Dáil Éireann Debate, Tuesday - 18 February 2014
405. Deputy Brendan Griffin asked the Minister for Social Protection the efforts she is making to tackle high replacement rates; if she can point to circumstances where departmental changes since March 2011 have reduced replacement rates; and if she will make a statement on the matter. [8176/14]
View answerThe replacement rate for given income levels is a tool used to measure the degree to which out-of-work benefits when unemployed replace take home income from work. While there is no predetermined level of replacement rate, which would influence every individual’s decision to work, higher replacement rates may indicate lower incentives to take up employment. In this regard a replacement rate in excess of 70% may be considered to be excessive.
Replacement rate analysis, as supported by research by the ESRI, demonstrates that the great majority of people on the Live Register have a strong financial incentive to work and significant numbers leave the Register each year. In this regard it may be noted that almost three-quarters of the people on the Live Register are only claiming a personal rate for themselves. They are either single or may have a spouse or partner who is working. In addition, 53% of the people on the Live Register receive less than the maximum personal weekly rate.
High replacement rates are generally associated with a relatively high number of dependent children and/or receipt of rent or mortgage supplement. However, it is important to note that, as the following table demonstrates, only a very small and decreasing proportion of persons on the Live Register are in receipt of these additional supports.
|
Year |
Rent Supplement |
Mortgage Interest Supplement |
Local Authority Mortgage Allowance |
% of Live Register availing of these supports |
Total Live Register |
|
2011 |
44,247 |
10,880 |
152 |
12.7% |
434,784 |
|
2012 |
39,377 |
8,078 |
90 |
11.2% |
423,733 |
|
2013 |
34,531 |
4,766 |
39 |
9.9% |
395,411 |
Reductions in the numbers of people in receipt of housing support has been the major factor in achieving reductions in instances of high replacement rates. In addition, changes such as basing entitlement under the jobseeker’s benefit scheme on a five rather than a six day week and the recognition of Sunday as a day of employment under the jobseeker schemes, also having a positive effect on reducing replacement rates for some jobseeker recipients.
In the area of housing, significant moves have been taken to address the impact of housing entitlements upon replacement rates. Arising out of commitments in the Programme for Government to review the operation of the rent supplement scheme, proposals to integrate the systems for providing rent supplement and social housing support have been advanced. It is intended to transfer responsibility for the provision of rental assistance to persons with a long term housing need from the Department of Social Protection (currently provided through rent supplement) to housing authorities using a new housing assistance payment.
The effect of this transfer and the introduction of a new form of housing assistance payment will be to address one of the significant disincentives to accessing full-time employment that exists under the rent supplement scheme. This will have a further positive impact on replacement rates.
