I move: "That the Bill be now read a Second Time."
The purpose of the Bill is essentially to implement the measures affecting social welfare services which were announced in Tuesday's Budget Statement. In view of the fact that the budget is late this year and that measures affecting social welfare must come into operation on 6 April, it is essential to have this legislation enacted this week. In the normal course it would not be necessary to enact this legislation for some time after the budget and there would be an opportunity for Members of the House to consider the Bill at greater length.
However, Deputies will be familiar with many of the provisions of the Bill since they have already been the subject of much debate in the context of the recent general election. Deputies will know that further delay will result in a deterioration of the income and financial position of the Department of Social Welfare with adverse consequences for welfare recipients. I hope the Bill will be accepted on this basis and I would like to thank the Opposition for facilitating me in having the legislation introduced today. We all know that difficult decisions must be taken in the interests of stimulating employment and creating a new base from which we can further improve our social services. Even in this difficult context I have succeeded in protecting the interests of those most in need and in maintaining the real value of basic payments. I look forward to constructive and favourable consideration of the Bill.
The general parameters of this Bill were already more or less fixed prior to the election. Implicit in the Abridged Book of Estimates published by the previous Government and now before the House and which were included in their proposed budget are the following measures aimed at reducing the level of expenditure on social welfare:—
1. The 3 per cent cost of living increase in the value of social welfare payments to be delayed until November this year.
2. Pay-related benefit for new claimants to be reduced to 12 per cent.
3. The duration of unemployment benefit to be reduced from 15 months to 12 months with a consequent loss of pay-related benefit also.
4. More restrictive conditions to be introduced for unemployment benefit, disability benefit and maternity allowances. These are:
(a) Increase the number of waiting days for which a PRSI contributor does not get disability benefit, when out sick, from three to six days;
(b) Introduce six waiting days for disability benefit claims which follow a period of maternity;
(c) Increase the number of contributions required to qualify for disability benefit beyond 12 months and for invalidity pension from 156 or three years to 260 or five years;
(d) Increase the number of contributions required to qualify for benefit from 26 to 39.
The previous Government were taking all of the above measures to reduce expenditure on social welfare. The abridged Estimates have taken credit for all these savings in 1987. The present Fianna Fáil Government, while accepting the need to contain the growth of social welfare expenditure, could not accept the reduction in unemployment benefit from 15 months to 12 months, or the increase in waiting days for sick PRSI contributors from three to six days. We considered that the increase to five years in the contributions required to qualify for disability benefit beyond 12 months and for invalidity pension was too severe and we decided to increase this requirement from three to four year instead.
In keeping with our commitments during the general election we decided that the withholding of the 3 per cent cost of living increase until November would involve undue hardship for widows, old age pensioners, the sick, disadvantaged and the unemployed. Accordingly, we have brought this increase forward to July. Before I discuss these measures in detail together with the improvements in the family income supplement and the extension in treatment benefits to dependent spouses of insured workers, I would like to refer to the Jobsearch programme.
The Government have decided to launch a major new Jobsearch programme to assist the long-term unemployed in their efforts to seek training and employment. This programme will be spearheaded by my Department in cooperation with the National Manpower Service and AnCO. Pilot studies have already been completed in Letterkenny, Limerick, and Tallaght. The Government are now making the necessary resources available to me to launch an immediate national job search programme. This will involve the interviewing of some 150,000 unemployed persons this year, commencing this month. Over 40,000 National Manpower Service scheme opportunities have been earmarked for unemployed people this year. In addition, some 12,000 Jobsearch places will be made available during the rest of the year.
Already an additional Assistant Secretary has been appointed since Tuesday's budget to head up a strong management team which I am establishing in my Department to operate and control the Jobsearch programme. Additional senior staff have also been nominated from other Departments to this team. Other support staff are being appointed. I have made arrangements for the Jobsearch programme to start immediately. Interviews will commence next week. This speedy implementation of the scheme could not have been achieved without the wholehearted support of the Government, my Department, the Department of Labour, Manpower and AnCO. I publicly thank those public servants for their very effective and immediate response.
The Jobsearch process is intended to assist in finding jobs for those who are unemployed. It involves a major programme of advising and assisting the long-term unemployed to find employment by assessing their skills, their retraining needs, their potential to take part in social employment schemes, and giving direction about participation in various manpower schemes.
This programme gives groups of people intensive coaching in job seeking techniques. It makes available to them extensive facilities to put this training into practice in trying to place themselves in jobs. It is a feature of the process of selection for Jobsearch that participants receive an intensive counselling interview with a National Manpower Service placement officer. At the interview the participant's skills and strengths are assessed and a range of possibilities is discussed with the interviewee. Among the possibilities considered are any suitable jobs which may be available, the chance of starting work on the enterprise allowance scheme, the possibility of a place on the social employment scheme, or on a suitable AnCO training scheme or, finally a place on the Jobsearch programme. The Jobsearch programme itself takes three to four weeks and has two elements. The first element involves intensive training in job-seeking skills and the second element involves the provision of assistance and facilities to participants in the practical application of these skills in actually seeking jobs.
To date Jobsearch courses have been run under the auspices of the Department of Social Welfare in each of three pilot locations. Results show that these were successful in helping the long-term unemployed. I have no doubt that participation in these programmes will pay dividends in the future. The Jobsearch programme can also have an indirect impact in helping to identify people who are not genuinely seeking employment.
The benefits to be derived from participation in Jobsearch by an unemployed person are considerable. It is well known that the most damaging psychological effects of unemployment are, apart from loss of a sense of identity. The Jobsearch one's day, the loss of self-respect and the loss of a sense of identity. The job search course is designed to help unemployed persons take a more active and better supported part in seeking employment and new skills. The Jobsearch programme, in a new and unique way, brings the resources of the State together and places them at the disposal of the long term unemployed. It deserves and will receive our fullest support and commitment.
Turning now to the present Bill, the general thrust of my approach is to ensure that, in the context of the difficult budget which the Government have had to introduce, the position of people dependent on social welfare payments and schemes is protected and maintained to the greatest possible extent. As Deputies know, the budget of the previous Government contained provision for deferring the 3 per cent cost of living increase in social welfare payments to November 1987, rather than July as has been the practice in recent years. This postponement would have imposed a burden on social welfare recipients and, as announced before the general election, Fianna Fáil could not agree to this measure. I am glad to be able to bring forward these increases to July. The additional cost of this step is £18.4 million over and above the previous Government's proposal. Including the increase in health allowances, the total additional cost is £19 million in 1987.
The previous Government had also made a number of proposals for restricting or cutting back on social welfare schemes. In this context, having examined the various restrictions proposed by the previous Government there were a number of them which could be regarded as justified in that as well as achieving a needed saving they also bring about a greater streamlining of the system.
A number of these measures have, therefore, been adopted either wholly or partially and I will be outlining these in greater detail later in this speech. There were a number of other restrictions, however, which in the Government's view would have involved severe reductions in entitlements to groups in need. I refer in particular to the proposal to reduce the period of entitlement to unemployment benefit from 15 months to 12 months. This was, in the Government's view, a retrograde step which runs counter to most current thinking and one to which we could not subscribe given present levels of unemployment. The duration of unemployment benefit was, in fact, increased from 12 to 15 months in 1976. Given current circumstances, there is an even stronger case for maintaining the duration of payment of this benefit. In fact the Commission on Social Welfare recommended that the duration of unemployment benefit be extended for certain categories.
Also, we are not proceeding with the proposal to increase from three to six the waiting days for disability benefit. This proposal would be in breach of ILO and Council of Europe conventions which this country has ratified. It would also have resulted in very serious hardship for the many thousands of employees who form a majority of the workforce in the private sector and who are not covered by occupational pension schemes. It could also have been counterproductive in that many of these people would have become entitled to supplementary welfare allowance.
I would like now, to discuss the individual items of this Bill in some detail. The Bill provides for a 3 per cent increase in the weekly personal, adult and child dependant rates of social insurance and assistance payments effective from July, 1987. This increase will apply to 700,000 social welfare recipients. A November increase, as proposed by the previous Government, would have meant — in the period from July 1987 to July 1988 — an average annual increase of 2 per cent. The revised date ensures that the increase in social welfare payments will match the increase in inflation over this period. This increase will maintain the real value of social welfare payments and meets our election commitment. I accept that 3 per cent is a modest increase and that it is not of great comfort to people living on very low incomes to be told that they are not falling behind in terms of the cost of living index. It would always be the Government's wish to provide an additional increase over and above the cost of living where this is possible and indeed Fianna Fáil's record in this regard is a proud one. Given the current very difficult situation, I am glad it has been possible to bring the general increases forward in the way we have.
In providing for the general increase in rates, I have taken the opportunity in this Bill to make provision for the rounding to the nearest 10p of each of the weekly social insurance and assistance personal rates and increases for adult and child dependants. This measure is designed to simplify the large number of payments now being made.
The Bill provides for the imposition of stricter conditions for entitlement to certain social welfare benefits. A person will now be required to have a total of 39 weeks contributions paid at any time instead of 26 as at present for entitlement to unemployment, disability and maternity benefits. The additional requirement for 26 contributions to be paid or credited in a particular year prior to the claim is also being raised to 39. This, however, will be done by regulation. These measures were among those proposed in the budget of the previous Government and we are accepting them in present circumstances.
The Bill also provides for a change in the contribution conditions for long-duration disability benefit and invalidity pension. In this context I should point out that the situation currently exists whereby a person with three years paid social insurance can be entitled to disability benefit or, indeed, invalidity pension, effectively for the duration of their lives. The Bill, therefore, contains provision for an increase in the contribution conditions for this area also. The former Government had proposed a change from 156 paid contributions to 260 — effectively a change from three years of paid contributions to five. The Bill introduces a condition which raises the three years to four so that 156 contributions becomes 208, instead of 260 as was proposed by the previous Government. This requirement will affect qualification for both long-dur-ation disability benefit and invalidity pension.
Section 5 of the Bill provides that the earnings ceiling for PRSI contribution purposes be raised from £14,700 to £15,500 with effect from the 6 April 1987.
Section 7 provides for an increase from £58 to £62 in the earnings disregard, or "floor" for pay-related benefit purposes. This change will affect only new claims from 6 April, where entitlement to pay-related benefit is involved.
Another change I am proposing in relation to the pay-related benefit scheme will save £13 million this year and some £28 million in a full year. At present the rates of PRB are 25 per cent for the first six months and 20 per cent for the following nine months approximately. It is now proposed that a single rate of 12 per cent be introduced. This measure was also included in the budget of the previous Government. Examples of the effect on families of this reduction in pay-related benefit are given in the following table:
Average Payment at present
New Payment (PRB 12%)
Married Couple & 2 Children
Married Couple & 4 Children
Married Couple & 2 Children
Married Couple & 4 Children
Married Couple & 2 Children
Married Couple & 4 Children
*Wage stop applies at this point (85 per cent of take-home pay). This is how the lowest levels are not affected by the change in pay-related benefit. The average payment is the average of the period of 15 months.
Section 4 of the Bill provides for a more favourable method of calculating the amount of the family income supplement. Under these new arrangements the supplement is being increased to half of the difference between the family income and the prescribed upper limit instead of one third as heretofore. The general effect of the proposal will be to increase supplements by 50 per cent. Section 4 also provides for an increase in the prescribed upper income limits up to which family income supplements are payable. These changes will take effect from next July.
Family income supplement is a weekly cash allowance to help families on low incomes and to maintain the incentive to work for the breadwinners of those families. In some cases there was little or no difference between the take-home pay of a family breadwinner and the amount received on social welfare benefits. The supplement is intended to redress this imbalance in favour of lower paid workers. It is specifically designed to help families of workers who are only marginally better off in employment.
The upper family income limit for eligibility for family income supplement is being increased to £104 for a family with one child. For a family with five children the upper income limit will be £192. The maximum weekly supplement is being increased from £10 to £16 in the case of a family with one child and from £26 to £44 in the case of a family with five or more children. This represents a real and practical increase in the level of assistance given to low income families.
The effect of the increases is that from July the FIS scheme will make up 50 per cent of the difference between family income and:
£104 in the case of a family with one child,
£126 in the case of a family with two children,
£148 in the case of a family with three children,
£170 in the case of a family with four children and
£192 in the case of a family with five or more children.
There are limits on the maximum payments which can be made under the scheme but it will be possible to receive up to:
£16 a week in the case of a family with one child,
£23 a week in the case of a family with two children,
£30 a week in the case of a family with three children,
£37 a week in the case of a family with four children and
£44 a week in the case of a family with five or more children.
In our Programme for National Recovery we stated that we would review the workings of the family income supplement, which is availed of by only a limited number of people at present. When this scheme was introduced in 1984, it was anticipated that up to 35,000 people might avail of it. Nothing like this number did so, presumably because the terms of the scheme were too restrictive. These new measures may serve to broaden the scope of the scheme somewhat, but I will still be anxious to press ahead with an examination of this scheme which might yield some clearer definitions as to the relevant target group and their particular income needs.
In addition to these positive developments in our social welfare system, I am pleased to announce another measure which will be introduced by regulation from next October. This is the extension of the treatment benefits scheme — that is free dental, optical and aural care — to the dependent spouses of insured workers. October is the earliest date possible for the introduction of this measure given the necessary preparations which have to be made in advance of its commencement. I have been very conscious of the need for this measure for some years and I was very pleased when Fianna Fáil included it in our policy programme.
It has often been put forward that women who work in the home had specific needs in this area given that, in many cases, they had no significant income of their own and that, where the family income was limited, the priority for treatment in these areas usually went to the children or to the major earner. This inclusion of the dependent spouse of the PRSI insured worker in this scheme will mark a major advance for Irish families. This measure should, then, be of considerable benefit to all dependent spouses who are without significant income or who are in low paid employment, and it opens up access to the social insurance system for these groups who, hitherto, have been excluded. This measure is a bonus to the PRSI full rate contributor.
With regard to pilot schemes for the unemployed, section 11 of the Bill provides that participants in the part time job allowance scheme or the educational opportunities scheme will be able to resume their previous entitlement to unemployment payments without serving the usual waiting days in cases where the part time job does not work out or where they find themselves in a position that they have to go back on to full time unemployment payments after a spell in the educational opportunities scheme. These are two of three schemes aimed at helping the long term unemployed in their efforts to re-enter the workforce. I have already referred to the third scheme, namely, the Jobsearch programme.
The part time job allowance scheme allows people who have been long term unemployed to take up part time work for up to 24 hours a week and to receive a flat rate allowance of £25 for a single person or £40 for a married person while doing so. Earnings from the job will not affect the allowance. The scheme originally operated in five pilot locations and was extended to a further 12 locations before Christmas. While the numbers participating in it are as yet still small — some 50 persons — I am hopeful that as knowledge of the scheme spreads the numbers will increase.
The educational opportunities scheme is operating in Limerick and Tallaght. This scheme allows long term unemployed persons who are over 25 years of age to attend a leaving certificate type of course organised by the local VEC. Three classes have been organised and there are some 50 participants in this scheme. An independent evaluation of the scheme is being carried out and I will be looking at the results of the scheme in all its aspects with a view to seeing whether an extension is worthwhile and feasible.
Another initiative in the job creation area provided for in this Bill is the employer's PRSI exemption scheme. Under this scheme employers in the private sector who took on additional employees on a full time basis between mid-December 1986 and the end of January 1987, resulting in a net increase in their workforce are exempt from their portion of the PRSI contribution for those employees for each week in the 1987-88 income tax year in which an increase in the workforce is maintained. Section 6 of this Bill makes the necessary provision to enable this to be done.
I would like to say a few words at this point about social welfare fraud. This subject as Deputies will know, has received much publicity in recent times. However, it is important to keep the issue of fraud in perspective in relation to the hundreds of thousands of families and individuals throughout the country who are in genuine need of the services of the Department. At the same time, it is essential to strike a balance between providing a speedy and accessible service on the one hand and ensuring that the service is not open to abuse on the other. That balance will have to be constantly adjusted in the light of ongoing experience.
The only quantifiable indicators currently available of the extent of social welfare fraud relate to the actual statistics of fraud uncovered and recorded in my Department. In 1985, the most recent year for which complete statistics are available, overpayments of benefit and assistance made by my Department amounted to £5.7 million out of a total expenditure of £2,291 million in that year. Of that amount, £4.07 million of total expenditure is attributed to fraud on the part of recipients. The balance is accounted for by overpayments where there was no fraudulent intent and by departmental errors. I have no doubt that many people believe this does not represent the true extent of fraud in the system. However, any other figures put forward must be viewed as speculative.
To obtain an independent assessment of the extent of fraud in the social welfare system a firm of international consultants has been engaged to carry out a security review of my Department's payment systems and the level of fraud. Additional staff have been assigned specifically to anti-fraud work, new control procedures have been introduced, legislative changes have been effected and new improved computer facilities have been developed. I am determined to do everything possible to improve the system of control on social welfare payments to ensure that the possibilities of fraud are minimised and I will be taking whatever measures are necessary arising from the work of the consultants and my own examination of the problem.
Apart from fraud arising in unemployment and disability payments, I am examining the question of fraud in its broadest sense in other areas, starting with deserted wife's payment. The State is paying out about £40 million in 1987 in respect of benefits and allowances for deserted wives. I propose to examine the extent to which some of this cost could be offset by pursuing husbands who might be in a position to make some payments to meet their obligations. The reality for many women who are receiving maintenance under a separation agreement or a court order is that payment of maintenance is often irregular and uncertain. The NESC have recommended that the State should have power in such cases to award a deserted wife's benefit or allowance and itself pursue outstanding maintenance claims. The Commission on Social Welfare endorsed this recommendation. I am having my Department examine at present how arrangements can be made to pursue deserting husbands for the maintenance they should have been paying to their wives. This would help to offset at least in part the high cost to the taxpayer under the present system.
I would like to refer to an area in which I will be taking a special interest over the next few years. This is the work of the Combat Poverty Agency which was established in September 1986. The new agency has now submitted to me a strategic plan of its activities over the next three years, as it was required to do under the terms of the Act. I will be discussing this plan in detail with the agency in due course. From my examination, however, it is clear that the agency sees itself primarily as promoting community development as an approach to tackling poverty. I support this general approach which is in line with my own views on the best way to make progress in this area. I will also be discussing with the agency the other functions which have been conferred on it but I emphasise the community development aspect of its work which I regard as being of prime importance at this time.
The provision which we are making for the anti-poverty programme in 1987 is £1.3 million. I will be concerned to ensure that these funds are spent in the best and most effective way. I am pleased to see that the agency is approaching its task in an orderly and logical fashion by setting out in its strategic plan the areas in which it intends to concentrate its efforts over the next three years.
I would also like to refer to the provision for grants to voluntary organisations in the social services area for once-off projects. This scheme has been in operation since 1983 and provides very worthwhile assistance to many voluntary organisations in the valuable work which they do with deprived and disadvantaged groups. Up to the end of 1986 grants totalling some £2.5 million had been paid to some 470 voluntary organisations. The sum of £750,000 has been made available for the scheme this year. This is entirely separate from the allocation of £1.3 million for the Anti-Poverty Agency which will also be providing support and assistance to local groups and organisations.
Social welfare currently involves expenditure of some £2.6 billion which represents 27 per cent of total current Government expenditure and 15 per cent of GNP. Social welfare services are provided to over one million persons and up to 3,800 are employed in the delivery of such services. These statistics clearly demonstrate the need for careful planning of the reform and future development of the whole social welfare system which directly affects the lives of so many of our people.
The report of the Commission on Social Welfare, since its publication in August 1986, has been the subject of considerable discussion and analysis. I have the considered views on the report of many organisations and individuals who have a direct interest in social welfare. I will be taking the report of the commission and all the views I have received on it fully into account in planning the reform and development of the social welfare system.
I will be giving particular attention in this regard to the views of the social partners as expressed in the report of the NESC entitled A Strategy for Development 1986-1990. The financial constraints on future social welfare developments in the period up to 1990 are clearly spelled out in that report. These show that given the projected demographic changes an increase in expenditure of at least 14.3 per cent will be required in the next four years just to maintain real social welfare payment levels. This increase, however, could be as high as 24.9 per cent if what the NESC terms the pessimistic scenario regarding increased unemployment levels comes about. This Government have given a clear commitment in their Programme for National Recovery to maintain social welfare payments in real terms and, therefore, the degree of progress that can be made in relation to further general improvements in social welfare payment levels will to a great extent be determined by our success in generating real economic growth and, in particular, reducing the levels of unemployment. The effect of the creation of every 1,000 jobs is to reduce the cost of social welfare by an estimated £2.65 million and to increase PRSI contributions by an estimated £1.2 million.
However, this does not mean that real social welfare reform will have to be tied exclusively to extra revenue becoming available from the benefits of economic growth. Serious deficiencies in the present social welfare system have been identified and the process of remedying these can begin without necessarily incurring significant extra expenditure. A series of changes in the payment structure have been recommended by the Commission on Social Welfare with the aim over time of simplifying the present structure and, in particular, equalising the rates payable to the various categories of social welfare recipients. This aim has been endorsed by the NESC and while it will not be possible to implement in the immediate future the more costly recommendations of the commission in this regard, I will be looking at ways of achieving some convergence of social welfare rates in the coming years.
I consider that a review of all social welfare schemes is necessary to see how effective these schemes are in meeting their objectives. In such a review schemes will not just be looked at in isolation but also as to how they interact with other social welfare schemes and with schemes administered by other State agencies. There is a danger that in focusing on schemes the overall needs of the individuals and families who are in receipt of benefits of one kind or another under various schemes is lost sight of. I want the focus to shift with the various schemes being assessed to see how the benefits they provide and the administration of these benefits can be tailored to meet the real needs of the people they are designed to serve. Also, I expect such reviews to highlight where the conditions for entitlement give rise to anomalies or where these conditions can lead to abuse. In particular, the reviews will be focusing on the various schemes for those incapable of work, for the unemployed, for one parent families and for children. The overall outcome will be proposals for changes in the coming years that will make social welfare schemes as a whole more effective in meeting their objectives.
In addition to the more effective use of existing resources, there will also be a need to look at ways of generating extra revenue that will not have a negative impact on the potential for economic growth. The NESC laid particular emphasis in this regard on broadening the social insurance base. The Commission on Social Welfare also considered this to be a priority. I will, therefore, be examining the implications of extending social insurance not just with the aim of generating extra revenue but also to bring Ireland into line with other developed countries, where all persons engaged in economic activity are covered by social insurance. Such a development should lead in time to a decline in the numbers requiring means-tested social assistance payments. Reliance on such payments as a form of social security can have the negative effect of penalising enterprise and thrift.
There is also considerable scope for reforms in the administration and delivery of social welfare services that will not have significant cost implications but will, at the same time, be of considerable benefit to social welfare beneficiaries. There is a clear commitment in our Programme for National Recovery to make the administration of the social welfare system more fair and more efficient.
I am determined to break down bureaucratic barriers and to simplify the delivery of our welfare services. This will involve a major overhaul of existing procedures designed to improve the quality and effectiveness of the supports and advice given to social welfare recipients and to the public in general.
The major computerisation programme which is currently underway in my Department will be of central importance in achieving this aim and I intend to ensure that sufficient resources are provided to enable this programme to proceed as quickly as possible. The computerisation of the local offices is taking place at present. By the end of 1987 it is planned to have all unemployment claims in the Dublin region computerised, with local offices throughout the country being fully computerised in the next two to three years.