The Government have decided to introduce this legislation to deal with the situation arising from the recent Supreme Court decision in relation to the 1985 Social Welfare Equal Treatment Act, pending a review of the full implications of the Supreme Court decision.
The Government are concerned at the wider implications of the Supreme Court judgment which could have major budgetary repercussions. It is necessary to take immediate action to deal with the situation arising in the current financial year so as to ensure that expenditure remains within the existing budgetary allocation. The decision of the Supreme Court would otherwise result in an estimated additional expenditure this year of not less than £21 million and not less than £31 million in a full year. These are conservative estimates.
The purpose of this Bill is to maintain the arrangements which were made by the previous Government and enacted by the Oireachtas in 1985. The 1985 Act was designed to implement the European Community Directive on equal treatment for men and women in the social security code. That Act gave married women living with their husbands access to unemployment assistance in their own right for the first time. This meant that a married woman could qualify for unemployment assistance while her husband was in receipt of an insurance or assistance payment. It was a basic principle of the 1985 Act, however, that unemployment assistance payments should continue to be provided on the basis of the needs of the household. This Bill maintains the principle and the clear intention of the 1985 Act that unemployment assistance payments should be provided on the basis of the needs of households.
The 1985 arrangements were found by the Supreme Court to be defective in that they treated households comprised of unmarried couples more favourably than households comprised of married couples. Clearly it was never intended that this should be the case and the anomaly has only arisen as a consequence of the particular arrangements which were made at the time applying only to married couples.
The basic principle embodied in the 1985 Act, that unemployment assistance to married couples should be paid on the basis of household needs, is a reasonable one and this Bill is designed to uphold this principle. To do so, however, it is necessary in the light of the Supreme Court judgment, to also apply the principle to the small number of households comprised of unmarried cohabiting couples who qualify for unemployment assistance. It has yet to be established how many, if any, such households are covered by this provision. It is clear, however, that the numbers involved will not be great.
I can understand why the 1985 legislation did not address this issue. It raises the whole question of the treatment of different household situations within the social welfare code. This is a very complex area which needs careful consideration in all its various aspects. The Government have therefore decided on a fundamental review of the concept of the household for social welfare purposes. This examination will be carried out by a review group consisting of people who are highly qualified in this area. It will be chaired by Mr. John Curry, who was formerly chairman of the Commission on Social Welfare. In the light of their analysis, the Government will consider what changes are required in the social welfare system and these will be brought forward in time for next year's budget. At that stage, the Oireachtas will have an opportunity to consider the various issues involved in the context of the associated Social Welfare Bill.
I consider this to be the only reasonable and realistic approach in the circumstances. In extending the present arrangements to cohabitees, we are maintaining the basic principle embodied in the 1985 Equal Treatment Act. I do not envisage any difficulties in applying the extended arrangements. The concept of cohabitation is not a new one as far as social welfare legislation is concerned. It already applies in a number of our schemes and its application does not give rise to any major difficulties. It simply means that in future claimants for unemployment assistance will be required to state whether they are living as man and wife.
While, in the light of the Supreme Court decision the position of cohabitation needs to be addressed immediately, it is of course only one of a number of possible household situations which can arise. Other obvious examples are brother and sister households, parents and children both claiming or people sharing a flat. The review group will need to look at how the social welfare system treats these different situations so that a consistent and equitable approach can be adopted for the future. This problem already arises in relation to the fuel allowance scheme where only one allowance is paid per household although there may be several persons with individual entitlements living in the household.
The requirements of equal treatment will also have to be taken on board. The 1985 Act which provided for equal treatment necessitated further fundamental changes in the system. To some extent this was responsible for the present difficulties in as much as the approach adopted was to discontinue the head of household concept. It may well be that it will be necessary to reintroduce the concept in some shape or form, perhaps by requiring that one person be nominated as head of the household. This whole area will have to be examined by the review group and they will have to have regard to the practices applied in other countries in this matter.
It will also be particularly important that the new arrangements continue to have regard to the position of households where only one spouse is claiming and the other is working in the home. It was one of the underlying principles in the 1985 legislation that households where both spouses were in a position to claim should not be treated more favourably under the unemployment assistance system than households where only one of the couple is in a position to claim. This principle is maintained in the present Bill and is in my view an important one.
The whole thrust of the Government's approach in the social welfare area this year has been to direct the available resources to households who are in the greatest need. There has been a particular focus on families, particularly families of the long term unemployed and families of those at work on low pay. Substantial increases in the rates of the lowest social welfare payments have been provided for which, taken together with the increases given in 1988, mean increases of almost 25 per cent in these payments.
In addition to the 11 per cent increase provided to the long term unemployed and recipients of supplementary welfare allowance last year, a further special increase of 12 per cent is being provided this year and this will come into effect from July next. In practical terms, this means that an increase of £29.10 per week has been provided to a family with five children over the past two years.
At the same time, a number of other major improvements have been made in the levels of social welfare payments. A minimum child dependent allowance of £10 per week has been introduced, child dependant allowances payable to long term social welfare recipients have been extended up to age 19 where the child continues in full time education, the higher rate of child benefit is being extended to the fifth child from October next and new social assistance schemes are being introduced for widowers and deserted husbands who are bringing up children on their own. The introduction of these new schemes means that the payment being made to a widower on supplementary welfare allowance with five children will increase from £80.80 per week to £115.30, a very substantial increase of £34.50 per week.
In addition, major improvements in the family income supplement scheme are to come into force from July next. These include increases in the weekly income limits, increases in the maximum payments, extra payments to families with six to eight children, an increase in the rate of supplement and a reduction in the minimum number of hours of work required each week to benefit under the scheme. For example, a family with five children with an income of £120 per week will now receive £50 a week bringing their total up to £170 per week.
All these improvements in the levels of social welfare payments have been made possible through the efficient allocation of resources in a fair and equitable manner. This approach has enabled us to more than maintain the real value of social welfare payments and provide significant additional resources to those on the lowest levels of payment especially families on long term unemployment assistance. At the same time, we have simplified the system through the streamlining of the various rates payable in respect of dependants. Over the past two years, the number of different rates payable in respect of children have been reduced from 36 to 12 and the number of rates payable in respect of adult dependants have been reduced from ten to six.
These improvements have demonstrated the Government's commitment to improving the position of families and to directing a substantial amount of resources to them. Over the last two years an additional £257 million has been specifically allocated by the Government for improvements in the social welfare area. In these circumstances, the comments of some of our opponents are ridiculous.
Under existing arrangements, where both of a married couple are entitled to a social insurance payment in their own right, each receives the full personal rate of payment. The limitation provided for in section 12 of the 1985 Act, only applies where one or both of the couple are entitled to unemployment assistance. This reflects the underlying objective of the unemployment assistance scheme which is to provide a level of financial support in the case of unemployment which is related to the needs of the household. The fact that the payment is needs based means that households with similar needs should receive the same level of financial support. This point was emphasised when the 1985 Act was being introduced by the then Minister for Social Welfare, Deputy Barry Desmond. He stated at the time that the unemployment assistance scheme is clearly a family household type scheme because the income of the spouse is taken into account in assessing the means of the claimant. He considered that the provisions of section 12 were necessary to prevent the scheme from being used as a general top up on family income and to avoid inequalities in the level of payments provided to families in different circumstances but with similar needs.
It was also necessary to ensure that implementation of the equality Directive did not give rise to any discrimination against married women working in the home. If the limitation provided for in section 12 were not applied, married couples where both spouses are available for work would receive a substantially higher payment than the vast majority of other married couples where one spouse, either by choice or by necessity, works in the home. This would be in total conflict with the needs based nature of the unemployment assistance scheme.
The level of unemployment assistance payable must be related to the needs of the claimant and it would be inequitable to provide households with identical needs with different levels of payment. It is clearly evident that a couple living together, especially married couples, are financially interdependent. All of the main living costs such as housing, fuel, household goods etc., are shared and there are obvious economies involved. International research carried out on equivalence scales suggests that the appropriate social welfare rate for a couple living together is about 1.6 times the rate for a single person. This view was also shared by the Commission on Social Welfare which recommended that the appropriate payment for a couple should be 1.6 times the personal rate. The current rates of payment following this year's budget increases are in line with this.
The overall task of the review group which is being established will be to examine the social welfare code as it affects households with particular regard to the equal treatment provisions. This will necessitate a fundamental review of the provisions for the assessment of means for needs based social assistance schemes as applied in different household situations. It will also be necessary to review the limitations on payments applied to different household situations. It is intended that the review will be concluded within the next six months so as to enable the Government to consider whatever changes are required in the context of next year's budget. It is envisaged that the necessary changes will be introduced in the associated social welfare Bill. I believe that this review provides us with an ideal opportunity to reform our payment structure so as to bring about greater consistency in the treatment of households with similar needs through the various social assistance schemes. I would like to take this opportunity to thank the members of the group for consenting to participate in the review. I know that they each bring with them a wealth of expertise in their respective fields and I look forward with great interest to the results of their work.
Section 1 of the Bill remedies the defect identified by the Supreme Court by extending the provisions of section 12 (4) of the 1985 Act to unmarried couples who are cohabiting as man and wife. There are two subsections in section 12 which are being amended. Section 12 (1) provides that where both of a married couple are entitled to unemployment assistance, the overall amount of assistance payable to the couple would be limited to what they would receive if only one spouse claimed and received an increase in respect of the other as an adult dependant. The Act provided that each of the couple would receive half of the appropriate "married" rate of assistance. Section 12 (4) of the Act provided that where one spouse is in receipt of a benefit or pension and the other is in receipt of unemployment assistance the overall payment made to the couple would be limited to what they would receive if the spouse entitled to the higher benefit or pension payment claimed and received an increase in respect of an adult dependant. In this instance, the Act provided that the payment to the spouse entitled to assistance would be reduced in order to stay within this limitation.
The Supreme Court judgment concerned section 12 (4) only and in its judgment of 9 May 1989 the Supreme Court found that this subsection was defective in that it treated married couples less favourably than cohabiting couples. While section 12 (1) was not at issue in these proceedings, this subsection, which limits the entitlements of married couples in exactly the same way, must also be regarded as defective.
The manner in which the limitation is to be applied, however, in cases where one of a couple is in receipt of benefit or pension and the other is in receipt of unemployment assistance is being changed. Under the provisions of the 1985 Act, the amount payable to a couple in these circumstances was limited to the "married" rate of the higher social insurance payment. Following on this year's budget increases, the long term rate of unemployment assistance will exceed the basic rate of unemployment and disability benefit. The opportunity is being taken in this Bill to allow a person to have the benefit of whichever is the higher rate.
Section 2 provides that any claims for unemployment assistance made on or after the date of the Supreme Court judgment will be payable in accordance with the provisions of the amended section 12. This section also provides that married couples to whom the provisions of section 12 applied, who have not submitted claims in writing or initiated court proceedings for an increased rate of unemployment assistance prior to the date of the judgment will not be entitled to retrospective payment.
By virtue of section 2, the provisions of the amended section 12 will apply to couples cohabiting as man and wife with effect from 9 May 1989. Section 3 provides that any such person who may have benefited from the higher rate of payment will not be liable to repay any payments made under the present arrangements.
In conclusion, the arrangements the Government are making in this Bill are in my view reasonable, responsible and fair. The immediate anomaly is being addressed and at the same time the wider implications are being considered in a calm and sensible way. In this way the Oireachtas will have an opportunity to consider the full implications and make adequate provision for any necessary changes in the social welfare code.
I commend this Bill to the House.