The purpose of this Bill is to give effect to the extensions and improvements of the social insurance and social assistance schemes which were provided for in the budget. The Bill also provides for increases in occupational injuries benefits and for improvements in the scheme of voluntary insurance and the school meals scheme operated by urban local authorities.
While representing a further advance in the Government's social programme, the provisions of this Bill also fulfil the undertaking given in the White Paper on A National Partnership, which stated that “the Government believe that those who are dependent on social welfare payments should be cushioned against price rises and should also be assured of at least an adequate maintenance of their position vis-à-vis other sections of the community”.
The increases in social welfare payments provided for in this Bill do not just keep pace with inflation. They represent a real increase in the value of these payments and they are in line with the Government's policy of improving the position of all social welfare recipients.
Total Exchequer expenditure on social welfare, that is on the services administered by the Department of Social Welfare in 1975, is now estimated at approximately £210 million, compared with £92 million in 1972-73. This increase of more than 125 per cent far outstrips the increase in the cost of living over that period and is an indication of the very substantial expansion and improvement of our social welfare services and of the Government's concern for the disadvantaged and less well-off section of our community.
In particular the provisions of this Bill provide for a substantial increase in the rates of non-contributory old age and blind pensions, a further easing of the means test and a further reduction in the qualifying age for pensions from 68 to 67 years. The maximum weekly personal rate of non-contributory pension is being raised from £7.30 to £8.85 for persons under 80 years and from £7.85 to £9.55 for persons aged 80 and over. The maximum weekly payment for dependent spouses who are not themselves entitled to pension is being raised from £3.65 to £4.40 so that the overall weekly payment for a non-contributory pensioner with a dependent spouse will at maximum rates be increased from £10.95 to £13.25 or, if the pensioner is aged 80 or over, from £11.50 to £13.95. In addition increases of pension for qualified children of pensioners are being raised by 40p a week to £2.35 for each of the first two children and by 30p a week to £1.80 for each further child while the payment for a prescribed relative looking after an incapacitated pensioner is being increased from £4.15 to £4.95.
I have already mentioned the further easing of the means test. The disregard of the first £6 of assessed weekly means, instead of the first £5 at present, will again improve the position of existing pensioners who have less than the maximum pension and will enable many persons who are at present debarred on grounds of means to qualify for pension. The increase in the amount of means which can be disregarded for pension purposes will apply only in the case of means in the form of current income. Generally it will not apply where the means take the form of ownership of capital as the existing provisions in regard to the assessment of means in that respect are sufficiently liberal.
In addition the reduction in the qualifying age for old age pension from 68 to 67 years will enable some 10,500 new pensioners to qualify.
I may mention here that in consequence of the reduction in pension age to 67 all persons of that age, whether pensioners or not, will now become entitled to benefit from free travel arrangements. The free electricity and free television licence concessions will also be available to qualified pensioners over 67 years.
The rates of non-contributory widows' and orphans' pensions are being similarly improved. The first £6 of a widow's weekly means will be ignored and the maximum weekly personal rate of pension will be increased by £1.55 to £8.85. The weekly amounts payable in respect of qualified children are being increased by 55p to £2.95. Together with the existing amounts of a widow's earnings which may be disregarded in assessing her means, the ignoring of the first £6 of weekly income will allow a widow greater scope for supplementing her income by earnings. Thus a widow with no other means who has two children could earn up to £9 a week and still draw the new maximum pension of £14.75 for herself and her two children.
The increased weekly rates and the easing of the means test will apply also to the allowances for deserted wives, unmarried mothers and prisoners' wives.
The weekly rates of non-contributory orphan's pension are being increased by £1 bringing the maximum rate to £5.75.
Senators will no doubt recollect that a scheme of social assistance allowance for single women who had attained the age of 58 years was introduced last year, the maximum rate of allowance being the same as the urban rate of unemployment assistance. The weekly rate of allowance in this case is being increased by £1.35 to a maximum of £7.70 and will accordingly remain in line with the maximum rate of unemployment assistance for single persons in urban areas.
I come now to unemployment assistance. The maximum weekly rates of payment are being increased by £1.35 to £7.70 for persons in urban areas and by £1.30 to £7.35 for persons resident elsewhere. The amount payable for an adult dependant is being increased by 95p bringing the maximum rate for a married couple to £13.25 in an urban area and to £12.80 elsewhere. The additions for children will go up to £2.35 for each of the first two and to £1.80 for the third and each subsequent child.
There are increases also in the general scheme of children's allowances. The monthly rates of the allowances are being increased by 30p for the second and each subsequent child, representing in all some 720,000 children. The rate for the first child will remain at £2.30 but the rate for the second child will become £3.60 and will be £4.35 for the third and each subsequent child.
Substantial increases in the rates of contributory pensions and in the rates of unemployment and disability benefit and other short term social insurance payments are likewise provided for in this Bill. In the case of retirement pension and old age contributory pension the personal rates go up by £2 to £10.50 a week, where the pensioner is under the age of 80, and to £11.10 a week where the pensioner is aged 80 or over. The allowance for an adult dependant is being increased by £1.15 a week where the dependant is under 67 years, and by £1.40 a week in the case of a dependant who is 67 years or over. The payment for a prescribed relative looking after an incapacitated pensioner is being increased from £4.15 to £4.95 as in the case of non-contributory old age pensioners. The personal rates of widow's contributory pension and deserted wife's benefit are being increased by £1.70 to £9.50 a week. In the case of a recipient of widow's contributory pension who is aged 80 or over the increase will be £1.80 a week. The new weekly rates of flate-rate unemployment and disability benefit will be £9.40 for a single person, an increase of £1.65, while the allowance for an adult dependant will be increased by £1.05 to £6.10 a week. Maternity allowance is also being increased by £1.65 to £9.40 a week.
The additions to pensions and other benefits paid in respect of qualified children are also being increased. In the case of widow's contributory pension and deserted wife's benefit the increase will be 60p for each child. In the case of the remaining pensions and benefits the increase will be 45p for each of the first two children and 40p for each other child.
Senators may be interested in some examples of the effect of the various increases in pensions and other social insurance benefits. An old age contributory pensioner, for example, who is married and whose spouse is aged 67 or over, will receive at the maximum rate £18.40 a week as against £15 at present. But if aged 80 or over such a pensioner will receive £19 as against £15.60 a week at present. These examples cover the case of a retirement pensioner also.
A widow with three qualified children will get £18.95 a week compared with £15.45 at present, while one with five qualified children will get £25.25 as against £20.55.
A married man in receipt of unemployment benefit or disability benefit who has two qualified children will receive £20.80 a week as compared with £17.20. A man with five qualified children will receive £27.40 a week as against £22.60 at present.
The qualifying age for contributory old age pension is also being reduced to 67 years. This reduction affects not only the qualifying age for old age pensions but also the maximum age up to which short-term benefits, such as disability and unemployment benefit, can be paid. The age reduction means also that liability for the payment of social insurance contributions will cease at 67 years instead of at 68 as at present. In this connection a number of "saver" clauses have been included in section 10 to protect the position of existing pensioners and persons approaching the age of 68 years. These saver clauses are similar to those enacted in last year's Social Welfare Act which reduced the pensionable age from 69 to 68 years.
In line with the improvements in the general social insurance system, the Bill provides also for increases in the rates of various benefits payable under the occupational injuries scheme. These increases will be broadly in line with those applicable under the other social insurance schemes.
I come now to the provision to be made to help meet the cost of the increases in the general rates of social insurance pensions and other benefits. I refer of course to the necessary increase in the social insurance contribution. This year the total increase in the contribution will compromise two elements, of which the first will be in respect of the increases in benefits and pensions and the other general improvements to be made in social insurance schemes as provided for in this Bill.
The second element of the increase is directly related to the current unemployment position. In the course of his budget statement the Minister for Finance indicated that in view of the likely trends in employment in 1975 the Government had decided that it would be prudent to make evailable an extra £15 million to meet the very greatly increased additional volume of unemployment benefit and unemployment assistance claims arising from the present difficult and continuing economic situation. The Exchequer, the Minister stated, would provide £7.1 million of this sum and the balance would be raised by way of a special increase in the social insurance contributions. This special increase, I would like to emphasise, will be a strictly temporary one to meet the current abnormal unemployment position.
The increase in the ordinary rate of social insurance contributions required in respect of the first element will be 93p, to be shared as to 63p by employers and 30p by employees. The amount of the special increase to which I have referred will be 31p, to be shared as to 21p by employers and 10p by employees. Thus the total increase will be £1.24 of which 84p will be borne by employers and 40p by employees. Increases of less than £1.24 will be applied to those rates of social insurance contributions which do not cover all the benefits of the system.
To meet the cost of the improvements in payments under the occupational injuries benefit scheme a small increase of one penny in the amount of the contribution payable to the occupational injuries fund by employers only will also be necessary. The new rates of contribution will thus be 12p for a male employee and 9p for a female.
The new ordinary rate of contribution covering the social insurance services administered by my Department will accordingly be £4.23 for a man, of which the employer will pay £2.59 and the employee £1.64. For a woman the new ordinary rate will be £4.12, of which the employer will pay £2.54 and the employee £1.58.
I want, at this point, to say something concerning the financing of the social welfare and health services, and of the social welfare services administered by my Department in particular. The gross cost in the present financial year of the social welfare and health services will be in excess of £380 million. Where public expenditure is at such high levels it is obviously necessary to give careful consideration to all the implications. It is essential that we should seek to obtain the best return, in terms of genuine social service, for the money spent, and in particular we must study the effects of what we are doing in order to ensure that adequate funds are directed to the relief and eradication of particular hardcore problems.
In this country the major share of the cost of the social welfare and health services is borne by the Exchequer. It might be thought that this would imply a major element of vertical redistribution of income, but a very high proportion of the general taxation raised in this country comes from various forms of indirect taxation, and such taxation — as well as flat-rate social security contributions — tends to be regressive.
In order to ensure a more equitable approach, to bring our systems more into line with the situation in the European Community and to concentrate Exchequer outlays more directly on areas of real need, it is now the intention of the Government that the present system of financing these services should be restructured over a period of years. Accordingly the Tánaiste has arranged to have this whole area examined and appropriate proposals will be formulated as soon as possible.
The fact that a Green Paper concerning a national income-related pension scheme and the question of providing social security pension coverage for the self-employed is to be published during the year will of course have a direct bearing on this matter.
Provision is also included in the Bill to rectify the situation which arose during the abolition of the remuneration limit for compulsory insurance of non-manual employees. Under existing legislation a voluntary contributor who becomes an employed contributor ceases to be a voluntary contributor. When the remuneration limit for compulsory insurability of non-manual workers was abolished with effect from 1st April, 1974, persons in the public sector who had until then been voluntary contributors paying contributions reckonable, inter alia, for old age contributory pension, retirement pension and death grants became compulsory insurable as employed contributors but only for widow's and orphan's pension, deserted wife's benefit and occupational injuries benefit. They were accordingly precluded under existing legislation from continuing to pay contributions as voluntary contributors for old age contributory pension, retirement pension and death grant. Provision is made in the Bill to enable such persons to continue as voluntary contributors so that they may continue their insurance cover for the wider range of benefits referred to.
In his budget statement the Minister for Finance announced also that the weekly rates of the various pension, benefit and assistance payments would be further increased with effect from the beginning of October next following a review of the position in the light of the rise in the cost of living. As Dáil Éireann may not be in session in the months immediately preceding October it is proposed to effect this increase by regulation and the Bill, accordingly, provides that the Minister for Social Welfare, with the consent of the Minister for Finance, may by regulation increase the weekly rates of benefit and so on. Provision is included in the relevant section of the Bill to ensure that the regulations will be laid before each House of the Oireachtas as soon as may be after they are made. The regulations will of course be annulled if a resolution accordingly is passed by either House within the next 21 days on which that House has sat after the regulations have been laid before it.
As the Minister for Finance said in his budget statement, the October increase will be designed to maintain the real value of the level of payments established in April. The erosion of the purchasing power of welfare payments in a period of rapid inflation is a cause of concern and the Government are determined to protect social welfare recipients against such erosion.
The proposed further increase in the rate of pensions, benefits and assistance payments next October is in fulfilment of the commitment to that effect given in the White Paper on A National Partnership.
I am happy to announce also an improvement in the school meals scheme operated by urban local authorities. Under existing legislation such authorities are empowered to provide school meals for children attending national schools in their functional areas. With the growth of local authority housing on the fringe of their areas large numbers of children who are living in an urban authority area or in dwellings outside the area which are owned or have been provided by the local authority in question are attending national schools which have been built just outside the functional area of the urban authority. Consequently these children cannot be provided with school meals as the scheme stands at present.
To correct this I propose to amend the School Meals Act so as to provide that where not less than half of the children attending a national school outside the functional area of an urban local authority reside either in that area or outside that area in dwellings owned or provided by the urban authority, that authority may determine that school meals may be provided in the national school in question. In this connection the instance that will immediately come to mind is the housing area of Ballymun. In that district the corporation have built more than 2,000 houses in the county area and there are some 4,500 children attending national schools which are just outside the city boundary.
In the past two years the improvements in social welfare services announced in the budget came into effect from the beginning of July. Previously increases in the rates of social assistance payments were payable from August, while increases in the rates of social insurance payments did not become effective until the following October. This year, because of the change in the financial year which now coincides with the calendar year, all the improvements proposed in the Bill now before this House will come into effect much earlier, that is from the beginning of April next, and a second round of increases will, as I have already mentioned, be payable from October next.
These combined increases will add considerably to the overall expenditure on social welfare. On the social assistance side, including children's allowances, the increase in cost to the Exchequer will be £22.4 million up to the end of December, 1975. On the social insurance side it is estimated that the gross increase in expenditure from the social insurance fund to the end of December, 1975, will be £26.6 million, of which £23.7 million will be met by increased contribution income leaving £2.9 million to be borne by the Exchequer in that period. This means that the total cost to the Exchequer of the increased benefit and assistance payments and the other improvements provided for in this Bill for the period April to December, 1975, will be £25.3 million.
As I have already indicated, the Exchequer will, in addition, provide £7.1 million towards the estimated cost of additional unemployment benefit and unemployment assistance claims during the same period. The special contribution increase of 31p will provide a further £7.9 million towards the cost of the additional claims for unemployment benefit. The Exchequer will, of course, also meet the cost of the extension of the schemes of free travel, electricity and television licences which from April next will result from the further reduction in pension age. This is estimated at £430,000.
Bills such as this contain a number of provisions which are amendments of existing legislation and are necessarily technical. I hope that Senators will have been helped in their examination of the Bill by the explanatory memorandum which has been circulated with it. In this regard I am more than conscious of the complexities of our social welfare legislation at this point in its development. The Bill's title of itself indicates the range of legislation governing this area — with reference being made to Acts including the Old Age Pension Acts and the Education (Provision of Meals) Acts and covering the period from 1908 to 1974. There are approximately 60 basic Acts and at least 350 regulations governing the various social insurance and assistance schemes administered by my Department.
I have had a start made in my Department on the codification of existing social welfare legislation. This will be a lengthy and difficult task, but one which should ideally lead to the production of a new consolidated Social Welfare Act. The work will be pushed on with all possible speed.
I am pleased to recommend this Bill for the favourable consideration of Seanad Éireann.