I thank the Chairman and the members of the joint committee for the opportunity to discuss the single working age assistance payment which I will refer to as the single payment as it is less of a mouthful. I will focus on the rationale for the payment, the work completed to date and the next steps. I emphasise that while the Department has done a good deal of work on the single payment, key elements remain to be completed and these will be further developed over the coming months prior to decisions being taken by Government on the matter.
Ireland's social welfare system has evolved in a somewhat ad hoc way over many decades in response to different influences and issues at different times. As a result, specific payments have been designed and implemented to meet the needs of certain groups of individuals. Examples include payments for jobseekers, people with disabilities and people parenting alone. Such an approach has allowed the social welfare system to respond in a flexible manner to the needs of specific groups. However, it has also created a complex system which treats individuals in receipt of social welfare supports differently depending on the type of payments they receive. The differences are to do with means testing, disregards, entitlement to secondary benefits, requirements to seek work and so on.
Furthermore, and in spite of flexibility within the system, trends in the social welfare population of people of working age indicate persistent welfare dependency and poor outcomes for some people in spite of an earlier sustained period of economic growth. In considering the extent to which the structure of the social welfare system has contributed to this position the question must be asked as to whether a reconfigured social assistance system based on a single payment could improve the outcomes for people of working age.
These considerations were informed by work carried out by the National Economic and Social Council, NESC, and reflected in its report, The Developmental Welfare State, published in 2005. That highlighted the need for greater interaction between services, income support and activation measures and saw these as developmental for families, communities and the economy. A recurring theme in the NESC report is that the current contingency based payments to people of working age can operate to confirm a person's status as someone outside of the workforce rather than as an unemployed member of it.
In November 2010, the Department of Social Protection published a report on the desirability and feasibility of introducing a single social assistance payment for people of working age, the link to which is welfare.ie/EN/Policy/CorporatePublications/Finance/exp_rev/Pages/WorkingAgeReport.aspx. This report addressed issues around the desirability of such a payment, its role in social welfare reform and the framework that would need to be put in place for such a payment to exist. The report paid particular attention to the design of a single payment and the associated issues that would have to be addressed were it decided to implement it. The report concluded that it is both desirable and feasible over time to move to a single payment structure. That is not saying it would be easy. The report also noted that the availability of other supports and services to recipients of the new single payment would be essential to ensure that these individuals will be in a position to avail of opportunities to move from relying on social welfare support.
The introduction of the single payment would represent a fundamental overhaul of Ireland's social welfare system. It is based on the principle that people are given or directed to the supports or services they need to enable them take up employment or avail of education and training opportunities. This is matched by a requirement that they avail of the support, that is, there is a right to a payment and a matching responsibility to engage.
The overall objective, therefore, in introducing the single payment is to improve outcomes for people of working age from a poverty and social inclusion perspective and, in so doing, to ensure that changes to the social welfare system make work pay. It is not all about work because we recognise that it may not be feasible for everybody to be in paid employment.
The restructuring of the Department, including the recent merging of the community welfare service, the employment and community services of FÁS and the development of the national entitlement and employment service will support the achievement of the objectives underpinned by the introduction of the single payment.
The Department's feasibility report on the single payment was referenced in the agreed programme of financial support with the troika with a commitment that: "The Department of Social Protection will build on their recent studies on working age payments, child income supports and disability allowance with a view to producing, after consultation with stakeholders, a comprehensive programme of reforms that can help better target social support to those on lower incomes, and ensure that work pays for welfare recipients". Specifically, the Department is to produce this comprehensive programme of reforms by the end of March this year. This commitment was reinforced at the recent meetings with the troika.
The single payment aims to create a single social welfare payment that would cover all people of working age including those who would currently be classified as unemployed, sick, disabled, or parenting alone.
I emphasise that while no decision has yet been made, it is envisaged that the single payment may possibly cover the following seven payment types: jobseeker's allowance; disability allowance; one parent family payment; farm assist; blind pension; widow-er's non-contributory pension; and carer's allowance.
The rationale for the single payment is twofold. First, introducing it is to give effect to the policy principle that people have both rights and responsibilities - a right to a payment and a responsibility to engage as part of the activation agenda. In order to support the activation of recipients of a single payment, the provision of the necessary supports and services to enable them to take up employment is essential. This will involve providing individuals with access to education and training supports and other secondary services such as child care and disability supports.
Second, the single payment provides an opportunity to address the current complexity of the social welfare system by streamlining a number of payments for people of working age. This will involve introducing a single means test, standardising the conditionality of the payment and simplifying the relevant income disregards that apply. Cost and efficiency gains from simplification of administrative structures and collapsing multiple payments into a single payment are also possible. The reduction in complexity is not just an administrative nicety. The evidence is that complex systems are difficult for everybody to understand and affect people's choices. The introduction of the single payment will, therefore, be a key development in the pursuit of a more focused and purposeful activation agenda which will be delivered under the auspices of the National Employment and Entitlements Service.
In July 2011 the Department held a consultation seminar with interest groups, the social partners and other Departments. The aim of the seminar was to provide participants with an overview of the Department's report on the single payment and give people the opportunity to make a contribution towards deciding the future policy direction and, of course, hear their concerns. At the seminar Mr. John Martin of the OECD made a key address which supported the proposal but also alerted us that it would not be an easy path and as such that there would be difficulties.
The stakeholders broadly welcomed the concept of introducing the single payment. However, several of them expressed concern about the possibility that certain claimants, particularly individuals in receipt of disability allowance and the one-parent family payment, might experience financial losses under the single payment scheme. Concern was also expressed about whether the system in the current economic climate could deliver the appropriate supports and services to recipients to enable them to progress to employment, education or training. These concerns have been noted by the Department. A report on the consultation process is on our website and I have made the link available to members.
The Department has established a working group which has commenced work on designing the single payment. Separately, intensive engagement with other Departments is taking place on the supports and services required. The Department will develop an implementation plan for the introduction of the payment on foot of the outcome of the deliberations of the working group and its engagement with other Departments. This implementation plan and the structure of the payment will then be presented to the Government for its consideration and decision.
While a significant amount of work has been done on the development of a single payment, many issues still have to be worked through and decisions made by the Government. The Department is committed to completing this work in order that, subject to the approval of the Government, an implementation plan can be submitted to the troika by the end of March. I would welcome the views of committee members. We are happy to answer any questions raised in so far as we can.