I thank the Acting Chairman and the members for the invitation to this meeting today. I am genuinely looking forward to a constructive engagement.
It is normal at this time of the year to outline how the Department is performing against its budget allocation. I will provide the committee with some details on that, especially focusing on the mid-year review position. My Department has provided the committee with a briefing document on this and I hope everyone has had a chance to peruse it.
I am aware that the committee will also want to have some discussion today on other matters, given that it is only two weeks to budget day. In particular, the committee has signalled that it would like to engage in a pre-budget discussion, including consideration of the proposals relevant to the committee’s very valuable report on lone parents last year. Of course, I am happy to do that and will come to those issues later, perhaps during the questions. I am also keen to hear what members see as the key issues for employment affairs and social protection for the months and years ahead.
Members will be aware that the Department’s budget represents approximately 36% of gross current Government expenditure. It is useful, in the preamble, to remind ourselves about the scope and scale of the Department’s expenditure and its importance for millions of citizens in the State who completely rely upon it.
An allocation of just over €20 billion was provided for the Department this year. Expenditure to the end of June was €10 billion and is very close to target for the year to date. Each week, about 1.3 million people - pensioners, people with disabilities, people on maternity and paternity leave, people who are sick, carers, and jobseekers – all receive payments from the Department of Employment Affairs and Social Protection. In addition, more than 625,000 families receive child benefit monthly for almost 1.2 million children.
The payments and services provided by the Department are targeted at those most in need and provide significant support to individuals and families who are facing particular challenges in their life, be that unemployment, caring for a very sick child, reaching old age, coping with an illness or disability that impedes their ability to work, or it may be as simple as meeting the costs of heating their home.
These are daily challenges facing many of our citizens and the development and maintenance of a strong social protection system is genuinely good for all of society, including those people who do not rely on a weekly payment.
Thankfully, the past few years have seen significant decreases in the live register and this trend has continued throughout 2018. People are finding employment in high numbers and that is one of the good news stories in recent times. However, our social protection system is not only there to support people who are unemployed.
Our largest block of expenditure will be in 2018 on pensions, which will amount to almost €7.6 billion or 38% of overall expenditure. This is increasing year on year as our population becomes older and we seek to ensure that people are provided with adequate incomes when they reach their older years.
I was happy to announce earlier this year that the Government decided that the pensioners affected by the 2012 changes in rate bands could have their pension entitlement recalculated on the basis of a total contributions approach, including a provision for up to 20 years of a new home caring credit. This approach will make it easier for many post-2012 pensioners affected by the 2012 rate band changes, who are currently assessed under the yearly average model, to qualify for a higher rate of contributory State pension. We had a constructive discussion on this issue at this committee and I thank all of the members for their input. It is intended that first payments will be made in quarter 1 of next year and, as we agreed in the Oireachtas, the payments will be backdated to March 2018.
Expenditure on working age schemes comprises two programmes called income supports and employment supports which, when combined, amount to about €4.2 billion or 21% of total expenditure. Income supports, including jobseeker's allowance, one-parent family payment, maternity and paternity supports, accounts for €3.4 billion or 17% of overall expenditure. Expenditure on employment supports, including community employment, back to education or enterprise and various employment programmes, amounts to just over €823 million or 4% of overall Department spend. The next biggest area of expenditure is illness, disability and carers which amounts to €4.2 billion or 21% of expenditure expected in 2018. Expenditure on children and families accounts for over 13% of expenditure or €2.6 billion, of which €431 million is allocated to the working family payment that is paid to low income working families who work in their towns, villages and cities. Expenditure on supplementary payments like rent supplement, agencies such as Money Advice & Budgeting Service, MABS, and the Citizens Information Board and other services accounts for €814 million or just under 4% of expenditure.
The live register, as I mentioned earlier, has continued to decline at an extraordinary rate. Our improved economic situation and healthy labour market have seen a decline of nearly 40,000 people on the live register since this time last year. Also, over 80,000 people have left the live register over the past two years. As of last week, the live register stood at just over 213,000 people and continues to fall. The ongoing fall in the live register is freeing up resources that we need to meet rising demand in other areas such as pensions, and areas with people with disabilities and people who are carers.
The drop in the live register has been accompanied by a serious increase in employment. There are now 2.255 million people currently working in Ireland. To the end of quarter 2 this year, there was an annual increase of more than 74,000 people in employment. The unemployment rate at the end of quarter 2 stood at 5.8% and long-term unemployment, which is particularly the focus of my Department, has fallen from 3.2% to 2%. From a peak level of over 30%, the youth unemployment rate has now fallen to 15.4%. We are making good progress but we do not have the luxury of becoming complacent. We must continue to ensure that our social protection system and labour market work together to move people into sustainable employment. We must also ensure that those people who cannot work, and their families, continue to be supported by the State and my Department. Over the coming weeks my Government colleagues and I will consider ways to build a sustainable budget that will benefit all our people, young and old, rural and urban, in a way that does not spread resources too thinly so in order to make a difference.
In last year's budget I wanted to focus on children and families, particularly lone parents. We did a number of things in this area as follows: we increased the rate of the qualified child increase by €2, bringing the amount up to €31.80 per child per week, which was the first increase in eight years and, hopefully, will not be the last; we further increased the earnings disregard on the one-parent family payment by €20, bringing the total up to €130 per week; we increased the thresholds for the working family payment by €10 for families with up to three children; and, we increased funding for the school meals programme to include the newly designated Delivering Equality of Opportunities in Schools, DEIS, schools, as well as supporting all of the schools in the previous year's allocation. This was alongside a general rate increase in the weekly social welfare payments.
The report on lone parents produced by this committee included a number of recommendations, which I am happy to discuss with members today. I would stress, however, that we have made significant advances since the report was published. I also welcome the comments that members of this committee have made heretofore. I am aware, and I hope that members are aware, that we cannot do everything we want to do in one budget but I want to build on what we achieved last year and further strengthen the position of families on low and fixed incomes in budget 2019.
The annual Christmas bonus was abolished in 2009 by the then Government due to the catastrophic collapse of the country's finances at the time. Thankfully, as the economy recovered the bonus was reinstated in 2014 at a rate of 25%. This rate was increased to 75% in 2015 and further increased to 85% in 2016 and 2017. Despite the fake news headline produced in a newspaper this morning I would like to put at ease the minds of the hundreds of thousands of people who have been absolutely needlessly worried this morning because of that contribution by that particular newspaper, and anybody else who contributed to it, that I have absolutely no intention of discontinuing the Christmas bonus for any social welfare recipient. It is disingenuous of anybody to try to grab a cheap headline at the expense of people who have no other income, other than their weekly fixed income from the Department of Employment Affairs and Social Protection, and totally rely on the Christmas bonus. I can guarantee that whoever did so has never had to live on a fixed income in their life.
Let us look ahead to the budget that will take place in October. The programme for Government includes a number of commitments on employment affairs and social protection. These include increasing payments such as pensions, and carers and disability payments in line with inflation. Thankfully, in the past few years, we have not only been able to meet but have exceeded this commitment through the increases granted in the weekly rates of payment.
On 20 July, we had a very successful annual pre-budget forum in Dublin Castle. We held six workshops that were separate to the plenary session and I had an opportunity to sit and listen to the discussions in each and every one of them. The workshops covered the following themes: retired and older people; supports for the most vulnerable; children and families; people with disabilities and carers; and, employment and pathways to work. Having read the groups' pre-budget submissions, and listened to the views expressed on the day, it is clear that the range of issues facing non-governmental organisations, NGOs, and the people they represent are vast and varied. In finalising proposals on budget 2019, I am conscious of all of that. I am also aware that we cannot do everything that we have been asked to do and, therefore, we will need to prioritise. The forum was extremely useful and gave me and my officials a great insight into the competing priorities for spending on welfare and employment issues.
The summer economic statement indicated that there is likely to be just €800 million of fiscal space available for new tax and spending initiatives across all Departments in budget 2019. We have to think carefully about where our resources should be directed, consider what will be most effective way to address child poverty, and what will be the most effective way to spend money to aid the position of families on a low income or no income. As I asked last year, I rely on and would very much welcome hearing what members think the budget priorities should be and the reason for same. I look forward to hearing their suggestions and comments in the hours ahead.