Before I begin, on my own behalf and that of my Department, I extend our sympathies to the committee's Chairperson, Deputy Naughten, and the Naughten family on the sad loss of his brother John.
I thank the Leas-Chathaoirleach and members for the invitation to present the 2024 Supplementary Estimate for the Department of Social Protection. I am seeking a Supplementary Estimate of €875 million for 2024. The purpose of this Supplementary Estimate is to address a shortfall in funding for my Department. This is required principally due to the range of cost-of-living once-off payments that were announced as part of budget 2025 and the associated additional expenditure on Vote 37 in 2024. This range of once-off cost-of-living measures includes an autumn bonus, a fuel allowance lump sum and a lump sum for people living alone. It also includes lump sums for our carers, people on disabilities and those on the working family payment. There will also be two double child benefit payments, a child support payment, which was previously known as the increase for a qualified child, and a Christmas bonus. I will shortly set out the specific details of these payments, including the dates and the number of recipients.
We are all deeply conscious of the cost-of-living challenges that continue to face so many households. It is heartening to note that inflation has moderated significantly over recent months, with the CSO’s latest release showing an increase of only 0.2% in the 12 months to September. We are still dealing with a sharp spike in inflation, however, caused by the Russian invasion of Ukraine in February 2022, with prices in Ireland having risen by 14% since then. The consequences of this spike are being felt by families throughout the State and have a knock-on effect on the cost of every household’s weekly shop. This is especially the case for those on fixed incomes, such as pensioners.
This Government has always supported those who need assistance the most. During Covid-19, the Government invested unprecedented sums in our health system, in supporting businesses and, through my Department, in supporting those who had lost their job. While the rise in inflation has, thankfully, abated, prices remain high and this is something of which the Government was conscious when framing budget 2025. I am delighted a core element of the social welfare budget remains a cost-of-living package designed to continue to support people in every community in Ireland. These additional payments made through October, November and December will put money into the pockets of older people, working families, carers and people with disabilities. In framing the budget, our aim was to ensure the support being given would be delivered in a timely manner, benefit households throughout the State and include key targeted supports. In 2024, these supports are estimated to cost €1.4 billion, of which €921 million is for Vote-funded schemes.
The cost-of-living supports that are paid to people in receipt of payments from voted schemes are funded entirely by the Exchequer. As members will be aware, there is a current-year surplus in the Social Insurance Fund. This means the cost-of-living supports paid to those on social insurance schemes have been funded from the Social Insurance Fund without recourse to funds from the Exchequer. As the cost of these supports was not included in the original Estimates for the Department, and unless equivalent savings on other schemes meet the entire cost, a Supplementary Estimate is required. In the briefing material provided to the committee, we have separately included the additional expense of the cost-of-living supports, including the Christmas bonus, to be paid for each scheme, showing the effect of these supports on the requirement for a Supplementary Estimate. This table also provides the outturn position on the various schemes prior to the payment of the cost-of-living supports, which eases comparison between the original Estimate and the Supplementary Estimate. I hope the committee will find this approach useful.
The balance of the Supplementary Estimate is required to meet a net overspend on the schemes and services delivered by my Department. In February of this year, a Revised Estimate of €25.6 billion was considered by the committee for projected 2024 social protection spending. This Estimate was based on Government decisions that had been made at the time. I have provided the committee with details of all schemes where the projected end-of-year Vote expenditure deviates from that projected in February 2024. I will now go through the key issues behind that in a little more detail for the committee.
The Government has provided a significant response to support social protection recipients in the face of the ongoing cost-of-living pressures that affected people during the year. Additional payments totalling almost €1.4 billion, specifically focused on mitigating cost-of-living pressures, will be made this year. Following the cost-of-living package announced as part of budget 2025, my Department will pay the following additional payments between now and the end of the year: an autumn double week bonus to be paid this month, a €400 disability and carer's support grant to be paid in November, further living alone and fuel allowance lump sums to be paid in November, more than 46,000 working families to get a €400 lump sum payment in November, €100 per child lump sum payments for those receiving a child support payment from the Department, two double child benefit payments for 1.2 million children in November and December and, of course, the Christmas double payments for more than 1.3 million people.
The position of the Social Insurance Fund in 2024 is again very healthy. As a result of our exceptionally strong labour market performance this year, the Social Insurance Fund’s PRSI income to the end of 2024 is projected at almost €17 billion. Gross fund expenditure in 2024 is now projected to be just under €13.3 billion, including expenditure for cost-of-living supports in quarter 4 in respect of Social Insurance Fund schemes. This means no Social Insurance Fund subvention is required from the Exchequer in 2024, and the Social Insurance Fund will carry forward an accumulated surplus currently estimated at more than €3.6 billion into 2025. I am sure the members will agree this is welcome news, but a surplus is important given the future financial pressures we face with our changing demographics.
Taking account of the cost-of-living measures, overspends and underspends on core schemes and the continued support to assist those under the EU’s temporary protection directive, overall social protection spending is projected to be €27.1 billion this year. This is a difference of €1.54 billion over the February 2024 Revised Estimate. Not all of this €1.54 billion is being funded through the Supplementary Estimate. There is a funding requirement of €665 million in respect of Social Insurance Fund schemes, which is funded by the 2024 surplus in the fund's income. This will more than cover the additional estimated expenditure on social insurance schemes.
Taking account of this, the total Supplementary Estimate required to meet the shortfall on voted schemes is €875 million. This €875 million comprises an additional €930.8 million for schemes and services funded from Vote 37 and a saving of €5.7 million on administration. Combined, this amounts to €925 million of which €49.9 million is offset by additional appropriations-in-aid receipts.
The need for this Supplementary Estimate is driven by additional expenditure of €921.5 million on cost-of-living payments on voted schemes. However, excluding these once-off measures, we estimate an underlying saving of €61.5 million on a range of schemes funded from Vote 37, mainly due to a stronger labour market and lower live register. The net amount sought as part of this Supplementary Estimate is therefore, as I have said, €875 million.
Before I conclude, as we approach the end of yet another busy year, I just want to take this opportunity to acknowledge the dedicated work of the people who work in the Department of Social Protection. During our time in government, the Department of Social Protection team have delivered again and again to support and protect our people. My Department has supported people through a series of crises - through the worst of the pandemic, then with the cost-of-living challenges and finally supporting those arriving from Ukraine. However, behind the headlines, this support is delivered day after day, week after week with professionalism, helpfulness, and speed. As we speak, the Department of Social Protection staff are working to deliver the first autumn bonus payments to customers in a couple of weeks’ time. I want to recognise the extraordinary efforts of the Department’s policy, IT, and operational teams to ensure all the payments are made. Payments will be made to hundreds of thousands of people and this is in addition to all the normal work of the Department as it supports our citizens. We can sometimes take it for granted that all of this will happen on time and on schedule and the money will just automatically land in people’s bank accounts or post offices. That is not the case. It takes a huge amount of work by a lot of people.
I want to use today as an opportunity to record my thanks to the staff of the Department of Social Protection all across the country. I have been in this Department for four and a half years and it has been a privilege and an honour to work in it. We all deal with people through constituency offices and no more than ourselves, Department staff cannot solve every problem, but they do their best.
I also want to take this opportunity to thank every member of this committee for their professionalism, courtesy and dedication on behalf of the people they represent and the support they have provided to me as Minister in two important Departments. I thank members for allowing me that opportunity. I am happy now to take any questions from the committee on the Supplementary Estimate.
