Ar aghaidh leis an Seanadóir, tá ceithre nóiméad aige.
Adjournment Matters
Social Welfare Benefits
Cuirim céad fáilte roimh an Aire Stáit. Táim buíoch go bhfuil sé anseo, ach tá díomá orm nach féidir leis an Aire sinsearach teacht isteach don cheist seo, mar is ceist í seo atá ag déanamh tinnis do go leor daoine faoi láthair. Tá an-chuid cainte ar na táirsigh freisin maidir leis na hathruithe a bhaineann le liúntais cíosa. Tuigeann muide go gcaithfidh an Rialtas iarrracht a dhéanamh an cíos atááíoc le tiarnaí talún agus mar sin de a ísliú agus tuigeann muid go bhfuil cíosanna an-ard áíoc i gcásanna áirithe agus nach cóir go mbeadh siadsan le n-íoc ag an Stát. Ach, tá fadhb againn leis an mheicníocht atá tógtha ag an Stát le sin a chur i bhfeidhm, is é sin na tionóntaí atá sna tithe a chur ag margántaíocht.
I raise the issue of the change to the rates for the rent allowance supplement. Although we agree in principle with the idea that landlords certainly need to be tackled on the issue of the rents under this scheme, there are serious issues with the way the scheme is administered currently. The tenants are being forced to renegotiate their leases with landlords. This is a disastrous situation for many people. Sinn Féin has been contacted by many people in Galway and we held a meeting on Friday evening. The tenants are finding it impossible to renegotiate and the landlords are playing hard ball and they are not willing to move on the rates. The Government should have used another mechanism.
This is current Government policy and Sinn Féin disagrees with the method of its implementation. I know of one family in Knocknacarra in Galway city which was informed two weeks ago by letter from a representative of the Department of Social Protection that the new level of rental support was being introduced. As a result of this new rate, the family's supplement was being lowered from €800 a month to €700. This will not cover the rent for their house and there is no accommodation available in the area at a suitable rent. The Department has stated the review of this case was based on figures from daft.ie, and the CSO. However, neither of those websites show properties in that area for that level of rent. The children attend a local school and both parents are unemployed. Before the end of last month, 31 May, they were forced to write to their landlord to say they would have to break the lease agreement and leave the house. They do not have any alternative accommodation and they will be homeless for all practical reasons.
I ask if an appeals system is available for such cases where the rent is more than the relevant limit. The Department's website states that in some cases rent supplement can be paid at the discretion of the Department's representative, formerly known as the community welfare officer, CWO, where the rent is over the relevant limit. There are three circumstances. For example, if a member of the household has special housing needs, for example, a disabled person in specially adapted accommodation; if a tenant can pay the rent by taking up employment the rent supplement at a higher rate can be paid for a short period of six to eight weeks; and if there are other exceptional circumstances. I ask for clarification as regards circumstances.
The decrease in the rate for rent supplement will cause some tenants to default on the lease agreement and they will be in a very precarious legal situation. It will also mean they will have to leave their home and force them back on the local authority homeless list to be accommodated in some other manner at a cost to the State. The system needs to be reviewed because tenants are being forced into a very awkward and unfair position. I ask for clarification about the appeals process because these people need a remedy for an immediate problem. Cuirim fáilte roimh an fheagra.
I will do my best, Senator.
I am taking this Adjournment matter on behalf of the Minister for Social Protection, Deputy Joan Burton, who sends her apologies for not being in a position to reply to the Senator. The purpose of the rent supplement scheme is to provide short-term income support to assist with reasonable accommodation costs of eligible people living in private rented accommodation who are unable to provide for their accommodation costs from their own resources and who do not have accommodation available to them from another source. The overall aim is to provide short term assistance and not to act as an alternative to the other social housing schemes operated by the Exchequer.
New maximum rent limits came into force on 1 January 2012 and are in place until June 2013. These new limits are in line with the most up to date market data available. The emphasis of the rent limit review was to ensure that maximum value for money for tenants and the taxpayer was achieved while at the same time ensuring that people on rent supplement are not priced out of the market for private rented accommodation.
Rent supplement is subject to a limit on the amount of rent that an applicant may incur. The general practice is that rent supplement is not paid where the rent is above the relevant limit. However, regulations provide that a supplement may be paid in cases where the circumstances so warrant. Guidelines are issued to determining officers to provide guidance as to the circumstances in which a rent supplement may be paid where the relevant limits are exceeded. The guidelines are as follows.
Where there are special housing needs related to exceptional circumstances, in particular, for example, a person with a disability in specially-adapted accommodation or homeless persons whose housing needs cannot be met within the standard terms of the rent supplement scheme etc; and where the person concerned is entitled to an income disregard and has sufficient income to meet his or her basic needs after paying rent, taking into account the appropriate rate of rent supplement that is otherwise payable in the case. Sufficient income in this context means the relevant basic supplementary welfare allowance rate less the prescribed minimum contribution to rent; where the tenant will be in a position to re-assume responsibility for his or her rent within a short period. For this purpose, a guideline period of no longer than six to eight weeks is suggested but where there are exceptional circumstances, an extension up to a total of 12 weeks may be allowed; where an existing claim is under review, the rent paid to the landlord is in excess of the prescribed limit and the lease agreement is not for immediate renewal, staff may use their discretionary powers and pay rent supplement based on the rate quoted within the lease agreement for up to 13 weeks. They may further use their discretion, and extend the 13 week period in circumstances where the lease agreement will expire within a reasonable timeframe, or; the termination of the lease agreement may give rise to onerous penalties payable by the applicant, or; the minimum notice within the lease agreement, that a tenant must provide a landlord to vacate the property, is in excess of the 13 week period. Appeals officers examine each case to determine the most appropriate response having regard to the particular circumstances of the case.
I suggest the Senator advise the family to go to the local appeals officer who has discretion and their very clear circumstances may be facilitated.
I welcome the clarification provided by the Minister of State. It is important to note that this is a scheme which provides a short-term response but it will not be suitable because the local authority housing is not available for people who are in the scheme. Directors of services in the local authorities I deal with are saying they are being forced by the Government policy towards private rental accommodation because houses will not be built to deal with the demand. This gives a short-term reprieve and I welcome the clarification but it will not be a solution to the issue and I call on the Minister of State to talk to the Minister for Social Protection to ask her to review this policy as it is a very flawed policy which is putting undue pressure on tenants and it will not solve the problem. It will force people out of their homes and children out of their schools. It will create ghettos in areas where only people of a certain class or those on social welfare are corralled into certain areas of cities. I call on the Minister for Social Protection to completely review this policy.
I assure the Senator that I will speak to the Minister for Social Protection and I will bring the file to her attention.
The point was made clearly. The rent supplement scheme is reviewed constantly and I have no doubt the Minister will take on board the Senator's recommendations.
The Senator questioned the availability of local authority housing. Galway may be the exception, but in many counties private landlords are happy to facilitate persons in receipt of the rent supplement as they would prefer to have a tenant in their vacant property. However, I hear the point the Senator is making and will bring it to the Minister's attention.
I hope the short-term measures will accommodate the Senator's concerns.
Redundancy Payments
I have a very short question. I ask the Minister to outline the details of an evaluation carried out by the Government prior to the introduction of the new redundancy arrangements, as they place a major onus on small businesses dealing with redundancies. It certainly does not help job creation. It acts as a deterrent to anybody considering employing a person.
Will the Minister outline the scheme and its effects on job creation?
I thank Senator Daly for raising this very important issue. I am taking this Adjournment matter on behalf of the Minister for Social Protection, Deputy Joan Burton, who sends her apologies for not being present to respond in person to the Senator. The purpose of the redundancy payments scheme is to compensate workers, under the Redundancy Payments Acts, for the loss of their jobs by reason of redundancy. An eligible employee is entitled to two weeks statutory redundancy payment for every year of service, plus a bonus week. Compensation is based on the worker's length of reckonable service and reckonable weekly remuneration, subject to a ceiling of €600 per week. Employees must have at least two years' service to be eligible for a redundancy payment.
It is the responsibility of the employer to pay statutory redundancy to all their eligible employees. An employer who pays statutory redundancy payments to its employees is then entitled to a rebate from the State. I am sure the Senator is aware of these provisions. Where an employer can prove to the satisfaction of the Department that it is unable to pay the statutory redundancy to its employees the Department will make lump sum payments directly to the employees and will seek to recover the debt from the employer.
Both the redundancy and insolvency payments scheme transferred to the Department of Social Protection in January 2011. Payments under both schemes are made from the Social Insurance Fund, SIF, which is currently in deficit.
While the SIF is constituted primarily from employer's contributions, the taxpayer's contribution is also significant. Significant amounts have been paid out in redundancy rebates to employers from the SIF in recent years. The total amount paid out in redundancy rebates to employers was €152.2 million in 2006; €167.4 million in 2007; €161.8 million in 2008; €247.9 million in 2009; €373.2 million in 2010; and €185.3 million in 2011.
The deficit in the Social Insurance Fund is of significant concern at present and it is not considered that the country should continue to borrow money to plug the hole in the SIF in order to fund the cost of making people redundant — often from very profitable companies.
In the context of the 2012 budget, the Government decided that the 60% level of rebate was not sustainable in the current economic climate. As a result, the rebate was reduced to 15% for cases where the date of dismissal for the purposes of redundancy occurs after 1 January 2012. It is expected that this measure will save €81 million in 2012.
It has been acknowledged that this may cause difficulties for employers, and I appreciate the Senator is making this point, but it should be noted that redundancy rebate payments to employers are not common in many EU states or other jurisdictions. For example, in the UK the redundancy payment is funded by the employer and there is no recovery from the state. In Sweden there is no statutory system of redundancy payments from employers while in Spain the employer cannot claim back any amount from the state. This new arrangement brings Ireland more closely into line with practice elsewhere.
An bhfuil an Seanadóir sásta?
As the Minister of State will be aware, it was stated in the reply that people were made redundant "often from very profitable companies", but at times they are seeking their redundancy payments from companies that are not profitable. This is militating against the creation of jobs.
The Minister of State is responding on behalf of the Minister for Social Protection and has been given the reply. However, I asked if a detailed evaluation was carried out prior to the introduction of the change in the scheme. I think the departmental officials did not read the question I asked, because I was looking for a cost benefit analysis and the impact on job creation, which should be done prior to the introduction of new measures.
I sincerely thank the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Perry, for coming into the House to respond to the Adjournment, but unfortunately the reply he was given was not appropriate to the question I raised.
I can answer that question. It is evident that an evaluation was conducted — the scheme cost €373.2 million in 2010, and if one considers that 1.8 million people are currently working in Ireland, of which 700,000 work in small companies, 137,000 work directly in IDA and an equivalent number in Enterprise Ireland companies, it is a question of affordability. Unfortunately, the evaluation of the Social Insurance Fund found that the tills are empty.
I fully accept that reducing the rebate to employers from 60% to 15% puts great pressure on small companies. The sad reality is that because we are borrowing from the IMF, it leaves the Government with few choices. An evaluation was carried out by the Department of the Finance which found that the scheme was no longer sustainable. The bottom line is that the scheme cost €247.9 million in 2009 and €373.2 million in 2010, which is a significant amount.
The backbone of our economy is the 200,000 companies employing fewer than ten people and giving employment to 700,000 people. The action plan for jobs is focused on increasing the number of jobs in SMEs by creating 100,000 new jobs by 2016. While the reduction of the redundancy rebate will have an impact, the Government has alternative schemes to encourage people to create jobs. The job of government is to make people employable and to encourage enterprise. The Government is incentivising companies to create jobs through the action plan for jobs, the lowering of the VAT rate, the reduction of the PRSI in the expectation, as the Taoiseach stated, that 50,000 small companies would each created one job at little or no cost to the State.
In 2010 it was costing the taxpayer €7 million each week to fund the rebate of the redundancy payment from the Social Insurance Fund. That is not sustainable. My job as Minister of State with responsibility for small business is to encourage employers and give them ten reasons to create a job and not ten reasons to make people redundant.
When I asked for an evaluation, I did not simply mean an evaluation in terms of pounds, shillings and pence but an evaluation of the measures to create jobs. If an employer is thinking of employing an additional person and then looks at the changes to the redundancy scheme, it is aware it will cost it a fortune to let the person go. This is another barrier to creating jobs.
The Minister has given a comprehensive reply.
I thank the Minister for his response and I appreciate that he came into the House.
I thank the Minister, who is always welcome in this House.
The Seanad adjourned at 8.10 p.m. until 10.30 a.m. on Thursday, 7 June 2012.