asked the Minister for Social Welfare if he will outline the reason it has been possible to reduce the State contribution to the social insurance fund by 8 per cent in real terms in 1988, and if he will make a statement on the matter.
Written Answers. - Social Insurance Fund.
26.
The State contributes to the Social Insurance Fund the amount by which the income of the fund from employer and employee contributions falls short of expenditure from the fund each year. The full extent of the State's contribution for 1988 will not be known until after the budget. The published Estimates do not include the cost of budget increases for 1988.
The figure in the Estimates for the State subvention to the Social Insurance Fund for 1988 is £388,843,000. This represents a decrease of £20,877,000 over the corresponding figure of £409,720,000 in the 1987 published Estimates.
There are a number of factors which in any year give rise to such variations, the most important of which in the current year are as follows. There will be one pay day less in 1988 as compared with the exceptional situation which arose in 1987 when there are 53 pay days.
On the income side allowance has been made for an increase in PRSI contribution income in 1988 over the 1987 published figure due largely to projected increases in earnings and the higher earnings ceiling for contributions. These additional receipts would of themselves result in a significant decrease in the level of State subvention to the fund. Furthermore, the fund will benefit from the full year effect of savings arising from measures taken in the context of the last budget.
The additional income will be partly offset by increased net expenditure arising from the carry-over effects of the 1987 budgetary increases in rates of payments. However, the fund will benefit from the full year effect of savings arising from measures taken in the last budget and allowance has also been made for the savings arising from further measures recently announced by the Government which will come into effect in 1988. The continued operation of the Jobsearch programme and the application of improved control procedures will also yield savings. The remaining factor on the expenditure side is the effect of trends in the numbers applying for benefit.
As stated already, the Estimates make no provision for increases in social welfare payments during 1988 and any increases in rates arising from the budget will increase the overall expenditure of the fund and the level of the State contribution.