It is urgent that we would develop a system to allow us to differentiate between various levels of disability in a way similar to the partial capacity scheme coming before the Dáil in the Social Welfare (Miscellaneous Provisions) (No. 2) Bill. This would allow for differentiated payments based on the level of disability and for a more nuanced approach based on people's individual need. However, within the current schemes and within the timeframe I have been in the Department, it has not been possible for me to bring such a proposal to fruition. I will continue to work on this and believe it is important that whoever is in the Department would bring this idea to fruition and make it a priority.
I will now turn to supports for children. Between 2000 and 2010, the monthly rates of payment for child benefit increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €150 and €187, respectively. In the same period, overall expenditure on child benefit grew from just €638 million to approximately €2.2 billion per year. As a result, approximately 10.6% of gross social welfare spending in 2010 was on child benefit.
This Government is proud to have been able to deliver such significant increases in payments to families when the resources were available. However, in the current economic environment, we cannot afford to keep spending at the same level as we did when our tax revenue was much higher. In that context, we have decided to reduce overall expenditure on child benefit.
In considering the various options for making savings in this area, we were conscious that the payment can be an important source of income for all families, for different reasons. Accordingly, the Government has decided against withdrawing child benefit completely from any family.
From January, the lower rate of child benefit which is paid in respect of the first and second child is being reduced by €10 to €140 per child per month. The payment for the third child is being reduced by €20 to €167 per month. This is still €27 greater than the payment for the first and second child. The payment for the fourth and subsequent children is being reduced by €10 to €177 per month, €37 more than the basic payment for the first and second child.
I appreciate that cuts in child benefit will be difficult for some families. However, it should be recognised that the payment will still be very generous compared with that in other countries and that the Government is making a substantial contribution towards child care provision, including the continuation of a free pre-school year.
As I have stated, the qualified child increase payable with welfare payments is fully maintained. The domiciliary care allowance, paid to parents and guardians of certain children who are ill or who have a disability under 16 years of age, is also unaffected, and the family income supplement and back-to-school clothing and footwear schemes are unchanged. The arrangement for multiple births, of twins and triplets, is also unchanged. The changes in these payments to those on social welfare bring levels back to those that obtained in 2008. For those not in receipt of a child dependant allowance or the family income supplement, the level has returned to that of 2005.
My Department will be initiating a number of reforms to the rent supplement schemes in order to generate savings of €60 million in the next year. These reforms include entering discussions with the Department of the Environment, Heritage and Local Government with a view to aligning more closely the minimum contribution payable by household couples with that paid by equivalent households under the local authority differential rent scheme; reviewing entitlement of people who refuse local authority housing; the reduction of payments made to landlords with a corresponding reduction in rent limits, where appropriate; and increased control activities through efficiencies arising from the transfer of the community welfare service staff to the Department of Social Protection.
The introduction of a €2 differential between the rate of basic supplementary welfare allowance and other schemes from January 2011 will generate over €10 million in savings in the rent and mortgage interest schemes. These will arise as entitlement to rent and mortgage interest supplement is based on the weekly rates of supplementary welfare allowance. Pensioners, carers and people on supplementary welfare allowance will not be affected by this change. Following these reforms, it is estimated that the rent supplement scheme will still cost €465 million in 2011.
The value of the household benefits package is being fully maintained in 2011. However, I am considering a number of reforms, some of which may require legislative change, to make schemes work on a more efficient and less costly basis.
As announced in the national recovery plan, expenditure on the free television licence and free travel schemes, respectively, will be capped at the levels provided for in the 2010 Revised Estimates volume. This will not affect individual entitlement but does generate savings in the long term.
The availability of job opportunities with real financial incentives to take these up is of crucial importance over the next few years. Beyond the immediate financial benefit to the worker, work benefits the psychological and general health of individuals in addition to the wider community and the economy generally.
Activation and support for the unemployed comprise a key priority for the Government. Earlier this year, the Taoiseach announced a number of changes to improve the delivery of employment, training and community services to the public by bringing together related responsibilities in these areas. These changes included the restructuring of departmental responsibilities with the aim of providing a streamlined integrated response to the income support and job search needs of people who are unemployed.
In this regard, the employment and community services operated by FÁS are being transferred to my Department in January and the budget day Estimates provided for this. As part of this integration, the national employment action plan is already being revised in order to provide more efficient interventions with jobseekers on a more frequent basis, and this process commenced last October. A key element of the new initiatives will be more intensive and more regular engagement by my Department's services with unemployed people in helping them get back to work and ensuring that all jobseekers are genuinely available for and seeking work.
I am also announcing the creation of a new community work placement programme called Tús and it is intended that it will become operational in the near future. It will provide up to 5,000 places and will provide quality, targeted, short-term working opportunities for people who are unemployed while at the same time carrying out beneficial work within communities.
The 52 local development companies will have responsibility for delivering the work opportunities. The programme will be delivered in the Gaeltacht areas through Údarás na Gaeltachta. Community and voluntary organisations will be asked to provide quality working opportunities for potential participants and a number of national, sporting, cultural and social organisations in addition to care and disability services will also be given the opportunity to participate. Participants will work for 19.5 hours per week for a duration of 12 months and there may be some degree of flexibility in terms of the schedule of hours. The rate of payment will be equivalent to the maximum rate of the person's underlying social welfare payment plus an additional top-up of €20 per week. The employment will be insured for all benefits under the social insurance system.
Participants will be selected through the processes used for the national employment action plan. My Department will contact people on the live register who satisfy the scheme criteria and offer them the opportunity to participate. Those interested in participating will be referred to the local development company, which will maintain a panel from which recruitment will be effected. As is required by law, persons in receipt of jobseeker's allowance must be genuinely and actively seeking employment. Where a person refuses a work opportunity including a work opportunity on the new scheme, that person's continuing entitlement to a payment will be examined.
This is an important new initiative to provide quality short-term working opportunities for the unemployed. It is essential that it be properly targeted at those who will benefit most; can be easily accessed and administered; does not impose excessive burdens on community organisations; and provides quality suitable work opportunities and beneficial outcomes to the community. It is anticipated that this scheme will cost up to €30 million in 2011, and provision is made for this in the budget day Estimates. Overall, it is anticipated that activation measures generally, including the refocused and reinvigorated national employment action plan, will save up to €100 million next year. In addition, the skills development and internship programme and the work placement programme operated by the Department of Education and Skills will provide up to 10,000 places in the private and public sectors.
Welfare fraud is theft. It is a serious crime and the Department of Social Protection is doing everything that it can to crack down on people who abuse the system. There are over 600 staff working in areas related to the control of fraud and the abuse of the welfare system. Between January and the end of October this year, over 585,000 individual claims were reviewed.
The level of fraud on most schemes is very low. As reported by the Comptroller and Auditor General, the percentage of expenditure resulting from fraud identified in the Department's fraud and error surveys was 0% for pensioners, 0.1% for illness benefit recipients, 0.8% for family income supplement recipients, 1.8% for child benefit recipients and 2.3% for disability allowance recipients.
When high risk areas are identified, targeted control measures are put in place to reduce the risk of fraud and abuse of the system. For example, certification was introduced regarding child benefit claims from non-Irish nationals and to other customer segments in schemes where any form of high risk has been identified.
Next year, my Department will begin the phased introduction of the public services card, with key security features, including a photograph and signature, which will be used to authenticate identity of individuals. One of the anticipated advantages of the public services card is that it will help to reduce fraud and error which result from the incorrect identification of benefit claimants. These cards will issue to approximately 3 million people over the next number of years and they will replace cards currently in use, such as the social services card and the free travel card.
Fraud detection systems have also been improved through data matches with organisations such as the Revenue Commissioners on commencement of employment data, the General Registrar's Office on marriages and deaths information, and many other organisations including the Departments of Justice and Law Reform, Environment, Heritage and Local Government, Education and Skills, and other State bodies. I assure the Deputies that my Department will continue to use every available means to crack down on welfare fraud, and savings will be generated by streamlining our approach in line with international best practice.
I would like now to look ahead to the welfare system of the future. Structural reform of the welfare system is crucial in the short to medium term to deliver better targeted supports while always encouraging participation in work. If we do not reform our systems, we will have no alternative but to make further cuts to achieve savings. I favour making savings from structural reform when and where possible.
In recent weeks my Department has published three reports which will assist with key areas of reform. These reports cover important areas of social welfare, namely, child income supports as well as payments to people of working age and to people who are ill or have a disability. These reports will make a valuable contribution to the transformation agenda and share common themes, with the main objective being the improvement of outcomes for people and their families who are dependent on my Department's support.
Structural reform changes should include the development of a rebalanced and integrated income payment system; and the development of a single social assistance payment to replace the different means tested working age payments, including some secondary and supplementary payments, as part of a more purposeful labour activation strategy. This new single working age means tested system would help to minimise the existing benefit traps and incentivise recipients to move back to work or move from part-time employment to full-time employment. Implementation will have to be done on a step by step basis to make the system more friendly to atypical working; and the disability allowance review proposes that customers should have their employment capacity assessed at the point when they first apply for the allowance in order to facilitate a greatly improved matching of services and needs.
The Minister for Finance announced yesterday that new bonds which will facilitate a sovereign annuity will be available for pension schemes from January 2011. I will now set out details of this initiative. The National Treasury Management Agency, NTMA, will issue bonds which will assist in the creation of sovereign annuities. The bonds will be available for purchase by any investor, including pension funds. The interest rate applying to the bonds will be announced in January in the light of prevailing market conditions. Any sovereign annuities issued by the insurance industry on the basis of these bonds will be certified by the Pensions Board.
I want to emphasise that this is a voluntary initiative and based on proposals from the pensions industry itself. It gives scheme trustees new options to deliver higher yields and improve the funding position of their schemes. They can buy the bonds for their scheme, in other words, invest in bonds rather than equities. They can also buy sovereign annuities from insurance companies either in the name of the scheme trustee or in the pensioner's name, or they can do any combination of these. It is up to scheme trustees to decide whether to avail of these options. I will be making changes to the funding standard to allow pension schemes that purchase these bonds or sovereign annuities re-price their liabilities to the extent of their purchase and thereby benefit from the higher yield. I am also examining further changes to facilitate greater smoothing for financial reporting purposes.
By purchasing the bonds or scheme annuities, the pension scheme continues to be responsible for investments made. In the event of a scheme wind-up, the current priority given to pensioners continues to apply. However, where sovereign annuities are purchased in the pensioner's name, this marks the end of the scheme trustees' responsibility. Every pension scheme is different in terms of its membership profile and current funding status. Therefore, we have ensured that scheme trustees are given a number of options to decide what is best for their particular scheme.
People may say that investing in Irish bonds is risky but there is absolutely no risk of Ireland defaulting on its sovereign debt. The Government has stated that on many occasions, and I want to be absolutely clear about it. It will not happen.
