Dáil Éireann Debate, Tuesday - 19 January 2010
754 Deputy Olivia Mitchell asked the Minister for Social and Family Affairs if the 2010 budget reduction of 4% to social welfare is deducted on a “gross” or “net” basis, in view of the fact that in some situations (details supplied) the 4% reduction can in effect translate to more than an 8% reduction proportionally for those recipients who receive only a reduced weekly social welfare payment; and if she will make a statement on the matter. [1213/10]
View answer786 Deputy Michael Ring asked the Minister for Social and Family Affairs if, in view of the recent budget cutbacks, in the case of persons who are getting means tested payments and are on a reduced payment, the reason the €8.30 is not implemented on a reduced rate, rather than at the full rate of €8.30; if she will introduce the reduction on a pro-rata basis; her views on whether the imposition of the full €8.30 cut is fair to those on partial social welfare payments; the legal position in this matter; and if she will make a statement on the matter. [1907/10]
View answerI propose to take Questions Nos. 754 and 786 together.
The various social assistance schemes operated by my Department are means tested and include schemes such as jobseeker's allowance and one-parent family payment. For means test purposes, account is taken of the value of any capital or property owned by the person in addition to any cash income the person might have including, inter alia, earnings from employment, income from self-employment, foreign social security pensions and occupational pensions. If a person has a spouse or a partner, the means of that person is also taken into account.
As provided for in social welfare legislation, where a person has means the weekly value of those means is deducted from the maximum weekly rate of payment and a reduced rate is payable. Where a person has weekly means in excess of the maximum personal rate of Jobseeker's Allowance, no payment is made.
The purpose of the means test is to reflect that fact that the person has other income or assets available to support him or her. Accordingly, the total weekly income available to that person or couple comprises both the value of the means of the person in addition to any jobseeker's allowance they may be entitled to.
In addition, where a person has income from certain sources, some of that income is disregarded under the jobseeker's allowance means test. Where a claimant or a spouse/partner has income from employment, the first €20 per day is disregarded, subject to a maximum of €60 per week and 60% of the balance is assessed.
Where a person has no means, jobseeker's allowance is payable at the maximum rate of payment. In the case of a single person, the maximum weekly rate was €204.30 in 2009 and is €196 in 2010, a reduction of €8.30 per week or 4.1%. In the case of a couple with no means, the reduction is €13.80 per week, also 4.1%, from €339.80 to €326.10 (including the qualified adult allowance).
The effect of the Budget changes in rates of payment where a person has means can be illustrated by way of the following example. In the case of a couple where the claimant is unemployed and the spouse or partner is working three days per week with net earnings of €460 per week, jobseeker's allowance of €99.90 per week would have been payable in 2009. This reduced rate is equivalent to the combined maximum weekly personal and qualified adult rates of €339.90 less weekly means of €240. Accordingly, the total income of the couple in this example would have been €559.90 per week in 2009 comprising net earnings of €460 and jobseeker's allowance of €99.90.
Consequent on the reduction in the maximum weekly personal and qualified adult rates of jobseeker's allowance announced in Budget 2010, the total weekly income of the couple will reduce to €546.10 per week in 2010, an overall reduction of €13.80 per week or 2.5%.
As the example shows, the overall reduction in percentage terms in total family income for persons on reduced rates of jobseeker's allowance is somewhat less than applies in the case of a person with no means who receives the maximum rate of payment. This arises because the element of their total income which is represented by their means is not affected by the recent Budget. The introduction of pro-rata reductions for recipients of reduced rate jobseeker's allowance payments would further reduce the overall percentage loss in total family income when compared with that experienced by persons who had no means and are, accordingly, totally dependent on the social welfare payment.
Similar effects will occur in relation to other social assistance payments. The precise level of reduction in overall family income will vary as the income disregards and assessment rates vary from scheme to scheme. No change was made in Budget 2010 in relation to the means testing arrangements where a claimant or a spouse/partner is engaged in employment in order to maintain incentives to take up, or remain in, employment.
Where a claimant, or his or her spouse, is in employment and net earnings from that employment reduce for one reason or another, the claimant should request his or her Social Welfare Local Office or, the appropriate scheme area, to review their means. In the event of a reduction in means, the level of entitlement will increase.
