I welcome Mr. David Dillon, principal officer; Mr. Paul Morrin, principal officer; Mr. Pat McDonnell, assistant principal officer; Mr. Joe Meehan, assistant principal officer; and Ms Patricia Molloy, assistant principal officer, from the Department of Social Protection. By virtue of section 17(2)(i) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I ask Mr. Dillon to begin the briefing on proposals to remove barriers to taking up employment where real income is reduced when social welfare benefits are lost.
Barriers to Employment: Discussion with Department of Social Protection
Mr. David Dillon
I thank the Chairman and members of the joint committee for the invitation to discuss this issue. Mr. Paul Morrin is a principal officer in the Department. He is on secondment from the Central Statistics Office where he was engaged as a statistician. He works on the dynamics of the live register which is germane to these proceedings. Mr. Pat McDonnell works with me on the issues of unemployment and activation policy. Mr. Joe Meehan who is based in our Sligo office deals with rent allowance and associated matters. Ms Patricia Molloy who is based in our Carrick-on-Shannon office deals with operational matters.
The topic under discussion is wide and open-ended. Therefore, what we have attempted to do in the material we have given members is provide a degree of context and an indication of behaviours in respect of the live register. The subject matter receives some press coverage from time to time. We have detailed instances which I will go through. I will also indicate how they reflect replacement rates; the interaction with other schemes such as rent supplement, and some policy directions, including in respect of the advisory group on tax and social welfare and the general national employment and entitlement service, NEES.
With the forbearance of members, I will go through some of the highlights in the material we have provided. Regarding payments, only three quarters of the persons on the live register are claiming a personal rate only - €188; almost half receive less than that personal weekly rate; while those qualifying for rent supplement or mortgage interest supplement, the biggest secondary payment in terms of scale, account for a relatively small minority, at 12% to 14%. The reality is that for many unemployed persons, unemployment is a relatively short-term experience. A total of 57% leave the live register before six months, while 77% leave before 12 months. The absolute nominal numbers have increased in tandem with the increase in the live register. Therefore, it is a significant issue for those who cross the 12 months threshold, but in an overall context, it is still a relatively minor amount. Customers with no dependants, who tend to be younger, tend to have higher and quicker rates of claim closure and exit than those who are married with dependants.
The first part of our presentation lists the rates people receive. The next part examines these in percentage terms relative to labour market rates. We use two metrics, the national minimum wage and two thirds of average industrial earnings, probably the most appropriate for people exiting the live register after a spell of unemployment. The OECD and ESRI suggest replacement rates in excess of 70% - where the welfare rate is more than 70% of one's net income in work - are excessive and dangerous and tend to lead to drag and people staying on the live register. When we examined the register rates for those who do receive a payment, we noted issues arose for those on secondary benefits, particularly rent allowance and mortgage interest relief. In the main, persons receiving a payment for their given circumstances are on the right side of 70%.
The high replacement rates associated with families with large numbers of dependent children pertain to those in receipt of rent or mortgage supplement. These supplements have been a recurring theme thus far and present a big barrier, about which everyone in the room will know. There are discussions on this issue and plans afoot to remedy it. The plans have been in the offing for a while and we are trying to move faster. The answer to the rent supplement issue lies largely in moving people more quickly to the rental accommodation scheme, RAS. The scheme operates on a somewhat similar basis to the differential rent scheme, whereby a percentage of one's household income is payable as rent to the local authority. That percentage is invariant, whether one is in or out of work. There is not the same withdrawal factor or ceiling. There is not an hourly rate above which one loses the benefit. That is not connected with differential rent. To move people from rent supplement, in respect of which there are the aforementioned traps, to the RAS is a departmental imperative. It is included in the programme for Government.
The decision to go to work is not solely a function of finance, although it has a significant bearing. Other issues such as access to child care and transport are important in that regard. The advisory group on tax and social welfare which has recently been established under the chairmanship of Ms Ita Mangan and which has had a couple of meetings thus far is examining these issues and how they affect the decision to return to work.
Hand in hand with the foregoing is a move to the national employment and entitlements service, NEES. Social welfare has traditionally been a relatively passive benefit, whereby entitlement to a payment was established, authorised and delivered. There was no great incentive or facility for people to move from welfare payments into work. We brought forward allowances in recent years such as the back-to-education and back-to-work allowances that allowed for this, but they were demand-led and it was largely up to the would-be beneficiary to seek them out and apply. That will likely change under the NEES. We are moving towards a more activist case management approach in that regard, a key feature of which will be profiling. Under profiling, people's probability of exit from the live register will be determined by reference to a suite of weighted characteristics such as previous experience, age and education, which characteristics we do not capture or use at present. Based on these, a profile value or score will be assigned and it will predict one's likelihood of exit from the live register. Based on this score, we will apply a range of interventions that will be appropriate to people in these circumstances in an effort to increase their profile value or score and assist them in having a quicker transition from the live register to employment, training or education, as appropriate.
That is the background to what we are doing and to the current discussion. We welcome suggestions and will deal with members' questions. Between us, we should be able to deal with most of them. If there are some we cannot deal with, we will undertake to take down the details and revert to the members concerned.
I thank the delegation for the presentation. One reason we are having this discussion is employers are telling us that, in some cases, they are finding it difficult to get people to take up jobs. I understand from the presentation there is a lot of misinformation. Part of our function today might be to tease out some of it and determine how we can improve the information available. There are many question marks and some may be unfair. I hope this will be a good discussion and that we will tease out some of the solutions.
I thank the delegation for the presentation. I apologise for being a little late. I have read the presentation with interest and believe it is a very welcome briefing note. I hope the media will take heed of it because it dispels some of the myths associated with the question of whether people have an incentive to work. It shows that there is a financial incentive to work. One case the delegates quoted - which was cited on radio not so long ago - concerned a man who could not get anybody to fill a €28,000 position he was offering. The delegation's breakdown of figures shows there is an incentive to seek work amounting to almost €100, in addition to what one might receive in social welfare. That is a huge incentive. I hope a little more work will be done to show there is an incentive to work for the majority. When there is an offer of a job, there is a lot of interest; the issue is the lack of opportunities to take up jobs.
There was a promise or proposal in the programme for Government to amend the 30-hour rule for both the rent and mortgage interest supplements. The briefing note indicates that if there were a move in a particular direction, there would be increased expenditure. It states people in receipt of long-term rent supplement would be moved to the RAS. What is the position on the promise on mortgage interest supplement in the programme for Government? What progress has been made thereon?
The briefing note acknowledges the incentives and disincentives in terms of activation supports. The delegates have stated a group was set up to examine transport and child care costs. When are we likely to hear more about the work of that group? Has it a set timeframe for reporting to the Minister? Is it a question of a report or an internal discussion group?
My final point on activation measures is on engagement with employers. A report on Britain has drawn attention to the problem of age discrimination. People over 50 years who become unemployed are not being selected by employers over young people coming straight out of college. What can be done to encourage employers to employ people with work experience and who have 15 to 18 years of work ahead of them? They are often overlooked in interviews and the problem seems to be growing. I have not seen any Irish statistics on the problem. Do the delegates have any?
Mr. David Dillon
The Deputy has mentioned a few issues. Mr. Meehan will deal with the issue of rent allowance.
There is a discussion taking place and press coverage. What we try to do is provide context. There is no escaping the fact that some people are better off on social welfare than in employment.
A small number.
Mr. David Dillon
It is a small number. For people in receipt of rent or mortgage supplement and other secondary benefits, there may be a very significant financial cost. What we have endeavoured to do today is provide a context for this.
Mr. Meehan will discuss the 30-hour rule and mortgage interest supplement.
The tax and welfare advisory group was established by the Minister and is under independent chairmanship. It has a couple of departmental officials, but the remainder are experts from both statutory and non-statutory agencies and the private sector. I do not have full details of the membership of the group, but I am aware its members who include employers have wide-ranging expertise in a variety of backgrounds. The group has had sessions and invited submissions. We actually received a call to make a presentation to it last week. To the best of my knowledge, it is seeking submissions from stakeholders and people with an interest in this area. Ms Ita Mangan is the group's independent chair and while I do not know the precise deadline, she is driving through the matter and I do not believe this will be a long-term process. As much of the area being covered already has been reported on, there will be an element of collating, updating and modernising those reports and I expect this to be done relatively quickly in the scale of such things.
On the issue of employers and age discrimination, I mentioned earlier the Department's passive engagement with its recipients and customers. We have also been relatively passive in our engagement with employers. To alleviate this, we are setting up a stakeholder forum specifically for employers, the inaugural meeting of which will be held next month. Letters have been issued to the employers' representative bodies asking them to attend, advising them of the topics we seek to discuss and asking them for their suggestions in this regard. The Deputy's point about employers finding it hard to recruit people obviously will be central to this forum and the Department will discuss it with them in that context. As for barriers to employment and issues of age discrimination and so on, if this is a known issue of some scale and extent and if known instances exist, the Department can ask employers to confront and deal with it. Many employers - B&Q is the example usually quoted in this regard - have found it to be extremely beneficial to employ older workers because they have greater experience, a richer seam of practical experience for that particular business and so on. As a result, there are additionalities and benefits to employing older workers in certain circumstances. It is a question of getting out this message and reinforcing it.
I will ask Mr. Joe Meehan to deal with the 30-hour rule and the general rent allowance issue.
Mr. Joe Meehan
I will kick off by discussing the 30-hour rule for mortgage interest supplement because it and rent allowance are in two different streams of process . The Cooney group made its final report in November 2010 and the 30-hour rule for mortgage interest supplement, MIS, was built into that with two major conditions. One was that in the future, mortgage interest supplement would be a time-bound scheme. At present, the main concern with the removal of the 30-hour rule for MIS pertains to the budgeting exposure. I am sure all members have seen newspaper reports on the Central Bank's figures for mortgage arrears and personal indebtedness. They will be familiar with the current number that is floating around of approximately 95,000 people who are in mortgage arrears or in structured debt. Within this context, another number is floating around of approximately 120,000 people who currently are in difficulties with their mortgages. One key problem is trying to forecast how many people would suddenly become eligible to join the mortgage interest supplement scheme were the barrier of the 30-hour rule to be removed tomorrow morning. I will explain the 30-hour rule for the benefit of those who may not be completely familiar with it. It is a precondition to the effect that those who work in full-time employment cannot obtain mortgage interest supplement.
Another problem in this regard is that were we to remove the 30-hour rule completely tomorrow morning, we could expect a large influx more or less immediately. This has already been discussed in the context of resources and changing the way things work. As matters stand, the community welfare service, CWS, probably could not cope with another 18,000 and 19,000 MIS cases over a six-month or seven-month period. It is bad enough now that the CWS is taking on rent supplement and mortgage interest support. It constitutes a major portion of the service's work when its main job pertains to activation, which has been discussed previously. Costing the removal of the 30-hour rule from this scheme would constitute another budgetary exercise it would be necessary to build into our numbers. The main precondition included in the Cooney report was were the 30-hour rule removed, it must become a time-bound scheme and there must be a limit to such support. The Cooney group proposed a period of five years, comprising two years of full MIS support with three years of tapered support thereafter, followed by the removal of MIS support from the person in question. The group's take on the matter was that five years was a sufficiently long time to enable people get back on their feet. The Cooney group has made its recommendations, which are being fed into a subgroup of the economic management council called the mortgage over-indebtedness subgroup. This subgroup will report to the economic management council at the end of September, which in turn will feed into a report to the Government on the 30-hour rule for MIS.
I note a review of the 30-hour rule regarding rent supplement is included in the programme for Government. Our current take on the application of the 30-hour rule with regard to rent supplement is that the latter is a short-term income support solution for those who are temporarily unemployed. It is important to understand the history of rent supplement. It was initially meant to be for a person who was out of work and in private rented accommodation and who had not the requisite resources to meet his or her own accommodation needs. Such people then would be supported on a temporary basis by the CWS - it was that simple. However, over time it changed to a point whereby it became the first recourse for people to get into social housing. At present, more than 95,000 people are in receipt of rent supplement, of whom 51,000 have been so for more than 18 months. Basically they are waiting for something to happen on the local authority side to enable them to move into accommodation. There are issues in this regard pertaining to the pricing structure of rent supplement, for which the minimum contribution is quite low when compared with the differential rents scheme. There is no real financial incentive for people to move from a rent supplement unit into a social housing unit. This issue is under consideration at present. We are trying to liaise with the Department of the Environment, Community and Local Government to agree together on a coherent strategy in respect of the nationwide differential rent rates it has at present and the rent supplement minimum contributions in our national scheme. This is the current status in respect of the 30-hour rule regarding rent. We are considering a change whereby local authorities will take on the long-term cases and rent supplement will move back to being a short-term process.
Members are probably familiar with the housing policy initiative that was released in June. When considering the cadre in receipt of rent supplement for 18 months plus, it suggested such people should move automatically to local authorities. In other words, as an automatic solution, local authorities should deal with their housing needs and the purpose of rent supplement should revert to that of looking after people's rent in the short term.
In respect of people taking up courses that will lead to employment, a matter that must be addressed is the retention of medical cards. For many people, it is a huge psychological barrier to lose their medical card and it certainly acts as a disincentive to making efforts to return to the workforce. In respect of rent supplement, as an incentive I believe rent supplement should be fully retained for the first year, after which it perhaps should fall to 50% in the second year and then down to 25% in the third year. I refer to last night's announcement regarding the live register, which indicated unemployment figures of approximately 14.3% or 450,000. In many instances, jobs do not exist or at least opportunities certainly are lacking. A huge problem exists at present in that many people are trapped financially. Although the number of people who have left the country constitutes a safety valve, many people are financially trapped and cannot so do. I refer to a similar experience back in the 1970s and 1980s, after which many people returned to Ireland and were a very valuable resource. They returned with experience and skills and made a huge contribution in the late 1990s and early 2000s. I suggest assistance should be given to those who are financially trapped. Many of them have neither future nor hope and perhaps they could be given six months' worth of their social welfare payments, in the form of a grant, to relocate. They do not have the wherewithal or the money to so do and it probably would take them up to two months to find accommodation in another country and to seek and secure employment. A complete and radical rethink on some aspects is required.
Mr. David Dillon
The first topic mentioned by the Deputy was that of medical cards, which has been around as an issue for a long time. As the Deputy correctly stated, much of the attachment to it is psychological and is based on comfort because one never knows when one might need it, even if one does not use it on a regular basis. Retention of a medical card is not within the gift of the Department as this is dealt with by the HSE and the Department of Health. This Department is represented on a working group that is considering the matter at present. One of the issues that we and various people have been trying to deal with is to ascribe a cash value for it to see if that is possible. The way people use a medical card, however, is just so different. Some people might use it once a week, while others use it once a month or once a year depending on their needs. Aside from the qualification criteria that is based on cash within the health board, there is also an element of discretion and reference to illness and conditions in the household. If a child is sick or has a special condition, a medical card may be granted irrespective of the family income, or without regard to the existing family income threshold.
If someone is already long-term unemployed and moves to work, he or she can retain the medical card for three years. A degree of retention has been arranged and has been in place for the last ten or 12 years. Getting that message out, or whether people are willing to make the jump and forego the medical card in those circumstances, is always going to be somewhat fraught.
We are represented on a group that is being chaired by the Department of Health that is examining these issues. We provide input into that but it is not within our gift to make any changes to it on our behalf. As regards the live register message and the six-month grant to people who might be emigrating, Deputy Sean Fleming's point is perfectly valid concerning people who emigrated previously and then came back to contribute to the success of the country. I have not heard of such a measure to date but we will take it into consideration. I can see the benefits of it but I can also see some problems with control and access as well as regulating it. We will examine it further.
As regards the rent allowance, I do not know if the scaled 100%, 50% and 25% reduction has been discussed or posited before.
Mr. Joe Meehan
I should focus the answer on what rent supplement is meant to be. It is a short-term solution and therefore, by definition, within the first year one would expect the person to have returned to employment. The reality is different, however. The issue surrounds the origin of the scheme, what it is meant to do and what it is currently doing. A person who is one year or towards 18 months, based on the recent housing policy initiative, will be moved into differential rents. Therefore they should be able to gain full-time employment and have the benefit of differential rents from the local authority of their choice.
Rent supplement is not going towards a situation where the housing solution is in the medium term. The focus of the Department of the Environment, Community and Local Government and the Department of Social Protection is to get us back to where we need to be.
Will Mr. Dillon confirm that a person can retain a medical card for three years if he or she is long-term unemployed?
Mr. David Dillon
If a person is more than 12 months unemployed and leaves the live register to take up employment, he or she can keep it for three years.
Is that being explained to people? I, for one, did not realise that until I read the document last night. Every Deputy deals with medical card requests on behalf of constituents. Is that told to people at the point of information in social welfare offices?
Mr. David Dillon
I cannot say whether or not it is said in our offices every time, but it is on our information leaflets, publicity and our website. The extent to which it is known or accepted is something that we obviously need to address in light of what the Chairman has said.
It might simply be that the medical card is issued to a person for three years. That might solve the problem. They might believe it if they see it on the card and the date is on it. It is a simple thing. This review every six months concerns people.
Mr. David Dillon
Yes.
I also read the document last night, which gave a great insight into the whole social welfare system. The change in work practices surrounds short-term employment involving people coming into part-time jobs and how that affects their social welfare payments. A number of people have told me how difficult it is if they get a job for one or two days a week, or if they work two or three hours a day. When they go back to the social welfare office they may find it extremely difficult to get their due entitlements back. The system does not seem to be flexible enough to deal with our modern workforce.
In 2007, a review was published of the application of the unemployment benefit and assistance scheme conditions for workers who are employed on a full-time basis. It made a number of recommendations and I would like to know how far down the road we are with those recommendations.
People may be working two hours per day until they build up the number of hours, particularly in the care sector. Care organisations find that people do not want to take up such jobs because they will lose a full day's entitlement as a result. Perhaps we should consider people on an hourly basis, rather than a daily basis. In that way, if they work ten hours a week they would be entitled to 25 hours of social welfare payments. Perhaps we should start thinking about that, although there may be cost problems associated with it.
Part of what I read last night concerned other measures designed to get people off social welfare payments. One of the issues that has arisen is JobBridge, the new national internship scheme, which has been highlighted in recent days by multinationals such as Tesco.
I have a couple of questions, but I do not know if the departmental officials can answer them. What happens if a job is not what the job description says? I highlighted such a case recently when a person went for a position as a web designer. He is a fully qualified web designer but he was going into a company in the removal business. One could not see where a full-time web designer was required in a removal company. What are the consequences for the company that puts up an advertisement like this on the FÁS programme? Are there any punishments because it misinformed people?
Are these schemes replacing a potential full-time job by putting someone on an internship? Can such schemes be used by companies to get cheap labour? Is there a potential to generate a full-time job for someone on a JobBridge scheme after a nine-month internship, or does it suddenly disappear and three weeks later the internship is advertised again? That would defeat the whole purpose of the scheme.
The other key question about all those schemes is who exactly is monitoring them? Who is keeping an eye on them to see if they are genuine internships? There is only one Tús scheme in Kildare but why is the take up of these schemes so slow? There is a lot of potential in this for people, particularly on long-term unemployment, to upskill.
A constituent of mine was complaining that he cannot get the back-to-education allowance. When I analysed it, I found he rarely attended the course the previous year. What is the attendance rate of those on the back-to-education scheme? Are they just using it because they suddenly go from €80 per week up to €340 per week? Who is monitoring that?
My final question concerns the short-term enterprise allowance schemes. How long does someone have to be unemployed before he or she can participate in those schemes? Many people who are unemployed have good ideas but the problem is that they must wait six months before they can participate in a scheme, when they really want to get out there straight away and do it. There is no link-up between the various schemes that are available.
Are these schemes there to steal real jobs? It looks like a freebie for the employer who has to pay nothing. Are the schemes taking real jobs away that could be generated instead of short-term ones?
There is a lot in that.
Mr. David Dillon
The review the Deputy mentioned is referred to in the Department as a typical review for convenience purposes. As he rightly said, that was published in 2007. One of the features of our unemployment system is, and has been for a long time, that it is predicated on the day of unemployment. One gets paid in respect of days on which one is not employed.
The unemployment week is a six-day week and Sunday is not included as a day of work. As a test of unemployment, a person employed more than three-in-six days - three days in any six-day period - is considered not to be unemployed and, therefore, does not get a payment. As Deputy Lawlor stated, that bears an increasingly small relationship to the world of work at present, with the growth in atypical employment, casual part-time work, etc., being more of a feature.
One of the facets of the current three-in-six days unemployment week is that part-time workers, depending on how they arrange their week, can be in a couple of anomalous situations. If somebody is only working part time and only available for part-time work and if he or she gets let go from that part-time work, he or she will not qualify for any payment. Therefore, there is under-compensation. The person's part-time activity is not recognised and he or she has not got paid. The second aspect of the part-time work is that if somebody is working part time and gets let go, and is available for work, he or she will get paid for a full week's work. Such a person will get paid for six days and gets over-compensated. Some part-timers will be under-compensated in the current system; some part-timers will be over-compensated.
On the three-in-six rule, if one goes to four-in-six one loses payment for the full week. That is a barrier. That is a structural problem within the system. People are reluctant to take on that extra day and employers, in those circumstances, will find it difficult to fill certain types of employment.
Another feature is, increasingly, people are being offered two or three hours a day or two or three hours a morning over five days, and that does not square with the current system.
Recognising all of those, the Department commissioned and carried out a value-for-money report, and came up with recommendations. The recommendation, for unemployment benefit recipients who are employed part time, is to move away from the concept of the day of unemployment and move to a system that recognises loss of hours and loss of money, a combination of both. We need to proceed on that.
Persons who work part time are known in our system as "casual". At the time the Department commissioned that report, there were 20,000 casuals on its books, of whom 16,000 got paid in any given week. This is because peoples' work patterns will change and not everyone who satisfies the three-in-six rule this week will satisfy it next week, etc., because they will be doing cover, etc. Of the 20,000 registered casuals, a rolling 16,000 were getting paid in any given week. The number of casuals is now at 83,000 or 86,000, with the change in the economy. It is of a scale that is much more significant that it was then.
Of the 20,000 casuals of whom 16,000 were working, there was under-compensation and over-compensation. Persons were adjusting their patterns to suit the welfare week. Sunday is not included as one of the welfare days and persons can work Sundays and it does not affect their welfare entitlement - it does not come into that three-in-six equation I mentioned earlier. Our systems are established and set up to pay on a six-day week. There are significant ISD requirements required to move to a seven-day week. There are significant administrative and structural issues in our local offices to change from a six-day week to a seven-day week and move to an hours basis. Finally, because there will be winners and losers in this if the Department goes down the route recommended in the report, there is that issue of how that is played out to consider as well. Does one save those who are currently doing this and if one saves those, does one perpetually trap them at that lower rate of participation, etc.?
In light of the change from 16,000 casuals to 83,000 who are getting paid now, we are looking at having an outsider update the review, that is, have a quick relevance check on the review to see how relevant the recommendations still are to the changed circumstances with a view to proceeding. If that gets proofed, we intend proceeding to make the changes because there have been significant ISD developments in the past couple of years in the Department to make the changes to allow us to move to that recognition of hours lost and money lost for atypical employment. Therefore, it is on the cards but it is slow to move because it is significant.
Is that report four years old?
Mr. David Dillon
Yes, late 2007.
It sat there for four years.
Mr. David Dillon
It sat there, it was considered. There are the impact assessments and there is ISD. There is an ISD queue for development, etc. There are other issues. It has not been enacted but that is not to say it sat there, if the committee knows what I mean. There is a slight difference.
If it has not been enacted, it was sitting there. I agree with the Chairman on that.
Mr. David Dillon
It was known about. It is on the radar. It is in the queue for development work, etc.
The other change since it came out was in 2008 the numbers coming through the doors mushroomed, as did the space and capacity to make any change. On the changes required, if the live register had stayed as it was, at 165,000 or 180,000, the changes required would still be significant in that context. They are of an order of magnitude bigger with the changes that have happened since 2008 on the live register. Even for the 20,000 casuals and rolling 16,000 equation I mentioned earlier, it would require significant development. If one must change the organisation for 5,000 persons, one must change it for 80,000. The changes are significant. I might be a little Jesuitical in my differentiation. It has not sat there. We have been aware of it and it has been in a queue, so to speak, of work.
It is something we can work on.
Mr. David Dillon
It is something we can work on.
It has become more urgent.
Mr. David Dillon
When we move, in this space there will be winners and there will be losers. Persons have changed their behaviour or persons are manipulating their behaviour and, logically, shaping their work and participation patterns to suit the system, and that does not suit everyone.
Interestingly, as part of that, Lansdowne Market Research was commissioned to do a survey of casual workers and employers who were employing casuals. The casual workers were all saying the employers are not offering any more work and the employers were saying that they were offering them all the work they could get. That is the space it is in. There are different narratives out there around these people.
It is out there and we plan to move on it. We just need to audit the recommendations in light of the changed circumstances and then begin a process of implementation.
The JobBridge programme is not our area. We have not briefed on it. It is a live issue. On the specific questions on displacements, whether it leads to a job, etc., I will speak to my colleagues in the Department who are looking at that and we will get back to the Deputy independently on it.
I was asked about the short-term enterprise allowance. Since 1993, we had a scheme called the back-to-work enterprise allowance which allowed persons who were on the live register to go self-employed. We paid them, like Deputy Fleming's reducing scale, 100%, 75%, 50% and 25% of their social welfare over a four-year period and they were entitled to access small grants, etc., around start-up costs. Since 2008, persons were coming on the dole straight away who had ideas and wanted to go out and set them up. As a response to that, the short-time enterprise allowance was brought in. Under the terms of the short-time enterprise allowance, one can get that from day one. If a person comes on the live register, is getting paid unemployment benefit and has an idea that he or she wants to start with, he or she could get sanction from one of our facilitators and go ahead. One has that for a year to make a fist of it. One gets access to the same range of benefits, support and small grants towards start-up costs, etc. One has access to the technical assistance and training fund as well. That was a response to an articulation that was out there. When persons came onto the live register in large numbers, some came on with ideas that they wanted to start straight away. It got a bit of publicity. They had to wait a year to qualify for the enterprise allowance and access that stream of supports. In 2008 or 2009, we changed that. We brought in the short-term enterprise allowance where one could get immediate access once one had an entitlement to an unemployment benefit payment. That was the response.
The back-to-education allowance is the other scheme mentioned. If one qualifies for the back-to-education allowance, one has access to funding for the duration of one's course. The Department does not check that the person is filling out the roll, but twice a year, first, after the Christmas term in the new year, we get confirmation that the person is still registered in the course and is still satisfying the course criteria, and we continue the person's payment until the traditional semester finishes in May or June and the first year or second year examinations. To qualify again in September, the person must satisfy the underlying course criteria. If he or she satisfies those, has done and passed the examinations, and is going into the next year, we resume the payment. We stop the payment in June and the person goes on the live register or goes to work. Before we restart payment in September, we check again that the person is complying with the course criteria, which is verified by the education provider in that case. If one satisfies that, we put the person back on payment. There are two checks, one in January and one in September. We take the person off payment in June. Before we put the person back on it, we check that he or she satisfied the criteria of the previous year. In January, there is a mid-year check that one is satisfying the criteria. However, with regard to whether a person is turning up every day, we cannot get into that level of control. We have taken note of the JobBridge questions asked by the Deputy and we will come on those.
Tús is a specific scheme. It is specifically confined to people who have been on the live register for 12 months and have an underlying entitlement to unemployment assistance. It was set up deliberately in a fashion to target those people and community employment, CE, caters for a similar audience. There was no point replicating CE and giving more places to that scheme. I will not say Tús has been slow but we commenced discussions with local development companies because we were conscious of the fact that we did not just want additional CE places. We wanted something that would be beneficial to the target audience for Tús. There have been ongoing discussions. It is not my side, it is dealt with from our offices in Tubbercurry, but I am reasonably familiar with it. Excuse me if I am missing anything but I will come back on it.
Two things are different. One is that the target audience is different. There has been an engagement with the ILDNs, the local development companies, to arrange programmes that respond to those needs and are not just an additional scheme place. They have to have a specific programme that will cater for and develop the employability and social inclusion of the target audience. The second is that CE is out there and recruitment is arranged via the local groups, so it is self-selecting to an extent. If there is a vacancy in the locality, the groups can recruit somebody or a person can go along and apply for a place. With Tús there is an immediate step before that where people on the live register are cold called and invited for an interview. They are asked whether they are interested in this and, if they are, their details are passed on to the appropriate local development company in the area and people are interviewed and placed from that pool. Proportionately, things are somewhat slower in that regard but the stone has begun to roll on it and it can only gather pace from here. There are reasons it was slow to start and it is a more considered process than community employment.
Is Mr. Dillon saying a person who has been out of work can claim the short-term enterprise allowance?
Mr. David Dillon
If he had access to jobseeker's benefit.
What about jobseeker's assistance?
Mr. David Dillon
I would have to confirm that but definitely for jobseeker's benefit.
This is where the confusion lies. It must be clear where someone on jobseeker's assistance can avail of it.
Mr. David Dillon
I will not attempt to mislead the committee. I will confirm that.
I have found the discussion interesting. The report is also interesting and educational. Will Mr. Dillon elaborate on the stakeholders' forum, which includes employers? Has this been done previously? What was the outcome?
Deputy Ó Snodaigh mentioned an employer who could not recruit somebody to work for €28,000 a year. I recall an incident 12 or 18 months ago where someone who had been unemployed was asked by a neighbour what he was planning to do and he said that he planned to get his golf handicap down because he could not afford to take a job paying less than €35,000 a year on the basis of the various social welfare benefits available. Employers face a challenge if this is happening.
The Comptroller and Auditor General's report - this is not necessarily under Mr. Dillon's remit - highlighted that €31 million was recouped from cases of social welfare fraud while €83 million was overpaid in benefits. That is a huge sum. Are steps being taken to avoid both fraud and overpayments? There was an outcry some years ago when a tax amnesty suggested. We all threw our hands in the air and said that would be outrageous. Has anybody ever suggested an amnesty relating to social welfare fraud? While we all said the tax amnesty was about looking after those who had not paid tax, it generated a huge sum compared with what was expected. Perhaps Mr. Dillon cannot comment on this. Has an amnesty ever been suggested for social welfare recipients who have defrauded the State?
Mr. David Dillon
With regard to the amnesty, it is not my area but I am not aware of any current considerations on it. There was a social welfare amnesty in parallel with the second tax amnesty in the 1980s. The amnesty concept was tried and so on. I am not sure how successful it was. There was some traction on it but I do not know whether it is a live issue. There is no harm considering it and we will come back on it.
I have not prepared for the Comptroller and Auditor General's report as it is not in our area of responsibility. There is a forum and the Committee of Public Accounts dealt with it. Our Department appeared before the committee last week dealing with some of these issues.
We have a meeting on 5 October specifically to deal with this.
I was only asking because such a huge figure was involved.
Mr. David Dillon
The Senator referred to the individual who wanted to get his golf handicap down and would not work for less than €35,000. The case of the employer who could not hire someone on €28,000 a year was in the newspapers more recently. We have gone through this. The example of how those people would be affected financially is set out in the document. It depends on where they live because there are different rent allowance payments and so on. We used a rural example and an urban example and, in both cases, people would be better off taking that job than staying on social welfare.
I will come to the behaviour behind that. There was a letter in the Irish Independent doing the rounds about somebody who said his neighbour wanted to get his golf handicap down and would not work for less than €35,000 and it was on a few websites and so on. I am not saying it did not happen but certain elements of that story did not add up because the person’s mortgage repayment was included and, on that basis, he would never have had access to a social welfare payment to cover this based on his prior earnings if one was to believe what was said. The significant financial barrier in the majority of cases where it does not pay to work or it pays to reduce one’s golf handicap or whatever is rent and mortgage payments. We dealt with that earlier. It is a live issue and there are plans in place to process and deal with it. We discussed those in the submission and we discussed some of them earlier.
With regard to employers as stakeholders, the Department has had relationships with employers. They largely have been passive and we ask employers to jump through various hoops to certify earnings, work patterns, take PRSI, remit PRSI to us and so on. That has largely been a one-way relationship and while we have had episodic and sporadic dealings with employer representative bodies, they have not been in the context of a systematic forum, venue or group. In recent weeks, we have written to the employer representative organisations signifying that the Minister intends holding an inaugural meeting of a stakeholders group with them.
Mr. Pat McDonnell
It is on 19 October. Our dealings with employers are largely one way and maybe passive, but we have so many different dealings and avenues on which the employment sphere intersects with the welfare sphere. With the new national employment and entitlements service, engagement with employers and the Department's impact on employers will only increase. This initial meeting will be held with a view to throwing everything on the table and allowing employer representative organisations to establish some frameworks or ground rules relating to the red flag issues for them. We will inform them about where we are coming from as an organisation and what the future is likely to look like and then also allow them to start a process whereby they communicate better and we listen better to their concerns about our current practices and where our future needs and requirements of them will be.
Did Mr. McDonnell say 19 October?
Mr. Pat McDonnell
Yes. A preliminary invitation has gone to IBEC. I can circulate the secretariat with further details on it. A proper agenda for the day is only in the works at the moment and we will send it to the secretariat in due course.
I thank Mr. McDonnell very much.
While on the question of the employer who could not recruit somebody to work for €28,000 a year, as the Senator mentioned, I ask Mr. Dillon to seal with the family income supplement, FIS, which seems to close the gap between being worthwhile and not being worthwhile. It is not discussed enough and it might solve this problem once and for all.
Mr. David Dillon
There are lots of numbers in FIS.
It is not so much the numbers, more whether FIS is advertised and whether people are told it exists. Most people are familiar with it. FIS closes the gap such that those not earning enough can apply for a family income supplement payment, which is the same as a top-up.
Mr. David Dillon
FIS is determined by reference to a person's net take-home pay and the number of children in the family. There are set thresholds based on the number of children and in recent years' budgets they have been expanded in favour of larger families because there were more significant issues to resolve with larger families. With reference to the threshold and net income, a person gets 60% of the balance made up via family income supplement. The reference period for earnings is four weeks so a person's average earnings over a four week period determines the rate of payment he or she will get, which remains fixed for 52 weeks irrespective of changes in circumstances thereafter. So a person who gets an increase in wages, gets extra hours or gets a promotion will still get FIS.
For years the number of FIS claimants was stuck on approximately 12,000 - not the same 12,000 people - but it is up to almost 30,000 now. The labour force went from 1 million to 2.14 million so I would expect a doubling of it, but it has nearly tripled. It plays an important role in bridging the gap. There are issues with it. Many other countries went down that route and then switched to an earned income tax credit. Earned income tax credits were not that relevant in Ireland because so many were out of the tax net that it would have been of no benefit and FIS was the solution. It feeds into the tax and welfare advisory group I mentioned. FIS is also part of the considerations of a current group in the Department that is considering child income support in general. The issues of child benefit and FIS are interlinked because they are both predicated on having children and getting payments in respect of them. FIS plays an important role.
In the analysis we have done on the replacement rates in the paper the committee sent, we assume FIS is paid. We assume there is an entitlement once a person is working more than 19 hours. Because of the wage levels we use at minimum wage and at two thirds average industrial earnings, one is working 39 hours. So FIS is an entitlement in that and we give FIS. For smaller families it may be more beneficial for the stay at home partner to claim unemployment assistance and be means tested on the working partner's earnings. However, with three or more children, FIS is more financially favourable. FIS plays an important bridging role. It is complicated and bureaucratic to apply for but once a person gets it, it is relatively smooth.
That is the problem. The Department's assumption is that people are getting it. A reformed FIS system could play an important role in getting people back into work and people wanting to go back to work where there is a disincentive. It closes that income gap. That needs to be discussed more and I hope we will get more of a chance to do so.
The problem with FIS is that there are so many part-time and full-time stamps. When applying for FIS, people are not told what stamp entitles them to get FIS. That should be on a person's application paper because there are so many different grades of stamps and it is very confusing. It is not good enough to be refused FIS after waiting 20 or 25 weeks. The system should be improved to inform people as to what stamp entitles them to get FIS.
Mr. David Dillon
I appreciate that. It is too long for someone to wait 26 weeks and be told he or she is not entitled to a payment. Regarding what Senator Quinn said about €81 million and fraud control, a balance needs to be found between having something that is robust in terms of investigation of entitlement but does not bestow unnecessary delays, especially given the increased demand on services.
FIS is a means-tested payment with reference to a person's income. Regarding the level of stamp one may or may not have been paying or be currently paying, the amount taken off will affect the rate of FIS one will get. A person paying a full stamp will have a lower net income. Access to FIS in the first place is not necessarily contingent on the rate of stamp someone has been paying, even if paying a modified rate. There is a threshold of 19 hours work, which is the first step, and then it is calculated depending on the number of children thereafter.
There is a clear barrier to someone going back to work. It helps a person go back to work if he or she can get a FIS payment. It is rarely discussed and is not advertised. It could feature prominently in getting people who want to do so to go back to work. I call Deputy Mitchell O'Connor.
Mr. Dillon has dealt with the question I wanted to ask.
Mr. David Dillon
I wish to say one other thing about FIS. The Department has been trying to sell FIS or get it advertised more than it is. Based on income distributions, more people should be getting FIS. However, the income distributions we have are not at a household level. P35 data are only for individuals and there are not enough matching data to suggest how many people should get FIS having regard to household level income. We carried out a survey on the uptake of FIS and discovered there was confusion about the entitlement, household income, and the gross and net. We need to simplify it and advertise it more. When people get their tax-free allowance statements at the start of the year, we have been including information leaflets on FIS. Information is in our local offices and on the website but obviously there needs to be greater awareness of it.
I know the Department is not directly involved in the JobBridge scheme. The Department is getting criticised every time the Minister appears on radio programmes to promote the JobBridge scheme because the first thing the broadcaster will mention is the Tesco job and all this type of stuff. Something needs to be done to monitor that website better than what is happening at the moment. It is not acceptable if that can happen regularly and it is damaging what I regard as an excellent scheme.
I am very interested in the proposed profiling system under the activation measures. Will Mr. Dillon give committee members a detailed example. From the moment a person walks in the door, how does it work for that person? What does it involve? For how long does it continue? What sort of contact is expected? What sort of services will be provided to that person as part of that profiling?
On a more philosophical point on the rights and responsibilities, Mr. Dillon is saying that any jobseekers or anybody on social welfare will be expected to understand they have responsibilities to seek employment as well as having a right to receive a payment. How does the Department propose to communicate that to people? Is it expected that people should just understand that or will it be explicit? Will the Department try to get them to understand through verbal communication or through some sort of verbal contract that a social welfare payment is to get them through the dark times and the ultimate goal is that they should be looking for work? Is it as explicit as that? We often end up in trouble as a result of our miscommunication and thinking the other person understands what we are thinking. If we do not explicitly say it, however, it is very difficult for them to buy into that contract of understanding.
Mr. David Dillon
I shall deal with that issue first. The Deputy is right. The social welfare claiming process has largely been about establishing entitlement to the payment and then authorising and delivering it. We ask people for details of the number of contributions made, income, spouse's income, and so on. That is the focus at the moment. In moving to a rights and responsibilities contract-based approach, there needs to be more added value and it has to be more mediated and managed. We anticipate explicitly having a written contract outlining the rights and responsibilities. Inherent in that will be that a person has a right to payment because he or she has so many contributions or has such means or no means. Based on that, we will pay the person and continue to pay. For that payment to continue, however, the person will need to comply with reasonable offers of jobs or training that are considered appropriate to improve the person's employability. That will be the written contract bit. It should be a mediated process and cannot just be passive. It has to be explained. It must be clear to both parties involved what is expected of them, and that will be written.
On how profiling will work, the focus at present is very much on authorisation of entitlement and delivery of payment. We do not ask questions that would allow us to assess a person's employability - questions about simple things such as whether they have a driving licence or access to transport, education levels, previous experience and so on. Some of that information is garnered, but only with a view to establishing whether the person is entitled to payment and not with regard to their employability level or its enhancement in future. In recent years we have been working with the ESRI to develop a profiling model which, based on experience and exhaustive tracking and measurement, identifies 14 separate characteristics associated with those who become long-term unemployed. There is nothing surprising in the findings in terms of the lack of access to transport, location and so on. The information is supplemented with system data on age, gender and so on. The key to profiling and what moves it beyond common sense is the fact that the relative weight of the individual characteristics is individually assessed and combined to give a profile value or score. Based on that, we can determine the probability of the person staying on the live register. That allows us to move away from the current system whereby everybody gets the same - the one size fits all - and everyone is sent to FÁS for three months. Instead, we will have modulated, differentiated referral based on the person's profile value or score. People who score low and have a high probability of staying on the live register will get more intensive supports.
Such as what? Will Mr. Dillon elaborate on that? It is what we really want to talk about.
Mr. David Dillon
It will depend on the circumstances and what informs the profile score. It could be literacy issues, substance abuse, low education or problems in previous education. We have to do one of two things and either deliver appropriate services or arrange delivery of them by other service providers. Service provision across a range of private and public providers is demand led to an extent. We need to be able to articulate that there is a need for adult education and literacy in Dún Laoghaire, for example. We will say to the VEC that we have 300 unemployed customers so far this year who need literacy skills, and ask the VEC what it will do about it. The approach is not just focused on the person but focused on meeting their needs and where the incidence and deficiencies of those needs exist.
I have a question for Mr. Meehan on rent assessment. I know of many cases in which a person has applied for rent allowance. Often, the landlord knows that if he puts down price X, the person will not be entitled to rent allowance because the rent is too much. The person needs housing but they cannot get it on the social housing list because the list is as long as this room. The landlord will buy into an agreement of working with the proposed new tenant and gives them a particular price that allows them to be eligible for rent allowance. The person has to meet the gap between the rent allowance and what the landlord is charging, but in many cases the landlord is actually charging even more than that. Everybody involved knows it, but it is not officially known. Those people are really struggling. What can be done about that? The person just wants somewhere to live. There are some really good landlords who abide by what they tell the community welfare officer the rent will be, but some are charging above that. I deal weekly with people who are looking for housing through the local authority because they cannot meet those other payments. What role can the Department play in dealing with such landlords? It is a tough question and I do not expect the witnesses to have a magic bullet, but it would be useful to hear their comments.
Mr. Joe Meehan
A report came in recently on an agency that might be involved in under-the-counter payments, but often the question is how we find out. Also, there are mutual interests involved, with the landlord and the tenant who is looking for accommodation, and there is a private contract between them. We are talking about trying to access that contract. In the case I mentioned, the tenant came forward to ask why he is paying more than he should be. He went into a contract in the first place, but he has now come to us looking for a moral solution that will deal with the situation. In many cases, the tenant and landlord have both filled in forms fraudulently and claimed money they should not have got. The rent for the place where the person is living is over the limit, so by definition it is oversuitable - if that is a word - for his personal circumstances. He should be able to source accommodation that meets his needs within the rent limit, and that is what he should have done.
Some landlords are leveraging profit through rent supplement from vulnerable people who may be struggling because of low education or substance abuse, and we know that under-the-counter payments are taking place. Usually, the information comes from the tenant through some other operation, such as when he is looking for another benefit. He fills in the real rent, and the community welfare officer, CWO, matches the form and says there is something wrong. We can then chase the landlord. The problem exists, but it is a tricky one to deal with.
The previous committee recommended that we move to paying the landlord directly.
Mr. Joe Meehan
Paying the landlord directly is proposed all the time and people ask why we are not doing it. The first point is that 20% of payments under rent supplement are made to people other than the tenant. In some cases, the landlord requests it as part of his rental contract with the tenant, and the tenant goes ahead and arranges it. There is an issue in such cases, because the tenant can pull that back quite quickly. It is only at the tenant's behest.
Why do we not pay landlords directly? In a way it is a philosophical issue, to use a word that was used earlier. What is rent supplement? It is an income support solution that provides temporary support to people looking for accommodation. If we move to paying landlords directly, we move into the housing space. The rental accommodation scheme, RAS, is a good example of a scheme in which landlords are paid directly, and the new local housing initiative is another. The focus keeps moving towards rent supplement becoming a medium-term or in some cases long-term housing solution, but it should not be treated that way.
I am the spokesperson in the Seanad on social protection and I have been doing some work on barriers to coming off welfare. In asking people the question, I have been getting some interesting responses. The first is that although a person might be offered a €40,000 job as a married man with children, it has taken him too long to get on welfare in the first place and he cannot run the risk of losing the benefits for him and his family. That is a significant issue. Second, there is a perception that a person on the minimum wage is essentially working for €3.65 an hour, because welfare is €5 an hour and the minimum wage is €8.65. The third issue is loss of benefits. Based on what has been shared here today, the Department of Social Protection badly, and quickly, needs a communication strategy, with a television campaign or whatever, on how people can bridge the move from welfare into employment.
Mr. Dillon said that some people are better off on welfare. Does he know how many people are in that position? The public would like to know that the Department is tackling the issue. Clearly, some people need to be on welfare, but will the Department examine that group specifically and consider the barriers that prevent those people from getting into work?
Before the summer recess, the Minister established a commission on social welfare and taxation. At what stage is it and have questions submitted by Members been incorporated into its terms of reference? We asked about issues such as barriers to taking up employment and incentives to remain on social welfare. There are only three solutions to moving away from social protection: education, employment and self-employment, the last being significant. This issue arose during the weekend. What is the Department doing about the unfairness experienced by persons who used to be self-employed and are now seeking social welfare benefits? They have been the multipliers and paid PAYE and PRSI for years, yet they are entitled to receive no social welfare benefits.
JobBridge is a good scheme.
We will not discuss it today.
An employer needs to have one employee already to take on people under the internship scheme. Hundreds of people are seeking internships. I have received multiple requests from Galway. Some people are sole traders and do not have employees, yet they see JobBridge as a means of growing a business. Could this matter be addressed? I am keen to hear the officials' answers.
We will discuss the matter another day.
I hope to discuss a matter similar to the one raised by Senator Healy Eames. I thank our guests for the helpful information they have provided. The information on replacement ratios provides important food for thought.
I apologise for focusing on a single subject, but it is an important one. Deputy Ó Snodaigh mentioned the media perception. In the case involving a figure of €28,000, the documentation states there is an incentive to work. There is not. Working 35 hours a week and 49 weeks a year, a person would be working for only €3 a hour. That is the figure mentioned.
Let us consider the other examples. Some 65% of people other than the person in question are above the two thirds ratio. This key issue needs to be tackled and the ratios reduced. How we go about doing so is the challenge facing us. Two thirds of the average industrial wage amounts to more than €22,000. I know of few employers who could afford to take on an extra employee at that wage. The cost is prohibitive. How do we reduce the ratios? The disincentive to taking up employment in a job that pays less than two thirds is significant.
I turn to the question of short-term job offers, particularly in industries such as the hospitality sector and construction. Someone on the live register might be offered three or four weeks work. Most members will have encountered people who have been forced to go through the entire application process again. How will we tackle this issue so as to make availing of employment easier and, when employment ceases, to make relying on the social welfare system to provide cash flow safer? Some people who want to work, get out of their houses and provide for their families are reluctant to do so because they fear they will have cash flow problems when their employment ceases.
I welcome the activation policy, which is important. The Department should not merely be concerned with processing payments. A more holistic approach is required. We are moving in the right direction and a reforming Minister is in charge of the Department. I have great hope for its future, but do we have the human resources to allow for a successful activation programme, or will it be another case of half measures? I hope the expertise is available. Will our guests confirm this?
There were a few questions asked.
Mr. David Dillon
Indeed. The common issue raised by the Senator and the Deputy is that of people being reluctant to take up short-term employment because of the difficulty in returning to the social welfare system and accessing money again. This has been a problem for a couple of years. It is a function of the increased in-flows onto the live register and the processing times involved. This concern has also been raised in connection with training and education, in that people have been reluctant to undertake training courses because of the difficulty in returning to the system.
Our regional support offices have put a measure in place. People who leave or take courses of short duration do not have their claims closed. Instead, they are placed in suspension and can be reactivated on their return. They do not need to repeat the application process. This is the policy, but I do not know whether it operates in every local office in every case. Most cases will be comprehended by this policy, but there may be particular ones in which, for example, persons become self-employed or leave the system and it is not clear where they have been, whether they have been working casually, etc.
It is as much about perception as the reality. That is why communication is important.
Mr. David Dillon
The measure has been put in place. We do not close the claim. Rather, we suspend payment and reactivate it when a person signs back on.
That sounds like a lot of work. Could claims be left suspended for three months as a rule?
Mr. David Dillon
I am uncertain as to whether there is an upper guideline. In most cases, a person is offered three weeks work, for example, and signs off. We will suspend the claim for those three weeks. Such claimants remain on the live register. Is that correct?
Mr. Paul Morrin
They are not, but it depends on how long persons in temporary employment are gone. I will revert to the committee with the specifics.
Mr. David Dillon
I am uncertain about the three or six month suspension. There is a facility, whereby a person's claim is not closed, meaning he or she does not need to go through the application process again.
Will Mr. Dillon write to us with a list of the offices not doing this?
Mr. David Dillon
No, it is policy. All offices should be following it, although I cannot say whether every office is.
Will someone in the Department check and revert to us, please?
Mr. David Dillon
Yes.
May we also receive clarification on the other crucial matter I raised?
Two matters must be clarified.
It is an important issue for the industries to which we referred.
Mr. David Dillon
The policy should apply in every case in every office.
Mr. Dillon hopes it is being done.
Mr. David Dillon
There will be cases in which it will not be appropriate to do so, for example, if someone becomes self-employed, leaves to take up work and returns without a P45, etc. There might be an investigation before he or she is returned to the system. If someone works for three or four weeks and returns with a P45 at the end of that period, the suspension will be lifted and he or she can return seamlessly. These are the new arrangements.
Is Senator Healy Eames making the point that people do not know about it?
Yes. There is a massive failure in communication.
Okay.
Mr. David Dillon
I will return to the issue of the national minimum wage and the figure of €3 a hour. This relates to Deputy Griffin's point on the two thirds ratio. International research by the OECD and the ESRI claims 70% is the key figure. Moving above it causes a difficulty in people sticking to the live register. International experience has shown that moving below 70% makes for a better outcome. A problem with our system is that it has mainly been passive, in that we pay people and let them do what they want. To replace rates above the two thirds figure, the process of engagement must be active, mediated and managed. We touched on this matter when addressing Deputy Lyons' questions. People cannot be left to their own devices and not expected to improve themselves.
The best place from which to find work is work. If one takes up a job on the minimum wage, one has a better chance of getting another than one would have were one on social welfare. A range of studies have shown this to be the case.
While it can be important for some, particularly for those with families, it can be somewhat reductive to view the decision to take up employment in financial incentives terms alone.
We must communicate the benefits of working to people at home who may be down in their boots. Married people, in particular, do not see the benefit in going out to work, perhaps because of child care costs.
Mr. David Dillon
I fully accept what the Senator is saying. The advisory group on tax and social welfare, as mentioned by the Senator and touched upon earlier, is chaired by Ms Ita Mangan and includes external experts. It has held some meetings and is taking submissions. I am not involved in it. The Senator asked if Members' inputs will be taken on board in the terms of reference. I will obtain that information and forward it to her. The group has had a number of meetings and is operational. From what I can gather, it is hoping to complete its work in a short time. We attended one of its meetings a couple of weeks ago, at which we made a similar-type presentation to the one we are making to the joint committee. The group is addressing issues such as child care, transport costs and so on.
When considering replacement rates, we use rates such as the minimum wage and two thirds of the average industrial wage because that is what people in employment are earning. What we do not know because the needs are so different is the level of child care needs and costs. Not everyone with a child has a child care need and not everyone with a child care need has child care costs. We cannot build them into the exit rates because the cost varies from person to person. The added value from the guidance and activation process must come into play. People must be convinced and mediated to improve their employability. If this means moving into a job that pays €3 a hour, that will be the case. Under the national employment and entitlements service, guidance and profiling will be predicated on the supply of appropriate interventions and outcomes. For some moving into employment will be the appropriate intervention. This all goes back to the solutions of education, employment and self-employment.
What about self-employment?
Mr. David Dillon
Our facilitators support people to move into self-employment. Every day they are putting people on the back-to-work allowance.
Perhaps Mr. Dillon might circulate to members a list of the benefits available to persons who are self-employed.
We have a copy which will be circulated to members.
That is important.
Mr. David Dillon
The Senator also touched on the issue of entitlements that flow from the differential contributions paid by self-employed persons vis-à-vis employees, which is not my area of expertise. Self-employed persons pay the self-employed rate which is lower than the combined employer-employee rate. Also, a lower rate of short-term benefits flow from this payment. The last actuarial review of the social insurance system found that certain categories did well in the long term from the PRSI system. Self-employed persons, because they have access to a pension, were identified as benefiting on a value for money basis in terms of the contributions made. However, it does nothing in the short term because the rates are not covered. That is an issue the group might consider, although I am not sure if it is covered by its brief. An actuarial review of the social insurance system is due to be undertaken.
Mr. Dillon has stated there are people who are better off on social welfare. Does he have a figure in that regard and has the Department asked the people concerned to identify the barriers to taking up employment?
Mr. David Dillon
I will contextualise the matter and then ask Mr. Morrin to provide members with some specifics in that regard. There are people who are better off on social welfare. In general, they have larger families and are in receipt of rent or mortgage allowance. They are the ones who ostensibly are better off on social welfare. Movement to the RAS is the way to go to address this barrier.
Mr. Paul Morrin
The brief circulated provides many figures. However, the two groups mentioned have different behaviours from everyone else. They are paid an adult dependant allowance plus a number of child dependant allowances as part of their claim. Approximately 10,800 or 2% of those on the live register are paid an adult dependant allowance and also three or more child dependant allowances. Another group is paid housing supplement in respect of rent or mortgage payments. There are approximately 60,500 in this category. While some, depending on the area in which they live, may not have a huge entitlement, this group behaves a little differently from everyone else on the live register and is less likely to close claims. These are the two target groups. Issues to do with rent and mortgage payments are being dealt with in the way outlined by Mr. Meehan. Large families have access to family income supplement and so on.
I will now take questions from the five remaining members offering as a vote may soon be called in the Dáil.
Mr. Dillon has spoken about people whose claims are suspended when they take up temporary work for two or three months. I spent 28 years working as a community welfare officer and never in all that time came across a person who, having had his or her claim for supplementary welfare allowance suspended, had, following the pressing of a few buttons in the local employment office on a Monday, his or her claim reinstated on a Thursday. Perhaps issuing local employment exchanges with a directive that this should happen is the way to go. Often when a person seeks to reactivate a claim it is thrown on a pile with, say, the claim of a man waiting six months to be assessed for unemployment benefit. This is a disincentive to ever taking up short-term work again.
Another issue of concern is that of self-employment, a matter I have raised several times previously. Such persons are unfairly treated in that they have no divine right to receive social welfare payments and are always assessed on their earnings in the previous year. A PAYE employee could earn €100,000 and if let go, receive unemployment benefit. Such a person might even receive unemployment assistance, regardless of his or her earnings. However, self-employed persons are assessed based on their earnings in the previous year, despite every penny earned that year having been spent in meeting bills. The assessment in this regard needs to be addressed.
Can a Tús employee work alongside a community employment scheme worker on a project? Perhaps rather than depriving a person who works two hours a day of a day's social welfare payment, such a person might have his or her social welfare payment reduced by half the amount earned.
On the question of habitual residence, many Irish people are being refused social welfare payments because they have been out of the country for two, four, six, eight, ten or 12 years. They have nowhere else to go. Their roots are in this country, yet when they return here in desperation, they are being told they are not entitled to social welfare benefits. I will not list the many examples of which I have been made aware. While listening to the proceedings earlier, I talked to another Senator about this issue. One cannot even sign on for credits when one returns having been out of the country for ten or 12 years, which is unfair. I know of a case involving a Traveller family who lived in the United Kingdom for 12 years. It was brought to the attention of the Department of Social Protection by the head of that family and his son that their PPS numbers had been active in Dublin during the 12 years they were out of the country but nothing ever came of this. Following six months of appeals in respect of refusal to the HRC, the man in question was granted social welfare payments. I am aware that there are Travellers' rights groups which act on behalf of such persons, but they should not have more rights than others in the country. This issue needs to be addressed.
I would like to make two further points.
The Senator has already asked seven questions.
We should pay rent to landlords.
We have a deadline to meet.
Many landlords are not receiving the contribution they should be getting from the system.
In fairness to other members, I must ask the Senator to raise issues which have not already been dealt with.
Social welfare fraud presents a huge problem and I wish we could get a handle on it. I have always said biometric finger-printing is the way forward. I am aware that the Department is considering the introduction of photo identification.
That issue will be dealt with at our meeting on 5 October.
I welcome the Minister's comments last week on self-employed persons. There is the issue of knowing one's entitlements, especially for the self-employed. We must put in place a new system of paying a stamp in this regard. Self-employed people already do this but it only goes towards a pension rather than full social welfare payments. I understand what the Senator mentioned about getting accounts for 2008, 2009 and 2010, or perhaps going back another year or two. The reason someone would seek social welfare is because he or she has no money, so getting an accountant to deliver accounts for the two years could cost €4,000 or €5,000. If that person had that money, he or she would not be looking to sign on.
We have been left exposed with our current system for self-employment and this must change. I hope this review by the Minister and the witnesses will move us forward in order that self-employed people can pay a stamp and be entitled to social welfare. When my business was going well I had no problem paying a stamp. If a business goes bankrupt, there should be something to protect self-employed people and their families.
Does the Deputy have a question?
How does Mr. Meehan feel about everything being under the one roof in local authorities with regard to rent allowance? Local authorities are already creaking at the seams and finding it difficult, especially in housing sections, even before we bring this on them.
I welcome the developments in the activation area. It was indicated that integrated customer offices would be rolled out from the middle of next year but will this happen everywhere? Will there be different centres and how will this happen? Is there a strategy to ensure communication with everyone, because many people are being grouped? Will there be outside help with the strategy?
Where is the begin again programme? My understanding is there is uncertainty over its funding, and people on the ground tell me it has a 70% success rate. I came across two cases regarding mortgage interest calculation recently. One person was separated and another was a lone parent and there was a significant difference in how the mortgage interest supplement was calculated in the cases, with advantage for one person and disadvantage for the other. I have failed to get clarity on the issue so will the officials provide some information on it?
From what we have heard all morning, there appears to be a consensus among all members regarding inflexibility within the system with people signing off, taking in short-term employment as outlined by Senator Kelly and Deputies Lawlor and Griffin. Is part of the problem with that inflexibility related to the information technology systems within the Department? What work is under way to make schemes more efficient and responsive by using information technology? For example, some of the schemes on the old ISTS system utilise function keys that were designed in the early 1990s. Is that impacting on the ability to be more flexible? As individuals working in the Department, what do the witnesses feel can be done to harness greater strategic use of the efficiencies of information technology?
I will highlight an aspect of the relationship between rent supplement and the rental accommodation scheme that is causing some difficulties. I am raising one issue so I will not be long. There is the example of a single parent with one child, with the adult working full time and not entitled to rent supplement. The person may have a relatively low income slightly above the minimum wage but may want to continue working and develop for the future. The person does not want to remain on social welfare. I know a woman like this on the local authority housing list who has been accepted as being in need of housing, but there is a long waiting list and she is not in the zone for an offer yet. She cannot get on the rental accommodation scheme because she is not yet in receipt of rent supplement for 18 months. This person is on the threshold of going from having a housing problem to falling into the Department's hands if she cannot survive. She is on the edge and the rental accommodation scheme will save her bacon. I have raised this matter separately with the Minister of State responsible for housing and I hope to achieve a result. This aspect needs a solution, which should be easy.
There are many questions and the witnesses may deal with them. We will have a meeting to deal specifically with the rental accommodation scheme in October.
Mr. David Dillon
Senators Kelly and Healy Eames, along with Deputy Griffin, mentioned the fast-track cases for people who have signed off for a short term and who will return to the system. To the best of my understanding that facility has been in place for a couple of years and is operating. I do not know if it is operating perfectly for everyone as I am not involved with it. The circulars would have been distributed outlining the process. The Senator mentioned that he had not seen one in his time as community welfare officer but I can only presume the system is in operation. We will carry out a check to see if it is consistently applied and if there are offices where it is not in operation. We will return to the issue in that context.
The matter of people who have been self-employed in the previous year seeking social welfare has been discussed at previous meetings. The 12 month period is not absolute and previous earnings in the period can be used as a guide for likely future investments, and that is moderated by changes in circumstances or absolute change in conditions. For example, a self-employed taxi man who loses his licence would not have the same earnings. I accept the Deputy's point about having to go to an accountant and associated costs. There are guidelines on expectation and at one stage there seemed to be a practice of asking people to de-register as self-employed before we dealt with them. That is gone and there are guidelines as to what is acceptable and reasonable. The legislation indicates that in the absence of any other evidence, the previous 12 months may be used as a guide. This does not indicate that what was earned in that period is assumed to be earned in the following year. There is regard to a change in circumstances, including economic, circumstantial or specific personal issues.
All cases must be investigated none the less. Senator Quinn spoke earlier about an €81 million loss and there is a balance between a rigorous investigation and an examination that is irrelevant, overly intrusive or seeks too many compliance requirements from the claimant. My understanding is that the balance is struck in most cases most of the time.
Will there be a process where self-employed people can pay a stamp as I outlined?
That is not really an appropriate question.
Mr. David Dillon
It is an issue. In countries where self-employed people have access to stamps, they are paying in the order of more than 20% of the income in social insurance. We have the lowest employer and employee rates of social insurance in the OECD, apart from Mexico. Any consideration of increased benefits might have regard to subsequent increased levels of contribution, which feeds into the replacement rate issue. The more money taken from people in net pay, the higher the replacement rate becomes.
The system is not fair for the self-employed and there is no incentive for people in the sector. These people are taking a risk and security is required if it all goes wrong.
Mr. David Dillon
The issue is pricing that risk.
Is it fair to say that is being looked at again? I realise Mr. Dillon cannot comment on policy, but is it being considered either at political level or departmental level?
Mr. David Dillon
I am not evading this but I am not involved in that area any longer, so I cannot say. There is an actuarial review of the social insurance fund due next year. We looked at self-employed access to disability benefit in the last social insurance actuarial review, for example, but I am not involved in it this time. Again, however, I can find out.
That would be good.
Mr. David Dillon
HRC is also not my area. It is an evolving area. The case outlined seems to have had success on appeal. Everyone who receives a decision from the Department is entitled to appeal. The appeals board is a quasi-judicial independent body that makes decisions based on the facts before it. I do not necessarily think there might have been additional rights. Everyone has a right to appeal and the people whose circumstances were outlined by the Senator might have made the appeal and been successful at it.
Where someone who has been out of the country for 12 years, has had no connection with the country for that length of time and does not have accommodation in this country, and where a decision that is made on appeal suggests they are entitled to social welfare, why are we refusing anyone who is ten years out of the country under the same circumstances?
That question cannot be directed to the officials today. There are two reasons. First, it is at a different level but, second, the committee dealt with it and there is a full report on it. It can be read and if we have problems with it, we can add to it. It is not a fair question to ask about a particular case.
Mr. David Dillon
Mention was made earlier about the inflexibility regarding people who get a couple of hours work a day and part-time workers. There are two issues here. One is the three in six rule which we discussed earlier. We have made a report recommending changes to that. Second, and this probably boils down to communication, there is in existence a scheme that was popular a few years ago but has died off since then. It is the part-time initiative. People who will only ever get a small number of hours of work with the same employer and it is unlikely to lead to full-time employment might be entitled to access that initiative. It deals with those circumstances. If the person is only doing two or three hours per day over five days or something that breaches the three in six rule but is not of massively significant hours and extent, they might be entitled to the part-time job initiative. There is, therefore, another element that might cover people in those circumstances.
Does that apply to someone who might be in paid employment?
Mr. David Dillon
Yes.
I am aware that scheme applied to the small-time self-employed years ago, people who perhaps did not earn enough and would probably earn more on social welfare. Their earnings were topped up by social welfare.
Mr. David Dillon
Under the jobseeker's allowance scheme, people can be self-employed and if their earnings are of inconsiderable extent, they will be topped up with social welfare in that case. To keep it simple, if someone is entitled to €188 per week on jobseeker's allowance and if they are earning €88 per week from self-employment, we will pay them the balance of €100. The €88 is net income. The part-time job initiative is slightly different. It is for people who are in employment. We spoke earlier about the concept of employment versus a couple of hours of unemployment. The part-time job initiative gets over that. If people get two or three hours over five mornings, they do not necessarily fall foul of going to four days and losing their claim altogether.
Mr. Joe Meehan
On the issue of landlords and the landlord being paid directly, one in five or 20% of landlords or people other than the recipient are paid directly. Again, it is part of the landlord's contract with the person. Where a person has not paid the contribution the person is meant to pay, that is a matter between the landlord and the tenant at the Private Residential Tenancies Board, PRTB. There are facilities in the PRTB currently to ensure that where landlords are trying to get a legal eviction within the PRTB, they are now fast tracked as part of the PRTB's processes. In 20% of cases landlords are being paid directly. Our relationship is not with the landlord but with the tenant. We do not provide a housing solution but an income support solution for people who are looking for work. If the landlord has not been paid, it is a legal matter between the landlord and the tenant. In that case, I expect the PRTB resolution process to kick in.
I am aware of that. Once upon a time I was not concerned about landlords, but many of them find themselves in a particular situation at present. They might have one or two houses and they are desperate to hold on to their clients. They will not bring them to court over €26 per week. They just want to keep what they have and get whatever the State contribution is. They are happy enough with that. They are not pursuing the tenants for it because they are desperate to keep them. They also know the tenants can have a selection of another 100 houses to pick from and a landlord who is equally desperate to take them on. Despite the fact that the previous landlord could give a reference stating that the tenant is dangerous and will not pay the rent, they will take a chance on the tenant. It is something we should consider. If we can do it for the rental accommodation scheme, RAS, we should be able to do it for rent allowance.
In fairness, Mr. Meehan has done his best to answer this three or four times today. We will have a specific meeting on it in two or three weeks and I hope the Senator will be at it. Mr. Meehan has done his best to explain his end of it.
My other question was on Tús and community employment.
Mr. Dillon has not finished answering the questions.
I asked if they can work together on a particular project.
Mr. David Dillon
The projects are hosted by the local development companies. I am not aware of any place where they are working together but I do not foresee any circumstances in which they may not be working together. It is not even a policy matter but how the local development companies deploy them and assign them. It will be people coming from different streams. They will have different arrangements and different qualifying criteria, and they might have different rates of payment in some circumstances. It has not yet been a policy issue and nothing has emerged to suggest it might be. However, there will be differences.
Deputy Áine Collins asked about the structure of the national employment and entitlements service. I will give some background on that. There is an assistant secretary within the Department specifically charged with the implementation of this project to bring together the community welfare service, FÁS and ourselves under one organisation. The Deputy asked about external consultants. External consultants from Accenture have been involved in that process. They have had meetings with staff across the three components of the new organisation. There are preliminary areas which have been advanced as pilots where this integration might happen more quickly on a physical basis. Coincidentally, I spoke to the regional manager in the west yesterday and he mentioned there are a couple of areas where his offices and FÁS are across the road from each other and they intend to conjoin on a pilot basis to provide a more integrated service. Integrating the community welfare service, which has a much more diffuse clinic-based service, will be another degree of difficulty to overcome. There is also the question of whether to have many doors and one service or one door and many services. The final configuration is probably not yet finalised or realised. However, there is a process. There is a coherent and joined-up framework in which it is happening and those issues are being addressed in that context.
Deputy Griffin asked about staffing levels in the new organisation. There are 600 or 700 community welfare officers coming into the service as well as 400 or 500 from FÁS employment services and ancillary FÁS central core staff, such as research staff and so forth. The training staff will be going into the new SOLAS configuration. That, allied with our existing resources, will be the core of that case management process profiling we were discussing earlier. The residual expertise exists. It is the sharing of that and building up expertise and complementary expertise across the three organisations when they become one organisation that will be the challenge. The expertise that has developed among those people will be the guarantor of the profiling activation project we are talking about. In short, it appears that the expertise is in place and the staff resources, although we always want more, will be there to operate it.
One of the keys issues for profiling will be that the intervention is appropriate. There is a graph in the paper we submitted which shows an arc that goes up. If one is low on it, one gets high supports and high intensification of activation. If one is highly qualified, one gets lesser amounts or one is referred to self help and so forth, web-based blended learning and access like that. However, everyone is sent to FÁS for three months. Profiling will allow a differentiated approach in order that the same people will not make the same demands on the service and they will receive an appropriate level of service within the continuum of service on offer.
Deputy Kyne asked about IT. I am not involved on that side of things. The Deputy mentioned the integrated short-term schemes and asked if they were key punch operations. Largely, they are. The ISTS system was based on authentification and delivery of payment and it is good at this. It might be laborious, but it is changing to a service delivery model in the Department.
Mr. Paul Morrin
Certain aspects of claims are being processed through the new modern system such as profiling information. It is then merged with ISTS information. A modernisation programme is in place, but we do not know when the big bang will happen and the ISTS will be brought within the modern system. There is a programme in place for it.
Mr. David Dillon
There is a web-based application for profiling and on-line completion of profiling questionnaires.
Mr. Joe Meehan
There is a feeling in the Department that all systems are being migrated to the new SDM. What the committee is looking for is already happening, while ISTS still carries out its function.
Mr. David Dillon
Deputy Collins asked about separated spouses and the MIS. It can be perceived as smoke and mirrors because every case that crosses a person's desk must be stripped down to see what is going on. Maintenance payments can be included, or mortgage increases because someone bought a boat or an apartment in Spain. When people start to ask me questions about MIS cases, these must be gone through line by line to understand what is going on. It can be a big file when we are trying to understand what makes up the mortgage. Issues can arise from shared ownership and who owns the property. A partner might have a 50% stake in the property, which can be messy. The bottom line in all cases is that a person is provided with the appropriate SWA rate, minus a minimum contribution allowing him to stay in his house for as long as possible.
I appreciate that and did receive the information from the Department on how it was calcuated. I spent some time on the issue and have some experience in the area. I found it all very cumbersome. The information on the separated spouse was also available in respect of maintenance figures and so on. When I analysed the figures, it seemed one was getting more than the other. I was concerned about this. Is this an issue nationally? It is a cumbersome calculation.
Mr. Joe Meehan
It is hard to nail the MIS down on a case by case basis and compare cases. The Deputy could ask about one case, but I would need to look at it to see what the problem is and then give a response.
It appears that for RAS, a person must be in receipt of rent supplement for 18 months.
Mr. Joe Meehan
That is not correct.
That is the interpretation.
Mr. Joe Meehan
I know where the Deputy is coming from. The 18 plus month rule is in place with local authorities. That is a benchmark set for them to understand that a person in receipt of rent supplment for over 18 months must be fast-tracked to a housing solution as opposed to leaving him or her on long-term income support. The figure on RAS eligibility is 12 months for persons who are unemployed. If a person has been working for over 12 months and is then assessed as eligible for RAS, he or she can remain on rent supplement and continue to work.
The issue concerns someone who is working full-time and has been accepted by the local authority as having a housing need and is struggling with high rents on a marginal income but cannot be accepted on the RAS by the local authority because of the 18 month rule.
Mr. Joe Meehan
Yes, if the person was in full-time time work, he would not be in receipt of rent supplement.
That is my point.
Mr. Joe Meehan
That brings us back to replacement rates.
It could leave someone on the edge, almost ready to fall off and become a client of the Department. If this condition could be removed, it would solve the problem of the person concerned.
Mr. Joe Meehan
Again, we come back to the question of what is rent supplement. If it becomes a long-term housing solution, were we to remove the 30 hour rule, the issue becomes who should be looking after the person and whether it should be the local authority. The figure on RAS eligibility is 12 months and a person can be assessed by the local authority as being eligible at that point.
We will have a meeting to discuss the RAS in a fortnight and can deal with it then. It needs to be adjusted, as it acts as a barrier to people such as this. No one can help him with his rent and he will potentially have to leave his job.
Mr. Joe Meehan
It is a replacement rate issue.
I have two questions. Do participants in JobBridge and Tús lose their secondary benefits such as fuel allowance? One of the problems previously was that a person who commenced a course lost benefits because he or she was no longer full-time unemployed. In the past this was a disincentive.
The back-to-education allowance is mentioned among the activation measures. This is a valuable scheme with a set qualification period, but I recently found a number of cases in which people had not been in receipt of benefit for long enough. The academic year starts in September and the person might qualify in December, but the course will have already started, meaning he or she will remain on jobseeker's allowance until the course restarts the following year, costing the State an extra nine months of payments. Is there a mechanism to show leeway in such cases?
Mr. David Dillon
I shall answer the last question first. Courses are tied to the academic year of September to June. We must have qualifying criteria for most schemes or there will be a massive pull onto the live register. The back-to-education allowance was originally intended as a support for the disadvantaged and long-term unemployed persons who needed to get back into education to enhance their employability and re-enter the workforce. It was meant to be a way of moving the normal trajectory of education to reconnect those who had missed out. With the changing nature of education provision, with courses such as PLCs available, and the increased range of provision, there has been a change in demand for the back-to-education allowance. The numbers have moved from a consistent figure of around 5,000 up to 25,000 and we do not know what it will be in the forthcoming year. It is a demand led scheme and we must have some controls. We do not want it to be a subsidy for the normal trajectory through education but we do not want it to be a pull factor for people who are not on the live register and who in the ordinary course of events will not end up on the live register.
Having said that, it is unwieldy and a victim of the structure of the academic year. If you fall the wrong side of the calendar, you must wait for the intake in the following September. That is not sensible.
The back-to-education scheme was chosen for review in the Department's structured review process. We are establishing the terms of reference and the modus operandi of the review. We will be inviting submissions from interested parties and we will take on board the points made in that regard.
My other question relates to the Tús scheme.
Mr. David Dillon
Our people in Tubbercurry operate the Tús scheme. The retention of secondary benefits, such as free fuel and so on, is a function of community employment. To the extent that the Tús scheme is modelled on community employment, that may be encapsulated. I will check out the scheme with the staff in Tubbercurry and come back to the committee with a specific recommendation.
I will allow a short question from Deputy Áine Collins.
I asked a question about the begin again programme.
Mr. David Dillon
I am sorry Deputy. I had a question mark on that. Will the Chair enlighten me on the begin again programme?
The begin again programme is run by the Department of Social Protection, where people who are placed in employment for 12 weeks continue to retain their entitlement and the employer will give them travel expenses of up to €50 a week. From my research I understand this scheme has been rolled out through the country, but obviously not to the extent that- - - - -
It is a Munster thing.
The success rate has been very good, 70% of the people who have been placed in employment through this scheme have retained the job that they were brought in to do.
Mr. David Dillon
We have a devolved regional structural and regions have access to funds such as the activation family support programme, whereby regional co-ordinators can fund projects such as this on a regional level. It may be that the scheme is funded through that, but I do not think it is a national programme. Other co-ordinators around the country may have copied it. The funding is dispersed down and the co-ordinators have the freedom, subject to guidelines, to spend it on programmes.
I understand the funding is coming to an end and I was asked to raise this issue.
Mr. David Dillon
I might talk to the Deputy about this later. If it is within the AFSP, the activation family support programme, this is a structure where sufficient funding is provided to allow a programme to seed, to demonstrate its effectiveness and following on from that it may become a mainstream programme. It is not meant for a scheme where ongoing funding on a year on year basis is required. The funding is provided to demonstrate the effect, establish it and have it mainstreamed afterwards. It may be that they got funding for a three year horizon to get the programme up and running.
I will discuss the matter with the Deputy off-line.
Is a self-employed person, such as an electrician or a plumber, who now has work for one week in every month facilitated in the system? I acknowledge there is the issue of trust. Does such a person have to sell his tools and van, because I understand that is still happening, which is not satisfactory in the present climate? A person might get work for a week or two every month.
Mr. David Dillon
We should not be in the business of telling people to stop. I got a sense that people were being asked to deregister as self-employed persons to show proof of being available for work. If a person is entitled to a jobseekers allowance of a certain amount, be it €188 for themselves and it increases with reference to family and so on, and if their net income - that is gross income minus certified justifiable business expenses, but that does not include the mortgage or the lease hold on the second car - is below the reference rate, he or she is entitled to the balance. To keep it simple, if the net income of a single person is over €188, he is ruled out on means and if it is under €188, he is paid the difference between the assessment and the €188.
It is clear what is allowed.
Mr. David Dillon
What happens is that if a person earned €85,000 last year and came in and said he will only earn €2,000 this year, an investigation will have to be carried out.
That is fair enough.
Mr. David Dillon
If somebody came in who had a large contract with Dunnes Stores to do the air conditioning or the refrigeration and he lost it, where a single identifiable contract is lost, it would be reviewed in that context. It will not necessarily go from the earning of the previous year to zero immediately. If records are kept and it can be shown that the work has diminished to such an extent or the expenses have risen it can be moderated.
Will Mr. Dillon clarify if a directive has gone out to the staff that they should not be telling people to deregister a business?
Mr. David Dillon
I am not involved in that side of the Department, but based on the last hearing, when we discussing back to education, this topic was raised. The sense was that we would take this issue on board and tell staff to stop.
Ms Patricia Molloy
I am sorry to interrupt. A circular has gone out from the RSO to confirm that inspectors should not be telling people to deregister.
We will act on that, because there are still examples of where people are told to deregister.
In the assessment, the Department does not factor in the cost of going to work. I know it is conducting reviews with a view to reform the system but we need to be honest about the cost of going to work.
Mr. David Dillon
The problem with building that cost into an allowance, is that it varies depending on individual circumstances. The cost of child care varies as well as the need for child care. The transaction costs associated with work are a factor, for example one buys lunches, which one would not need at home. We cannot say that these costs apply to everybody on the live register. One can assume that a percentage will have an average transaction cost of €20 to €40, but it will not be activated for everybody. We have matched the minimum wage and two thirds of the average industrial earning against welfare rates and that is applicable to those people.
I thank the witnesses for the presentation, which is very useful. We will send a copy of it to every Member of the Oireachtas, because it deals with a great many myths. We have had a very worthwhile discussion on teasing out the points. I appreciate the honesty and effort of the witnesses in answering the questions. It is clear that communication is an issue at the point of contact. This applies to employers who might not know all the details of FIS. It is clear that improvement have been made, but more needs to be done.
Mr. David Dillon
I thank the Chairman and Members.