Written Answers. - Social Welfare Benchmarking.

Jim Mitchell


401 Mr. J. Mitchell asked the Minister for Social, Community and Family Affairs the full-year cost of implementing a proposal of the social welfare benchmarking group (details supplied). [27710/01]

The social welfare benchmarking and indexation group, established under the terms of the programme for prosperity and fairness, reported in September 2001. While it did not prove possible to reach consensus on the desirability of establishing a formal benchmark for social welfare rates, the group did produce the following majority recommendation:

Recognising that the exact rate was a matter for Government, and having balanced the various factors set out in the terms of reference, the majority of the group considered that the target of 27% of GAIE [gross average industrial earnings] (on a current-year basis) for the lowest social welfare payments was not an unreasonable policy objective. Given current uncertainties in relation to the short-term economic position, it was difficult to be prescriptive about the precise time frame, although it would not be unreasonable to expect that the target would be met in full by 2007, that is, in the budget announced late in 2006.

The report also contained a rough estimate of the total costs of this proposal over the period to 2007. Assuming a steady incremental progress towards the target rate in the period 2002-07 and assuming that existing relativities between welfare rates were maintained in full would indicate that additional expenditure of the order of £2.9 billion, approximately 3.7 billion, would be required in respect of weekly welfare rates and FIS payments if the target of 27% GAIE was reached at that stage, that is, excluding child related payments. It should be noted that annual increases in any event will be provided for in the rates of weekly welfare payments. Accordingly, the net additional cost associated with the proposal would therefore be lower.

With regard to child related payments, the group recommended that the appropriate equivalence level of basic child income support should be set at 33% to 35% of the minimum adult social welfare payment rate. Assuming the 27% GAIE target was met in full, aggregate additional expenditure of some £363 million, 461 million, to £526 million, 668 million, on child benefit payments would be needed over the period to 2007, over and above the existing £1 billion, 1.27 billion, Government commitments for the period to 2003, to achieve that level. This assumes that the current policy of channelling all additional child income supports through the child benefit scheme remains in place.

The group also costed the benchmark options assuming, for simplicity, that the rate was achieved with immediate effect, that is, after the implementation of the changes announced in budget 2001. In this respect, the 27% GAIE option would cost approximately £1.235 billion, 1.568 billion, in a full year.