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Dáil Éireann díospóireacht -
Tuesday, 23 Feb 2010

Vol. 703 No. 1

Other Questions.

Social Welfare Benefits.

David Stanton

Ceist:

71 Deputy David Stanton asked the Minister for Social and Family Affairs the number of persons still on the back to work allowance when the last person will complete the scheme; the number on the back to work allowance in 2007, 2008 and 2009; the cost to her Department of the back to work allowance in each of these years; if her Department has conducted research into the cost incurred by the State each year of the back to work allowance scheme through the retention of secondary benefits; and if she will make a statement on the matter. [9032/10]

I presume the Deputy is referring to the back to work allowance scheme for employees which is one of two strands in the Department's back to work programme. The scheme was designed to assist the long-term unemployed, lone parents, people with disabilities and other social welfare recipients to return to work. The allowance is paid on a reducing scale over a three year period. Participants retain any additional secondary benefits they had prior to participation.

In order to respond effectively to the growing numbers on the live register, the changing profile of jobseekers generally and the current employment situation, it was decided in April 2009 to refocus the existing resources for back to work schemes towards helping people into self-employment. The intention is to support enterprises that will, in due course, create further employment opportunities. To this end, the back to work allowance scheme for employees was closed to new applicants from 1 May 2009. Existing participants retained their entitlements and, in general, the last of these will have finished by the end of April 2012. However, the scheme contains a provision that participants who drop out before their entitlement ceases can in certain circumstances resume where they left off. Consequently, there may be a small number of people re-entering whose entitlement will not expire until after April 2012.

There were 4,305 people on the back to work employee scheme at the end of 2007. The equivalent figure was 3,558 at the end of 2008 and 2,012 at the end of 2009. The expenditure figures collated by the Department do not distinguish between the back to work allowance scheme and the related back to work enterprise allowance. The overall expenditure on both schemes in 2007 was approximately €71 million. In 2008, it was over €73 million. The outturn for 2009 has not yet been finalised, but the estimated figure is approximately €76.5 million.

Participants in the back to work allowance scheme retain any secondary benefits they were in receipt of prior to participation, as long as they satisfy a household income means test where applicable. The Department has not undertaken specific research on the annual cost to the State of this measure, which has always been seen as important to the success of the back to work allowance scheme.

Can the Minister confirm that 20% of those who are unemployed are under the age of 25? Does she agree that the scrapping of this scheme has robbed such people of any hope of getting employment? Can she tell me why the scheme has been abandoned at a time when the rate of unemployment in this country is the second highest in the European Union? Why has the Government decided to abandon young people and a scheme that seemed to be working well? Was there evidence to suggest that the scheme was a failure in some way? If so, why was it maintained for so long? How many people are now on the short-term enterprise allowance scheme, which replaced the previous scheme?

I do not accept that the scheme has anything to do with young people. It was designed to enable those who were becoming long-term unemployed to get back into the work force. Our aim with young people is to ensure they do not become long-term unemployed in the first instance.

Approximately 40% of them are unemployed.

Our priority for them is to get them into training, activation, education or work placement programmes. I suggest that the scheme under discussion is not the appropriate one for them. A scheme that has been introduced as part of our efforts to get people back into work — the back to work enterprise allowance — might be the most appropriate one for them. It enables young and old people who have ideas to get social welfare support while pursuing those ideas. Having closed the back to work scheme, we decided to focus on the back to work enterprise allowance in order to encourage innovation and enterprise. At the end of last year, some 6,603 people were availing of the enterprise scheme. The relevant figure for short-term enterprise allowance, which was also mentioned by the Deputy, was 1,195.

Am I right in saying that the number of people availing of short-term enterprise allowance is greatly below expectations? Does the Minister agree with the CSO that 60% of unemployed people are at serious risk of long-term unemployment? At a time when so many people are at risk of long-term unemployment, why did she scrap a scheme which focused on the long-term unemployed? Some 12.7% of the population is unemployed. That figure was 15.7% when the scheme was introduced in 1993. Does the Minister intend to wait until the unemployment rate reaches 15.7% again before she introduces a meaningful scheme to give hope to the long-term unemployed?

A number of new initiatives have been introduced. The useful back to work enterprise scheme encourages innovative people who have ideas to set up their own enterprises. The number of people on the back to education scheme, which is the only guaranteed way of ensuring one does not become long-term unemployed, has increased significantly, to over 20,800, by comparison with last year and the year before. We have introduced the PRSI incentive scheme, which is designed to take people off the live register and put them into work. It has the potential to be costly this year. In order to avail of the scheme, one needs to have been on the live register for at least six months. If people are taken off the live register after six months, they are protected from becoming long-term unemployed. Such people are put into work, which is exactly where many of them want to be. The employer does not have to pay the PRSI for them. That scheme costs €3.3 million for every 1,000 people who participate in it. We reckon that it could cost a significant amount of money this year. It will have the exact effect that the Deputy wants to achieve. It will ensure that people get back into work, rather than staying on the live register for too long.

Social Welfare Code.

Bernard Allen

Ceist:

72 Deputy Bernard Allen asked the Minister for Social and Family Affairs her plans to introduce national guidelines for the operation of the mortgage interest supplement scheme; and if she will make a statement on the matter. [8930/10]

Eamon Gilmore

Ceist:

81 Deputy Eamon Gilmore asked the Minister for Social and Family Affairs the reason for the delay in reforming mortgage interest supplement. [8896/10]

Michael Noonan

Ceist:

83 Deputy Michael Noonan asked the Minister for Social and Family Affairs her plans to amend the mortgage interest supplement scheme; if she will make revised guidelines publically available; and if she will make a statement on the matter. [8993/10]

Seán Barrett

Ceist:

122 Deputy Seán Barrett asked the Minister for Social and Family Affairs the number of persons in receipt of mortgage interest supplement; the cost for same; if she will arrange for the collection of figures on the number of persons who apply for mortgage interest supplement; and if she will make a statement on the matter. [8933/10]

I propose to take Questions Nos. 72, 81, 83 and 122 together.

The initial purpose of the mortgage interest supplement scheme was to provide short-term support to people who have difficulty meeting their mortgage repayments due to changes in their employment circumstances and whose means are inadequate to meet their basic day-to-day needs. The goal of the scheme, within the overall social welfare framework, was to ensure that people do not suffer unnecessary hardship due to loss of employment and can, in the short term, maintain their sole place of residence while being unemployed. Mortgage interest supplement only covers the mortgage interest payments in respect of an eligible person's sole place of residence. It is a means tested payment and other qualifying criteria apply. Just over 15,400 people are in receipt of mortgage interest supplement at present. Given that there were 8,091 recipients in 2008, there has been an increase of 91% over the last 12 months. The levels of expenditure on the scheme for the years up to December 2009 and December 2008 were €60.7 million and €27.7 million respectively. Therefore, there has been a 119% year-on-year increase in the outturn.

The assessment for the mortgage interest supplement scheme provides for a gradual withdrawal of payment as hours of employment or earnings increase. Those availing of part-time employment or training opportunities can continue to receive mortgage interest supplement, as long as they satisfy the standard means assessment rules. Claim details are generally electronically recorded when entitlement to mortgage interest supplement is refused. As the practice can vary between community welfare areas, statistics for the number of people who applied for and were refused mortgage interest supplement without an appeal are not fully reliable. Community welfare officers have been reminded on many occasions to record electronically details of the receipt and status of all claims. Requests to change operational procedures should be viewed in the context of the increased demands being placed on community welfare officers in the current economic environment.

The review of the administration of the mortgage interest scheme is progressing. The main purpose of the review is to examine how the scheme can best meet its objective of catering for those who require assistance on a short-term basis because they are unable to meet mortgage interest repayments on their sole place of residence. The review group includes representatives of the community welfare service, the Departments of Finance, Social and Family Affairs and the Environment, Heritage and Local Government and the Financial Regulator. The group is examining trends in programme and administrative costs, the impact of the Financial Regulator's statutory code of practice on mortgage arrears on the mortgage interest supplement scheme and legislative and operational issues including the cap on hours of employment. The review is also considering whether alternative approaches to achieving the scheme's objectives are warranted in light of recent changes in the economic climate and the mortgage market. The full review should be completed in the coming weeks. The ensuing report will be available for publication in April 2010. Following consultation with the community welfare service, guidelines on specific and immediate operational issues for the community welfare officers operating the scheme have been finalised. The guidelines were issued in June 2009 and are available on the Department's website, www.welfare.ie.

I am interested in the Minister's statement that "community welfare officers have been reminded" to record information on the number of applications that are granted or refused. Having spoken to community welfare officers and those representing them, I understand they have been collating this information for years——

Not all of them.

——but have not been asked for it. When will we see this information? It is not enough to remind the officers to compile it. As the Department is paying this money, it has a duty to provide details on who is applying for it, who is getting it and who is being refused it. When will we get such information? I do not know how the scheme can be reviewed in the absence of information on those who are being refused under it. Not only are we waiting for reports from the review groups established by the Minister and her colleague, Deputy Ryan, but we are also waiting for the Taoiseach to establish the high level independent group. In the meantime, will the Government consider easing the mortgage interest supplement criteria so that those who may benefit from the various reviews, if anything is ever done on foot of them, do not lose their homes while the various reports are being collated and examined? People are being refused mortgage interest supplement at the moment. They are losing their homes because they cannot negotiate anything with their banks. When the review is produced in due course, it will not suffice for us to tell such people we might have been able to save their houses if something had been done in the meantime.

Two distinct groups are considering the matter at present.

The first group is the mortgage interest supplement review group, which is based in the Department of Social and Family Affairs. Its report, which will be finalised over the next couple of weeks and is to be published in April, will give us specific guidelines on our own scheme. The second group, which is examining the wider issue of home ownership and protection of homes, etc, is led by the Department of Finance. As I said earlier, that group is charged with considering the wider issues of shared equity and rental, etc. We should not ignore the fact that——

What about the third group the Government promised to establish?

That is a separate group. The Departments in question are working on the two groups. We should not ignore the fact that a moratorium of 12 months has been established which covers all institutions covered by the Financial Regulator, including the sub-prime lenders. This means that when someone gets into difficulty in paying their mortgage, as long as they engage with the bank, no action will be taken in repossessing their homes for 12 months. They can still do this through MABS too.

The record starts from the first missed payment.

Allow the Minister to reply.

What about those who missed their payments 12 months ago?

It is 12 months from the first time they went into arrears. As long as they are engaging——

Yes, but that could have been 12 months ago.

The moratorium was only for six months until last week.

People are still losing their homes in the meantime.

We must put this in perspective.

Please allow the Minister to reply. I will call Deputy Enright again.

The Minister should go down to the courts in the morning to see what is happening in the area of mortgage arrears.

People who are genuinely engaging with the banks and financial institutions are not losing their homes. The Government is anxious that the agreements in place with the Financial Regulator, the Irish Banking Federation and the financial institutions are designed to ensure people are left in their homes.

The Minister expects the review to be published at Easter. However, we were promised it for last Easter. This is another example of a scheme that is simply not meeting the current needs of those who look to it for support. It does not reflect the real-life situation with which people are faced.

The ridiculous 30-hour rule means that, irrespective of a family's income, if one member of the couple works 30 hours or more, the family is automatically precluded from the assistance. Apart from this rule, what else is being considered in the review? Is the Minister contemplating restricting the scheme any further? Some home owners facing difficulties with repayments cannot avail of the scheme to assist them. While we are waiting for the review, will the Minister set down specific guidelines for monthly limits? In the absence of specific guidelines, community welfare officers are basing payments on the existing rent supplement limits. Given what has happened to rents recently, rent limits are completely out of line with what is happening with mortgage repayments. As there is a real gap in the area which means many home owners are refused assistance, will the Minister set down guidelines for monthly assistance payments?

Another reason community welfare officers are turning people down is because they claim the mortgage was too high in the first place. What guidelines has the Minister given to community welfare officers to make that decision? From figures I have from around the country, it seems the assistance is decided arbitrarily. Whether the officers have the qualifications to determine what was too high is questionable. This must be examined, particularly while we are waiting for the Minister to report on the review.

It would be inappropriate for me to pre-empt the findings of a report that will arise in a month by setting out new guidelines. It is more appropriate to wait for the report to be published. It is examining the 30-hour rule, the trend in the administration and costs of the programme, the impact of the code of practice on mortgage arrears and on mortgage interest supplement and the impact of mortgage interest supplement on how the banks are reacting to clients in arrears. It will also examine the relationship between the 12-month moratorium and the mortgage interest supplement. Our aim is to support as many people as possible, not restrict mortgage interest supplement. This year, over €60 million will be spent on the supplement.

Yet people are still losing their homes.

The scheme is designed to enable people to stay in their homes. However, when granting such an amount, it is reasonable to see if it could be afforded in the first place or, more particularly, in a year when they are back in employment.

Written Answers follow Adjournment Debate.

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