Vol. 946 No. 2
41. Deputy Mick Barry asked the Minister for Social Protection his plans to announce an increase in his Department's contribution to Bus Éireann to cover the real cost of free travel; and if he will make this announcement before the conclusion of talks between Bus Éireann management and unions at the WRC. [17854/17]
49. Deputy Mick Barry asked the Minister for Social Protection the methodology arrived at for calculating the contribution his Department makes to Bus Éireann and to private coach firms for free travel; and if he will make a statement on the matter. [17855/17]
I am asking the Minister to report on the issue of increasing his Department's contribution to Bus Éireann for the free travel pass scheme. When precisely will the relevant changes be coming through? That question is quite pertinent at the moment.
I propose to take Questions Nos. 41 and 49 together.
The free travel scheme is a valuable support for older people, those with disabilities, carers and their companions. I am fully committed to its retention and I am keen to see more private bus operators participating in the free travel scheme, particularly across rural Ireland. My Department, the Department of Transport, Tourism and Sport and the National Transport Authority are reviewing the overall funding mechanisms underpinning the scheme to ensure equity, consistency and transparency in approach to all participating travel operators. These discussions are going well and I expect matters to be brought to a conclusion in the near future. The Deputy will appreciate that I am not yet in a position to make any specific announcement on the future level of funding for the scheme.
My Department makes a block payment to the CIÉ group and the apportionment of payment between the three constituent companies, Bus Éireann, Bus Átha Cliath and Iarnród Éireann, is a matter for the group's board. This payment reflects a range of factors negotiated over the years, including fare increases, peak-time access to free travel and service improvements, changes and enhancements. A discount of 40% is applied to reflect the fares forgone nature of the scheme.
Payments to private travel operators participating in the scheme, new operators wishing to enter the scheme or existing operators seeking an increase in payment are determined by way of a survey of their passenger numbers. An average fee is agreed on foot of surveys undertaken over a six-month period and based on an operator's own fare charges. This is then discounted by 30% to reflect the fares forgone nature of the scheme. Discounts are the norm for bulk purchases and also reflect the savings that arise from not having to collect fares and issue tickets. Many journeys undertaken would not have taken place at all were it not for free travel.
Putting Bus Éireann on a sound financial footing is, to a significant extent, within the Minister's gift and that of his Department. If the free travel pass was to be paid to Bus Éireann at a 100% rate, rather than at the rate the Minister has indicated, it would make a difference to the tune of millions. I have seen some reports that indicate a sum of €17 million per annum. The Minister for Transport, Tourism and Sport, Deputy Ross, tells us that this is in the pipeline. He says it will happen soon but he has been telling us that for weeks and months. We are at a critical stage with this company, so why is it taking so long? Is there a deliberate policy on the part of the Minister, Deputy Varadkar, and his Department to facilitate the crisis at Bus Éireann and push a privatisation agenda? Can the Minister please reply to that question?
First of all, it is not within the gift of my Department. Any money we spend on free travel is taxpayers' money. It says a lot about the Deputy's political philosophy that he sees taxpayers' money as a gift that the Government can just give out to resolve problems in companies, pay off debts or solve other difficulties. If we are using taxpayers' money, we expect to get something, such as a service, in return. This is not unusual when one buys something in bulk. I do not know if the Deputy goes to the supermarket very often but if I am buying Coke Zero, I buy the twin-pack and get a discount on that. If I am buying toilet rolls, I buy the 24-roll pack and get a bloody good discount on that too. That is how bulk buying operates - one gets a significant discount. When it comes to the TV licence, for example, there is a discount from RTE. I do not, therefore, see why there should not be a discount. That is the basic principle that is applied.
As regards how this impacts on Bus Éireann, the Deputy should bear in mind that it is not just about Bus Éireann or CIE. These payments are also made to Luas. A sum of €8.5 million is paid to private operators, €1.5 million to Pobal for rural transport and €1.8 million is paid in respect of cross-Border travel. Any decision we make on free travel, therefore, will not be about CIE or any one part of that company because we are paying for a service and we need to have equity across the transport sector.
On 1 April, the mask slipped a little when the Minister said in an interview that the Government may allow Bus Éireann to fold. He did say that this would not be his preferred option but he then highlighted what he described as the reality of the fact that there are more and more private transport firms in the field, which clearly indicates that this is an alternative he would consider. The Minister has just expressed his concern for the taxpayer. It would cost the taxpayer a king's ransom if the Government were to allow Bus Éireann to go to the wall. Some €59 million in payroll taxes would be forgone. The Minister could buy a lot of Diet Coke with that. There would also be hundreds of millions in redundancy and social welfare payments.
Leaving the word "gift" out of it, the Minister's Department clearly has the option of increasing payments made for the free travel pass to semi-State companies. We have been hearing for months that this is in the pipeline.
The crisis continues and yet the money continues to be withheld. Why? What is the story there? What is the agenda?
First of all, we only have a certain amount of money allocated in the budget for free travel this year, which is in the region of €77 million to €80 million. That is the envelope in which I can operate. I do not have the authority to spend a whole load of extra money beyond that envelope in one year because of the way the Estimates work. It is not the case that I can just decide to pay additional funds to public transport companies. The same would have to apply, and the same treatment would have to be given, to private operators such as the private bus companies and the Luas for example. Any increase would also have to apply to the bus operators who have continued to operate for the past 18 days, to the Luas and to others. For obvious reasons I could not single out one part of one public company and give it an increase without giving it to everyone else as well.
I am keen to come to a situation, if we can, whereby we are able to increase funding for free travel not just for commercial bus operators operating in the public sector, but also for those in the private sector. That would provide additional revenue for Expressway but it would also provide additional revenue for private operators. It might, perhaps, bring some more of them into the scheme, because some are not currently. That would serve the very important public policy objective of giving people who have the free travel pass more options. That would be of benefit to the taxpayer.
The mask is slipping even further.
42. Deputy Willie Penrose asked the Minister for Social Protection his plans for reforms of the family income supplement scheme. [17591/17]
I understood that last year, when Deputy Varadkar became Minister, he indicated that he had significant plans to implement reforms of the family income supplement scheme. More particularly, I believe it was his intention to introduce a working family payment that would replace the family income supplement. Will the Minister let us know how far these thoughts and policy reviews have been advanced in his Department?
The family income supplement, FIS, is an in-work support, which provides an income top-up for employees on low earnings who have dependent children. FIS is designed to prevent in-work poverty for lower paid workers with child dependants and to offer a financial incentive to take up employment. There are in excess of 57,000 families with more than 126,000 children in receipt of FIS. The estimated spend on FIS this year is approximately €422 million.
The programme for Government contains a number of commitments to improve the take-home pay of families on low incomes. One such commitment is the proposed working family payment targeted at low-income families. My Department’s approach to developing the working family payment is being guided by two principles. First, that it should ensure that work pays and that no family is better off on welfare than at work, and second, and equally important, that it should have a positive effect on reducing child poverty.
Family income supplement is one of the in-work supports that contribute to Ireland having one of the lowest at risk of poverty rates for working families among the EU's 28 member states. Recent EUROSTAT data, based on the latest CSO survey on income and living conditions for 2015, show that Ireland has one of the lowest in-work poverty rates among the EU 28 member states. The EU average is 9.5% and Ireland ranks fourth lowest with a rate of 4.8%. I am satisfied that the family income supplement is fulfilling its role in assisting employees to take up employment opportunities and to remain at work but further improvements can be made.
I agree with the Minister. I and the Labour Party would be very supportive of FIS. The one concern we have is that it is not used as an addition to, or substitute for, very low pay, that employers can avail of at the State's expense. We must be careful. We have to try to balance that. I think that is what the Minister has in mind, in his own way - that it should not be used that way. It is very important.
The figure of €420 million signifies a significant element of low pay across the economy. That is what the starting figure is for this scheme. Of course, if a person has four or five children, or if a person was, like me, one of ten, that would certainly mean any such person would be a big recipient of this. If it had been out in the 1960s, my family would have been. I might as well be straight and honest with the Minister.
There are two aims with the introduction of a working family payment, namely, to reduce child poverty and to ensure no family is better off on welfare than in work, which would have a positive effect. How far advanced is the Minister in bringing forward this type of proposal for inclusion in the 2018 budget? What is his aim with these plans?
I share the Deputy's concern. As is the case with any in-work payment, there is a worry that low pay might be subsidised and facilitated. That is a big issue in the United Kingdom where I think they have very much gone down that road. We always need to guard against that.
FIS is, of course, about more than pay. It is also about family size, so there are people on low pay who do not qualify for FIS because they have no children or only one. There are people on low to middle incomes who qualify for FIS because they have a lot of children. It is important to acknowledge that.
My Department has given me an options paper on different options we could pursue in respect of the working family payment. I am considering that paper at the moment and I intend to share it with the Oireachtas joint committee this side of the summer. The approach emerging at the moment is to make amendments to the family income supplement rather than starting from scratch and designing a whole new scheme - to build on FIS, which seems to be working quite well. Anything that is done comes with a cost, but my intention is to share that paper with the joint committee before the summer recess.
I thank the Minister. That is a sensible way of progressing this. As I said, I support family income supplement very strongly. It is important for large families. It encompasses two things and must be balanced between the risk of aiding employers who only give low wages and the necessity of ensuring large families are maintained and sustained. In this context it is extremely important that the appropriate balance is struck with the working family payment when the Minister brings it forward.
I very much agree with what the Deputy has said. I look forward to engaging with the committee on this and talking to the various spokespeople in the run-up to the budget.
44. Deputy Mick Wallace asked the Minister for Social Protection the measures he is taking to address the unemployment rate in County Wexford (details supplied); and if he will make a statement on the matter. [17847/17]
As we are told by members of the Government every second day, the national unemployment rate has dropped to 6.4%. The Government is slightly more sheepish about revealing the number of people on the live register in Wexford. Some 18% of the workforce in Wexford is on the live register, and that does not take into account the number of people in job activation programmes.
I have raised this issue with the Minister for Jobs, Enterprise and Innovation on a number of occasions but she struggles to differentiate between the south east region doing well and the fact that Wexford is performing dismally and being left further and further behind. Given that the Minister has a more than 50-50 chance of being the next Taoiseach, is there any chance we might get some joined up thinking, because Wexford is a seriously deprived area? It will require some all-round Government approach to change things.
The official measure of unemployment comes from the quarterly national household survey. The most recent data show that unemployment has fallen from a peak of 15% in 2012 to 6.7% at the end of 2016. Numbers at work have increased from 1.825 million at the start of 2012 to 2.048 million at the end of last year, which is an increase of almost 250,000 people. Within the south east, unemployment has fallen from 20.1% to 9.4% over the same period, and numbers in employment have increased by 33,500 to 214,800. Unemployment in the south east has fallen by more than half since my party came into office.
The live register, which captures those registering for unemployment benefits, including people working part-time who draw partial unemployment payments, is an administrative record. While data from the quarterly national household survey are not available on a county level, trends in the live register can give an indication of underlying trends in unemployment.
Overall, the live register in Wexford has fallen by 37.5% in the period from 2012 to March 2017 compared with a reduction of 36.5% nationally. In the year to March 2017, the live register has fallen by 2,112 people, or almost 15%, compared with 12.8% nationally. These figures show that Wexford, although it is a county with high unemployment, is now catching up with the rest of the country and unemployment in Wexford is now falling faster than in the country as a whole.
The Department has ten activation case officers and an activation support team in Wexford. These officers are based across the county and work closely with other stakeholders including the Waterford and Wexford Education and Training Board to identify suitable training and educational opportunities for jobseekers in Wexford. Case officers in Wexford are currently working with over 1,400 people in identifying suitable employment and training opportunities. Almost 3,000 referrals to training and educational opportunities took place in 2016, and 1,165 have been made to date in 2017, an increase of over 33% on the same period last year.
Additional information not given on the floor of the House
Case officers also work closely with employers to ensure that suitable people are matched to appropriate vacancies and in promoting the back to work enterprise allowance for those wishing to pursue self-employment.
Additional activation capacity has also been sourced through the local employment service operated by Wexford Local Development which employs eight mediators across the county.
Furthermore, there are almost 1,000 community employment places available to long-term unemployed jobseekers and over 300 places available on the Tús programme in Wexford.
Listening to the Minister's reply, one would think that things are wonderful in Wexford. If things are improving so much, how can the live register still be at over 18%? Wexford is ranked the third most deprived county in the country. Why does Wexford have one of the worst illiteracy rates in the country? Why does it have one of the highest teenage pregnancy rates in the country? Why does it have one of the highest suicide rates in the country?
The Minister can use figures all he likes but they will not change the reality. There are bugger all jobs in Wexford. Most of the Wexford people that are working have to leave the county to do so. There are a few people back working because they are getting into vans at 5 a.m. and driving to building sites in Dublin for work. There are no jobs worth talking about coming to Wexford and they will not come unless there are proactive measures taken by the Government.
I did not claim, nor do I believe, that everything is rosy in the garden of Wexford. That is not what I said. I appreciate that there are long-standing problems in Wexford. As Deputy Walllace knows, I lived there for a few months while I was a hospital doctor. I got to know the county and liked it a lot. It has a lot to offer. It has not done as well is it should have done for decades now and has a lot of the problems that the Deputy mentioned. It is encouraging that unemployment is now falling in the county and I do not think anyone is denying that. I have given examples of some of the things that my Department is doing.
There are other important things happening. Deputy Wallace will be aware of the investment in the Wexford road infrastructure which is crucial to driving economic growth. The very important Enniscorthy and New Ross bypasses are pressing ahead. There have been other very good road investments in the county.
Deputy Wallace will be familiar with the broadband plan produced the other day. There are a lot of yellow areas, that is, areas with no high speed broadband, in Wexford which will benefit from intervention. There is the potential for Rosslare Port to become a more important sea facility because we may, depending on trade arrangements with Britain, need far more direct links with France. There is potential in that for Rosslare in particular.
It would be wonderful if there was investment put into Rosslare Port because there is an opportunity there to make things much better.
The Minister mentioned road improvements. That is not the biggest demand in Wexford at the moment. A bypass is being built around New Ross. A bridge to deal with the traffic issue could have been built for a fraction of the price that the bypass will cost. It is a public private partnership. It is going to cost over 15% to buy the money to do it. We are paying 15 times more than we should be for the money because we have not managed to get the EU to allow us to invest in infrastructure off the books. If it goes on the books we have to watch the 3% mark. We are paying through the nose for that.
We are building a new courthouse and a new Garda station but these are not the most demanding things for the people of Wexford. Sadly, there are massive waiting lists for social housing and jobs. There are huge problems of lack of investment in and resources for mental health. Improving the road infrastructure is not solving all Wexford's problems.
No one thing will solve all our problems. However, the vast majority of people in Wexford, certainly any I have talked to, welcome the substantial investment that has been made in the road network in Wexford including that Gorey is bypassed and we are building new roads for Enniscorthy and New Ross. Roads help to bring economic development into a county.
The national broadband plan is particularly positive for Wexford as are the developments Deputy Wallace mentioned such as the courthouse and so on.
We should invest more in Rosslare port. We are somewhat constrained by EU state aid rules and by the port being attached to Irish Rail. Part of the response to Brexit could be a recognition that if Britain continues on its current course, a transition fund will be needed. We will need to look at facilities like Rosslare Port, the Port of Cork and potentially Knock Airport and say that we will need special investment, with the support of the EU, in direct links between the island of Ireland and the Continent of Europe. Perhaps there is an opportunity there which should be pursued.
45. Deputy Willie Penrose asked the Minister for Social Protection his plans to reform PRSI. [17588/17]
46. Deputy Willie O'Dea asked the Minister for Social Protection the social insurance measures that are to be introduced in December 2017 for the self employed; the type of benefits that will be included; the amount which has been allocated for this extension; the estimated full year cost of the measures that are due to come into effect in December 2017; and if he will make a statement on the matter. [17858/17]
What plans has the Minister to extend and reform PRSI? He has recently spoken about this possibility. In particular, what plans are there to extend the range of benefits for people who make their PRSI contributions? There has been a recent debate in the House on that issue.
I got a letter today from the mother of a surrogate child. She is a teacher who pays PRSI. She gets no PRSI benefit, no maternity benefits, nothing. That is a huge hole in the availability of benefits for people.
I do not know why that is so. The Deputy might pass that letter on to me. I would be interested to see it.
I was shocked by the letter.
It may concern a pre-1995 public servant who pays 0.9% rather than 15%. If the contribution is less than one fifteenth of the normal contribution, the benefits will be less.
That could be the case.
I propose to take Questions Nos. 45 and 46 together.
PRSI is just one element of a statutory payroll deduction system that includes three parts, income tax, USC, and PRSI, which between them have three different sets of thresholds and entry points, seven bands and eight rates. Given its complexity, this is a system that most people find difficult to understand. It is expensive to administer and can be inequitable. For example, certain reliefs and benefits are available to employed people but not self-employed people.
Welfare and taxation systems which use income and other thresholds to trigger eligibility and payment rates will inevitably give rise to some unintended effects at the margins of these thresholds and these can reduce incentives for people to work or for employers to offer employment. We should therefore constantly seek ways to improve how the system works and, in particular, how it can be simplified and its benefits to contributors and taxpayers made more transparent.
As one example of how the system could be simplified and made more transparent, it might make sense to replace the USC and PRSI with one new PRSI-style charge: social insurance. This could in turn be linked to wider and better benefits. This is an option I intend to explore further once the results of the actuarial review of the Social Insurance Fund, which is currently under way, become available later this year. These results will allow us to calculate long-term costings for any changes to social insurance.
We also need to make the system more equitable, particularly for self-employed people, and I have already started this process by implementing a number of important measures as part of budget 2017.
Since March 2017, self-employed people have access to the treatment benefit scheme which includes free eye and dental exams and contributions towards the cost of hearing aids. These measures benefit over 300,000 self-employed workers and their dependants and will cost €3.5 million in 2017 and €4.5 million in a full year. Treatment benefit entitlements will also be extended from October 2017 to provide further dental and optical benefits for both the self-employed and employees. The cost of this measure is €9 million in 2017 and €47 million in a full year. Over 2.5 million workers, including the self-employed, will benefit from these additional benefits.
Self-employed workers will be also be eligible for the invalidity pension from December 2017. This is a major reform as, for the first time, self-employed people will have access to the safety net of State income supports without having to go through a means test if they become permanently incapable of work as a result of an illness or disability. It is estimated that 1,400 self-employed people will immediately qualify for invalidity pension based on contributions made to date from December 2017, giving rise to a cost of €1.5 million this year. The estimated 2018 and 2019 costs are €23 million and €38 million respectively.
I note that it is the Minister's intention to roll the PRSI and USC into one scheme.
How would that progress, and what impact would it have in terms of the various existing wage structures? I know the PRSI system is complex.
I salute the Minister for attempting to end the discriminatory way self-employed people were treated. I know that from first-hand experience as I was self-employed before I was elected to this House. They way they were treated was disgraceful. I always believed self-employed people had a legal case to make against the State and it was in my head to take it before I got elected here.
The Minister is due to bring a social welfare and pensions Bill to the House soon. Would he consider extending maternity benefit to those mothers whose babies are born prematurely? It is a simple measure that we discussed here previously ad nauseam by way of a motion. In an emotional contribution, Deputy Catherine Martin of the Green Party made a compelling argument in favour of the motion, for which I believe all the colleagues were present at the time. I understand it would only cost €5.4 million, which is not a lot of money when the Social Insurance Fund is on target and unemployment, thankfully, is falling. I ask the Minister to consider bringing that forward.
First, will the Minister reiterate the figures? It is €1.5 million this year for the introduction of invalidity pension for the self-employed in December. I think he mentioned €23 million next year and then €28 million. He might clarify that. I appreciate the fact that, for the first time, the self-employed will benefit by way of getting invalidity pension without a means test as and from December. Could the Minister give us some idea of the criteria that will apply? He stated that 1,400 people will qualify based on contributions paid so obviously he has worked out the contributions system. Will it be the same as that for employees?
Second, one of the criteria for getting an invalidity pension is that the person must be deemed to be permanently incapacitated. Many self-employed people, through injury, temporary illness or otherwise, become temporarily incapacitated; they are not permanently incapacitated. In such a case an employee can avail of illness benefit. What will be the position for the self-employed when invalidity pension is introduced for them?
I will have to get back to the Deputy with the details on that. The self-employed will be able to apply for invalidity pension but not illness benefit. There is a difference between the schemes but the criteria for the self-employed will be the same as for employees for invalidity pension.
The costs for 2017 are €1.5 million; €23 million for 2018 and €38 million for 2019 but it is very much an estimate. We do not know for certain the number of people who have been paying PRSI at class S as self-employed and are unable to work long-term because of illness or injury. It is one of these measures for which we will find out a definite cost when the scheme is in place, although so far I have found the officials in my Department to be fairly accurate in their costings. I hope it will come in a little cheaper than that but we will know when it happens.
In terms of maternity benefit, maternity benefit flows from maternity leave so it is a matter for the Minister for Justice and Equality and the Oireachtas to make a decision on maternity leave but if that decision is made, we will follow on with that in terms of maternity benefit.
I did not have a chance to follow the debate but I can see the compelling case that may exist for extending maternity leave and maternity benefit where a child is born prematurely. However, we would need to think it through because children born prematurely can be very healthy and not spend any more time in hospital than any other child yet other children who are born full term or who come late have to spend a good deal of time in hospital due to all sorts of problems and issues. We would need to look at the entire area in the round.
We had a comprehensive debate on this and there was a unanimous view among colleagues on all sides of the House. The range we focused on at that time was from 24 or 25 weeks up to 37 weeks. In the interests of fairness, there are huge costs associated with premature births. The Minister will be aware that a parent might have to attend one of the specialised neonatal units and may have to travel from Mullingar to Dublin, as well as to look for accommodation. There are many costs involved, and the 26 weeks of maternity leave are utilised, as well as the non-paid term, without the mother getting a chance to bond with the child. This is a very important issue. The money comes from the Minister's pot whereas the legislation will have to be prepared by his colleague, the Tánaiste and Minister for Justice and Equality, Deputy Fitzgerald, and the Minister of State, Deputy Stanton. This is a measure that would be of immense benefit to mothers across Ireland and if the Minister is not able to do it soon, it certainly should be included in the budget in the autumn.
Will the Minister consider extending eligibility to self-employed people who will be in receipt of illness benefit on a short-term basis, perhaps after December 2017? Many of them are not permanently incapacitated and therefore would not qualify for invalidity pension on those grounds. However, they are temporarily incapacitated and if such a person's spouse happens to be working, he or she would not be entitled to jobseeker's or disability allowance or the means-tested benefits, which can be demeaning.
I ask the Minister about his plans regarding the unemployed and jobseeker's benefit. Has he given consideration to the notion of extending jobseeker's benefit to the self-employed on a voluntary contributions basis?
In response to Deputy Penrose first, it does not have to be the case but it has always been the case that the benefit is aligned with the leave. If somebody gets X number of weeks statutory maternity leave we will match that with the benefit. I had intended to do the same. Of course, the money does not come from my pot. It comes from the Social Insurance Fund so that has to come from contributions from people working and paying their PRSI every week. However, I believe it is something people would be willing to pay PRSI for and I do not believe that would be a great difficulty if the rules around leave are changed.
In terms of the other benefits for the self-employed, I have asked my Department to do up some work on a system of jobseeker's benefit for the self-employed. It is a tricky one because it is very obvious when somebody who is employed becomes unemployed in that they get a P45. It is a little trickier to establish when a self-employed person becomes unemployed. I have not made a decision on it yet. The earliest we can bring it in would be 2018 but perhaps in line with proposals the Deputy has made in the past, a voluntary scheme with somebody paying for a new stamp or voluntarily paying a higher rate of PRSI in return for that additional benefit might well be the most sensible way to proceed.
On short-term illness, we will examine that too. The order in which we are doing it is treatment benefit, invalidity pension, jobseeker's and then short-term after that.
47. Deputy Clare Daly asked the Minister for Social Protection his plans to alleviate the financial hardship that will be endured by many persons due to an absence of financial bridging in the social protection system and the time-limited nature of jobseeker's benefit (details supplied). [17757/17]
This question arises from the massive race of the previous Government to increase the pension age in 2012 without putting in place any financial bridging arrangements to cushion the blow from the way in which our pension schemes operate, with the result that many people who took early retirement had their pension based on an un-coordinated basis until they reached the age of 65. However, upon reaching 65, the full State pension is deducted from that pension even though they are not receiving it. That is causing massive hardship and I ask the Minister about his plans to address that.
There is no statutory retirement age in the State, and the age at which employees retire is a matter for the contract of employment between them and their employers.
Where a person exits the workforce before reaching State pension age they may apply for either the jobseeker’s benefit or jobseeker’s allowance schemes. Jobseeker’s payments are paid to eligible jobseekers aged 18 to 66 years and all recipients of a jobseeker’s payment are subject to the rules of the scheme.
People in receipt of a jobseeker's payment must engage with my Department's activation measures and can face sanctions if they fail to do so. However, from January 2014, these criteria were eased for people aged 62 and over, such that they are not obliged to engage with the activation process. They are still able to voluntarily avail of an array of supports, which are available from my Department if they wish to return to work, training or education. Furthermore, the majority of these individuals will have to register with their local office only once a year and their payments will be paid directly into their bank accounts.
Once a person has exhausted his or her entitlement to jobseeker’s benefit, he or she may be eligible for jobseeker’s allowance, subject to the means test and other qualifying conditions. However, someone claiming jobseeker’s benefit from a date after his or her 65th birthday continues to be eligible for that payment until reaching State pension age.
Notwithstanding the Minister's answer, there is still an enormous gap because of the rules around the State contributory pension and indeed rules around pension schemes. I will give an example of a former Aer Lingus colleague of mine who took early retirement. His pension was €25,615 per year. He celebrated his 65th birthday in January 2017 but it was not much of a celebration because his pension was reduced by €15,150, a staggering drop of over €10,000 or over €200 per week. He did not have an entitlement to jobseeker's benefit because the six to nine months were used up and he was not entitled to an allowance because his pension, even though it had been butchered, was inadequate. Like many others, this man had worked all his adult life bar a couple of years at the end and contributed significantly to the system. There is an anomaly here and we need some form of financial bridging system to meet the gap because a gap is there and many people like this man are falling into it.
There are anomalies. The Government made the right decision to increase the pension age. It might not be popular but it was necessary. The State pension age in the 1970s was 70. Average life expectancy in those days was 68 for a man and 72 for a woman so people paid into the pension system for 40 or 50 years and retired for a few years. We are now in a very different situation where people are working for 40 or 50 years and are retired for 20 or 30 years. The Deputy can understand why we need to increase pension age in line with life expectancy if we are to have decent pensions in the long term. However, it has thrown up anomalies, one of which involves people who are contractually required to retire at 65 by their employer and who cannot avail of the State pension until the age of 66. We are dealing with that through employment equality law and, hopefully, a change to the rules for public servants to allow them to work to 66 if they wish.
The other scenario raised by the Deputy has come up previously. I do not yet know what the solution to it is. We need to come up with a solution for it. I know that some pension schemes and some trustees have changed their own rules, and they can do that, to extend the bridging period. I know of schemes that have done that but, obviously, all schemes are not going to do that, which leaves some people in a difficult position. It would be hard to come up with a solution that would recognise the fact that every pension scheme has its trustees and they make their own rules.
The problem is that the Minister does not have the solution but I would be somewhat reassured if I thought he was actively looking for one. What the question is saying is that we need to put a system in place that addresses this. The Minister calls it an anomaly. I call it a deliberate gap or a gap that has arisen because of the way we structure our State contributory pension scheme and the rules around the occupational pension schemes. In some cases, if the pension schemes absorbed it, it would put a strain on the solvency of the schemes when there are already difficulties - not because of actual solvency but because of the rules around that. I ask the Minister to get heads together in the Department to look at how private pension scheme rules and the State contributory pension can be matched up or married to address what is a heartbreaking erosion in quality of life for people who have worked for years. Let us remember that if we do not address this, people retiring in 2021 will have two years with no income - not just one year as in the case involving the man to which I referred.
I am aware of the problem. We are looking for a solution precisely because of the reason mentioned by the Deputy, namely, the fact that this issue will become twice as frequent in 2021 and three times as frequent in 2028 so it would be wise of us to find a solution as quickly as possible. Admittedly, it certainly would have been wiser when the change was made a few years ago to think through many of these consequences and the bad solutions in place. The ideal solution is for trustees of pension funds to do the right thing and extend the bridging for another year. This is what they should do but in cases where they do not, it leaves individuals very exposed to a reduction in their income through no fault of their own for that one-year transition period. While we do not yet have a solution, we will try to develop one.
48. Deputy Willie O'Dea asked the Minister for Social Protection his views on the concerns that have been expressed regarding the moves towards increasingly using for-profit companies as opposed to not-for-profit companies for services such as employment activation services and the local employment service, his further views on the impact that this is having on the community and voluntary sector and if he will make a statement on the matter. [17860/17]
As the Minister is aware, the move towards using private for-profit companies to deliver employment activation services and local employment services, which were previously delivered by the State and the voluntary sector, has caused a number of concerns. Is the Minister aware of these concerns and what action is being taken?
The State's public employment service is managed by my Department and delivered directly by its own Intreo service, as well as by contracted private companies such as the two JobPath companies, Seetec Limited and Turas Nua Limited, the local employment service companies and job club providers. The Department has contracts in place with in excess of 60 companies for the provision of these services. This includes two contracts with JobPath service providers.
JobPath is a new contract model whereby the providers, which are private commercial enterprises, are paid by results. In other words, they are paid when they achieve sustained employment outcomes for jobseekers. This payment model contrasts with the approach used to fund the local employment service, where the providers are paid by inputs regardless of outcomes. In other words, they are paid an amount that is agreed at the beginning of each year based on the forecast level of activity. The success or otherwise of the local employment service provider in securing employment for jobseekers does not affect the payment amount.
When JobPath was developed, fears were expressed that it would take over from or substitute for the local employment service. While I understand these concerns, this was not the intention and it has not happened. The purpose of JobPath was, and is, to complement and augment the existing service capacity of the Department through Intreo and the local employment services. There has been no reduction in the budget allocated to the local employment services.
In fact, in addition to the service capacity offered by the local employment services, more than 600 staff are employed by the JobPath providers delivering a case management and advisory service to long-term unemployed people. These people would not have had access to such a service had JobPath not been made available. In addition, the capacity introduced by JobPath has enabled the Department to reduce the workload on its own caseworkers such that each local employment service caseworker should have a caseload of no more than 120 jobseekers. This is in line with international norms. Prior to the introduction of JobPath, the caseload was more than 1,500 jobseekers per Intreo and local employment service caseworker. I am, therefore, satisfied that the development of JobPath has been, and will continue to be, positive both for jobseekers and for the local employment service.
I understand the Minister's rationale. These jobs were previously done by the community and voluntary sector and the State. One could get the figures regarding the number of jobseekers per case officer etc., if one expanded the State's resources. Is it more cost-efficient to bring those private companies on board? Is it a cost saving measure? Is the Minister aware of a number of allegations of cherry-picking by those companies where people who are likely to succeed are preferred to those who will require more intensive supervision or attention?
I am certainly aware of allegations of cherry-picking but they do not stack up because it is my Department that decides who is referred to JobPath. This is very different from the model used in the UK, which has been much criticised and where cherry-picking was possible. We decide who is referred and we make sure it is a decent spread of people with different types of needs.
I do not really mind whether the service is provided by a private for-profit company, a private not-for-profit company or any other body. What I am interested in is value for the taxpayer and results for the people receiving the service. One of the advantages of Seetec and Turas Nua in respect of JobPath is that they covered all the set-up costs themselves. There would have been a considerable expense for the taxpayer had the Department had to set up all those offices around the country. Another advantage is payment by results. These companies are paid for the results they get whereas under different models, people are paid for the activity they do regardless of whether they get any results. There are pitfalls and perverse incentives in any system one uses. That is inevitable, which is why they need to be monitored closely. I do not think we will really know which model is the best for a number of years but I think we should continue to use both.
I take the Minister's point but has analysis been done or is any planned regarding the impact of those reforms?
Is there any independent evidence as yet that they represent the best outcomes for the State and the individual?
The evidence that exists, which is there in the first quarterly report on the Department of Social Protection website, and there will be another quarterly report out in the next couple of weeks, shows very high levels of customer satisfaction. It also shows that people who have been referred to Seetec and Turas Nua are more likely to be in employment and to gain employment than a similar profile of people who were not referred. This is especially true of people who are longer-term unemployed. These are only initial results and I would not be writing about them in the OECD Journal just yet. We are going to need to see this develop over another year before we can be certain that these results are as good as they appear. An independent econometric analysis will be done also to see what sort of results and outcomes we are getting.
63. Deputy John Brady asked the Minister for Social Protection the reason for the delay in the report on the impact of reduced jobseeker's payments for those aged under 26; his plans to end this discrimination; and if he will make a statement on the matter. [17954/17]
We are aware of the ongoing discrimination against our young people aged under 26 who are unemployed. This has been borne out by evidence, through constituents, by people coming forward and by a number of organisations. The budget just gone has continued that discrimination. What is the Minister going to do to bring an end to the ongoing discrimination?
The Central Statistics Office latest monthly figures report that the seasonally adjusted unemployment rate for persons aged between 15 and 24 was 13.9% in March 2017. This is a significant decrease of more than five percentage points, from 19% in March 2016.
Lower weekly rates for younger jobseekers were first introduced in 2009 and further extended in subsequent budgets. The rationale for these rates is to prevent young unemployed people from entering longer-term welfare dependency by providing a strong financial incentive to take up a job, training or education programme. Should a young jobseeker on a reduced jobseeker’s allowance payment participate on an education or training programme, he or she will receive a higher weekly payment of €160. This rate will be further increased to €193 per week from September 2017.
The National University of Ireland, Maynooth, NUIM is undertaking a piece of research at the moment which is examining the effectiveness of the reduced rates in encouraging young jobseekers to avail of education, training, employment programmes and opportunities. My Department has not commissioned the NUIM to undertake this research. Rather, as part of an effort to encourage and promote research, my Department has facilitated the NUIM with access to the data from the jobseeker’s longitudinal database to undertake this research. The findings of the NUIM research are likely to form the key element of the review which my Department is undertaking in line with the Pathways to Work 2016-2020 strategy. It is hoped that the research and report will be completed shortly.
With effect from last month, rates of jobseeker’s payments were increased for claimants of all ages as a result of measures introduced in budget 2017. I have no plans for any further increases in rates at present. Any such changes could only be considered the context of the next budget.
I urge the Minister to look at it in the next budget. It is certainly having a huge impact on our young unemployed. We know the figures. Young people are twice as likely to be unemployed as older people. The Minister did commit to a report, which I believe was due to be brought forward in the second quarter of 2016. This was in the Pathways to Work 2016-2020 strategy but we still have not seen that report. I am not sure if this is the report to which the Minister has just referred in his reply. He said there were increases to the jobseeker's payment for the young who are unemployed. This was a measly €2.70 for people under the age of 24 and €3.80 for those aged 25 and upwards. This continues the discrimination for young people who are unemployed and it needs to come to an end. I ask that the Minister brings forward the report. Let us have a debate on the matter and put in place measures to end the discrimination for our young people.
I do not have the report so I cannot bring it forward at this stage. Once I have it I will certainly read it and bring it forward then. Changes I am making at the moment which the Deputy may be aware of include the opening up of the community employment, CE, scheme to younger people by reducing the minimum age from 25 to 21 for all schemes. It is already the case for child care and one or two other schemes. Any person who is between the ages of 21 and 24 who cannot find employment, training or education and who is unemployed for more than a few months now has the option of going on to a CE scheme. In this case he or she will receive more than €200 per week.
Sin deireadh le ceisteanna chun an Aire Coimirce Sóisialaí. Táimid ag dul ar aghaidh anois go dtí Ábhair Reatha.
