Dáil Éireann díospóireacht -
Thursday, 12 Nov 1981

Vol. 330 No. 11

Supplementary Estimates, 1981. - Vote 50: Social Welfare.

Minister for Social Welfare (Mrs. E. Desmond)

I move:

That a supplementary sum not exceeding £113,318,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1981, for the salaries and expenses of the Office of the Minister for Social Welfare, for certain services administered by that Office, for payments to the Social Insurance Fund, and for sundry grants.

This Supplementary Estimate is required to meet increased expenditure arising from increases in the rates of social welfare payments from October 1981, the payment of a double week to recipients of certain social welfare pensions and allowances in December 1981, increases in administration costs and an upward trend in the numbers claiming under the various schemes. The increases arise on all three sections of the Social Welfare Vote for the current year, namely, administration, social insurance and social assistance.

The original Estimate, which was passed by the House in July last, was for the sum of £476,635,000. A Supplementary Estimate for £106,420,000 was also passed by the House in July last. The reason for taking the Supplementary Estimate at that time was the exceptional cost of increasing long-term payments by 25 per cent and short-term payments by 20 per cent from April 1981 and children's allowances by an average 30 per cent from July 1981. It was apparent that there would not have been sufficient voted moneys available to the Department to meet these costs during the period that the House was in recess. The sum of £106,420,000 was the estimated cost of the increases in rates of payment and other improvements in social welfare services provided in the 1981 budget. The present Estimate is for a sum of £113,318,000, which brings total Exchequer spending on the services administered by my Department in the current year to £696,373,000.

Under the section for administration — subheads A to C — the net additional expenditure amounts to £4,907,000. This derives from increases amounting to £4,440,000 on subhead A.1 in respect of salaries, wages and allowances; £100,000 on subhead B.1 in respect of increased travelling and incidental expenses; £265,000 on subhead B.2 in respect of increased computerisation and £130,000 on subhead C in respect of an increase in the cost of telephone services. These increases are offset by a small saving of £28,000 on subhead A.2 in respect of consultancy services.

The additional expenditure on social insurance — subheads E and F — amounts to £70,720,000 which is the result of an increase of £70,644,000 on subhead E and an increase of £76,000 on subhead F.

The extra amount required for social assistance — subheads G to L — is £39,453,000. The overall increase on the three sections comes to £115,080,000. There is, however, an increase of £1,762,000 in the receipts from appropriations-in-aid — subhead M — which serves to reduce the net additional requirement to £113,318,000.

The sum of £70,644,000 required for subhead E is the additional amount payable by the Exchequer to the Social Insurance Fund to meet the deficit on the working of the fund. The cost of the increases of 5 per cent to beneficiaries over pension age and 3 per cent to others from October 1981, which were announced in the July budget, is £6,091,000, while the cost of the extra week's payment in December to recipients of contributory pensions and allowances is £7,294,000. There is also an increased expenditure of £57,259,000 arising mainly from an upward trend in the numbers claiming insurance benefits during the year. The main constituents of this sum are £29,980,000 in respect of unemployment benefit; £15,800,000 in respect of pay-related benefit; £6,440,000 in respect of old age contributory pensions; £4,050,000 in respect of disability, benefit; £1,364,000 in respect of widows' and orphans' contributory pensions; and £1,600,000 in respect of invalidity pensions. The total of these increases is £59,234,000, but variations from the original estimates in the remaining insurance schemes had the effect of reducing this figure by £1,975,000. On the income side the estimate of £477,500,000 in receipts from contributions payable by employers and employees is expected to be realised by the end of the current year.

As Deputies are no doubt aware, final draws must be made from the Exchequer before the end of each year on an estimated basis because actual figures of expenditure and income are not available until after the close of the year. Any overdraw or underdraw resulting will be reflected in the amount payable by the Exchequer to the Social Insurance Fund in the following year.

The additional expenditure required in the Supplementary Estimate for social assistance amounts to £39,453,000. This expenditure arises from the increases in rates of payment from October 1981 at a cost of £3,531,000; the cost of the extra week's payment in December to recipients of certain pensions and allowances amounting to £4,384,000 and a net sum of £31,538,000 to meet increases of £12,240,000 on unemployment assistance; £7,600,000 on children's allowances; £2,630,000 on old age non-contributory pensions; £2,754,000 on supplementary welfare allowances; £1,850,000 on free travel and £1,335,000 on unmarried mothers' allowances as well as increases under various other schemes totalling £3,183,000. These increases are offset by a small saving of £54,000 on prisoners' wives allowances.

The surplus of £1,762,000 in appropriations-in-aid arises mainly from the increase in the amount of the administration costs of the social insurance and the occupational injuries schemes which have to be refunded from the Social Insurance Fund and the Occupational Injuries Fund.

As I have already stated, this Supplementary Estimate is for an additional sum of £113,318,000 which is required to meet the cost of the increases in rates of payment from October 1981, the cost of the double week's payment in December and to meet other excesses on the services administered by my Department which have arisen since the original Estimates were prepared. Deputies may wish to note that overall expenditure on social insurance and social assistance services will amount to more than £1,206 million in the current year, which is an increase of £309 million or 34.4 per cent on 1980. Expenditure in a full year at current rates will amount to some £1,330 million.

If Deputies require any further information regarding the matters affecting this Supplementary Estimate I shall be pleased to furnish it.

Dr. Woods

I have pleasure in supporting the Minister's Estimate, which is set out very clearly. At the outset let me say that the document was not available to me until this morning and I would have welcomed having it yesterday or the day before. I do not want to make much of that point, but I would hope that it would not be the practice in future.

I note that the bulk of the Supplementary Estimate relates to the general level of the unemployment figures throughout the year. The question of unemployment is not directly one for the Department of Social Welfare. It is unfortunate that it has been running at a fairly high level in recent times and is now at 129,000, its highest level. We are coming into the winter and can expect the demands on social welfare insurance and assistance schemes to increase. The Department of Social Welfare can only do the appropriate bookkeeping and make the payments. At the time we left office it was quite clear that a Supplementary Estimate of approximately £77 million would be necessary. Indeed, the Minister for Finance mentioned that figure in July when he spoke in relation to the budget. There is considerable difficulty in the Department of Social Welfare in getting correct Estimates on unemployment in the year ahead. The figure estimated for 1980 was 86,000, but it turned out to be just over 100,000. The average for this year then was estimated at about 104,000 or 106,000 — the Minister can supply the exact figure.

There was a major capital programme of £1,700 million at that time which was expected to produce a certain number of jobs and reduce the impact on the payments of unemployment benefit and unemployment assistance. But, despite that, it looks as if we will have to estimate unemployment at higher levels going into next year. From the present trend and because of the adverse impact of the Government's general policies, we will be faced with a much higher level of unemployment this winter. I appreciate that there is a measure coming forward which will be of assistance and will be discussed here in this House quite soon. There is a deficiency in the Social Insurance Fund of £70.6 million. This creates a problem when looking forward to next year because we know already that the employee will have to face an increase in the pay related social insurance and health contribution. The present social insurance contribution is 3.5 per cent and is being increased for the employee by 1 per cent and the health contribution is being increased by 1.5 per cent, giving a total of 6 per cent. We also know that for those earning more than £8,500 there is an addition of 3.75 per cent. If the number of unemployed is allowed to increase the pressure on the fund and on the contributors, both employers and employees, will become intolerable in the coming year. What will the State's contribution be to the fund this year? It is acceptable and reasonable that the contribution from the State to the Social Insurance Fund should increase during periods of high unemployment. I appreciate that the Department of Finance would not welcome that statement because their interest is in bringing in the resources by other means. The State's contribution has varied between 18 per cent and 25 per cent. It looks as if it will be of that order this year, and I believe that is necessary. I want to put that on the record of the House against such an increase because of the general Government policy of not encouraging deficits even of reasonable proportions. This is one of the elements which will be important in relation to this Estimate. By far the biggest aspect is the impact of unemployment on the whole Estimate.

The Minister has referred to a number of aspects. I am delighted to see that there will be a Christmas bonus. We have had a long discussion on social welfare this week so I do not intend to extend the debate unduly at this time. There were some remarks made about the Christmas bonus to the effect that it was forced upon us last year by the national understanding. The idea originated from the Minister for Social Welfare, got the full support of the Government and was then put to the national partners as one of the possibilities to alleviate the position of those on lower incomes and on social welfare long-term benefits over the winter period. It was welcomed and supported by the national partners, which in turn was valuable to the Minister, as I am sure the present Minister would find if that national partnership was still functioning. We were concerned last year that the Christmas bonus would be extended to all who needed it. Its introduction was costly and it was a big step. We were pressed at that time and I seriously considered covering people who were on unemployment assistance for a long period. I am not making this as a political point, but it was the first time we had introduced this scheme and people on the Opposition side of the House raised the question of those on unemployment assistance for some time. Would the Minister consider the situation and see if there was any way in which he could alleviate their position? The House appreciates that unemployment benefits are considerable in the first period, diminishing as time advances and, eventually, an individual goes on to unemployment assistance, which is a particularly low level. In that case there is a difficulty and perhaps the Minister would give some consideration to this matter. She will have the support of this side of the House in anything she decides to do in that regard.

I was criticised by the Minister for Finance for spending what at that time was an estimated £77 million Supplementary Estimate which was required at the end of the year. It is now £113 million. The £113 million is a 19 per cent increase on the basic estimate. The £77 million was a 14 per cent increase on the basic estimate. Given the very difficult times we are facing, I do not think this is as extraordinary as was made out by the Minister for Finance. Looking back over the record, I find in 1973-74 the Supplementary Estimate was 29.7 per cent. In 1975-76 it was 22 per cent and in 1976-77 it was 8.5 per cent. So, historically, it is not the first time we have had a situation like this. I do not mention that specifically because it was during a Coalition period of Government but it was a time when we had an international recession, a period of great difficulty and, naturally, the Minister for Social Welfare would have been under considerable strain from unemployment figures, unemployment assistance and so on. The same situation applies today and we believe the present Government are accentuating and worsening the position. There is still the fundamental problem of meeting the requirements during this recession. I welcome the Christmas bonus. The Supplementary Estimate is being used by the Minister for Finance to build up a case about distortion of the figures which is quite untrue and unfair. It is not based on the facts as we know them. If you tease out the various elements you will find this is the case probably in most Departments. The Estimate shows that the level of unemployment reached during the year is the principal contributor to this excess. The other elements are decisions which had to be taken by the Government in the latter stage of the year — for instance the fuel scheme.

It has also been said in the House that the fuel scheme was something that would not have been reviewed and revised by the Fianna Fáil Government because they did not make an allowance for it initially. Normally, in the July/August period — if the Minister is not aware of this, her officials will confirm it — the situation is reviewed and the moneys seen to be necessary for the coming winter are made available then. That is what we would have done. It is the normal practice. The Minister for Finance is wrong in suggesting otherwise. However, that is a different argument.

One of the elements which is important and about which we will hear a lot more in due course is the question of children's allowances. In the original Estimate there are very substantial increases which were applied this year by the former Government. These increases have led to a very considerable extra demand from the Exchequer and they represented a policy which was in train at that time of increasing the contribution to those who avail of children's allowances. I am disappointed that the Department have agreed under the new policy to claw back the husband's tax free allowance, the policy to be implemented at this stage, and have not made up sufficiently the direct children's allowance on the other side. I am referring to the proposed £12, £3 per week per child. This sounds like a great increase but except for those on the very lowest incomes and those paying no tax, it will result in a loss. The tax free allowance at the 25 per cent rate was of considerable benefit. It is now proposed to do away with that. These are figures which will not show but are a clawback in relation to the figures on children's allowances. The position, therefore, is that many families will lose as a result of the clawback of the husband's tax free allowance. At present this is being presented as a substantial gain. In the Estimate we have a 30 per cent increase which was given under the Fianna Fáil Government this year for children's allowances, that part of it which applied this year. That 30 per cent increase was substantial and was widely welcomed. If we were only to give the same increase next year, the position for a four child family would be the equivalent of £14.52 per week from next April as against £12 which is promised at this stage. For many families this will be a set back. It is a clawback of their tax benefit.

I accept that those who pay no tax and those on social welfare benefits will gain, although the gain per head will be very small. Had we proceeded on the lines introduced by Fianna Fáil, without any further improvements — and one must remember that we set up a committee to examine the situation in general and the Minister will have the report of that committee presently — the benefit would only be 25p per child where no tax applies. In other words, had we, as we did last year and the year before, increased the allowance by 30 per cent next year, the total would be £11 as against the £12 promised by the Coalition. If one is going to transfer something, rather than have a sleight of hand, it should be substantial. Even for those on the lowest level, with no tax to pay — people whom this measure is intended to benefit — it is right that they should benefit, whichever way it is delivered. However, they are not getting much benefit. Those in the lower and middle income group will lose substantially on a tax basis, because for each child they will lose £195 tax allowance. This is something which people may not fully realise. It will have a major impact on families in general.

We support the increases in children's allowances in the original Estimate and hope to see them continue at least on the lines of previous increases. The plan which the Coalition Government have at the moment will not be good for the vast majority of families. For those for whom it is an improvement, it will be a very small one.

I have put down a question to the Minister for Finance. He did not give any figures here today, but I hope that he will give me this figure. I would estimate that the clawback will bring about £45 million to the Minister, from the £195 per child now lost. There may be some small variations in that, but I am sure that the Minister's officials have the appropriate tables and could work that out very quickly. The clawback would be of the order of £40 to £50 million. If one is taking back that much money from middle income families, a lot of money is available to give to families at the lower level or to those middle income families by way of better direct children's allowances. That is not represented in the Government's proposals at present. The cost to the Government of the total switch around would be as in the case of the £9.60, going from one hand to the other. Someone will have to pay for the administration. There will be some small improvement for those at the bottom of the scale and a very big disimprovement for people who are paying even 25 per cent tax rate. When one comes to people paying 35 per cent and 40 per cent tax — and quite a few people with families are paying the 35 per cent tax rate — there will be a very substantial loss as a result of this trend.

I wish the Minister every success in regard to modernisation and computerisation of the Department, which is a very major undertaking. She will be subject to sniping, as I was, from the sidelines while this process is under way. It is a difficult process which will take some time to be fully completed. The Minister has agreed that it is well under way at this stage. I hope that she will not be held up in any way by restriction of funds for office machinery and supplies and for computerisation and the consultancy in relation to it. I suspect that this is one of the areas where the Minister for Finance may not be fully pulling his weight in relation to the Minister for Social Welfare getting very substantial backup and assistance for the transfers and changes which are at present taking place and which are so urgent. On the basis of this change in the administration and in the improvement and modernisation of the service, a far better service will be made available to the public. Without those changes one could not have a better service. A lot of nonsense has been talked here about what can and cannot be done, but none of these things can be achieved until a sufficiently powerful and effective computer system is installed and operating. These bring not only mechanical and practical problems, but industrial relations problems also. One is adjusting the whole environment, which is why difficulties have arisen from time to time in that area. However, these are teething problems which must be faced and overcome. The Minister will have my full support in those difficulties. I also would seek the ultimate objective of a decentralisation of as much information and feedback as possible.

It was a matter of great joy to me that before I left office I was able to have one extra video unit opened in Dublin, in Gandon House. Because of practical difficulties it took quite some time before that unit was operating, but it was marvellous to have a visual display unit in Gandon House and Oisin House, away from Store Street, where people could come into a modern, scientific, technological, environment, to the information officers there, to see how they stood in relation to disability benefits and other items. Of course, the objective is to go beyond that, to Cork, Galway and other places. The first small steps have become possible. Further improvements are taking place at the moment at the computer end, so that this type of service can be supplied around the country. At that stage one can give a much better service locally to those requiring it.

May I take it that it is intended to finish this debate at 5 p.m.?

An Ceann Comhairle

Yes. The Deputy will then move the adjournment.

Dr. Woods

Will the Minister be replying?

An Ceann Comhairle

She has made a very good initial speech, Deputy.

Dr. Woods

I will not be too hard on the Minister at this stage. In conclusion, we have had a long discussion during the week on this subject. I wish the Minister and her staff every success and assure her that in the development and modernisation of her Department she will have our full support.

Minister for Social Welfare (Mrs. E. Desmond)

I will begin by thanking Deputy Woods for his contribution to this Estimate. Deputy Woods asked one or two direct questions which I should like to answer in the time available to me. He made a point about the presentation of the documentation. My understanding is that the documentation was provided by the Department of Finance and that it was available in the House yesterday afternoon.

Dr. Woods

This morning.

Mrs. E. Desmond

I am sorry that that should be the case. The Deputy asked what the Exchequer contribution to the social insurance fund was this year and the answer is 30 per cent. Deputy Woods dealt with the increased numbers on unemployment benefit which accounted for the bulk of the Supplementary Estimate before us this afternoon. The general Estimate was based on a figure of 106,500. The latest Supplementary Estimate is based on a figure of 134,750. When the figure of 106,500 was released, it was pretty clear that it did not represent a true estimate of what the position would be this year. There was ample evidence from international trends in unemployment that the figure could well be a lot higher and that there was an under-estimation in that regard.

Dr. Woods

Might I point out that the Estimate of the Department of Finance was 112,000 and that 6,000 was taken from the £170,000 million investment which brought us back to the figure of 106,000. The Minister can confirm that with her officials.

Mrs. E. Desmond

Deputy Woods also mentioned the question of computerisation and expressed a desire that computerisation should be pressed ahead with as much as possible. I share that view. Our main concern is to ensure the elimination of any delays and the quick processing of claims. It will be necessary in that regard to press ahead with computerisation to ensure that the information is available at the earliest possible moment. The Deputy can be assured that we will press ahead with computerisation as quickly as possible and that it will not suffer from lack of will or lack of finance.

Vote put and agreed to.