This Bill is designed to implement the proposals in the budget for improvements of the social insurance and social assistance schemes. It also includes provision for the abolition of the remuneration limit of £1,600 for social insurance.
In drafting the Bill a special effort has been made to make the text of the Bill this year easier to follow than similar Bills in former years. This together with the explanatory memorandum which has been circulated with the Bill should help Senators in their examination of the Bill.
The budget proposals provided for a very substantial increase in the rates of non-contributory old age and blind pensions, for a considerable easement of the means test and for the reduction of the qualifying age for pension from 70 to 69 years. The maximum weekly personal rate of non-contributory pension is being increased by £1 from £5.15 to £6.15 for those under the age of 80 and from £5.65 to £6.65 for those aged 80 and over. Because, however, of the changes in the means test whereby the first £4 of weekly means will be ignored, all existing pensioners under the age of 80 whose pensions are at present between £1.90 and £4.90 will qualify for the maximum pension of £6.15, while those aged 80 and over whose pensions are from £2.40 to £5.40 will qualify for the new £6.65 pension. In addition, increases of pension for qualified children of pensioners are being raised by 50p a week to £1.65 for each of the first two children and to £1.25 for each further child.
Some 108,000 persons will shortly have the maximum rates of pensions as against some 21,000 at present. The easier means test will give existing pensioners whose pensions are less than £1.90 considerably higher pensions and will allow some additional 10,000 persons to qualify for pension. The reduction in qualifying age, will also bring several thousand new pensioners into the scheme.
Non-contributory widows and orphans pensions are being similarly improved; the weekly maximum personal rate of pension will be increased by £1 and as in the case of non-contributory old age and blind pensions the first £4 of weekly means will be ignored. The weekly amounts payable for qualified children, however, are being increased by 65p which include a special increase of 15p in recognition of the problems of such one-parent families. The new maximum weekly rate of non-contributory pension for a widow will thus be £6.15 with a further £2 for each qualified child.
Taken in conjunction with the existing amounts of earnings which may be disregarded in assessing a widow's means, the ignoring of the first £4 of weekly income will allow a widow to avail of opportunities to supplement her income by taking up employment without risking the loss of her pension. Thus a widow with no other means and with no children could earn up to £4 a week and still draw a full non-contributory pension of £6.15 a week, while if she had two children she could earn £7 a week without affecting her right to a full pension of £10.15 including increases for children. A widow with four children could earn up to £10 a week and still be entitled to a full pension of £14.15.
It is estimated that the increases in rates and the changes being made in the means test will enable some 15,600 widow pensioners to receive higher pensions and some 3,000 widows not already receiving pension to qualify for pension. Reduction of the qualifying age for old age pension to 69 will result in some 1,100 widow pensioners transferring to old age pension thus becoming entitled to free travel and, assuming they meet the other conditions necessary, qualifying for free electricity allowances and for free television licences.
The new weekly rates and the easing of the means test in the case of non-contributory widows pension will apply also to deserted wife's allowance and to the new allowances for unmarried mothers to which reference will be made later. The position of deserted wives is also being improved by some amendments which are being made in the statutory regulations covering the scheme.
The maximum weekly rates of unemployment assistance for persons in urban and rural areas will be raised by £1 in the personal rate and by 50p for an adult dependant and for each child dependant. This will give a maximum weekly rate of £5.35 for a single person in an urban area and of £5.05 elsewhere; while the rate for a married couple will go up to £9.25 in an urban area and to £8.85 elsewhere. The payments for children will rise to £1.65 for each of the first two and to £1.25 for each additional child.
Two major changes in the general scheme of children's allowances are being made in the Bill. The first is a general increase of £1.50 a month in the amount for each qualified child. This will bring the monthly amounts up to £2 for the first child, £3 for the second and £3.75 for each additional child. The monthly allowances will then be £8.75 for a three-child family and £16.25 for a five-child family. These new rates will compare favourably with the rates payable in Britain and Northern Ireland where under the general family allowances scheme there is no payment for the first child and the monthly payment for a three-child family is £8.23 and for a five-child family £16.90.
The number of families who will receive increased allowances is approximately 359,000, involving just over one million qualified children. The other improvement being made in the children's allowances scheme is the extension of the qualifying age limit for allowances from 16 years to 18 years where the child stays on in full-time education, or is apprenticed or is physically or mentally incapable of self-support. It is estimated that some 85,000 additional children will qualify for allowances under this extension.
Extensive publicity has been given to the proposal to "claw-back" the increase in rates of children's allowances by reducing the tax-free child allowances in the income tax code. This will, of course, be dealt with in the Finance Bill. In so far as the children's allowances scheme is concerned everybody will get the increase in children's allowances and the "claw-back" will only apply to families where the taxable income is more than £2,500, which in effect means that the actual income will be well in excess of that figure. It might be mentioned that in Britain and Northern Ireland not only is there a "claw-back" but the total family allowances themselves are treated as taxable income.
The Bill provides for increases in rates of pensions and short-term benefits under the social insurance system similar to those already mentioned for the non-contributory schemes, that is to say there is the £1 a week increase in the personal rates and 50p for adult dependants and qualified children. In the case of widow's contributory pensions, however, the increase for qualified children is 65p, including the extra 15p provision for children in one-parent families. In the case of retirement or old age contributory pensions the increase for an adult dependant who is aged 69 or over will be £1 a week.
The new weekly rates of unemployment and disability benefit will be £6.65 for a single person with an increase of £4.25 for an adult dependant and of £1.85 for each of the first two qualified children and of £1.50 for each further child. This will give a married couple with two children £14.50 a week, and a couple with four children £17.50 a week. The personal rate of widow's contributory pension will go up to £6.60, and the amount payable for her qualified children to £2.15 for each child. Thus a widow with two qualified children will get £10.90 a week as against £8.60 at present and one with four such children will get £15.20 as against £11.60 at present.
In the case of retirement pensions and contributory old age pensions the personal rates go up to £7.20 a week where the pensioner is under the age of 80, and to £7.70 a week if he has attained that age. The amount payable for an adult dependant will go up to £4.65 for one who is under the age of 69 and to £5.15 for one who has attained that age. Thus a married couple both of whom are aged over 69 would get £12.35 by way of weekly pension, or £12.85 if the pensioner is aged over 80.
The pensionable age under the social insurance system is being reduced to 69 years. This affects not only the qualifying age for contributory old age pension but also the maximum age up to which social insurance contributions are payable and the short term benefits, such as disability and unemployment benefit can be paid. The reduction in the age limit at such short notice may give rise to some transitional problems for example, in the matter of transferring current recipients of these benefits to pension. Steps will be taken to ensure that in such cases payment of benefit will continue until such time as the pension comes into payment.
Part of the extra cost of the improvements in the social insurance services provided for in this Bill will be borne by the Exchequer and to meet the balance of the cost it will be necessary to increase the rates of social insurance contributions payable by employers and insured persons. The position up to now has been that employers and insured persons shared the cost of the contribution almost equally. Under he Bill employers will be required to carry a much larger proportion on this occasion. This is being done partly to bring the basis of financing the social insurance system more into line with the pattern of the schemes in most other member states of the EEC and partly because of the relief in rates which employers in general will enjoy as a result of the budget proposals for transferring part of the cost of the health services from the rates to the Exchequer.
A total increase of 57p in the rates of contribution which cover all benefits of the social insurance system is necessary and it is proposed in the Bill that the employer should pay 42p of this and the employee 15p. Lesser in creases apply where all the benefits are not covered. However, in the case of female agricultural workers and female domestic workers, regulations are being made to remove a restriction on their entitlement to unemployment benefit, following a recommendation of the Commission on the Status of Women. As a consequence, the special reduced rate social insurance contributions hitherto payable in respect of such employees because of their restricted right to unemployment benefit must be increased more sharply. Thus, while the employees' element is being increased by only 15p, as in the case of other workers, the employers' shares of these contributions are being increased by 45p and 54p respectively.
The new ordinary rates of social insurance contribution will be £2.80 for men, of which the employer will pay £1.62 and the employee £1.18. For women the new ordinary rate will be £2.69 of which the employer will pay £1.57 and the employee £1.12. These rates include the element for occupational injuries benefit but do not include the health contribution of 15p. Neither do they include the present redundancy contributions of 8p for men and 6p for women which are being increased by the Minister for Labour.
In line with the improvements in the general social insurance system provided for in the Bill, it is proposed also to increase rates of benefits payable under the occupational injuries scheme. The basic rates of injury benefit and disablement benefit are being increased from £8.10 to £9.10 a week, while the married man's rate will go up from £11.85 to £13.35, and if he has two children from £14.55 to £17.05. Pensions for widows are being increased by £1 a week to £8.60 with an increase of 65p for each child bringing the new payment for children in this case to £2.15 for each child. It is not proposed however, on this occasion to increase the weekly contribution to the occupational injuries fund from which the cost of occupational injuries benefit is met.
The Bill provides two other improvements in the occupational injuries scheme. These relate to unemployability supplement and constant attendance allowance. In order to qualify for unemployability supplement a disabled person must be permanently incapable of work, but a claimant may be treated as being so incapable if he is unable due to loss of faculty to earn more than £104 a year. This figure which has not been altered since the scheme commenced will be increased to £234 a year, thus bringing it into line with the corresponding limit in the British industrial injuries scheme.
Constant attendance allowance is payable to persons in receipt of 100 per cent disablement pension who require such attendance as a result of loss of faculty. The normal maximum weekly rate of this allowance is being increased from £3.00 to £3.50 to keep pace with the prescribed relative and old age care allowances under the general social insurance and assistance schemes. No increase has, however, been made since 1967 in the higher allowance limit of £4 a week which was then provided for cases of exceptionally severe disablement and it is proposed to increase this limit now to £7. This restores the original position whereby the higher limit was double the normal limit.
The Bill also proposes to abolish the remunration limit of £1,600 for social insurance which applies only in the case of non-manual workers. This distinction between manual workers and non-manual workers is a survival from the days when the levels of pay and working conditions of "white collar" workers were greatly superior to those of manual workers. These differences no longer exist to any appreciable extent and, indeed, the question as to what constitutes manual work or non-manual work is now very difficult to answer in many areas because of technological advances and developments in skills, as for example in the field of electronics and computers.
Furthermore, the limit is flexible and does not have regard to marital condition or family size. There is no similiar limit in the national insurance scheme in Britain or Northern Ireland or, indeed, in any of the member states of the EEC. Finally, the forthcoming introduction of the pay-related benefit scheme which is based on the principle that the higher a person pays, the higher the benefit payable to him and the contribution payable by him should be, is a further strong reason for removing the limit.
The proposal to abolish the limit for social insurance purposes should meet with general approval but its removal will have consequences outside the social insurance field. A person who is insured under the Social Welfare Acts is, ipso facto, eligible for the limited health services available to members of the middle-income group, and any extension of the social insurance system thus has implications for the health services. These are at present under active consideration and it is hoped to have an early decision in the matter. In the meantime, however, it is necessary to secure the legislative authority to abolish the limit for social insurance purposes. The provision in the Bill will enable this to be done from a date to be fixed by ministerial order. The abolition of the limit gives rise to the need to remove from the Social Welfare (Occupational Injuries) Act, 1966 a provision which debars civil servants covered by that Act from the benefits of the scheme for compensation for death or injuries in the course of their duties which is provided under the Superannuation Act, 1887. This provision would act unfairly in the altered circumstances brought about by the abolition of the limit. The Minister for Finance is anxious, therefore, to have it removed and to deal with the question of double entitlement to benefit by the scheme administered by him under the Superannuation Act.
The deserted wife's allowance scheme introduced in 1970 has been reasonably acceptable and there are at present some 2,150 allowances in payment. Many difficulties have, of course, been encountered, particularly in regard to the question of what constitutes desertion, but the bulk of these have now been resolved and amending regulations are being made to clarify the position in these respects.
One criticism of the scheme has been that while it purports to treat the deserted wife as if she were a widow, it takes no account of the fact that where the deserting husband has been insured, his wife, would, if he had died, have qualified for contributory widows pension. The Bill will remedy this by providing a specific benefit in the social insurance system for deserted wives on broadly the same lines as the widows contributory pension scheme, which will be payable subject to contribution conditions which may be satisfied by either the husband's or the wife's insurance as at the date of desertion. The fact of desertion will be established in the same way as for deserted wife's allowance under the revised regulations.
There are provisions in the Bill for four developments to meet recommendations made by the Commission on the Status of Women. The first of these is the introduction of a scheme of social assistance allowances for unmarried mothers who keep their children which will be broadly on the same lines as the scheme of deserted wife's allowance. This is entering rather unexplored territory is so far as the Department of Social Welfare are concerned and, accordingly, power is being taken to prescribe detailed conditions of the scheme by regulation, which will be used flexibly to ensure that the scheme operates effectively.
The second development relates to the special condition which requires that in order to be eligible for unemployment assistance, widows and spinsters with no dependants must have paid 52 social insurance contributions at the ordinary rate in the four preceding contribution years. It is most difficult for a woman whose main occupation is in agriculture or domestic service to satisfy this condition because she pays special rates of contribution in these employments. The Bill will ease the condition by allowing any paid contribution other than voluntary contribution to be reckoned.
The third development will relieve widows, deserted wives and unmarried mothers who are receiving pensions or allowances as such under one or other of the Department's schemes of the liability to pay the employed contributor's share of the social insurance contribution when in insurable employment. This concession will be worth up to £1.12 a week to the persons involved and should they become ill or unemployed they will, as widows do at present, be paid the half rate of benefit in addition to their pension or allowance without having paid any contribution. The employer will, of course, be liable to pay his share of the contribution.
Finally, it is proposed to remove a further long-standing source of grievance among insured women workers. At present an insured woman who marries is paid marriage benefit but regardless of how much insurance she may have had before marriage, she is disqualified for certain benefits until she has worked in insurable employment for at least 26 weeks after marriage. The Bill will remove this disqualification, and abolish marriage benefit, thus allowing married women to use their pre-marriage insurance for benefit purposes immediately after marriage.
All except three of the proposals in the Bill will come into operation from the beginning of July next. Apart from the proposal to abolish the remuneration limit for social insurance which, as already indicated, will be brought in by ministerial order, the exceptions are the proposal to ease the conditions for unemployment assistance in the case of certain widows and spinisters, and the proposal to abolish the condition which requires married women to have 26 contributions after marriage, both of which will come into operation at the beginning of October, 1973. As the main budget increases will be brought into operation much earlier than in previous years very heavy demands are being made on the resources of the Department of Social Welfare and of the other Departments involved in staff, accommodation and equipment.
This extra work must be done while the normal day-to-day work of the Departments concerned, which cannot be held up, continues. The following figures give an indication of the size of the task. A total of 23 million new social insurance stamps at 22 different rates must be printed and put into stock in post offices before 1st July next. At the same time, new or revised pension order books must be printed and distributed to some 260,000 existing pensioners while provision must be made by way of special stamps for the payment of increased rates of children's allowances to some 359,000 existing families. All of these figures are apart from the many thousands of new cases which the extension of the various schemes and the new schemes will bring in. Those payments which are made by cheque from head office or in cash at local offices of the Department will be increased immediately the new rates are effective, as will also all payments made by way of pension order books or allowance books. There may, however, be some little delay—a matter of a week or two —in getting the special stamps distributed to all children's allowances cases. All efforts will be made to avoid delays but in view of the exceptionally heavy pressure of work, it would be unreasonable to expect that some isolated cases of delays will not occur.
This Bill involves a very heavy increase in expenditure on social services. On the social assistance side, including children's allowances, it is estimated that the increased cost to the Exchequer of the proposals in the Bill will be £41.1 million in a full year and £30.68 million in the current year. On the social insurance side, the gross increase in expenditure is estimated at £21.14 million in a full year of which £16.47 million will be met by increased contribution income, leaving £4.69 million to be borne by the Exchequer in a full year and £3.52 million in the current year. Thus out of a total increase of £62.24 million in expenditure on social welfare which this Bill will bring about in a full year the Exchequer will bear £45.79 million.
I have great pleasure in recommending this Bill to Seanad Éireann for speedy and favourable consideration.
