I thank the joint committee for giving us the opportunity to speak on the issue of family income supplement. As members will know, the social welfare system provides qualifying persons with a personal rate of payment and, on top of this, increased payments for any dependent adults or children they may have. For example, a lone parent would typically receive €207 per week and a couple with one child, €331. To put the matter in context, a 40-hour week at the national minimum wage results in a gross income of €332 per week, similar to what a couple would receive. A consequence of this is that a lone parent or a couple with children may find that it is not financially worth their while to take up an offer of work or to remain in low wage employment. That is where family income supplement comes in.
Family income supplement, FIS, is administered from our office in Longford which is run by my colleague, Mr. Galvin. It provides financial support for persons who have a dependent child or children with the objective of making sure it is financially worth their while to work. It does this by bridging the gap between whatever income they have from employment and a reference amount of income, set out in the Social Welfare Act. The reference amount depends on the number of children one has. For example, for a person with one child, the figure is €480 per week and for a family with three children, €625. The amount does not vary between lone parents and couples. The amount of FIS paid is 60% of the difference between the income from employment and the reference amount. For example, a lone parent or couple with one child who have an income from employment of €380 per week are €100 per week below the reference amount and receive €60 in FIS. Similarly, a lone parent or couple with three children who have an income from employment of €425 per week are €200 below the reference point and would receive 60% of €200, or €120. That is how the system works.
The entitlement is based on satisfying the means test I have just described and on certification by an employer that the person concerned is in employment. FIS is not payable to those who are self-employed. The income limits were increased significantly in the most recent and earlier budgets. This has enabled more people to qualify and provides a higher level of payment at any given level of qualifying income.
The average payment last year was €89 per week, 12% higher than the average payment in 2005 — approximately €80. The reason for the increase was that the reference amounts were increased in the budget and increased more quickly than average employment income. Therefore, the gap to be bridged is greater. We expect that a further increase in the average payment will occur in 2007, for the same reasons. Last year, we spent €107 million on the scheme. This year we expect to spend €152 million. Part of the increased budget is to provide for the increased rates of payment that flow from the increases in the reference amounts announced in the budget but most of the additional budget is to provide for increased numbers of beneficiaries.
At the end of 2006, more than 23,000 people were in receipt of a weekly FIS payment. This is an increase of over 5,700, or 33%, since the beginning of 2006. The Department received 13,500 new claims in 2006 compared with 8,500 in 2005. This is an increase of 59%. The Department also received 19,500 renewal applications in 2006 compared with 15,000 in 2005. This is an increase of 30%. We have seen large increases in recipient numbers and that led to the processing delays which were brought to our attention last year.
One of the reasons for the large increase in claim volumes is that the scheme has been improved substantially in recent years in order to encourage people with children to take up employment or, if already working, to remain in employment. The reference rates which determine the amount of FIS payable in any individual case are about 50% higher than five years ago while the average industrial wage is about 30% higher than five years ago. FIS is making a more significant relative contribution than it did five years ago.
A second reason for the large increases is the nationwide awareness campaign run by the Department last year. The campaign included advertising on TV, on national and local radio and in the national and regional press. A nationwide poster campaign was also undertaken. The campaign proved very successful and led to a substantial increase in the number of applications.
The Department responded to the increase in the number of claims in three ways. First, additional staff were assigned. Staffing levels are 29% higher than at the beginning of 2006. Second, there was increased funding for overtime. The total amount of overtime worked in the Longford office rose by 62% in 2006 compared with 2005. Third, a review of all processes and procedures was undertaken with the object of reducing delays and minimising disruption to FIS customers. With regard to the third response, priority is being given to renewal claims so that people do not experience a gap in their payment.
As a result of these actions, the number of decisions made on FIS applications in 2006 was 35% higher than the number made in 2005. However, the number of new claims was even greater than this so that we still have a backlog of claims. When we spoke to the joint committee last July that backlog was a cause of concern to the joint committee. I said on that occasion that because it was summer time we had little scope to address the problem but that we hoped to do so after the summer holidays, when our full staffing complement was working. By last September, there were almost 7,000 claims on hand awaiting finalisation. Last Friday there were 5,400. We are making some progress. The current backlog consists of 3,000 new claims and almost 2,400 renewal claims. While this is a considerable improvement on last year, it is nevertheless a higher number than the Department would wish and we need to drive the numbers down further.
The Department is committed to providing a quality service to its customers. This means dealing with applications in a timely manner. We have introduced the measures I have mentioned and we will continue to do whatever we can to improve monitoring and our performance in this area until it is back to where it was before the recent large influx of claims.
