show that unemployment continues to decline, with the standardised unemployment rate falling to 11.2% in August from a crisis peak of 15.1% in early 2012. These statistics, together with the latest quarterly national household survey and the end of August Exchequer figures indicate that as the economy is strengthening, our jobs market thankfully is recovering. The number of people at work has increased by more than 75,000 since the recovery began in 2012.
While we are beginning to see a positive turn in our domestic economy, it is important and necessary that we help those who have been hit by the recession to get back on the ladder of recovery as quickly as possible. Since the lowest point of the jobs crisis, long-term unemployment has fallen from 9.5% to 6.8%. These positive trends are very welcome and in line with the Government's Pathways to Work objectives. The Government has greater ambition for those citizens who are unfortunate enough to be unemployed.
In addition to deep-rooted reforms, I have prioritised efforts to combat social welfare fraud. The vast majority of people on social welfare are claiming only the entitlement due to them. As such, it is essential that we respect the majority - and taxpayers and PRSI payers who fund the system - and maintain public confidence in the system by vigorously tackling any fraudulent activity within the social welfare system.
I have spoken to the committee previously about the public services card. We have also begun the phased introduction of the public services card with key security features, including a biometric standard photo and signature, which will be used to authenticate identity of individuals. As of last week, we have issued in excess of 910,000 cards, of which 240,000 are the free travel variant, mainly to our retired citizens. These new cards will enable individuals to gain access to public services more efficiently and with a minimum duplication of effort while at the same time preserving their privacy to the maximum extent possible. They will also play a crucial role in eliminating fraud in the social welfare system.
The clearance of backlogs in all areas continues to be a major priority in the Department. Considerable progress has been made in recent years in this regard. It is worth noting that the number of pending claims, that is, claims being processed, has almost halved since the end of 2010, falling from more than 118,000 to just under 62,000 at the end of July last, a drop of 56,000. This has been achieved, as members are aware, through a combination of updating IT systems, introducing significant processing efficiencies and a quicker and more responsive service to our customers in the face of increased claim loads in recent years. I thank the staff and management of the Department for the huge effort they put into this and their great enthusiasm for getting better service to people who use the Department's services.
The number of appeals in hand has also fallen dramatically. The number continues to decline from more than 20,000 at the start of 2013 to under 14,800 at the start of 2014, and I am happy to say it has further reduced to just over 10,000 on 1 September 2014.
I return to our consideration of the 2014 Revised Estimates. Table 1.1 on page 6 of the briefing shows departmental expenditure by the various programmes we operate. Table 1.3 shows that 80% of expenditure is incurred by a relatively small number of schemes.
Other than expenditure on child benefit, respite care grant and domiciliary care allowance, members may wish to note that the expenditure outlined in this table relates to the cost of the weekly rates of payment for the recipients involved. It does not include the cost of supplementary benefits, such as the free travel, fuel allowance and the household benefits package.
As everybody knows, Ireland has had to stabilise its Government's finances over recent years. As I mentioned, it is sometimes forgotten in this context that the welfare system continues to play a key role in our society, and I have ensured that the necessary resources have been made available where required. This is very evident in the overall expenditure in two important areas, namely, that devoted to carers and pensioners since 2010. I draw members' attention to the very significant rise in both spend and numbers, notwithstanding the pressure the country has been under.
Total expenditure by the Department on carers has increased from just under €752 million in 2010 to almost €806 million in 2014. This is an increase of €53.9 million or 7.2%. The overall number of caring recipients has increased from just over 76,000 in 2010 to almost 84,000 recipients in 2014. This is an increase of 7,815 people in receipt of carer payments, an increase of 10.3%, notwithstanding the acute financial crisis of which we are all aware.
Likewise, the 2014 Estimates provided for expenditure of €6.5 billion for pensions, up from €5.9 billion in 2010, an increase of more than €600 million or 10.3%, which is a really big level of increase. The number of pensioners funded from the Department's pension programme has increased from 494,000 in 2010 to in excess of 587,000 in 2014, an increase of 93,000 or 18.9%. We have prioritised those payments to the additional number of pensioners coming through at an average of almost €200 million a year to provide for almost 100,000 additional pensioners. We have a democratic dividend in Ireland in terms of more older people retiring and living longer, and we have a demographic bonus relating to the numbers of young children and our very strong population growth. Of course, these demographic pressures result in extra money being paid and I am happy to say I have been able to prioritise and provide for that.
The Department will spend €19.6 billion this year on a wide range of schemes and services. At the end of June more than 1.44 million persons were in receipt of a weekly payment in respect of almost 2.3 million beneficiaries, as well as a further 607,000 families in receipt of a monthly child benefit payment in respect of more than 1 million children. The scale of the numbers alone means that our payments and services impact on the lives of almost everybody in the State in one way or another. Social transfers play a pivotal role in alleviating poverty and cushioning people from the worst effects of rising unemployment and falling incomes. They are essential in supporting well-being and reducing inequalities through the redistribution of income, therefore helping to promote social solidarity in society. In addition, the importance of welfare spending as a key tool in stabilising demand in the economy is recognised both at home and abroad.
I held a pre-budget forum on Friday, 4 July last in Dublin Castle. It was attended by 37 voluntary and community groups. The purpose of the annual forum is to provide such organisations with an opportunity to have an input into the budget process. I value such meetings enormously. This year’s forum included a number of workshops on specific themes such as children and families, illness and disability, poverty and social inclusion and housing supports.
In terms of budget 2015, the Government made a number of commitments in the Statement of Government Priorities 2014-2016 which I concluded with an Taoiseach in the context of the formation of the new Cabinet in July. I wish to draw the attention of members to three elements of the agreement which reflect on social welfare commitments. The first is to increase the household benefits package by €100, in part to compensate older people and other vulnerable groups for the introduction of water charges. It is a water support payment which we estimate will cost approximately €42 million, which will extend to people aged over 70, carers, families who receive a domiciliary care allowance in respect of a child with special needs and people with disabilities who are on a disability payment. It goes to some of the most important groups in society. I estimate the payment will go to about 410,000 households.
We have committed to the full retention of the free travel scheme. It was never in doubt, but I know people raised concerns earlier in the summer. We have committed to introducing measures to assist low-income families by improving the system of child income supports such that those moving from welfare to work will retain payments for children to ensure that people are better off in work. That is a fundamental reform. People might wish to ask about it but I have told Deputies previously that we have significantly increased the amount of money we spend on family income supplement, FIS. As of now, expenditure on it is approximately €280 million for this year but it will be higher next year. For families with children it will be an additional support which will increase the incentive for people with children to go back to work.
On foot of the latter commitment I have asked the Department to bring forward options to smooth the transition from welfare to work and to ensure that families are encouraged and able to avail of an employment opportunity. The work is nearing completion. The specific aim is to provide an additional incentive for families who are long-term unemployed to move from a social welfare payment into employment, including, importantly, self-employment. The working family dividend scheme will allow such individuals to retain a portion of their previous social welfare payment which relates to their children, the QCI, for a period after they leave the welfare system. I look forward to progressing the scheme in the forthcoming budget.
Overall, €19.6 billion was allocated to the Department for 2014. Department of Social Protection expenditure in the year to date is very close to that target. Recent Exchequer returns indicate that Ireland’s financial position continues to improve. However, it is too early to say what the precise implications are for budget 2015, but the latest returns indicate another positive step forward. We have four more months of returns and it is clear that the September returns in the context of the budget date will be particularly important. When account is taken of once-off factors in 2013, the Exchequer deficit is nearly €2.4 billion better than last year. That represents real progress in stabilising the finances. I am conscious that almost everyone in the country has contributed to us getting to that point from where we were following 2008. However, we need to be cautious at this stage as 40% of total tax revenues are received in the last four months of the year.
My colleagues and I will give detailed consideration to the coming budget over the next few weeks. Our priority is to meet our deficit target of 3%. The emerging economic and Exchequer data mean that we now have a somewhat more positive environment over the next few years in making budgetary decisions than this Government faced in its first three years. I caution against expectations of a so-called giveaway budget along the lines of the Celtic tiger years. The key achievement of the Government has been to stabilise the nation's finances, to increase employment and to achieve economic growth. This endeavour is well under way and we can look forward to reaping the benefits in a sustainable way in years to come. I hope the briefing gives committee members a good overview of the Department's expenditure in 2014 and the challenges and opportunities ahead in 2015.
