I move: "That the Bill be now read a Second Time."
This Bill gives effect to the substantial improvements in social welfare rates of payment announced in the budget. It introduces new income support measures for carers, special rate pensions for people with pre-1953 insurance and a new widowed parent grant. It also provides for exemptions from PRSI for low paid employees, a radical reform of the method of assessing capital for social assistance purposes and improvements for farmers and people making the transition from welfare to work. The Bill addresses commitments set out in the Government's action programme, as recently reviewed, aimed at building an inclusive society and improves the living standards of everyone on social welfare.
This year's package of social welfare improvements is by far the most significant ever, involving a core budget package of £403 million, increased since budget day to £428 million to include improvements aimed at pensioners, people with disabilities and the low paid. In addition, this Bill provides for substantial reductions totalling £103 million in PRSI and health contribution levies for low paid employees. This amounts to a total package of £531 million. To put this in context, the equivalent figures for my previous two budgets were £225 million in 1998 and £316 million in 1999.
That is not all. I also refer to the social inclusion commitments entered into by the Government with the social partners in the new Programme for Prosperity and Fairness which forms a solid basis for further economic prosperity and promoting greater social inclusion over the next three years. All rates of social welfare will be increased in real terms and substantial progress will be made towards a target of £100 per week for the lower rates of payment. For pensioners the new agreement confirms that the level of old age pensions will be improved in line with the commitments given in the review of the Government's action programme. For families, substantial progress will be made towards a target of a monthly child benefit rate of £100 per month for the third and subsequent child. These commitments are backed up by a £1.5 billion investment over the three years. This investment represents a clear demonstration of this Government's priority in ensuring that the fruits of our new found prosperity will be shared equally among all our people.
I wish to outline the provisions contained in the Bill. Securing the future of older people continues to be a key priority of this Government. Since we took office we have taken significant steps towards our objective of building an inclusive society. In our recent review of An Action Programme for the Millennium we have set priorities in a number of key areas, including the attainment of a minimum rate of £100 to all social welfare old age pensioners by 2002 and to increasing these pensions in line with increases in average industrial earnings. The Bill delivers on these commitments. It increases all pensions to older people by £7 per week bringing old age (contributory) and retirement pensions to £96 per week and on target to exceed our original commitment to a rate of £100 per week for those pensions in next year's budget.
The rate of payment to widow(er)'s (contributory) pensioners for those aged 66 or over increases to £89.10 with the old age (non-contributory) pension increasing to £85.50 – both on line to reach £100 by 2002. These increases represent real increases for pensioners well ahead of the expected rise in average earnings. The Government is also committed to substantial increases in other social welfare payments. The personal rates of social welfare payments, other than those for older people and invalidity pensioners, are being increased by £4 per week. This represents an increase of about 5.5% for most payments, the same level as the wage increase agreed in the Programme for Prosperity and Fairness.
I secured Government approval for an additional increase of £1.90 in the standard weekly rate of invalidity pension. This will increase the weekly rate by £5.90 from £75.20 to £81.10 and bring it into line with the standard rate of widow's and widower's contributory pension.
In addition, the Bill provides for a special increase in the rate of qualified adult allowances for this year as part of an overall strategy to increase the allowance to 70% of the main rate over the next three budgets. This Bill represents the first step in this strategy by providing for a minimum increase of £3.80 in the general qualified adult rate. The qualified rate for old age contributory and retirement pensioners is being increased by £4.70 per week giving a total increase for a pensioner couple of £11.70 per week. The rate for old age non-contributory pensioners where the qualified adult is aged over 66 is being increased by £7.50 with such couples gaining £14.50 per week overall. There are also higher increases for those rates currently below 60% of the relevant personal rate.
The combination of personal and qualified adult increases will mean that couples will receive a minimum weekly increase of £7.80 per week, an increase of almost 7%. The increases in the weekly rates will take effect from the first week of May or four weeks earlier than last year. Next year, I intend to bring forward this implemen tation date to coincide with the start of the tax year in early April 2001.
The Government acknowledges the importance of child benefit in providing financial support to families and in reducing child poverty. The Bill provides for substantial improvements in the monthly rates resulting in a full year investment of some £106 million which represents an overall increase of 23% in the cost of the scheme. Child benefit rates will be increased by £8 per month in respect of the first two children and by £10 per month in respect of the third child and subsequent children. This means that a family with three children will receive £141 per month, an increase of £26. I intend over the next few years to continue to provide substantial increases in child benefit in line with the commitments in the Programme for Prosperity and Fairness with a priority focus towards £100 per month to the third child and subsequent children.
Sections 8 and 34 introduce key reductions relating to PRSI and the health contributions aimed at improving the position of low paid workers, following on the discussions of the new partnership agreement, the Programme for Prosperity and Fairness. Under section 8, employees paying Classes A, H and E contributions earning £226 or less per week will be exempt from paying PRSI. Employees earning more than this will continue to pay PRSI on earnings above the PRSI allowance of £100. More than 460,000 employees will gain up to £5.67 per week from this additional measure at a cost of £50 million in a full year.
The earnings limit for exempting employees from the 2% health contribution is also being increased under section 34 from £217 per week to £280 per week, £14,560 per year. All employees earning between £217 and £280 per week and all self-employed people earning between £11,250 and £14,560 will benefit by up to £5.60 per week at a cost of £52.6 million in a full year. This will benefit up to 200,000 workers.
Sections 8 and 9 also provide for an increase, from April next, in the earnings ceilings up to which contributions are payable by employers, employees and the self-employed and for a reduction of 0. 7% in the employer's rate of social insurance contribution to compensate for the introduction of the new training fund levy later this year.
The Bill contains a number of measures aimed at improving the incentive to work and alleviating certain unemployment traps. Section 7 increases the weekly income thresholds for family income supplement from May next by £13 which will lead to an increase of approximately £8 per week in the average FIS payment. I also intend to increase by way of regulations the minimum payment provided under the scheme from £5 per week to £10 per week.
As announced in the budget, the tapered qualified adult allowance arrangements, which relate to the treatment of spouses' earnings are being improved and extended to include people on invalidity, old age contributory and retirement pensions. At present, a qualified adult allowance is payable where the qualified adult has income or earnings of less than £60 per week. A reduced allowance is paid where his or her income is between £60 and £105 per week and in such cases child dependant increases are payable at 50%. The improvements announced in the budget provide for an upward adjustment of the income range to £70 and £135 per week, improvements in the rate of withdrawal and the full payment of child dependant payments until the spouse's earnings exceed £135 per week. Section 20 implements the latter measure. This improvement will be of particular benefit to families where the head of the household is claiming social welfare and the other is engaged in part time work. A family with two children, where the spouse has earnings of £90 per week, for instance, will be better off by £38 from May next, by comparison with the current system.
I am also taking steps in section 26 to improve the treatment of people on rent supplement who take up part-time or casual work opportunities. Under the existing arrangements, any increases in earnings are currently clawed back in full by way of reduced rent supplement payments. From April, a £25 income disregard will be introduced to ensure there is a positive return from work for those who avail of part-time work opportunities. The section also provides for a disregard of additional income arising from participation in training courses, such as FÁS skills training courses, for people in receipt of rent supplement. This measure will take effect by April next and some 2,500 people are expected to benefit.
The valuable role of carers in our society is irreplaceable. No other Government has been as committed to supporting carers as this one. We have delivered on a wide range of measures, both in terms of income support and in terms of services provided. This is reflected in the increasing numbers of carers in receipt of carer's allowance which have increased by more than 60%, from 9,200 when we took up office to more than 14,200 at the end of this month. Expenditure has also increased substantially and will be more than doubled this year, from £36.5 million in 1997 to £78.3 million this year.
In addition to improvements in the carer's allowance, I have extended existing schemes to carers, such as the free schemes, and introduced new support measures such as the respite care grant. I am providing for an increase of £100 in the respite care grant this year.
However, in spite of these major improvements, more needs to be done and this Bill extends our support to a new group of carers. As announced in the budget, I am introducing a radical and innovative benefit scheme to enable carers to give up work temporarily to care full time while still retaining their employment rights. This will ensure that our social insurance system caters for a very important contingency with which many of us are only too familiar.
I am very pleased that the Government has agreed to extend the duration of the carer's benefit and associated leave from 12 months, as originally announced, to 15 months. The new scheme, to be called "carer's benefit", will involve two central elements, both of which are regarded as essential to the recipient. The first of these is a weekly income support payment of £88.50, to be operated and paid by my Department. This will be a social insurance benefit and will therefore not be means tested. It will be paid provided the relevant PRSI contribution conditions have been met.
The second entitlement is the protection of the carer's employment rights for the duration of the caring period. This will require the introduction of separate legislation by my colleague, the Minister of State at the Department of Enterprise, Trade and Employment, with special responsibility for labour affairs, Deputy Tom Kitt.
Sections 10 to 12 outline the main features of the new scheme. The new benefit will be based on a person's PRSI contributions and the maximum claim duration will be set at 15 months in respect of any one care recipient. This time period should be sufficient to facilitate carers who have to leave the work force temporarily to care for an elderly or infirm person or to make alternative long-term arrangements. In addition, it will allow for the protection of the carer's employment rights, which is a key feature of the scheme. In the event of the carer's benefit expiring and the need for income support still existing, the carer will be able to apply for carer's allowance. Although it will not be means tested, the new scheme will be closely linked to the means tested carer's allowance in relation to other conditions. The same medical criteria, residency and part-time working conditions will apply. Employed contributors paying social insurance will be included for the purpose of the carer's benefit scheme, except for the self-employed, class S, and those earning less than £30, class J. The scheme will be available to people in employment for at least three months immediately prior to claiming benefit, who have at least three years' contributions and are working for a minimum of 38 hours per fortnight prior to commencing full-time caring duties. The weekly rate of payment will be £88.50 and additional increases for child dependants will be payable, where appropriate. The Bill also provides for an additional payment in cases where a carer is caring for more than one person, as applies to the carer's allowance and for payment of a respite care grant. It is estimated that when the scheme reaches maturity there could be in the region of 6,600 claimants of this benefit. This new scheme will become operational from October 2000, following the introduction of the necessary legislation by my colleague on the protection of carers' employment rights.
Deputies will recall that in my budget speech last year, I announced that my Department would carry out a review of the qualifying conditions for the retirement and old age contributory pensions in 1999. I am pleased to be able to report to the House that the first phase of this review is now completed. The second phase will be finalised before the end of 2000. The review is looking closely at the operation of the current yearly average test and the implications of moving to a total contributions approach which many people consider more equitable.
In relation to contributions paid prior to 1953, Deputies will be aware that such contributions, while currently taken into account for certain requirements in determining entitlement to old age contributory and retirement pensions, are not counted in determining the yearly average test. Consequently, many people with pre-1953 insurance have failed to qualify for pensions or only qualified for a minimum pension because their contributions were not fully recognised. Under section 16 of the Bill, these people may now qualify for a special old age contributory pension at 50% of the maximum personal rate if they have at least five years or 260 social insurance contributions paid under the National Health Insurance Acts or a combination of pre- and post-1953 insurance.
I am also pleased to announce significant improvements in the current structure of the rates bands for the retirement and old age contributory pensions. The current structure includes five different rates of reduced pensions. This will now be reduced to three rates. Pensioners with a yearly average ranging between 20 and 47 contributions will now be entitled to a reduced rate of pension equivalent to 98% of the maximum personal rate. This change will result in some 38,000 pensioners receiving overall increases of between £7.50 and £12.20 in their weekly personal rates of pension. This improvement will take effect from May next and will be implemented in regulations.
Section 17 introduces radical changes to the method of assessing capital for social assistance payments. This is an issue that has been raised by the Oireachtas Committee on Family, Community and Social Affairs, by members of my own parliamentary party and indeed by Deputies on all sides of the House. Concerns have been expressed, for example, that the effective assessment rates under the existing system, particularly in the case of single people with relatively low amounts of capital, bear little relation to the actual returns currently available on investments. I am pleased to be in a position to respond positively to these genuine concerns and I have gone further than required. I am introducing quite radical changes to the system of capital assessment and extending this improvement to most social assistance schemes, including unemployment assistance.
Briefly, the new arrangements will provide that the first £10,000 of capital will be completely disregarded. Capital between £10,000 and £20,000 will be assessed on the basis of £1 weekly means for each £1,000 of capital; capital between £20,000 and £30,000 will be assessed on the basis of £2 weekly means for each £1,000 of capital, and capi tal above £30,000 will be assessed on the basis of £4 weekly means for each £1,000 of capital. These limits will be doubled in the case of a married couple in receipt of old age non-contributory or blind pensions or carer's allowance.
This new system, which will be introduced next October, at a full year cost of £6.7 million has a number of key virtues. First and foremost, it means that pensioners with the lowest amounts of capital will not face any pension reduction. A survey of old age pensioners with capital, undertaken by my Department, found that 88% had capital of less than £10,000. The majority of pensioners with capital will no longer find that capital assessed against their pension. The change is equitable and progressive and is considerably easier to understand from the perspective of the customer. It also provides significant gains to social welfare claimants who have capital. For example, a single pensioner with £10,000 capital will gain £6 per week as a result of this change. This will also apply to those on unemployment assistance, as announced earlier.
Section 18 of the Bill provides for a number of improvements in the farm assist scheme agreed as part of a package for the farming community outlined in the new Programme for Prosperity and Fairness. They involve a reduction in the assessment rate from 80% to 70% and an increase of £100 per annum in the child income disregards. Both these improvements will make a valuable contribution in supporting farmers on low incomes. It is proposed these improvements will also apply in the case of low income self-employed fishermen claiming unemployment assistance.
In the 1999 Social Welfare Act, I introduced an enhanced bereavement grant of £500. As a result of this measure, the numbers claiming the bereavement grant in 1999 increased by 80% and expenditure on the scheme increased fourfold. I also indicated that it was my intention to introduce further measures in this year's Bill to address some of the difficulties and problems faced by newly bereaved people. We are all well aware of the particular grief experienced by families on the loss of a spouse and parent. The emotional difficulties can be particularly acute as, more often than not, it means the loss of a spouse at a relatively young age. In addition, with children involved there can also be very practical problems for a newly widowed person at this time.
To assist newly widowed persons with children to cope in the immediate aftermath of such a loss, the Government has decided to introduce a special additional grant payment of £1,000 effective from budget day, 1 December 1999. This is provided for in sections 13 to 15 of the Bill. The grant will be payable to widows and widowers with dependent children who qualify for widow's and widower's contributory pension, a one parent family payment or a bereavement grant payable on the death of their spouse. It is estimated that the payment will benefit over 1,500 widows and widowers each year at a cost of £1.5 million. The measures contained in section 25 of the Bill deal with the problem where the six weeks after death payment is not currently made or is paid at a reduced amount. This is additional to the changes announced in December's budget. These arise in particular in households where there are two pensions in payment and in cases involving the payment of one parent family payment. Approximately 3,300 people will benefit from these measures at a full year cost of approximately £1.5 million. These measures will mean that a six weeks after death payment now applies in all circumstances under the social welfare code. We have eliminated the many anomalies in this regard.
Section 27 of the Bill implements one of the social inclusion commitments in the proposed Programme for Prosperity and Fairness and addresses a concern which has been raised many times by Members of this House and other public representatives. The section allows an unemployed person to qualify for either unemployment benefit or unemployment assistance, whichever is more beneficial to his or her circumstances. This change will be of particular benefit to community employment workers who were previously long-term unemployed. They will now be able to claim unemployment assistance at the long-term rate if they revert to the live register and qualify for extended child dependant increases for school going children up to age 22 and for secondary benefits such as free fuel and the Christmas bonus, which is a bone of contention in this House every year.
I now turn to some of the miscellaneous provisions. Current financing arrangements of the social insurance fund allow for the reimbursement from the fund to the Exchequer of social insurance costs arising where a person entitled to old age or widow's and widower's contributory pension or deserted wife's benefit opts instead to claim old age non-contributory pension at a higher rate. The annual cost of these payments is £24 million. These provisions are being extended to other categories of payments where a person who is entitled to a social insurance benefit on foot of his or her PRSI contributions opts instead to claim certain assistance payments at a higher rate, for example, a higher unemployment assistance payment than an unemployment benefit payment. The new arrangements are expected to cost in the region of £22 million annually.
Section 29 also provides for the charging to the fund of expenditure incurred in relation to recipients of social insurance payments under certain free schemes administered by my Department. These schemes are currently available to people receiving certain social welfare payments or other qualifying payments, or who are aged over 66 years and satisfy a means test. The schemes are currently fully financed by the Exchequer from my Department's Vote. This change will not lead to an increase in overall expenditure by my Department but will involve a transfer of charges from my Department's Vote to the fund of approximately £71 million.The section further provides that expenditure incurred under the medical card system for dental treatment for insured persons who would otherwise qualify under my Department's dental benefit scheme by virtue of their PRSI contributions will also be borne by the social insurance fund. This will involve a transfer of approximately £7 million in charges from the Exchequer to the fund. I believe it is logical, therefore, to charge the social insurance related expenditure, such as free schemes, to the social insurance fund. On the same principle, it is also logical to recoup from the fund any liability which exists where a person who is entitled to a social insurance benefit on foot of his or her PRSI contributions opts instead to claim certain assistance payments at a higher rate.
Section 31 provides for changes in the administration of the supplementary welfare allowance scheme. As Deputies are aware, the scheme is currently operated by health boards under the general direction and control of the Minister. The purpose of this amendment is to enable deciding officers of my Department to decide entitlement in certain cases. These include claims for basic supplementary welfare allowance from people who are awaiting a decision on claims made for social welfare payments, such as unemployment assistance or one parent family payment, and claims for retention of rent or mortgage interest supplement from people who are making the transition from welfare to work with the support of active labour market programmes such as the back-to-work allowance.
Some 22,000 people currently receive a basic weekly payment under the scheme. Just over half of these, 11,600 people, claim supplementary welfare allowance from their local health board while awaiting a decision on claims before my Department for payments such as unemployment assistance/benefit or one parent family payment. Dissatisfaction has been expressed by public representatives and others that people seeking assistance from the State are obliged to make their case in duplicate at the health board office, having already provided all the relevant details to the Department. Some 47,000 people currently receive rent or mortgage interest supplements under the scheme. Approximately 5,000 of these are people who are making the transition from welfare to work with the assistance of programmes such as the back-to-work allowance. They receive supplementary welfare allowance under special arrangements introduced as a work incentive and, in most cases, would not qualify under the standard rules of the supplementary welfare allowance scheme. It is my intention to provide for the direct payment of supplementary welfare allowance by my Department in these cases with a view to improving customer service and administrative efficacy. This proposal is in line with the conclusions reached by the Comptroller and Auditor General in 1998 in his report on the value for money examination of the administration of the scheme. My Department is at present consulting with the relevant staff interests in the health boards on the appropriate timescale for this change. Following these discussions, I will be bringing forward regulations giving effect to this transfer.
Section 32, at the request of the Department of Health and Children, extends the scope of the legislative provisions I introduced in 1998 for an integrated social services system to include the National Breast Screening Board on the list of specified bodies. Deputies will recall that these provisions provided for the standardisation of the RSI number as a unique public service identifier, the introduction of a public service card and a payment card and the sharing and transfer of personal information between specified public bodies for the purposes of determining entitlement to certain social services and for the control of such services. The existing list of specified bodies includes Departments, local authorities, health boards, the Revenue Commissioners, FÁS, An Post, the General Registry Office, the Legal Aid Board, the General Medical Services Payments Board and the voluntary hospitals. My Department has consulted with a wide range of specified bodies on how the new system should work. Plans are now well advanced to launch a combined PPSN and public service care initiative across the public service to heighten public awareness of the potential it offers for improved service delivery. This initiative will include the development of a common means database accessible to agencies delivering means tested public service schemes.
At this stage I wish to inform the House of my intention to introduce an amendment on Committee Stage to extend the existing data sharing provisions to allow data exchange between my Department and other specified bodies for the purpose of providing them with a PPSN for each person for whom they hold records. The amendment will provide also that my Department provides to local authorities landlord details of tenancies in respect of which a rent supplement is payable by my Department to assist them in carrying out their statutory responsibilities with regard to fire safety and accommodation standards in relation to private rented accommodation; that the Department of Education and Science track early school leavers across publicly funded training courses so that the information may be used to develop appropriate responses in terms of outreach and curriculum development; and that the National Breast Screening Board should exchange data with other specified bodies, using the PPSN, for the purposes of identifying persons who, for public health reasons, may be invited to participate in their programme.
In relation to the issue of post-retirement integration, I tabled an amendment in last year's Social Welfare Act to prohibit reductions in occupational pensions already in payment arising from increases in social welfare pensions, as recommended by the Pensions Board in its report on the national pensions policy initiative. However, I am still concerned that, under the rules of a very small number of occupational pension schemes, the integration process is continued after retirement under a total pension income approach effectively depriving the pensioner of the full benefit of the large increases in recent years in the social welfare pension. Therefore, I am tabling an amendment to this Bill which will prohibit this practice. In relation to the general issue of post-retirement integration, I will be considering a report which I have requested from the Pensions Board on the indexation of occupational pensions generally in the context of the new pensions Bill which I propose to publish during the summer.
The Social Welfare Bill demonstrates the Government's commitment to looking after the needs of our older people, carers and others who are dependent on the social welfare system for income support. This is clearly evident when one considers the additional resources being made available for these improvements – £252 million this year and £428 million in a full year. I commend the Bill to the House.