I am pleased to welcome Sr. Bernadette MacMahon D.C. and Ms Ann Stokes of the Vincentian Partnership for Social Justice. I draw their attention to the fact that members of the joint committee have absolute privilege, but that the same privilege does not apply to persons appearing before the committee. Members of the committee are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
Household Budgets: Discussion with Vincentian Partnership for Social Justice.
Acting Chairman
Sr. Bernadette MacMahon
On behalf of the Vincentian Partnership for Social Justice, we are very pleased to attend this meeting. Our whole experience supports and substantiates the work of the Society of St. Vincent de Paul. In our study we attempted to establish a figure for social welfare payments that would take people away from poverty. The Vincentian Partnership for Social Justice consists of the Society of St. Vincent de Paul, the Vincentian Congregation, the Daughters of Charity and the Sisters of the Holy Faith. It was established in 1996 to work for social and economic change in tackling poverty and exclusion. We began by encouraging people who do not normally vote to get involved in elections. This was done in a non-party political way.
We noted the major issue was inadequate income and began to explore this area. In 2001 we studied 118 families on social welfare and the minimum wage. Each of the families was in debt and we heard of the suffering and depression people went through when they turned to moneylenders. From this, we began a study of low-cost but acceptable budgets for three households. It was based on research carried out by York University's family budget unit. In 2006 we began to construct an Irish base and a minimum budget for six households. Our study was supervised by Professor Bradshaw, an international expert in household budget standards. The United Kingdom is carrying out further studies on minimum household budgets which were awarded approximately £350,000 from the Rowntree Foundation.
The aim of our study was to make available detailed information on the actual cost of a minimum essential standard of living for six households. It aimed to provide the foundation for a national database for minimum essential standards which could be developed and modified for application to different family types. Unless payments reflect the cost of living, they will not help people to move away from poverty. The study aimed to lobby for a more adequate level of income for those in receipt of social welfare payments and on the minimum wage.
The six types of household studied were: a lone parent with two children, a three year old and a ten year old; two parents with two children, a three year old girl and a ten year old boy; two parents with two teenagers, a ten year old girl and a 15 year old girl; a pensioner couple, 66 and 69 years old; a lone female pensioner, over 70 years of age; and a single adult. The minimum budget means a standard of living, with no luxuries, that meets a person's physical, moral, spiritual and social well-being. The methodology is very thorough and the figures have not been plucked from the air.
Of the six family groups, there had to be three focus groups, taking the total number of people involved in the study to 118. Every focus group came from a different area. Families in focus group 1 had to fill in a diary of what they spent and ate for one week. They were asked to fill out an inventory of all household items, clothing, etc. They also had to complete a questionnaire on personal holidays. From this we worked out the household menu for one week and the shopping budget that would go with it. After this, the information was given to the families in focus group 2. They were asked to take out everything that was a luxury rather than an essential. While most of them were able to take out one or two items, most claimed the budget was too tight. The third set of focus groups were given extended budgets and told to take items out. Again, they said it was too tight but could take out the social night. Ms Ann Stokes will discuss the methodology further.
Ms Ann Stokes
All of the households studied were in local authority housing with the exception of the single adult male. Child care costs were based on private crèche arrangements and the pricing of budget items occurred from March to June 2006. Households with children under six years of age are not eligible for the early child care supplement of €1,000, or €19.23 per week. Therefore, they were not included in the tables presented to the committee. The recent increases in the price of gas and electricity were also not included because they had not taken effect in the study period. Income in the case of any of those households in receipt of income for paid employment is at the rate of the national minimum wage, and that is the figure prior to the increase. Social inclusion and participation items and activities were seen as essential for all the households. The NAPS definition of poverty is relevant in that regard. Savings and contingency budget items include only minimum amounts of savings for times such as Christmas and birthdays. Contingencies, emergencies, unexpected expenses and life assurance premia are also included within that budget. They are aspects to bear in mind when members are viewing the tables.
Our results show the income necessary for each household type to have a minimum essential standard of living, without entitlement to secondary benefits. That is shown in the table on the next page of the presentation. Housing and car costs are not included in those income figures. Those figures can be then applied to different situations. The figures show the minimum incomes required. We also show the income and expenditure patterns of scenarios representing different household types, whether they are dependent on social welfare, work part-time or work full-time. Members should also note that our costs do not include debt repayments, household maintenance costs, pension contributions and bank charges. It is important to keep that in mind.
Members will note from the tables the income necessary for a minimum essential standard of living for different household types. The minimum income for a family of two parents and two children, as of June 2006, was €435.22. We have done some calculations factoring in general inflation at 2.9% from June 2006 to February 2007, which brings the minimum income required by that family to €447.84. We do not have time to go through all those figures but members will note from the presentation the minimum incomes required.
I will focus in more detail on the income required by a family of two parents and two children, one a ten year old girl and the other a 15 year old girl. When child benefit is applied for those children, members will note from the presentation the family's total cash income and minimum essential costs. We have also included a household scenario including a 15 year old boy, which is outlined in the report. The household's weekly costs were very slightly less in that case. The costs of the minimum essential budget is well above the reach of each of the five households in this income scenario, with the household dependent upon unemployment benefit having the greatest shortfall of €162.83 per week.
The report details the added household cost of having a teenager, in particular the added costs of food, clothing, education and social inclusion and participation items and activities. Social inclusion and participation were a very important aspect for this family type. Many individuals in focus groups mentioned how they would prefer to pay for sports and social activities rather than see their children get involved in anti-social behaviour.
The cost of child care was not a major issue for this family as the children were slightly older but decreases in secondary benefits and the increase in local authority rent make the scenario of two parents working on a low wage economically disadvantageous as, for example, the back to school clothing and footwear allowance is lost. Realistically, in a household with two adults working, the household income should work out equivalent to an additional income of €149.94 per week. However, members will note from the relevant table that the two increases in income gained by a household with two adults in employment amounted to an additional income of only €54.01 per week.
One of the main conclusions was that the income required for a minimum essential standard of living, with no entitlements to secondary benefits and housing and car costs not included, for a household of two parents with two children, a three year old and a ten year old, was €435.22 per week as of June 2006. For a household of two parents with two children, a ten year old and a 15 year old, the income required was €546.42 — members will note the dramatic increase in the income required by this household. For a lone-parent household with two children, a three year old and a ten year old, the minimum income required is €545.01 per week. The very significant increase in child care costs amount to the slight difference in minimum income between this household type and the previous household type.
The minimum income required by a pensioner couple household is €330.40 per week. The minimum income required by a single female pensioner household is €241.16 per week. The minimum income required by a single adult male household is €249.04 per week
We found that a minimum essential standard of living was not possible for 25 of the 30 households studied. The 30 households comprise a combination of different household scenarios. These households struggle to cope on a daily basis. Their physical, mental, spiritual and social needs are not met. Many of the individuals concerned are trapped in poverty. To cope with a seriously inadequate income they either have to borrow and live with the consequent social problems or to stay within their budget with a very poor standard of living.
Child care costs and the scaled down secondary benefits account for the very small increase in income when both parents work — one parent working full-time and one parent working part-time. I also stress that households with a teenager face considerable additional costs. I will finish on that and pass over to Sr. MacMahon to conclude.
I thank Ms Stokes for that. I now invite members to----
Sr. MacMahon
May I mention the recommendations, which are linked with what Ms Stokes said in conclusion?
Sr. MacMahon may continue.
Sr. MacMahon
We recommend the benchmarking of social welfare payments and the rate for the national minimum wage to an amount which allows for a minimum essential standard of living. We recommend addressing the situation for households dependent on the national minimum wage in which at present the financial benefits of having one full-time worker and one part-time worker are very minimal. We request that child care would be more affordable and accessible, particularly for low-income households thereby removing a large obstacle to accessing education and employment.
I am going through these recommendations quickly. We recommend that child benefit be increased, particularly to make allowance for teenagers. Having a teenager in the family results in an extraordinary increase in the family's costs. We also recommend bringing the contributory and non-contributory old age pensions in line with the costs of a minimum essential standard of living. We recommend the taking of immediate action to address the situation in which a single female pensioner dependent on State pensions has an income which makes a minimum essential standard of living impossible.
To ensure the well-being of all citizens and a stable society we ask members to give serious attention to the requirement by households for an adequate income and appropriate access to services and support. What is required involves two elements. One is an income that meets the cost of living. Inadequate social welfare payments and the national minimum wage will increase demands on the Exchequer, health, education, social welfare, housing and the justice systems. We know that the elimination of poverty is the concern of all Departments
We are very pleased to be here today. Our plea is that payments should reflect what it costs households to live. I refer to a minimum essential standard of living, not one that only meets one's physical needs and keeps one alive with a roof over one's head. That does not lead to a reduction in the number of people who are excluded from society today.
I thank Sr. MacMahon.
I welcome Sr. MacMahon and Ms Stokes and thank them for their presentation. I was at the launch of the partnership's report, which was attended by a large crowd of people. I did not get a chance to stay on after it because I had to come back here but the launch of the report was quite impressive. I congratulate them on the work they have done.
The report sets out a novel and different way of approaching the addressing of needs and tackling the problem of poverty. Have the representatives presented this report to the Minister, his Department's officials, the Combat Poverty Agency and the office for social inclusion? If so, what reaction did they get?
We have been debating with the Minister over the last while how one measures poverty. In this report the partnership has measured need, minimum essential standards and minimum essential budgets. We have been debating consistent poverty versus relative income poverty. Earlier we heard Professor Monaghan compare consistent poverty and relative income poverty with the health service in that one is either very sick or healthy and there is nothing in between. What the partnership has done is totally different. I remember the professor from the UK making a presentation on the day. This model is evident in the UK and is being looked at there and, hopefully, here. Has this happened anywhere else?
The partnership is interacting with people and encouraging them to get involved in the political process in a strictly non-party way. Will Sr. MacMahon or Ms Stokes comment on the success of that project because it is something in which we are very interested at this point? Given that the people with whom the partnership is interacting are, to put it mildly, under pressure financially, will they take part and take an interest in the political process? That has not been the case until now. Perhaps that is the reason for the partnership's activity there.
It has been said that we should consider bringing pensions up to gross average industrial earnings and percentages of 40% and 50% were mentioned. The partnership's model is far more complex than that. How does it see this model moving forward? As the situation changes, does it believe this type of research should be done on a regular basis? Is it possible to do that?
I have two teenagers, so I have an idea of how demanding they can be. The shortfall in discretionary income is, in some cases, remarkable and quite high and figures of €162, €72, €89 and so on were mentioned. What I believe the partnership stated is that if that income was available, people would meet the minimum. What is happening is that people are below the minimum and must borrow or else have a very poor standard of living. A question arises as to the extent of this throughout the country using the partnership model rather than any other model we have seen over the years. Can it be extrapolated to get a figure as to how many people are in the situation described and living with an income which is below an acceptable standard?
We are all concerned, including the Minister, about the number of people borrowing, especially from moneylenders, and paying exorbitant rates. Will Sr. MacMahon or Ms Stokes comment on that? I refer to the definition of "poverty" used which mentions physical, mental, spiritual and social needs. That is all-encapsulating.
I thank Sr. MacMahon and Ms Stokes. This is a very thorough study which makes very interesting reading in terms of identifying the pitfalls and how difficult it is for some families to manage on their budgets. In regard to the provision of child care, it must be almost impossible for people to access child care, particularly in the private sector, because of its cost. It is even very difficult for people on high incomes to access good quality child care. We all know there is an insufficient number of places available in the community creches. I have seen the waiting lists for them. If we cannot provide child care for families so that parents can go to work or to training, they will remain trapped in poverty. I am sure the partnership will agree it is one of the issues we must address, namely, to provide child care at a cost people can afford. Of course, many people cannot afford child care costs at all.
This study provides valuable information for us in terms of moving forward and encouraging Government, particularly the Minister for Social and Family Affairs, to address the needs of people on low incomes. It also highlights what Professor Monaghan said earlier that it costs as much to look after a child regardless of whether he or she has one parent or two parents. That must be addressed. It is obviously more difficult for a single parent because he or she faces all the social problems and responsibilities of rearing a child on his or her own which leads to greater stress.
As was said, if a family is in debt, it brings about stress which leads to depression and illness. That will result in a greater cost to the State because it must deal with parents who may be ill and, therefore, cannot cope very well. We all know the effect on children living in a household in which there is stress and illness. I thank the partnership for the excellent work it has done which will be very useful to us in the future.
Sr. MacMahon
Deputy Stanton asked about the Government's reaction. We sent a copy of the study to all Departments and received acknowledgements. That is the extent of the response to date. Somebody on our research advisory group was from the office of social inclusion. We also had representatives of the Combat Poverty Agency on the research advisory group as well as representatives of the Society of St. Vincent de Paul.
The Society of St. Vincent de Paul, the Combat Poverty Agency, MABS and the Edmund Rice Trust funded the study, so they would be very much aware of it. We received very good support for the study and people have said it was needed. They are very happy with the thoroughness of it and the fact it is very transparent because if one looks at the big study, one can see exactly from where every figure comes. For example, one dessert per week is allowed. One can see what is spent on holidays or on any type of treat. Everything is priced and the shop is mentioned.
The model has been used in parts of the United States. The US used it as a part basis for its decision on how to provide a health service. Australia has, to a greater degree, used it in a number of states. The Scandinavian countries would have been the most supportive of it and would have done similar studies. That is probably why their figures are more pointed and reflect the actual cost of living in a much better way than in many other countries.
We are using the voter education programme throughout the country. The partnership is a small organisation and that programme is labour-intensive. One does not convince people who are alienated from the electoral process to suddenly turn around and vote. It consists of four workshops and it makes a great difference. After the local and European Parliament elections, we looked at every area in which we had worked and saw a definite increase. The figures in Mulhuddart doubled. This also means that people on the ground are active because we just deliver the programme. We believe it is a way forward but people need to be convinced.
In answer to Deputy Stanton, we have been working in the past few months on our election campaign in the workshops. We intend to update that study each year, taking into account the increases in social welfare benefits, payments and inflation. The family budget unit is in existence in England and it is updated at least twice a year. The items included must also be updated because tastes in eating and clothing change.
The shortfall is considerable; we did not call it a debt. The Society of St. Vincent de Paul highlighted the fact that people manage by going into debt. People live in debt and are prepared to live that way for the rest of their lives, including when they are grandparents. Many of the older people, the pensioners, want to stay within budget and therefore their diet suffers. They do without, as do families with teenagers where the parents go without. Mothers in particular do this because they believe that is their role as a parent. People are borrowing but they hope to get access to banks because they should not be going to moneylenders. Without the St. Vincent de Paul society the lot of many of these families would be much worse.
Ms Stokes
We chose the combination method. This measure was chosen from the rights-based approach. If we are to decide what is a minimum essential standard of living, then the individuals themselves who live on a day-to-day basis are the experts. These budgets if drawn up by academics or civil servants would not give an accurate account and this is the reason we have chosen this route.
Sr. MacMahon
We used the method they are using and we did not use the method we used in 2004. They used what are called the consensual budget standards which means involving the people but also with input from the experts. It is not just a case of people asking for such and such an item to be included because every item must be justified for meeting physical, social and psychological needs, otherwise we will not help people get out of poverty.
We have done a lot of work and we intend to keep it going. The ESRI, the Combat Poverty Agency and Government agencies all commented on how good the scheme was. We asked why it had not been started already and they replied that it was very time-consuming and labour-intensive. Is there any other basis for determining what is an adequate payment for social welfare or for a minimum wage? If not, we are pulling figures out of the air.
Acting Chairman
I thank Sr. MacMahon and Ms Stokes for attending the meeting and for a very important presentation. I compliment them on their wonderful work and hope that the powers that be are listening. This committee will note their comments and wishes them well in their work.
The joint committee went into private session at 4.34 p.m. and adjourned at 4.40 p.m. sine die.