My party opposes this section because it abolishes pay-related benefit from 1 November 1994.
SECTION 21.
Question proposed: "That section 21 stand part of the Bill."
July. People who have the benefit will continue to have it.
The rates of unemployment benefit and disability benefit have been increased. However, the report of the Commission on Social Welfare said that the abolition of pay-related benefit should not be considered until the recommended rates in the commission's report were reached. As the rates still fall short of the rates recommended by the commission, pay-related benefit should continue. There will be serious hardship in many families as a result of this measure. Our opposition, which we voiced on Second Stage, is based on the hardship that will be incurred by families from July in the case of new claims.
Pay-related benefit is of critical importance. It was introduced as a major advance in the social insurance system in the early 1970s by the former Minister, the late Deputy Frank Cluskey. It was hailed as a major advance in the provisions for pepole who became unemployed or sick because it applied to other benefits besides unemployment benefit.
At the same time, a pay-related social insurance system was introduced. That system, was a departure from the flat rate stamp system which was more or less standard for everybody. I cannot remember the exact amount I paid for a stamp but I remember it was quite low. Although the new system meant that we paid more, we realised that we would be guaranteed a phased reduction in our income if we become unemployed. We did not suddenly drop — in today's financial terms — from £200 per week to £60 per week in one fell swoop. The pay-related benefit gradually reduced the income over a period. The Minister is abolishing that pay-related benefit.
It should not be ignored that, apart from abolishing pay-related benefit from July, the Minister is also reducing the amount of pay-related benefit for current beneficiaries from 20 July. Tucked away in this section is an increase in the earnings which are disregarded from £80 to £97.50. If a person is currently on pay-related benefit or qualifies for pay-related benefit before July the person will be paid only on the excess of £97.50 of income whereas at present it is on the amount in excess of £80 per week.
The Minister is doing two things: he is abolishing pay-related benefit for those who become unemployed after July 1994 and he is virtually eliminating it for current beneficiaries through the income disregard. It is unacceptable that such a change in the conditions that apply to social insurance be implemented in this way. The trade union movement appears to be silent about the change. I am not aware that its representatives raised the matter in the course of the recent negotiations on the Programme for Competitiveness and Work. It is extraordinary that a change in the conditions that apply to insurance paid from wages should be introduced in such a dramatic way.
However, it does not surprise me. The amounts payable in pay-related benefit have gradually been whittled down since 1987 when the knife was first applied to this benefit. The Minister's argument that he has increased the amount payable by 10 per cent is not adequate. It does not compensate for the loss of pay-related benefit and it undermines the pay-related element of the social insurance scheme.
Earlier I welcomed the Minister's abandonment of means testing widows' pensions and widowers' pensions. If he had proceeded with that course of action it would have caused a major change in people's views on the payment of PRSI. When people pay PRSI they expect it to provide for them when they become sick, unemployed and old. They expect a certain fixed rate of payment to be available. I pay into the voluntary social insurance scheme and it is quite expensive. However, I believe it is worthwhile to pay. If we continue to reduce the benefits people can expect as a result of unemployment, sickness or old age, as has happened with pay-related benefit, and if we means tests benefits or pensions — as was attempted and I welcome the change in that regard — we will completely undermine the pay-related social insurance system.
Deputy De Rossa mentioned the widowers' pension scheme. It should be recognised that about £27 million has been allocated to that scheme. It is my job as Minister for Social Welfare to secure funding for such schemes. How I managed to obtain that figure is my own business. That amount, however, has been achieved and is covered in this Bill.
Deputy Allen asked about pay-related benefits coming up to the levels recommended by the commission. At this stage, it is currently at 93 per cent of that figure. The one difficulty I had with this measure was that while all the money went back to the basic rates, I also had to increase the disability benefit. As a result, that spread the money out, otherwise I might have achieved what Deputy Allen was referring to. In any event, all the money Deputy De Rossa referred to is going back into the system. An additional allocation of £2.7 million has also been made available.
I know it is confusing, but the floor arrangement was not put in to make people lose money. It is designed to ensure that those who continue to get pay-related benefits do not also get this extra payment. It is only a technical arrangement. These people get any increase given but do not get the reallocation of the pay-related benefit because their benefit is not being reallocated.
Deputies have indicated they are opposed to the measure. It is a bona fide measure. All the money is being put back into the system and an additional £2.7 million is being added to that amount. Therefore, the matter is being dealt with in a fair manner.
The point about the trade unions was already made by Deputy De Rossa. In normal circumstances one would be surprised if there was no opposition to this provision. The reason why this might have been the case here is that the Social Welfare Act, 1982, was effectively the beginning and end of the PRSI system as we knew it. At that stage, a worker with half his current rate would get approximately £47 PRSI payment per week within a few weeks after becoming unemployed. A PRSI contributor would have less than half that figure, although he may have been earning double the wages. Effectively, the system has been pared down from the 1982 Act, when it stood at 40 per cent. It was brought down to 30 per cent and then to 12 per cent. The ceiling has now been lowered and the floor has been increased. The level of payment period was also reduced over a number of Social Welfare Bills since 1982.
I have long advocated the elimination of the system as it currently stands. Instead, payment should be built into the basic rate. Once this is done, no Minister could reduce the level of social welfare payments in future. However, this was done with PRSI payments and they were always vulnerable because of that. This was done in every Social Welfare Bill from 1982 in one way or another, to the extent where they were absolutely worthless.
I welcome the decision the Minister has taken because at least this provision will be built into the rates. Any increases that come, percentage or otherwise, will compound on that figure. That was the reason there was no opposition from the trade unions. They agreed with my point of view. I consulted my colleagues.
May I take up this point again? We have a pay-related social insurance system. People pay into the social insurance fund on the basis of their income. They pay a certain percentage of their income up to a certain level or ceiling. There are also other issues involved. That ceiling should be removed in certain circumstances. Nevertheless, it is a fair system and people do pay. The system is supposed to provide that those in work will guarantee an income for themselves if they become unemployed, sick, move into old age or become widowed. This contribution helps to assist others who also find themselves in that situation. By abolishing pay-related benefit and in moving towards the means testing of pensions or benefits, we are undermining that solidarity.
I want the Minister to say that having abolished pay-related benefit he will not now move in the direction of means testing benefits or pensions. That sort of thinking was indicated in relation to widowers' and widows' pensions. The fact that it got as far as being included in the Minister's Budget Statement is a serious indication of the thinking taking place in Government circles. If that is the case, people will simply refuse to pay PRSI in a few years time because it will be of no benefit to them, their families or friends. They will see it as another tax. I ask the Minister to give an undertaking that, as long as he is Minister for Social Welfare, he will not means test benefits or pensions.
I have a small request to make which will not cause the Minister any sleepless nights. I welcome the improvements the Minister made in sections 15 and 16 — I was not present for the discussion — to means testing for lone parents and carers' allowances by increasing the earnings disregarded for these tests. This is welcome and applauded by all. However, there is an area the Minister should examine. It refers to the welfare means test contained in other areas of income disregards. Some of these have not been reviewed for years. The Army pensions disregard for the purposes of old age and widows pensions has been fixed at a maximum of £80 per annum since 1966. Similarly, the disregard for the earnings of blind people was fixed at £312 per annum, with an additional £208 per annum in respect of a spouse and £104 per annum in respect of any qualified child. This has not been amended since 1988. I call the Minister to give an overall review of the level of these disregards and for the provision to link them in future either to inflation, the consumer price index or another such measurement.
Like Deputy De Rossa, I would like the Minister to assure us that he will not be attacking either the widows or old age pensions at a future date. The Minister said that ministerial promises and assurances were worth something at one time. Will the Minister indicate that the bad thoughts he had about means testing widows pensions earlier in the year — which was a mean and vindictive move against those who are most vulnerable — will not be attempted in the near future and that there will be no attempt to means test old age pensions or any of the insurance-based benefits? As Deputy De Rossa said, this proposal is an attack on and an erosion of the insurance-based system. I hope the Minister can give some assurance and comfort to widows on this matter.
I wanted to introduce a widowers' scheme with an upper limit because it would help many people, although it would cost a lot of money and I succeeded in doing that in the budget. This Bill does not include any limit and there is an insurance based addition. I am happy with my achievement in that regard. We talked about a new scheme and new entitlements for widowers, which I have achieved, although my objectives may not always be obvious.
The Minister proposes to rob widows.
Fewer than 150 people were affected.
They would all have been affected in time.
That is not true. The Deputy is talking about history which is not included in this Bill. I have already explained the situation.
Deputy De Rossa raised a question about the pay related social insurance system. There is a pay related contribution system, but there is no pay related social insurance system. Pay related benefit changed from disability benefit to unemployment benefit which is inevitable. As Deputy Bell pointed out, the only difference is that I have put that money back into the basic rates for the future. The Deputy may represent it any way he wishes, but that is what I have done and it costs extra money.
The other point mentioned by Deputy Penrose related to the special disregards and allowances for Army and other pensions. Regardless of the rates one sets, increases on resources will be included so that pensions for those people will continue to increase. Their other pensions may also increase, but I have continued to increase their pension from the Department. I note what the Deputy said in relation to this matter, although one concentrates on increasing the money given to these people.
My earlier point in relation to the pay related social insurance system is that pay related benefit was introduced with the PRSI system. The pay related social insurance system was sold on the basis that people in certain circumstances would qualify for pay related benefit, which no longer exists. The pay related social insurance contributions still remain and we have flat rate benefits and contributory pensions.
Will the Labour Party Deputies note that the Minister has not denied the "bad thoughts", the words Deputy Allen used, to describe the means testing of widows' pensions? He has not assured us he will not consider that approach to contributory pensions and benefits at a future date. This is a serious matter and the Minister has not given the undertaking for which I asked today. If people feel their benefits and contributory pensions are not protected in the long term they will not be willing to pay into the system. On a personal level — and I am not approaching the matter on that level — it will not benefit me to continue paying approximately £2,000 each year in voluntary contributions, if, when I reach 66 years of age, the pension I expect to get from those contributions is means tested or no longer exists. That would not make sense.
I am well known as a strong supporter of the social insurance fund. I have fought many battles for that fund and will continue to do so, and I have no plans to means test it.
Question put and agreed to.