The purpose of the Bill is to make legislative provision for the implementation of the social welfare increases and improvements announced in the budget.
It deals, therefore, with increases in the rates of payment under the schemes of social insurance and social assistance; with a number of significant improvements in the conditions attaching to these schemes; and, with consequential changes in the occupational injuries scheme.
The Bill also contains the necessary provisions for increases in the contributions payable by employers and employees under the social insurance scheme which are required, together with the Exchequer subvention, to finance the services now provided.
A special provision is included in the Bill to enable effect to be given to the ratification of multilateral instruments such as the European Convention on Social Security of the Council of Europe.
This Social Welfare Bill contains a number of amendments of existing legislation and these are necessarily technical. An explanatory memorandum which has been circulated with the Bill has been drafted with the intention of clarifying the various provisions and I hope that it has proved helpful.
This Bill is designed to implement a central aspect of the Government's economic and social strategy. The budget had a number of key policy objectives: stimulation of the economy; creation of new jobs; reduction of the rate of inflation and promoting justice. It must be seen as a package and in that package these social welfare proposals have been accorded a highly significant place.
While the central thrust of the budget was in the direction of economic growth and job opportunity, the Government have nevertheless allocated a major share of scarce resources to the social services, and to social welfare in particular. Such a balance between the economic and social aspects of strategy is vital if there is to be real success in facing up to our national problems.
Social policy and economic policy cannot be divorced. To suggest, as some people do suggest, that social advance must await some unspecified future stage of economic development is dangerous nonsense. Not alone is that viewpoint wrong in terms of national strategy, it is harmful to the interests of those groups in our community who are most vulnerable.
We must plan our development so as to ensure harmonious social and economic development at all stages, unless the problems of the poor, of the badly housed, of the victims of discrimination and of the unemployed are to increase, even in periods of alleged progress. Those who fail to see this point are either ignorant of the facts of life or they are blindly pursuing vested sectoral interests.
I see this year's budget as an exercise in achieving just the right balance: between incentive and investment on the one hand, and justice and equity on the other. The social welfare provisions of the budget are realistic and essential in this context. I reject utterly the view that there is a contradiction between incentive in the economic area and improvement of the social welfare system. Both are necessary if the overall goals of national policy are to be met. This is the fifth Social Welfare "Budget" Bill to have been introduced since the National Coalition came into office in 1973. It is the eleventh piece of social welfare legislation which I have brought into this House in four years.
In each of these measures the Government's objective has been to advance the work of alleviating social problems; of making adequate provision for all our citizens against the universally recognised contingencies of life; and of laying the foundations for the eventual elimination of financial need from our society.
The advances made in social welfare in the past four years must be seen as the clearest evidence possible of the commitment of the Government of social progress and reform. In a period of almost unparalleled world recession total financial provision for social welfare has been more than trebled and it has been possible, not alone to maintain and improve the real value of all basic rates of payment, but to bring about many important changes and expansions in our social welfare system.
There has been an increasing amount of evidence of the difficulties experienced by national social security systems all over Europe as a result of the recession and in particular of the sustained high level of unemployment. Restrictive measures have been taken in the social welfare systems of even the most advanced member states of the EEC, such as Belgium, Denmark and Germany.
In these circumstances the progress which has been made in our social welfare system must be seen as evidence of the Government's firm determination to ensure that the old, the sick, the widowed and the unemployed are not called upon, as in the past, to bear the full burden of the nation's economic difficulties. Those who are in fact the victims of the working of our economic system will not be asked to pay twice for its failures.
The increases in weekly rates of social welfare payments to be implemented in April will ensure that, taking into account the increases paid to many recipients last October, all those in receipt of benefit and assistance payments will have obtained increases of the order of 15 per cent over the rates in operation in April, 1976.
This will involve a total expenditure in the current year of over £46 million and it will bring the overall outlay on social welfare benefits and allowances to more than £520 million. This figure compares with the total outlay of £151 million in 1972-73. It represents about 10½ per cent of the projected gross national product, compared with the corresponding figure of 6½ per cent in 1972-73.
In the period between July, 1973, and April, 1977, the increases in personal rates of payment under the social insurance scheme will have been between 120 per cent and 142 per cent, while payments in respect of dependent children will have increased by between 163 per cent and 195 per cent.
Maximum personal rates of payment under the social assistance scheme will have been increased over the same period by between 124 per cent and 155 per cent. Child dependant allowances will have risen by between 174 per cent and 220 per cent.
In the period between early 1973 and the present the increase in the consumer price index has been of the order of 90 per cent, so that the increases provided for in the Bill in all rates of social welfare payments represent substantial real gains to all recipients.
I want to be a little more specific about this question of real increases.
In the period from early 1969 to early 1973—roughly the period in office of the last Fianna Fáil administration—the rate of contributory old age pension for a couple, both over pension age, rose from £6.63 to £10.35, a rise in real terms of about 11½ per cent, taking inflation into account. The real increase in pension for a similar couple in the four years of this Government will—at April, 1977, rates—be more than 20 per cent.
In the same period of Fianna Fáil Government—1969 to 1973—the flat rate of unemployment benefit for a couple with two children rose by just over 15½ per cent in real terms. The corresponding real increase in the term of office of this Government has been about 18 per cent.
These superior real increases represent a positive achievement and they prove the nature of this Government's commitment in the whole area of social welfare. These facts repudiate in the clearest way possible the suggestion that social welfare payments since 1973 have failed to keep pace with inflation.
The Government have decided that welfare recipients will not be allowed to absorb price rises over a full year period following on the April increases and provision is again being made for a further 5 per cent increase in rates from October next to provide against such price increases. This further increase will be effected by regulation at the appropriate time.
Thus, an October increase is being provided for the third year in succession. Senators will agree with me that this has been a most important innovation in our social welfare system and one which takes full account of the special needs of social welfare recipients at a time of high inflation.
Before giving an outline of the changes proposed in the main rates of social assistance and social insurance payments I wish to point out that I intend to deal separately with the various improvements and changes in the schemes later in my speech.
Significant increases in the rates of all social assistance payments are provided for in the Bill. For example, the maximum weekly personal rate of non-contributory old age and blind pensions is being raised from £10.75 to £11.75 for persons under 80 years and from £11.60 to £12.65 for persons aged 80 years and over. The rates of pension payable where the weekly means exceed £6 are also being correspondingly increased up to the point where means exceed £15 and no pension is payable.
The maximum weekly payment for dependent spouses who are not themselves entitled to a pension will be raised from the October 1976 level of £5.35 to £5.85, so that the overall weekly payment for an old age non-contributory pensioner with a dependent spouse will, at the maximum rate, be increased from £16.10 to £17.60 and, where the pensioner is 80 years of age or over, from £16.95 to £18.50.
The allowance paid in respect of a prescribed relative giving full time care and attention to an incapacitated pensioner is being increased by 55p a week to £6.55. In addition, the increases payable in respect of qualified children are being raised by 25p to £3.15 a week for the first two children and by 20p to £2.40 a week for each additional child. The new table of weekly means and rates of pension in section 2 of the Bill sets out particulars of these changes.
Section 4 of the Bill provides for increases in the personal rates of unemployment assistance, which are raised from £8.90 to £10.20 in the case of urban areas and from £8.55 to £9.80 in rural areas. Corresponding increases are made in the rates for adult dependants and for qualified child dependants. Thus the rate of unemployment assistance payable to a married couple with one child is increased from £18.10 to £20.75 in an urban area and from £17.65 to £20.20 in a rural area, representing an increase of £2.65 and £2.55 in these payments respectively.
The Bill provides also for increases in the weekly rates of non-contributory widow's and orphan's pensions. The increases granted in the case of widows apply automatically to the social assistance allowances for deserted wives, unmarried mothers and prisoners' wives. The maximum personal weekly rate of these allowances will be increased from £10.75 to £11.75 and the increase payable in respect of each qualified child is raised from £3.55 to £3.90. The orphan's non-contributory pension is increased from £7.00 to £7.65 a week. The single woman's allowance is also increased and the maximum weekly payment will be £10.20, an increase of 85p a week. All of these rates, it will be remembered, were also increased last October.
I will now refer briefly to some of the main changes in rates of social insurance payments. The personal rates of contributory, old age and retirement pensions, in the case of persons under age 80, go up by £1.15 a week to £13.90, and for those over age 80 the pension is increased by £1.25 a week to £14.75. The maximum personal rates of widow's contributory pension and deserted wife's benefit go up by £1.05 a week to £12.60 in the case of those under age 80 and by £1.15 a week to £13.60 for those over that age. The rate of invalidity pension is being increased from £11.45 to £12.45 a week. Again, it must be remembered that all of these pensions were increased last October.
The allowances paid with pensions and benefits in respect of adult dependants and children are also being increased. Thus, in the case of old age contributory and retirement pensions, a married couple both of whom are over pensionable age will get £24.40 a week pension from April or £25.25 a week if, in addition, the pensioner is 80 years of age or over as compared with £21.30 and £22.00 in April, 1976.
Similarly, the short-term benefit rates are also being increased. These increases apply to the personal and dependant rates in all social insurance schemes. A married couple with four children will get £33.55 a week by way of flat-rate unemployment benefit compared with £29.40 at present.
Maternity allowance is being raised from £10.90 to £12.45 a week, and the contributory orphan's allowance is to go up from £8.40 to £9.20 a week.
In line with the improvements in the general social insurance system, the Bill also provides for increases in the rates of the various benefits payable under the occupational injuries scheme. The increases in weekly rates will be broadly in line with those provided for in the social insurance scheme.
About 300,000 pensioners and 12,000 recipients of long-term benefits and allowances, together with their adult and child dependants, will receive increases under the various provisions of the Bill. In addition, approximately 190,000 claimants to short-term benefits and assistance allowances will receive the proposed new rates of payments, together with appropriate increases for their adult dependants and qualified children.
For the fourth time since the Government took office pensionable age under the social welfare system is being reduced by a further year, from 67 to 66 years. This is being effected by section 13 of the Bill, which will come into operation on 1st October next.
The significance of this advance can be appreciated by reference to the fact that, prior to 1973 and the advent of this Government, there had never been a reduction of pension age from the original age of 70 years. That pension age was originally set, in respect of non-contributory pension, 70 years ago in the Old Age Pensions Act, 1908—a United Kingdom statute—and, in the case of contributory pensions, 17 years ago in the Social Welfare (Amendment) Act, 1960. Nothing at all was done in this direction in the whole period of Fianna Fáil rule from 1957 to 1973.
I regard the progress made in this respect as most important. The Government gave a simple commitment in 1973 to reduce pension age, and four such steps have now been taken. It is estimated that these changes will have brought in more than 50,000 new pensioners by next October.
This provision affects not only the qualifying age for old age pension, both contributory and non-contributory, but also affects the maximum age up to which the short-term benefits, such as disability benefit and unemployment benefit and assistance, may be paid. Liability for payment of social insurance contributions will cease also at the reduced pensionable age and, in order to prevent any undesirable repercussions which this might have in relation to pension entitlement, the section includes a number of "saver" clauses to protect the position of existing pensioners and persons who will be approaching 67 years.
The reduction of pensionable age also affects the numbers of persons entitled to the benefits of free travel, free electricity and free television licences and it is expected that as a result a further 11,000 pensioners will be brought into those schemes this year.
I want to mention at this point that the facility of free travel and, where appropriate, free electricity allowance and free television licence, is being further extended to include approximately 10,000 recipients of the invalidity pension under the Social Welfare Acts. This extension will also be made available to persons in receipt of the disabled persons' maintenance allowance under the Health Acts, thus bringing a further 32,000 persons within the scheme from April next.
As in the case of pension age, this Government have given very special consideration to the development of the scheme of children's allowances. The view, widely held among professionals in the social services, that these allowances are of particular importance in meeting the financial needs of larger and poorer families has been fully accepted. The arrangement whereby the children's allowances are payable to the mother has added significantly to their effectiveness in social policy and thus it is now an indispensable element in our overall approach.
The rates of children's allowances are being increased with effect from July next. The increase of 50p a month will apply to the second and each subsequent qualified child and the monthly rates of allowance will then be £2.30 for the first child—no change—£4.10 for the second child and £4.85 for each other qualified child. For a four child family therefore, the monthly allowance will be £16.10. Thus, children's allowance rates have been raised four times in the five budgets of the National Coalition. This performance, reflecting as it does the very firm commitment of the Government to a crucial form of social provision, is in sharp contrast to what went before.
In the ten years from 1963 to 1973 children's allowances were increased only three times. Over that 10-year period the amount payable monthly to a four child family rose from just £3 to £6.50, an increase of 118 per cent. In the four year period, 1973 to 1977, the increases will have been 148 per cent, bringing the amount payable in July this year to £16.10. The real increase in the past four years is also greater than that in the previous ten. Expenditure on children's allowances has risen from approximately £17 million in 1972-73 to just £50 million this year. Seven hundred and fifty thousand children will benefit from this year's increases.
As an expression of the special concern of the Government for the position of pensioners living alone, this Bill also provides for the payment of a special increase of £1 a week to social welfare pensioners who have reached pensionable age and who are living alone. This special increase will apply therefore to old age pensions, both contributory and non-contributory, retirement pensions, widows' contributory pensions, deserted wife's benefit, invalidity pensions and death benefit pensions under the Occupational Injuries Acts, where the age and living alone conditions are met. In all these cases, including qualified non-contributory pensioners who are in receipt of payments below the maximum, the special increase of £1 a week will apply in full.
This improvement in the pensions scheme reflects an acceptance of the case made by many of those working with old people about the particular problems of those who are living alone and dependent on the personal rate of pension. It will, for example, raise the basic rate of contributory old age pension for qualified pensioners to £14.90 a week, with the rate for pensioners over 80 years of age rising to £15.75 a week. It is estimated that at least 30,000 pensioners will benefit from this provision of the Bill.
Section 3 of the Bill increases substantially the amount of earnings which may be disregarded for pension purposes in the case of blind persons. The changes will be as follows: the disregard in the case of the claimant will be increased from £65 to £208; that for an adult dependant from £52 to £156; and that for each qualified child from £39 to £104. Thus the earnings disregarded in the case of a couple with two qualified children will be increased—by 193 per cent— from £195 to £572 per annum. This change will take effect in April.
The "housekeeper" allowance which is at present payable along with unemployment assistance, disability benefit, unemployment benefit, injury benefit under the Occupational Injuries Acts and invalidity pension to single men and widowers in respect of a woman who has the care of their children is being extended—from April—to single women, widows and deserted wives in similar circumstances. This goes some further distance in eliminating inequality in the social welfare system in the case of women and in meeting the recommendations of the Commission on the Status of Women. The sections of the Bill which give effect to this provision in relation to the various benefits are sections 7, 16 and 21.
Subsection (2) of section 4 is designed to give effect to the changes in the special scheme of unemployment assistance for smallholders which follows a review of the position by the Government, namely that the increases in rates of payment provided for in this Bill will not apply to landholders whose rateable land valuation is in excess of £10 but not £20 and whose means are based on notional assessment by reference to their valuations.
Section 5 of the Bill provides that the notional method of assessing means from land of smallholders whose rateable land valuation exceeds £20 in the specified areas for unemployment assistance purposes will no longer apply. These smallholders may however continue to be eligible for unemployment assistance but only on the basis of the factual assessment of means which applies to applicants generally for such assistance. The Government's decision in this matter was largely influenced by the significant improvement in present levels of farm incomes and the highly favourable multipliers used in the calculation of means.
In practice these measures will mean that landholders whose rateable valuations do not exceed £10 will benefit from the increased rates of unemployment assistance provided for and that landholders whose rateable valuation lies between £10 and £20 and whose means for unemployment assistance purposes are notionally assessed will remain on their present rates of unemployment assistance and they will not gain the advantage of the new increased rates. In the case of smallholders whose rateable valuation exceeds £20 and whose means have been assessed on the notional basis, their title to unemployment assistance will cease as from 30th March, 1977.
An estimated 12,600 smallholders, or over 57 per cent of the 22,000 involved, will receive the rate increases provided for in the Bill. The 8,000 in the over £10 to £20 rateable valuation bracket will remain on their present rates of unemployment assistance and the 1,400 smallholders affected whose rateable valuations are over £20 will cease, as from 30th March, 1977, to be entitled to unemployment assistance on the notional assessment. Any smallholders who feel that these changes will result in hardship may make an application for a factual assessment of their means.
The purpose of the special provision contained in section 22 of the Bill is to extend the power which the Minister already has to make orders implementing reciprocal agreements with individual countries so as to enable him to make similar orders in the case of multilateral instruments affecting social security. This provision is necessary to enable consideration to be given to the question of ratifying the European Convention on Social Security of the Council of Europe. The convention is designed to ensure a broad measure of co-ordination of the social security schemes of the member states which become contracting parties to the instrument and it covers all the usual benefits in the field of social security.
The extra cost of the rates increases and the other improvements in the social insurance scheme which are provided for in the Bill must be met out of the social insurance fund, which is financed by insurance contributions from employers and employees with an annual subvention from the Exchequer. This extra cost, including the cost of the further increases in pension and benefit rates in October next, will amount to almost £23.4 million in the current year. To this must be added the sum of about £3.26 million to cover the full year cost of the October, 1976, increases and some additional administration costs, bringing the total additional expenditure to be borne by the fund to about £26.66 million in the current year.
The Exchequer contribution towards this extra cost will amount to approximately £13.77 million leaving the balance, about £12.89 million, to be met from increased contributions. This will require an increase of 6.3p in the rates of contribution which account for all benefits, of which the employer will be required to pay 4.2p and the employee 2.1p. The special increase of 31p introduced in 1975 is being retained for a further 12 months to meet the cost of the high level of unemployment claims which is still being experienced.
The ordinary rates of social insurance contributions, including the occupational injuries contribution, will thus be increased to £6.41 for men, of which the employer will pay £4.06 and the employee £2.35. For women the new ordinary rate will be £6.30 of which the employer will pay £4.01 and the employee £2.29. These rates do not include the health contribution, where that is payable, nor do they include redundancy contributions.
The rates of voluntary contributions will be correspondingly increased to £1.20 a week at the low rate and £3.10 a week at the high rate, an increase of 10p and 27p respectively. All of the new rates of contribution come into effect from Monday, 4th April, 1977.
In line with the improvements in the general social insurance scheme the Bill also provides, as I have stated, for corresponding increases in the benefit rates payable under the occupational injuries scheme. However, it is not proposed on this occasion to increase the rate of weekly contributions which are payable by employers only to the occupational injuries fund.
All of the rates increases provided for in the Bill come into effect at the beginning of April with the exception of the increases of children's allowances which come into effect from 1st July. The reduction in pensionable age will operate from 1st October and in that month also the further increase in rates will be implemented. The substantial nature of the overall improvements included in the Bill may be judged by the size of the financial commitment involved. On the assistance side, which includes children's allowances and the extra cost in relation to the free travel schemes and so on, the cost in the current year is estimated at £19.732 million. On the social insurance side the additional cost to be borne by the social insurance fund comes to £26.656 million. The overall cost is therefore of the order of £46½ million towards which the Exchequer contribution will amount to some £33.5 million in the current year.
I have already indicated the overall level of social welfare expenditure this year—about £520 million. The Exchequer allocation for social welfare this year has reached £290 million, compared with the 1972-73 figure of about £92 million. These increases should be viewed in the light of the overall rise in Government social spending since 1973. As a proportion of the total current budget, Exchequer spending on the social services has grown from 37 per cent to 42 per cent. This increase—representing a rise in cash terms of almost £600 million— reflects the determination of the Government to fulfil their social policy commitments.
Total social spending in 1977, including the gross expenditure figure for social welfare, has been estimated at about £1,070 million. This is approximately 21 per cent of the projected gross national product for the year. It may be compared with a figure of 13½ per cent in 1972-73.
By now Senators will have realised the scope and, indeed the complexity of the provisions of this Bill. It is also significant that, while most of these changes will become operative in April others will be implemented in July and October. I consider it to be of the greatest importance that beneficiaries and claimants should be assisted as far as possible in understanding all aspects of the changes which are being introduced. Accordingly, my Department are arranging for appropriate publicity at the time of the introduction of the new rates and improvements. The Department of Social Welfare booklet, which has been welcomed for its clarity despite the complex nature of its contents, will be published at the time of the April changes as usual.
This Bill represents a further considerable stage in the development of our social welfare system. It provides for very real advances in that system and it must accordingly recommend itself to this House. However it would be a grave mistake to be in any way complacent about the situation in the field of Social Welfare. Whatever may have been achieved a very great deal remains to be done. The task of bringing about a better distribution of the resources of the country in favour of those in need and to provide a broader range of supports capable of helping many of these people to provide for themselves and for their dependants must go on. In particular is this true in the case of those who are forced to resort to the social welfare system by reason of unemployment.
No matter which benefit or allowance one points to, the consideration of the real needs of individuals and families must bear heavily upon us. A budget such as this marks a significant further advance, but it should also serve to point out for us all the huge responsibility which rests upon the community to provide for those in need and the tremendous challenge which this throws out to our whole economic and social structure.
Recent studies have underlined these facts. I can refer in this respect to the excellent paper on unemployment payments prepared by the director of the National Social Service Council and to last week's National Economic and Social Council's document Towards a Social Report. Mr. Murray of the National Social Service Council has documented the position of those who are dependent on the social welfare system because of short-term or long-term unemployment. In exploding the persistent myths about the level of financial support for the unemployed he has indicated the seriousness of the problems of those people and of their families. About 80 per cent of those on the live register receive at most flat-rate unemployment benefit, which will from April amount to £27.65 a week in the case of a man with a wife and two children.
The National Economic and Social Council report points to the rapid development of our income maintenance services in recent years, in terms of both the scope of the system and the level of benefits. However the Council's conclusion, which I believe we must take very seriously, is that the level of many of the benefits is low both in absolute terms and in relation to the incomes of the working population and that much remains to be done, in particular for those who are largely dependent on social welfare.
We must accept that there is a continuing need to expand and improve our social welfare provision, on the basis of our developing knowledge of the facts and issues arising in the community. Research and informed debate are essential if we are to fulfil this important task and I am very much encouraged by the recent trend in these areas. Current financial pressures must not be allowed to deprive us of the factual basis for future policy advance.
In conclusion, I can say that this Bill is a genuine attempt to make the most positive and relevant contribution which our resources permit to the development of the sort of social welfare system to which the Government have committed themselves. Not alone has the necessity of maintaining the value of all social welfare payments been recognised and acted upon but the opportunity has been taken to further improve and strengthen the system in many important respects.
The new elements introduced and the specific improvements brought about in the areas of pension age, children's allowances, invalidity, pensioners living alone, widows and so on will benefit many thousands of families and individuals around the country. They prove that, even at a time of great economic difficulty and of pressure on the public finances, it is possible to maintain the forward impetus of social reform. The responsibility of the community in this vital area of social concern has been recognised and acted on by the Government.
I now recommend the Bill to Seanad Éireann for speedy and favourable consideration.
