This Bill will give legislative effect to certain social welfare measures announced in the Budget Statement of 7 December which are due to come into effect from 1 January 2011. Last month the Government outlined in the national recovery plan the blueprint for a return to sustainable growth in the economy. In particular, it sets out the measures that will be taken to restore order to the Government finances and specifies the reforms the Government will implement to increase employment and accelerate economic growth. The plan is necessary to bridge the gap between Government expenditure and revenue which is being filled by borrowing. Unless the rate of borrowing is reduced, the burden of debt servicing will take up an increasing proportion of tax revenue. This would mean expenditure on vital schemes and services such as those provided by my Department would become increasingly unsustainable.
My Department accounts for approximately 38% of total gross Government current expenditure which will increase to 39% in 2011; therefore, it is not possible to stabilise and reduce public spending without an impact on the Department's budget. Accordingly, the plan provides for significant reductions in expenditure by my Department in the next four years. These will be achieved through a reduction in the number on the live register through economic growth; more intensive labour force activation measures designed to help people to get back into employment and, therefore, reduce live register costs; enhanced control measures to better direct expenditure only to those who need and are entitled to it; major structural reform of the welfare system to rationalise and simplify supports available to people of working age and ensure there is always an incentive to take up a job; and such reductions in rates of payment as may be necessary to ensure the overall savings targets are met, although this would be very much a last resort.
From my Department's point of view, our focus will be on enhancing fraud and control measures to try to make the bulk of the savings there; on labour activation measures which would lead to a reduction in number on the live register, and on structural reform. If we can make substantial progress in these key areas, reductions in individual rates of payment can be limited over the period of the plan.
Budget 2011 is the first step in achieving the goals of the national recovery plan. This will involve a reduction of €873 million in expenditure by my Department. Even after this reduction, expenditure by my Department will amount to €20.62 billion in 2011. As Minister for Social Protection, I am fully aware that the expenditure changes in the budget will affect the living standards of many citizens in the short term. However, if we put off these changes, there will be a greater burden in the future on those who can least bear it, including people with disabilities, families with children, the unemployed, carers and pensioners. In the context of a very tough budgetary environment the Government has done its utmost to protect as far as possible the most vulnerable in society and the improvements made in the past decade in these areas. The savings to be made in 2011 will be achieved by greatly enhanced control measures; proactive labour activation initiatives, including the introduction of a brand new community work placement programme called "Tús" operated by my Department; structural reform measures designed to deliver more effective income and housing supports in a sustainable way; and reductions in rates of payment.
Before I detail the areas in which changes are being made, I would, first, like to outline the supports being fully maintained at current levels to provide reassurance for those who had been concerned that their payments might be cut. Similar to last year we have been able to maintain pensions and other payments made to people aged over 66 years at current levels. They include payments for pensioners' dependent spouses aged under 66 years. This means that approximately 490,000 people aged 66 years and over and their dependents are being fully protected in the budget. Extra allowances paid to pensioners who live alone and those aged over 80 years will continue at current rates.
I have preserved welfare supports for pensioners generally as I believe all pensioners are entitled to a minimum level of guaranteed support by the State. For many pensioners, social welfare pensions, be they contributory or non-contributory, are their only source of income and most of them do not have an ability to earn. However, pensioners who can afford to pay towards economic recovery will contribute through changes in the taxation system which were announced last week by my colleague, the Minister for Finance.
A number of valuable other payments have also been maintained. These benefit not only pensioners but also people with disabilities, carers and all those on low incomes, regardless of age. They include the household benefits package which includes the free television licence, electricity-gas allowance and telephone allowance, as well as the fuel allowance and the free travel scheme.
The half-rate carer's allowance scheme and the extra payment for caring for more than one person are retained, as well as the respite care grant at its current value of €1,700 per annum. The half-rate illness benefit and jobseeker's benefit payments for widows or lone parents will also remain. The current payment arrangements for lone parents and people with a disability who participate in community employment schemes are being retained without change. The family income supplement scheme which benefits lower income families with children is also unchanged.
Bearing in mind the recent bad weather, I am providing for a special once-off additional two weeks fuel allowance payment worth €40. This will be made to most recipients in the next two weeks, with the remainder receiving the payment in early January.
Unfortunately, in the budget it will be necessary to introduce a rate reduction in working age payments from January 2011 to produce the necessary savings required in 2011. Whereas there have been some increases in inflation in recent months, consumer prices are back at April 2007 levels and we have managed to maintain the payment rates for all aged 25 to 66 in 2011 at rates higher than those paid in that year. No reduction is being made to the qualified child rate which will remain at current levels. In addition, the reduced rate of €100 per week for jobseeker's allowance recipients aged under 21 is also unchanged. Accordingly, the weekly rates of payment to those aged under 66 are being reduced by €8 per week or an average of 4.1%. Increases for qualified adults on working age schemes are being reduced proportionately. This will bring the personal rates of jobseeker's payments, one parent family payment, illness benefit and associated schemes in 2011 to €188 per week or €2.20 per week in excess of the rate which applied in 2007.
Even taking into account the reductions that were applied in 2010 and 2011, the Government has delivered unprecedented increases in welfare rates since 2004. Over that period, jobseeker's payments, disability allowance and one-parent family payments have increased by 39.5% while the cost of living has increased by 11.8%. The Government appreciates that reductions in rates will be difficult for people but we also know that if action is not taken now, we risk putting social welfare payments at greater risk in future. The weekly rate of supplementary welfare allowance will be reduced by €10 per week, or 5.1%, and supplementary welfare allowance is normally paid to persons who are awaiting entitlement to another welfare payment. The rate of the rural social scheme and community employment scheme will be revised in line with the changes in social welfare rates to €208 for a single person.
Issues have been raised relating to the blind pension, invalidity pension, disability allowance and widows' and widowers' pensions as well as the carer's allowance. I have looked at the issue of disability in detail since I was appointed to the Department of Social Protection. I accept there is a need for long-term reform in payments for people with disabilities that is much more tailored to individual positions and levels of disability. I will work to my last day in this Department to progress this agenda.
Much has been said and written on the reductions in these payments and in this context I must point out that to exempt all these recipients from the rate reduction would have meant exempting approximately a further 260,000 people. The effect of this to achieve the same savings would be to have required a cut of €11 per week in a jobseeker's personal payments and €18.30 per week for a couple. It must be remembered that people on disability allowance are also entitled to the full household benefits package, free travel pass and companion free travel pass where appropriate. These are worth approximately €20 per week. Disability allowance, blind pension and invalidity pension are paid to more than 150,000 people at present.
I have empathy for people with disabilities who have no capacity to work. It is urgent now that we develop a system that would allow us to differentiate between various levels of disability in a way similar to the partial capacity scheme which is contained in the Social Welfare (Miscellaneous Provisions) (No. 2) Bill 2010. This would allow for differentiated payments based on the level of disability and would allow for a more nuanced approach based on people's individual need. Within the present schemes and within the timeframe that I have been in the Department, however, it has not been possible for me to bring such a proposal to fruition yet. I would urge whoever succeeds me in this Department to make the development of this type of approach a priority.
On supports for children, between 2000 and 2010, the monthly rates of payment for child benefit increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €150 and €187 respectively. In the same period, overall expenditure on child benefit grew from just €638 million to approximately €2.2 billion per year. As a result, approximately 10.6% of gross social welfare spending in 2010 went on child benefit. The Government is proud to have been able to deliver such significant increases in payments to families when the resources were available. In the current economic environment, however, we simply cannot afford to keep spending at the same level as we did when our tax revenue was much higher. In that context, we have decided to reduce overall spending on child benefit. In considering the various options for making savings in this area, we were conscious that the payment can be an important source of income for all families for different reasons. Accordingly, the Government has decided against withdrawing child benefit completely from any family.
From January, the lower rate of child benefit which is paid in respect of the first and second child is being reduced by €10 to €140 per child per month. The payment for the third child is being reduced by €20 to €167 per month and the payment for the fourth and subsequent children is being reduced by €10 to €177 per month. I appreciate that cuts in child benefit will make life difficult for some families but it should be recognised that the payment will still be very generous compared with other countries and that the Government is also making a substantial contribution towards child care provision, including the continuation of a free preschool year. The qualified child increase payable with welfare payments is fully maintained. The domiciliary care allowance paid to parents and guardians of certain children under 16 who are ill or who have a disability is also unaffected and the family income supplement and back to school clothing and footwear allowance are unchanged.
Some questions were raised about multiple births and I confirm that additional benefit and grants for multiple births will continue to be paid. The rate of child benefit payable in respect of triplets remains payable at twice the normal levels. Child benefit support in 2011 for a family with triplets will be €894 per month or €10,728 per annum. The special grants payable at birth and at ages four and 12 are unchanged at €635 per child.
My Department will initiate a number of reforms to the rent supplement schemes to generate savings of €60 million next year. These reforms include entering discussions with the Department of the Environment, Heritage and Local Government with a view to aligning the minimum contribution payable by household couples more closely with that paid by equivalent households under the local authority differential rent scheme. Reforms also include reviewing entitlement of people who refuse local authority housing, the reduction of payments made to landlords with a corresponding reduction in rent limits, where appropriate, and increased control activities through efficiencies arising from the transfer of the community welfare service staff to the Department of Social Protection.
The introduction of a €2 differential between the rate of basic supplementary welfare allowance and other schemes from January 2011 will generate more than €10 million in savings in the rent and mortgage interest schemes. These will arise as entitlement to rent and mortgage interest supplement is based on the weekly rates of supplementary welfare allowance. Pensioners, carers and people on supplementary welfare allowance will not be affected by this change. Following these reforms it is estimated the rent supplement scheme will still cost €465 million in 2011.
The value of the household benefits package is being fully maintained in 2011. I am considering a number of reforms, however, some of which may require legislative change, to make schemes work more efficiently and at less cost. As announced in the national recovery plan, expenditure on the free television licence and free travel schemes will be capped at the levels provided for in the 2010 Revised Estimates. This will not affect individual entitlement but does generate savings in the long term.
The availability of job opportunities with real financial incentives to take them up is crucial over the next few years. Beyond the immediate financial benefit to the worker, work benefits an individual's psychological and general health as well as the wider community and the economy generally. Activation and support for those who are unemployed is a key priority for the Government.
Earlier this year, the Taoiseach announced a number of changes to improve the delivery of employment, training and community services to the public by bringing together related responsibilities in these areas. These changes include the restructuring of departmental responsibilities with the aim of providing a streamlined integrated response to the income support and job search needs of people who are unemployed. In this regard, the employment and community services operated by FÁS are transferring to my Department in January, as provided for in the budget day Estimates. As part of this integration, the national employment action plan is already being revised to provide more efficient interventions with jobseekers on a more frequent basis. This process commenced in October. A key element of the new initiatives will be more intensive and more regular engagement by our Department's services with unemployed people in helping them get back to work and ensuring that all jobseekers are genuinely available for and seeking work.
I am also introducing a new community work placement programme entitled Tús. It is intended that this will become operational in the near future. It will provide up to 5,000 places and will provide quality targeted short-term working opportunities for people who are unemployed while carrying out beneficial work within communities. The 52 local development companies, the Leader-partnership companies, will have responsibility for delivering the work opportunities. Community and voluntary organisations will be asked to provide quality working opportunities for potential participants and a number of national, sporting, cultural, social organisations as well as caring and disability services will be given the opportunity to participate.
Participants will work for 19.5 hours per week for a duration of 12 months and there may be some degree of flexibility in the schedule of hours. The rate of payment will be equivalent to the maximum rate of the person's underlying social welfare payment plus an additional top-up of €20 per week. The employment will be insured for all benefits under the social insurance system. Participants will be selected through the processes used for the national employment action plan. My Department will contact people on the live register who satisfy the scheme criteria and offer them the opportunity to participate. Those interested in participating will be referred to the local development company which will maintain a panel from which recruitment will be made. As is required by law, persons in receipt of jobseeker's allowance must be genuinely and actively seeking employment. Where a person refuses a work opportunity, including a work opportunity on the new scheme, his or her continuing entitlement to a payment will be examined.
This is an important new initiative to provide quality short-term working opportunities for people who are unemployed. It is essential that it is properly targeted on those who will most benefit, can be easily accessed and administered, does not impose excessive burdens on community organisations and provides quality suitable work opportunities and beneficial outcomes to the community. It is anticipated that the scheme will cost up to €30 million in 2011 and provision is made for this in the budget day Estimates.
Overall, it is anticipated that activation measures generally, including the refocused and reinvigorated national employment action plan, will save up to €100 million next year. In addition, the skills development and internship programme and work placement programme operated by the Department of Education and Skills will provide up to 10,000 places in the private and public sectors.
Welfare fraud is theft. It is a serious crime and the Department of Social Protection is doing everything it can to crack down on people who abuse the system. More than 600 staff are working in areas related to control of fraud and abuse of the welfare system. Between January and the end of October this year, more than 585,000 individual claims were reviewed. When high risk areas are identified targeted control measures are put in place to reduce the risk of fraud and abuse of the system. For example, certification was introduced in relation to child benefit claims from non-Irish nationals and other customer segments in schemes where any form of high risk has been identified.
Next year my Department will begin the phased introduction of the public services card with key security features, including a photograph and signature, which will be used to authenticate identity of individuals. One of the anticipated advantages of the public services card is that it will help to reduce fraud and error which result from the incorrect identification of benefit claimants. These cards will issue to approximately 3 million people in the next number of years. They will replace cards currently in use, such as the social services card and the free travel card.
Fraud detection systems have also been improved through data matches with organisations such as the Revenue Commissioners using commencement of employment data, the General Register Office on marriages and deaths information and many other organisations, including the Departments of Justice and Law Reform, Environment, Heritage and Local Government and Education and Skills as well as other State bodies. I assure Senators that my Department will continue to use every available means to crack down on welfare fraud and savings will be generated by streamlining our approach in line with international best practice.
I will now look ahead to the welfare system of the future. Structural reform of the welfare system is crucial in the short to medium term to deliver better targeted supports while always encouraging participation in work. If we do not reform our systems, we will have no alternative but to make further cuts to achieve these savings. I favour making savings from structural reform when and where possible.
In recent weeks my Department has published three reports which will assist with key areas of reform. The reports cover important areas of social welfare, namely, child income support payments as well as payments to people of working age and people who are ill or have a disability. The reports will make a valuable contribution to the transformation agenda and share common themes with the main objective being the improvement of outcomes for people and their families who are dependent on my Department's support.
Structural reform changes could include the development of a rebalanced and integrated child income payment system and the development of a single social assistance payment to replace the different means tested working age payments, including some secondary and supplementary payments, as part of a more purposeful labour activation strategy. The new single working age means tested system would help to minimise the existing benefit traps and incentivise recipients to move back to work or from part-time employment to full-time employment. Implementation will have to be done on a step by step basis to make the system more friendly to atypical working. The disability allowance review proposes that customers should have their employment capacity assessed at the point when they first apply for the allowance to facilitate a greatly improved matching of services and needs.
I will bring proposals before the Oireachtas this week with regard to sovereign annuities in a separate Bill, the Social Welfare (Miscellaneous Provisions) (No. 2) Bill.
Significant changes are being made to the PRSI system in the Bill. As Senators are aware, the social insurance fund is in deficit and faces significant liabilities in the coming years, particularly from rising pension costs. These measures will increase social insurance fund income and work to safeguard the future sustainability and integrity of the social insurance system. Among the measures being put in place is the abolition of the employee PRSI ceiling, a progressive measure which will increase fund income by some €145 million in a full year. The self-employed PRSI rate is also being increased by 1% to 4%. State benefits, particularly the contributory pension, are very valuable and we must ensure that those in receipt have made adequate contributions to the fund.
A number of changes to the base of income on which PRSI is being charged are also being put in place. These include the abolition of PRSI relief on employee pension contributions and a halving of the relief on these contributions for employers. Irish social insurance contributions are low by international standards. These measures go some way towards achieving the necessary balance between contributions to the social insurance fund and expenditure from the fund. They also increase the fairness of the system. The Bill also provides for miscellaneous amendments to the social welfare code.
I will outline the main provisions of the Bill. Section 3 together with Schedule 1 to the Bill provide for the reduction in the weekly rates of social insurance benefit payable to people of working age, as provided for in the budget, with effect from the beginning of January 2011.
Section 4 together with Schedules 2 and 3 to the Bill provide for the reduction in the weekly rates of social assistance payable to people of working age, as provided for in the budget, with effect from the beginning of January 2011.
Section 5 provides for reductions of €10 each in the monthly rates of child benefit for the first and second child and the fourth and subsequent children, as well as for the introduction of a new rate of child benefit for the third child, with effect from 1 January 2011.
Section 6 clarifies the legislative provisions in relation to the payment of various increases with disablement pension so as to ensure the increases of disablement pension for qualified adults, children etc. can only be paid where the disablement pensioner is entitled to an incapacity supplement.
Section 7 provides for changes in the reduced rate of jobseeker's benefit for claimants who refuse to participate in an appropriate course of training or to participate in a programme under the national employment action plan. This change is consequential on the reduction in rates provided for in section 3. Section 8 provides for changes in the reduced rate of jobseeker's allowance for claimants who refuse to participate in an appropriate course of training or to participate in a programme under the national employment action plan. This change is consequential on the reduction in rates provided for in section 4. Section 9 provides for changes in the reduced rate of supplementary welfare allowance for claimants who refuse to participate in an appropriate course of training or to participate in a programme under the national employment action plan. This change is consequential on the reduction in rates provided for in section 4. Section 10 provides for repeals consequential on sections 7, 8 and 9.
Section 11 provides for the abolition of the income ceiling of €75,036 applying to the PRSI contributions payable in the case of employees, voluntary contributors and optional contributors — those engaged in share fishing — with effect from 1 January 2011. The section also provides for a number of consequential amendments to the Social Welfare Consolidation Act 2005.
At present PRSI is levied on gross income, less any superannuation contributions payable. Section 12 provides for the abolition of PRSI relief on employee superannuation contributions, payable with effect from 1 January 2011. At present both employer and employee PRSI is levied on gross income less any superannuation contributions payable. While section 12 provides for the abolition of PRSI relief on employee superannuation contributions payable, section 13 provides for a reduction of 50% in the PRSI relief available for employer PRSI contributions arising from the employee superannuation contributions payable. Section 14 increases the rate of PRSI contribution payable by self-employed contributors by 1% to 4%.
Section 15 provides for the abolition of the health contribution payable under the Health Contributions Act 1979 with effect from 1 January 2011. This section also provides that any liability for health contributions assessed after 1 January 2011 in respect of tax years before 2011 are payable and that matters relating to the estimation, collection, recovery or refund of those contributions, or of interest thereon, or other proceedings relating to those contributions or that interest, can be enforced.
As I stated, the Department of Social Protection accounts for approximately 38% of the total gross Government expenditure and will account for 39% in 2011 and, therefore, it is not possible to stabilise and reduce public spending without any impact on my Department's budget. Failure to take action now on the level of expenditure by the Department of Social Protection would mean that supports to pensioners, carers, people with disabilities and jobseekers, among others, would become increasingly unsustainable. If we do not make these changes we risk making the economic situation far worse in the long term for everyone, including welfare recipients.
I commend the Bill to the House and look forward to an informed debate. Molaim an Bille don Teach and tá mé ag súil le tuairimí na Seanadóirí a chloisteáil maidir leis na míreanna éagsúla atá ann.