Seanad Éireann debate -
Thursday, 25 Mar 1976

Vol. 83 No. 16

Social Welfare Bill, 1976: Committee and Final Stages.

Section 1 agreed to.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. Yeats

Since this is the first section that brings in the increase of 10 per cent in rates, I would say something about the question put before us by the Parliamentary Secretary as to what we in Fianna Fáil would do to suggest how this might be raised by more than 10 per cent. Obviously, it is not the business of the Opposition to tell the Government how to do their business. They are supposed to do their business.

There is the fairly obvious point that the Minister could have raised the amounts quite a bit further by maintaining in the social welfare sphere the £8 million excess which was put on the stamp and which is just thrown into the general scheme of the budget as an additional piece of taxation. If that £8 million which is being raised from the workers were to be used for increasing benefits, that is one obvious simple way in which social welfare benefits could be increased further.

However, the basic and more important point is that the real cause of the shortfall this year, the inability of the Parliamentary Secretary—and I accept that he would be very anxious to do better than he is doing in this Bill— to do any better, even to maintain the existing real level of benefits under these schemes, is the incompetent financial policy of the Government which ultimately, and after doubling the national debt in two years resulting in quite simply running out of money, have had to borrow an enormous amount from the EEC on condition that they are not to borrow any more. The reason why they cannot do any better than they do in this Bill is that they have made a mess of the finances of the country. All I can say is that if Fianna Fáil had been in office for the past three years the country would not have run out of money and it would have been possible to do better than this Bill. It is a simple plain statement of fact.

Question put and agreed to.

Sections 3 to 10, inclusive, agreed to.

SECTION 11.

Question proposed: "That section 11 stand part of the Bill."

Mr. Yeats

I should like to ask a question under this section, dealing with the extension of the period of unemployment benefit. This is a section that we are entirely in favour of. I would be glad to know from the Parliamentary Secretary whether he has any figures as to the number of people who were formerly on unemployment benefit and who have had to go to rely on assistance and the number who will benefit under this section and, in addition, the number who have been on the dole so long that they are unable to benefit under this section. I would be glad to know what the general position is.

Mr. Cluskey

I have not precise figures for this Senator in so far as it fluctuates practically every week. It would not be possible to have up-to-date figures. I regard this section as one of the most important new developments in the area of social welfare in so far as it extends for the first time the eligibility for flat rate benefit in the social welfare code. It is something which has been long overdue and I am glad to see that it has been possible to include it in this Bill.

As I said, I could not possibly give the Senator up-to-date figures because it fluctuates from week to week. He could take it that on pay-related benefit there are approximately 33,000. When you take that off the total unemployed figure you would find that you have the rest either on benefit or flat rate benefit, but I cannot give precise figures in a breakdown between the two of them.

Mr. Yeats

I am a little puzzled by this. This is a matter which will arise under the next section on pay-related benefits. Perhaps I had better deal with this aspect of the matter on this section. I will not raise it on the next section again. As I understand it, the period for pay-related benefit is now the same as for unemployment benefit —12 months in each case. It will be extended for three months in each case

Mr. Cluskey

The two are being extended simultaneously.

Mr. Yeats

Without the extension they are 12 months each. The Parliamentary Secretary said there are 33,000 approximately getting pay-related but I think I am right in saying there are 65,000 on unemployment benefit. I am puzzled as to how there could be so many on unemployment benefit who do not get the pay-related benefit.

Mr. Cluskey

The pay-related benefit only comes into operation between £26 and the £50 ceiling. Unfortunately in our society for a long long number of years we have had 6 per cent to 7 per cent unemployed. The figures in relation to these people who have been unemployed for a long number of years, although the actual personnel might have varied during that time, remain fairly static. None of these people would have built up any previous earning capacity to allow them to qualify for pay-related benefit so that the hard core of unemployed we have had over that long number of years would not be in the pay-related benefit element of the total figures.

Mr. Yeats

It would appear, then, that some 50 per cent or so of all those on benefit do not get pay-related benefits, which is 33,000 out of somewhere around 65,000 to 66,000, and half of them do not get pay-related benefit at all. I must say I had not appreciated that. It is certainly an unfortunate situation.

With regard to the number who formerly were on unemployment benefit at least until the enactment of the pay-related Bill, it is clear from the weekly figures we get that, whereas those on benefit are up by approximately 2,000 as compared with this time last year, there are some 13,000 or 14,000 on assistance. Would this be a reflection of the numbers who have had to go over to assistance from benefit?

Mr. Cluskey

Up to this point, until the passage of this Bill, the period of eligibility for benefit was only for a 12-month period. This will extend it by a further approximately three months. If you exhausted that period of eligibility you go on over to assistance. The situation under this Bill is that even had a man exhausted his 12 months eligibility for benefit but was still within the three months extension period, he would come back into unemployment benefit.

Mr. Yeats

I appreciate that. I was trying to get some concept of the numbers involved. It would seem that something in the region of 10,000 have already gone over to assistance and some proportion of that will be saved by the three months more provided for by this Bill. I just wanted to get some idea of the numbers involved. I appreciate the legal position that formerly after 12 months they had to go over to assistance and now there is a further short period under this Bill.

Question put and agreed to.

SECTION 12.

Question proposed: "That section 12 stand part of the Bill."

Mr. Yeats

I will not raise again the question of the numbers involved and so on but I am puzzled and saddened by the percentages involved under this section. Whereas in the initial six-month period of pay-related benefit under the original Act, the benefit is 40 per cent, in the last Act which dealt with this the Minister extended it for three months at 30 per cent. For the third three-month period it is 25 per cent and now in this Bill it is down to 20 per cent. One wonders at the reason for this, because after all, as the Parliamentary Secretary knows, when unemployment begins there are likely to be some sort of family reserves which help to ease the position. But by the time a man has been unemployed for more than a year, it seems unfortunate that he should be reduced from 40 per cent to 20 per cent. After all, after a year's unemployment quite clearly there are no further reserves of any kind that the family can rely on. Anyone would have thought they need money a good deal more than they did at the start, but we find that under this Bill the amount given for pay-related benefit is only 20 per cent, half the original 40 per cent. I do not know whether this is just that the money is not there, but it seems an unfortunate way of doing it.

Mr. Cluskey

I appreciate that unemployed people or people suffering from a long time illness require as much money as they can get. However, the Bill dealing with pay-related benefits when it was enacted in 1974 was limited to a six-month period of eligibility. It has been extended now to a 15-month period. As the Senator stated, people might have some reserves when they commence their unemployment or sickness period. I personally doubt that, knowing working-class people. In the main, the amount of reserves they have with which to face these contingencies are very limited indeed, if at all. However, I think the Senator would agree that people who have responsibility for the administration of the fund must also take into consideration in any developments or progress that is made in the fund that the fund remains financially viable and healthy in order to ensure that it can meet the commitments which it has to meet and foresee any difficulties before they arise in this respect. The provisions under this Bill, which extends further the eligibility period is a significant advance on the present situation. The Bill dealing with pay-related benefits since its introduction has played a very significant role in ensuring against the worst financial repercussions on people and their families who have to face unemployment or sickness, because when we talk about pay-related benefits the whole emphasis seems to be that we are paying out to people who are unemployed. In fact, 47 per cent of the money paid out in respect of pay-related benefit is for illness.

Mr. Ferris

I should like to clarify one point. The Parliamentary Secretary in his last statement said quite a large proportion of pay-related payments is applicable to disability benefit. As he now envisages, in this Bill pay-related benefits will be paid on the cessation certificate or the P45. I welcome that development because I feel this was one of the anomalies of the pay-related scheme: it only took into account a man's earnings in the previous year. Now he envisages that it is applicable immediately. But cessation certificates or P45's are not normally written for people who are just temporarily ill although entitled to pay-related benefits. How does the Parliamentary Secretary feel that the worker can overcome this, or are arrangements to be made with employers that all employees who become sick or unemployed will have P45s written for them on the date that they either leave or get sick?

Mr. Cluskey

There have been consultations between the Revenue people, the Department of Finance and the Department of Social Welfare to ensure the successful operation of the transition.

Mr. Yeats

I appreciate, as the Parliamentary Secretary said, that a lot of this money—I think he said 47 per cent—goes to people who are sick, but the financial problems of the fund do not derive from this aspect. I take it that the number of people sick this year is much the same as the number last year or the year before. Obviously there may be slight fluctuations but they would be slight. The big problem obviously is caused not by sickness but by the increase in the number who are receiving pay-related benefits on foot of unemployment.

I accept, as the Parliamentary Secretary said, that some workers have no reserves when they become unemployed. Others may have. But that is not really the point. In so far as there are any reserves, they would have gone long before the time the provisions of this section come into force. Indeed not only that, but in many cases families will have run into debt in an effort to try to maintain some sort of standard of living. In these circumstances, therefore, it does seem very hard even though one welcomes the passage of the Bill— quite obviously it will bring about an improvement in people's circumstances—that the percentage of the actual amount paid should be halved.

The Parliamentary Secretary has pointed out that the fund needs to be kept solvent. After all, he has in an earlier section brought in a very large increase of £1.53 on the insurance stamp. The pay-related payment involved per week is quite small. One would have thought that a few pence extra would have kept the fund solvent while keeping the percentage the same. Certainly the £8 million which is being extracted from the fund in order to help out the budget would have been far more than is needed to solve this problem. I do not think that shortage of funds or insolvency of the fund is an adequate explanation. That could be easily dealt with provided the Minister for Finance was willing to do it.

Mr. Cluskey

I find the Senator's plea for an increase hard to reconcile with the call for a cutback of £20 million to £30 million by the Fianna Fáil spokesman.

Mr. Yeats

Which spokesman?

Mr. Cluskey

Does the Senator want me to elaborate?

Mr. Yeats

If the Parliamentary Secretary elaborates on the section I would be happy but I do not recollect any spokesman talking about a cutback of £20 or £30 million.

Mr. Cluskey

It is a matter of record.

Question put and agreed to.

SECTION 13.

Question proposed: "That section 13 stand part of the Bill."

Mr. Yeats

I repeat the question I put which has not been answered, and that is what estimate has been made as to the effects on unemployment of this impost on industry and services generally? I take it the Department have made some estimates.

Mr. Cluskey

I do not think it will have any adverse effects on employment. The Senator mentioned this this morning and he spoke about the Minister for Labour's speech on the question of equal pay which would cost the country £6 million with the consequent loss of 10,000 jobs. Senator Yeats equated that with this situation. The Senator must be aware that the application of an increase in the insurance stamps applies right across the industrial field. It would not be a fair equation to make. Senator Yeats must also be aware, as a member of the European Parliament, that the social welfare contributions by employers here are the lowest of any of the nine member states. Therefore, the burden being placed on them is by no means onerous although I admit that in some cases it could cause difficulties. I stated before that I am unhappy with the financing arrangements of social welfare. A study is being carried out in the Department of Social Welfare with a view to finding alternative means of financing social welfare contributions.

Mr. Yeats

The Parliamentary Secretary is correct in saying that other European countries have much higher insurance stamp contributions and the impost on both employers and employees is much greater than here. I am well aware of that. This situation has been ongoing for a period of years, perhaps even generations. The additional annual amounts have been long since absorbed in industry and economic activities generally. That is a different situation. What is happening here is that in this year of very great depression even under a a recession, when a great many industries, and more particularly services, are put to the pin of their collar to survive, when many firms are having losses and others are not making profits, when the employment of a great many people is on a knife edge, to place an impost of this scale on industry in these circumstances can only have dangerous results. The Parliamentary Secretary, towards the end of his intervention, admitted that he was worried, that there might be untoward effects. One cannot, therefore, make a comparison with the Continent where these increases have been happening over a long period. I am certain he will find that in continental countries which are also suffering from depression in various degrees, they will not impose an enormous increased impost on industry this year. Far from it.

One would have thought that an estimate would have been made. The Minister for Labour was very quick off the mark to come dashing into the public forum with an estimate of 10,000 unemployed as a result of equal pay. I presume he had some facts and figures to back this statement in the same way as I hope the Parliamentary Secretary's resources will give him some idea as to the effect of this increase.

I agree, naturally, that the cost of equal pay is centred in limited areas rather than across the board, but as against this the £20 million here is three times the cost of equal pay and is therefore spread wider, but it is a much larger sum. I wonder if the burden on the individual industries is all that different, although some of the service industries could be badly affected. However, it seems that the House is not to be given any estimates from the Parliamentary Secretary. One can only hope that one's fears will not be justified.

Mr. Ferris

I am concerned about the number of employers who do not pay the required sum. There are quite a number of employers who do not fulfil their commitments and I should like an assurance from the Parliamentary Secretary that he will pursue this matter. This is the type of situation which creates anomalies in the scheme—employers who employ nixers, people who are already signing on, avail of the opportunity of not putting on contributions. Naturally, the more people who contribute the better the scheme will work. The pity is that people can avoid their commitments in this regard. I know the Parliamentary Secretary would not condone such action, so his Department should make every effort to ensure that such employers are caught.

Mr. Harte

In regard to one of the points made by Senator Yeats about the cost of insurance stamps to employers, it is not all one-sided. They have other advantages. They are continually trying to reduce labour and to facilitate this operation there is the Redundancy Payments Act which goes alongside the unemployment pay-related benefit and so on. This makes it easier for an employer to negotiate a reduction in staff numbers. Apart from that, when an employer pays a redundancy lump sum he receives it back. On the other hand, if he contributes to the stamp, he asserts certain rights to pension schemes in the fund, that he does not necessarily benefit from the social welfare benefit scheme but in the case of a person reaching a pensionable age under the old age pension or retirement pension, many of the companies which have negotiated pension schemes cut back and take their whack out of the social welfare contributions.

Mr. Yeats

I am inclined to agree with Senator Harte. One of the problems created by this legislation is that there is a natural incentive to employers to let people off. On the one hand, we have this rather unsuccessful unemployment premium which pays employers to take people on, and on the other hand we have this type of Bill which makes it worth the employers' while to lay people off. This is a problem.

Mr. Harte

I am concerned about the Senator's concern about employers.

Mr. Yeats

I do not care a hoot about the employer. I am worried about the effects on employment. Employers will be letting them go. When people talk about employers in this context there seems to be the implication that you can throw an extra £20 million on to the cost of industrialists— industrialists are rich, they have lots of money in their pockets, fine yachts and so on. That is not the way life goes on. They do not take the £20 million out of their own pockets. It is handed on in price increases to everybody else. It has a direct effect on the worker. It serves as an encouragement to lay off workers, makes them less likely to take on new workers. It is the consumer and the workers I worry about, not the employer, who, I agree in most cases, is well able to look after himself. If he does look after himself he passes it on to everyone else.

Mr. M.D. Higgins

It is only fair to say that in the number of cases coming before Fóir Teoranta it is alarming the number of employers who have departed from their statutory obligations. A number of the people who have gone to the wall show a tremendous reluctance to give priority to social welfare obligations. I am sure that if an industry saw itself moving into difficulties and said that the new provisions proposed were a distinguishing factor between their remaining viable and non-viable, they would receive an extremely sympathetic treatment.

Mr. Cluskey

The question of employers not living up to their obligations under the social welfare code has been mentioned. There are two sides to it. There are employers who do not stamp cards. There are also insured persons who draw various forms of social welfare benefit or assistance to which they are not legally entitled. I have said before and I still maintain that the number of people, whether they be employers or insured persons, who are engaged in this practice is relatively small but it does not make the practice any less serious. It is one that gives rise to a lot of generalised criticism of the whole social welfare code. It is a practice which gives rise to a climate of opinion which hinders progress being made in the whole area of social welfare.

For that reason I am seriously concerned with that. I can assure the House that in the immediate future new legislation will be introduced which will increase very substantially the penalties that can be imposed by the courts on either employers who do not stamp cards or persons who claim unemployment benefit or assistance to which they are not entitled. I do not want to put this out of proportion. The numbers involved are relatively small. However, it does not make the practice any less anti-social or any more desirable. I can assure the House the penalties that will be introduced under the new legislation will not make it worth people's while and will act as a very strong deterrent to people who may be contemplating engaging in this practice.

Question put and agreed to.

Sections 14 to 20, inclusive, agreed to.

Title agreed to.

Bill received for final consideration and passed.