Joe Walsh
Ceist:1 Mr. J. Walsh asked the Minister for Social Welfare the reason it was decided to sell local loans fund mortgages in order to fund equality payment arrears. [6255/95]
Ceisteanna — Questions. Oral Answers. - Equality Payment Arrears.
I have recently announced the Government's decision to introduce arrangements to give full effect to the decision of the High Court in relation to the equality payments for married women affected by the delay in implementing the 1979 Equal Treatment Directive. Under these arrangements, the estimated 70,000 married women involved will receive payments on the basis of the rules applied to married men in the period of delay in implementing the Directive. These payments will consist of increases for adult and child dependants and unemployment assistance, and they will also receive the transitional payments as provided for in the court's decision. In addition, compensation will be payable based on the increase in the consumer price index from the date of entitlement in December 1984 onwards to the date on which the payments are made.
The total costs of these arrangements are estimated at some £260 million, of which up to £200 million will be paid by the end of 1995. The remaining payments, estimated at £60 million, will be paid from January 1996 onwards over as short a period as possible. All the married women involved will receive payments on account by September next at the overall cost estimated at £110 million. Further payments on account will be made up to the end of December 1995 at a cost of £90 million.
A special unit is being set up in my Department to process the payments in question. All the women who have received payments under the European Communities (Social Welfare) Regulations, 1992 (S.I. No. 152 of 1992), will be notified of the arrangements for the payment of arrears and an extensive advertising campaign will also be undertaken over the coming weeks. In addition, a special telephone inquiry unit is being set up in the Department to deal with inquiries from the married women concerned.
As a means of funding these payments the Department of Finance will sell a portion of the debt owing to the local loans funds to the Housing Finance Agency or the National Treasury Management Agency. The technical term for the procedure is securitisation. It will not affect in any way the agreements between mortgage holders and local authorities.
I welcome the fact that this payment will be made. Will the Minister clarify the system of payment of £140 million through the local loans fund? He said on the radio a couple of weeks ago that this fund would be capitalised; now we are told it will be securitised. Why was the money not borrowed directly by the Exchequer? Will the money not have to be borrowed as part of public service borrowing rather than direct Exchequer borrowing? What is the need for this sleight of hand?
I am not an economist and I do not know — I do not know whether Deputy Walsh knows — the difference between capitalised and securitised. There is a £449 million debt owing to the local loans fund. That is a fund from which moneys were loaned to local authorities. The moneys in the fund were borrowed by the State to pass on to local authorities. The local authorities in turn lent the money to people buying houses through local authority loans. The £490 million due to this fund will be paid by borrowers to local authorities who in turn will pass the money to the Department of Finance.
The income stream from local authorities will be sold, I expect, to the HFA or the NTMA. It may be sold to a private institution; it depends on the offers received. One set of debt is being swapped for another. As a State we owe £260 million to 70,000 married women who have been denied their rights since 1979. In turn we are owed £490 million by local authorities and we are simply bringing forward the income from that debt to pay the debt we owe to women. No offer to buy the debt will be entertained by the Government which would change the relationship between the mortgage holder and the local authority. The only change will be that instead of the local authority paying the money to the Department of Finance, it will pay the money to the agency which acquires the debt concerned. I do not think I can make the position clearer.
The Minister referred to the income stream; I understand it is in the order of £55 million per annum. How much of that income stream accrued to the Department of Social Welfare? As a result of the latest transaction, what element of that will accrue to the Department in the future?
There are all sorts of income streams to the Department of Finance, ranging from PAYE tax, capital acquisitions tax, capital gains tax, corporation profits tax and profits from various State companies, including the local loans fund. I am sure it would be impossible to define what proportion of that income stream would be allocated to the Department of Finance. I am proud that of the expected income stream this year I have managed to get £212 million for the Department of Social Welfare.
I am not talking about the overall income stream, I am trying to elucidate how much thinking went into this whole matter. The Minister said he does not know the answer but I want him to find out how much money accrued to the Department of Social Welfare from this income stream — I am referring to the £55 million per annum from the £490 million fund. What will the result of the transaction be? Will there be a charge against the Department of Social Welfare in the annual estimates or will there be a reduction in services? There will either have to be a reduction in services or an increase in borrowing by his Department as a result of this way of raising money.
I can appreciate fully why the Fianna Fáil spokesperson on social welfare is unwilling to acknowledge that this Government has finally, in spite of the ham-fisted way the previous administrations in which the Fianna Fáil Party held the social welfare portfolio handled the issue of equality payments, set about resolving a debt to the married women who have been denied their rights since 1979. It would be more gracious for the Fianna Fáil spokesperson to acknowledge that the party made a complete hames of the issue of equality treatment and forced women into the courts to establish their right to this money. This Government, of which I am proud to be a part is finally paying the married women concerned their entitlements in this regard. If Fianna Fáil administrations in the past had attempted to find the money to pay this debt earlier, it would have been much less than £260 million. Had it been paid up front back in the early eighties it would have cost the State only £18 million instead of the £260 million it is now costing us. That is a gross mismanagement of resources and the taxpayers money. At this stage the Deputy should move on to the next question as he will be only increasingly embarrassed by the facts.
He should stand up and apologise.
Order. As Members can observe more than half the time available to us for dealing with Priority Questions has been exhausted in dealing with Question No.1. In fairness we have to move on.
The Minister is in serious difficulty. The Government has been found out in this sleight of hand and he is unable to answer the questions. He said he did not know and the country now know that the Minister does not know. Will there be an annual charge with this hidden agenda in the borrowing of this money by public service agencies rather than by the Exchequer? Is this not a clear breach of the Government's programme. A Government of Renewal where it is stated quite specifically that over the period of this programme it is intended that the growth of current supply services spending will be constrained to a maximum of 6 per cent? Yesterday officials of the Department of Finance said that this would be breached to the extent of 7.1 per cent and will not the annual expenditure——
I cannot permit a debate at this stage.
I am trying to elucidate the facts——
The Deputy says the people should not be paid their money.
——and so far I have been unable to do so. I am asking the Minister to make another attempt to answer these very straightforward questions.
I am seeking to conform to Standing Orders.
The attitude of the Fianna Fáil spokesperson on Social Welfare is extraordinary. Yesterday he spent half an hour decrying the fact that we did not pay enough money to social welfare recipients but today he is saying we spend too much money and we are spending too much money paying the married women their lawfully determined arrears.
Answer the question.
The annual stream of money which he claims is more than £50 million amounts to a tiny proportion of the more than £8,000 million that the State will spend this year, next year and the following year. I guarantee him that as long as I am in the Department of Social Welfare there will not be cuts in services or the delivery of income to the people dependent on social welfare, unlike Fianna Fáil when it had control of the Department of Social Welfare and every increase it delivered was paid for by a cut in some other area of social welfare.
The 2.5 per cent increase is a cut.