I move: "That the Bill be now read a Second Time."
It gives me pleasure to introduce again this year a Social Welfare Bill which provides for substantial increases in payments to pensioners, the sick and disabled and the unemployed. This Bill shows clearly the Government's determination, even in the face of economic difficulties, to look after the weak, the deprived and the underprivileged in our society. The increases provided in the Bill go well beyond our commitment to keep social welfare payments in line with the cost of living and once more increases in real terms are being made in the value of social welfare payments.
Over the last number of years, in addition to the primary consideration of improving the living standards of social welfare recipients and of providing substantial extensions of schemes, attention has been given to consolidating the statutory provisions relating to the social welfare code including the various schemes in that code. Under the Acts passed each year anomalies have been removed, qualifying conditions have been eased and additional allowances have been made available to those not previously entitled to them. All these changes have been embodied in the Social Welfare (Consolidation) Act, 1981. This process is being continued in the current Bill inasmuch as certain anomalies and minor discrepancies which came to light during the preparation and passage of the Consolidation Act are now being put right. Some of these were recommended by members of the Standing Joint Committee who considered the consolidation measure and I am now honouring my promises to legislate for these matters.
The main purpose of the present Bill is, of course, to provide for the implementation of the proposals for increases in payments announced in the budget and for major changes in the pay-related benefit scheme and in the maternity allowance scheme.
The provisions of interest to the majority of social welfare recipients are contained in Part II of the Bill, sections 3 to 8, which deal with increases in payments. The new rates of payment being provided represent increases of 25 per cent in the adult long-term rates of payment. Generally, these will give increases ranging from £5.25 to £6.15 a week in the personal rate of payments to old age pensioners, widowed pensioners and those in receipt of payments such as the deserted wife's allowance. The single woman's allowance is being increased by £4.60 a week. Pensioners under the occupational injuries benefit scheme will receive increases of up to £7.40 a week. Where appropriate the amounts paid in respect of adult dependants are also being increased by 25 per cent, as are the "living alone" and "over 80" allowances.
Short-term payments, disability benefit, unemployment benefit and unemployment assistance as well as injury benefit and supplementary welfare allowance are being increased by 20 per cent. I should point out here that all smallholders, both factual and notional, qualifying for unemployment assistance will receive this increase. The amounts paid for dependent children under all insurance and assistance schemes, both long and short-term, are going up by approximately 10 per cent in addition to the 30 per cent increase in children's allowances.
The explanatory memorandum circulated with the Bill sets out a number of examples showing the increases being granted. I would like to deal with some of these in more detail.
In the case of a married person receiving a non-contributory old age pension there is an increase of almost £8 per week — £7.90 to be exact — to a new maximum rate of £39.45. Where the spouse has also attained pensionable age the combined pensions go up from £42.00 to £52.50, an increase of more than £10 per week. A factor which must not be lost sight of is that the value of these pensions is in fact considerably enhanced by the various additional services available to these pensioners. They are entitled to free travel and frequently also to fuel vouchers. In addition, any pensioner living alone receives an additional £2.05 per week and is eligible to receive free electricity allowance, free TV licence and assistance towards the cost of having a telephone.
Even if we do not count the value of the TV or telephone rental concessions, a married couple both of whom are over pensionable age could receive additional services to the value of about £5 a week based on very conservative estimates of the use of free travel and free electricity facilities. For the purpose of determining this figure the annual value was taken to comprise free travel, £104: free electricity, £78 and free fuel, £90. The full value of the pensions, therefore, to such a married couple is £57.50 a week or about half the average pre-tax industrial earnings figure.
The increases in the case of contributory pensioners are also significant; for example an old age contributory pensioner will receive an increase of £6.15 per week in his pension bringing his personal rate to £30.65. If he is married and his wife is over pensionable age, the increase will be £10.75 giving a new rate of £53.55.
In addition to the "living alone" allowance, the "over 80" allowance and the prescribed relative allowance, all of which are increased by 25 per cent and which are paid as an integral part of the pension, contributory pensioners may also qualify for free electricity, free travel and other concessions and many of them also receive assistance towards heating. Here again, therefore, the value of the pension is well above the monetary amount payable each week.
A further substantial increase in the monthly amounts of children's allowance is being provided this year. The new rates will be £6.00 for the first child and £9.00 for the second and each subsequent child. Accordingly, the allowance for a family with three children will increase from £18.50 a month to £24 a month, an increase of almost 30 per cent.
As a consequence of the increased rates of payment the means limits for the assistance payments are again being raised from £23 to £27 per week in the case of long-term payments such as old age pension and blind pension.
A further change in relation to old age pension, which I am pleased to announce, is the total removal of the condition which requires that in order to qualify for pension a person must have had at least 15 years' residence in the state. This type of condition has already been eliminated for widow's pension and unemployment assistance purposes. The improvement will be of general application but it will be of particular and immediate benefit in the case of refugees recently settled in this country. While the total number of beneficiaries is likely to be small, I am confident that the abolition of this residence condition, which in one form or another has existed since 1908, will be welcomed.
Two changes are being made in the pay-related benefit scheme. At present pay-related benefit is payable only from the 13th day of incapacity for work in a period of interruption of employment. In other words there are 12 `waiting days' for pay-related benefit purposes. Where two periods of incapacity are not separated by more than 13 weeks, `waiting days' are not imposed on the second claim.
The change proposed in section 6 means that 12 `waiting days' will be imposed for pay-related benefit purposes for each distinct spell of incapacity. Where however a person has a relapse within a few days of resuming work or his incapacity occurs during a period of unemployment, the present conditions will generally continue to apply. Additional `waiting days' will not be imposed in maternity allowance cases.
The pay-related benefit supplement was never intended to be paid for very short interruptions of employment due to illness or unemployment; this was the philosophy underlining the original waiting-days provision when the scheme was introduced in 1974. In the case of unemployment, tax refunds are taken into account in determining the rate of pay-related benefit payable as a supplement to unemployment benefit. For a variety of technical reasons, it would not be possible to take tax refunds into account in disability benefit cases without causing unacceptable delays in the making of payments. The measure now proposed can be seen as an alternative way of ensuring that the objectives of the pay-related scheme will be generally and equitably met in the cases of short absences from work.
Section 7 proposes the second change. The rate of pay-related benefit is calculated by deducting £14 from the reckonable weekly earnings and by taking a percentage of the balance of those earnings up to the ceiling of £140 in weekly terms. The disregard was fixed at £14 in 1973 and came into operation when the maximum rate of disability benefit was £6.55 and the earnings ceiling was £50. It has not been revised since, despite the increase in the ceiling and in the rate of flat rate benefit. The ceiling is being raised to £8.500 in this Bill, that is £170 in weekly terms and the flat rate of benefit goes up to £24.55. While the provision in section 7 will not restore the old relativity it will in future link the amount disregarded to the maximum personal rate of short-term benefit payable at the beginning of the benefit year. The new disregard will, accordingly, be £20 in the present year and will apply to fresh claims commencing after 6 April.
A new pay-related maternity allowance scheme for women in employment is being introduced to relate with the provisions for paid maternity leave in the Maternity Protection of Employees Bill, 1981, recently passed by this House. Under the new scheme the allowance will be payable to women on maternity leave for 14 weeks. The level of payment is designed to correspond to take home pay when tax refunds are taken into account. The actual payment will be 80 per cent of the earnings which are reckonable for pay-related benefit purposes.
A significant feature of the scheme is the provision of a minimum weekly payment of £45.75 as compared with the maximum of £20.45 payable at present. The new minimum level is based on the average earnings of female workers in employments which are insurable for pay-related benefit purposes. A further feature I should mention is that the contribution conditions for maternity allowance are being eased under the new scheme, so as to cater for women who re-enter the workforce after an absence of some years.
The new scheme will subsume the existing 12 weeks scheme in the case of women entitled to maternity leave and the additional cost will be met in full by an addition of 0.15 per cent in the employer's pay-related social insurance contribution, which is included in the overall increase of 0.25 per cent in the PRSI rate. The existing 12 week maternity allowance scheme will continue to apply to women who do not qualify for maternity leave under the Maternity Protection of Employees Bill, 1981.
Part IV of the Bill, sections 12 to 20, contains a number of miscellaneous amendments designed to achieve uniformity in the social welfare code. With one or two exceptions, these items arose from the preparation of the Consolidation Act and were debated in the private sessions of the Joint Committee on Consolidation Bills. As mentioned earlier, I undertook to provide for some of these items at the first suitable opportunity; I refer especially to the provision in section 18 which makes directors and officers personally liable for certain offences connected with unemployment assistance where companies are involved as employers and also to section 19, relating to the Debtors Act, which extends to recipients of unemployment assistance and old age pension the protection of that Act in actions for non-payment of debt.
With the exception of the increases in rates of children's allowance, which are due to come into effect on 1 July 1981, the increased rates of payment provided under the Bill will be due from the beginning of April next.
The overall cost in 1981 of all the rates increases and other changes being provided by this Bill is estimated at £137 million. An additional £7 million is being provided for improvements in the fuel voucher and telephone rental schemes which do not come under the scope of this Bill, giving a gross cost of £144 million. It is expected that the increases in the rates of pay-related social insurance contributions from 6 April 1981 provided for in the Bill will yield £33 million; this will leave £111 million to be borne by the Exchequer.
The new rates of social insurance contributions which are being provided under section 5 of this Bill will be 9.55 per cent for employers and 3.75 per cent for employees as compared with 8.5 per cent and 3.5 per cent respectively at present. The rates of voluntary contributions are being correspondingly increased. The new employer's contribution of 9.55 per cent includes an element of 0.15 per cent to meet the cost of the new maternity allowance scheme. The occupational injuries contribution which is payable in full by employers is being reduced from 0.45 per cent to 0.3 per cent as the yield from the current rate has proved to be more than is required to meet the fund's outgoings. The earnings ceiling up to which contributions are payable is being raised from £7,000 to £8,500. All these changes will take effect from 6 April next.
The new overall PRSI contribution will be 14.8 per cent as compared with 14.3 per cent at present. Employers will pay 10.05 per cent and employees 4.75 per cent, the net increase in each case being 0.25 per cent.
The effect of the changes on an employee earning £8,500, or more, will be an increase of £88.75 per annum—or £1.71 per week—in pay-related social insurance. These persons will, of course, be entitled to the new rates of payment. In addition, the increased ceiling will enable them to receive as much as £12 more a week in pay-related benefit in the event of sickness or unemployment. I should also mention that persons earning between £7,000 and £8,500 a year will become eligible to Health Act benefits from June next.
For someone receiving average industrial earnings, say £104 a week, the immediate increase will be 26 pence, from £4.68 to £4.94 per week. Let us, however, compare the average weekly pay-related social insurance contributions in each of the two years 1980-81 and 1981-82. If the average earnings figure increases to £121 per week, the amount of weekly PRSI will go up from £4.68 to £5.75, an additional £1.07 per week, of which about 77 pence will be attributable to the increase in earnings. In these cases also, the pay-related benefit entitlement will, generally, be based on higher earnings giving an extra £4 to £5 in the weekly rate.
There has been a certain amount of comment about increases in contributions arising from wage rises. The contributions are a fixed percentage of earnings and pay for benefits such as disability benefit, unemployment benefit, contributory pensions for widows and the retired as well as Health Act entitlements.
Social welfare benefits, generally, have been raised well beyond the increases in both the cost of living and the levels of wages. In other words, the cost of social welfare benefits has decreased in real terms as far as employees are concerned. I think it is necessary to restate that social insurance contributions are not a tax in the usual sense of the word; all the money paid in by employees and employers, including a very large Exchequer subvention, is used to pay out benefits and pensions.
The improvements in the fuel voucher scheme and the telephone rental scheme do not require any legislative changes. The value of the fuel vouchers issued under the recently established national fuel scheme has already been increased from £2 to £3. This change took effect from 30 January last. The number of beneficiaries has increased from 89,000 in 1979 to 115,000 at present and expenditure on this service has increased from £4 million in that year to £8.4 million in the current year.
In summary this Bill
—provides for further substantial increases in rates of social welfare payments;
—establishes a new maternity allowance scheme;
—brings the pay-related benefit system into line with new levels of payment;
—tidies up aspects of the social welfare code which the consolidation committee would like to have tackled but could not do so because of Standing Orders.
I commend the Bill to Dáil Éireann and ask for its speedy and favourable consideration.