The Social Welfare Bill provides for the implementation of the increases in rates of payment and of the other changes in the schemes of social insurance and social assistance announced in the recent budget. It provides also for increases in the benefits payable under the occupational injuries scheme and for a number of minor improvements in the social welfare code.
This year, the Bill goes beyond the budget proposals in so far as it is designed to give effect to an extension of the maximum period of entitlement to unemployment benefit and pay-related benefit. It contains the consequential provisions for increases in the contributions payable under the social insurance and occupational injuries schemes in order to ensure the adequate financing of the extensive services now provided.
Because this is a technical Bill, and also an annual Bill closely related to the budget, there is an understandable tendency to see it as a matter of routine. I would submit, however, that the Social Welfare Bill each year is one of the more important pieces of legislation debated in the Houses of the Oireachtas. It deals with the financial and administrative provisions for a range of services which, together, cost more than the services provided by any other Department of State. The total number of beneficiaries under the various social welfare schemes amount to almost 900,000 men, women and children even leaving out the 1.1 million children in receipt of children's allowances.
But far more important than any statistics which may be calculated or circulated is the knowledge that, in making provision for social welfare, we are making the nation's collective answer to some of its profound responsibilities. By the way in which a country treats the old, the widowed, the orphans, the sick, and the unemployed it is possible to judge its social values. We must look upon our approach, in the Oireachtas, to those matters as a very great test of the democratic system which we operate.
I have attempted on a number of occasions to stimulate debate and discussion on the future of social welfare and on social policy as a whole. Never has the need for such interest and debate been greater that at the present time when we must take long term decisions about the way in which this country is to develop and advance in the years ahead.
This debate on the detailed proposals contained in the Social Welfare Bill, 1976, is not, perhaps, the most appropriate place for discussion in depth of the proper social components of national strategy. It is, however, an opportunity to remind ourselves of the importance of the social component in our overall national policy.
As indicated in the budget statement, the increases proposed for introduction in April next will amount to 10 per cent in all weekly rates of social welfare payment. This will involve a total expenditure of more than £25 million and will bring the overall outlay on social welfare benefits and allowances in a full year to more than £430 million—nearly three times as much as in 1972-73. Social welfare spending will amount, this year, to about 10½ per cent of the gross national product.
These increases consolidate the advances made over the past three years. In the period between July, 1973, and April, 1976, very substantial increases in all rates of social welfare payments will have been given. The rise in personal rates under the social insurance scheme will have been between 89 per cent and 110 per cent, with child dependant rates up by between 130 per cent and 160 per cent. The growth in maximum personal assistance rates will have been between 96 per cent and 122 per cent, with child dependant rates up by between 139 per cent and 180 per cent. The increase in the consumer price index between February, 1973, and November, 1975, was approximately 52 per cent so that—even taking account of price rises since last November—very substantial real gains have been enjoyed by all social welfare beneficiaries. These gains will not be permitted to be whittled away by inflation since they represent the minimum response of a community that claims to care for its disadvantaged citizens.
The Government have decided that the rates to be introduced in April will be reviewed in the light of the trend of price rises during the year and that necessary adjustments will be made—as was the case in 1975— to guarantee the recipients against the erosion of the purchasing power of their benefits and allowances. The important change made last October when weekly rates were increased for the first time during a benefit year has been recognised as crucial in a time of rapid inflation.
The budget proposals for social welfare involve increases in all social assistance payments. The maximum weekly personal rate of non-contributory old age pension is being raised from £9.30 to £10.25 for persons under 80 years and from £10.50 to £11.50 for persons aged 80 years and over. The rates of pension payable where the weekly means exceed £6 are also being increased—by 10 per cent—up to the point where weekly means exceed £14 and no pension is payable.
I should explain that, for a pensioner with qualified children the means limit is greater than £14 which is the figure shown in the table, and this section enables the table to be extended to cases where the means are not actually shown within the limits of the published text.
The maximum weekly payment for dependent spouses who are not themselves entitled to pension is being increased from £4.65 to £5.10, so that the overall weekly payment for a non-contributory pensioner with a dependent spouse will, at the maximum rate, be increased from £13.95 to £15.35 and, if the pensioner is aged 80 years or over, from £14.70 to £16.15. The allowance paid in respect of a prescribed relative giving full-time care and attention to an incapacitated pensioner is to be raised by 50p a week to £5.70 a week. In addition, increases of pension for the qualified children of pensioners are being raised by 25p a week to £2.75 for each of the first two children and by 20p a week to £2.10 a week for each further child.
The details of these changes and of the new table of weekly means and rates are set out in section 2. I should explain that, for a pensioner with qualified children the means limit is greater than £14 which is the figure shown in the table, and this section enables the table to be extended to cases where the means are not actually shown within the limits of the published text.
Section 3 provides for 10 per cent increases in the personal weekly rates of unemployment assistance bringing them up to £8.90 in urban areas and to £8.55 in rural areas. There are corresponding 10 per cent rises in the rates for adult dependants and for qualified child dependants. Thus, the rate of unemployment assistance payable to a man, wife and child in an urban area will be increased by £1.65 a week—from £16.45 to £18.10. Subsection (2) of this section makes provision for the change announced in the budget in respect of certain smallholders in receipt of unemployment assistance. It is now proposed that the existing rates of unemployment assistance—those are the rates established in October last—will continue to apply in the case of landholders with valuations in excess of £15 whose means are notionally assessed by reference to land valuation for purposes of determining eligibility for unemployment assistance.
Section 4 is designed to give effect to a major amendment of the special scheme of unemployment assistance for smallholders which Senators will agree is long overdue. This special scheme, as Senators are aware, was introduced in 1966 and under it the means of landholder applicants for unemployment assistance are calculated on the basis of the poor law valuation of their holdings. The scheme applies to smallholders resident in specified areas—the whole of Connacht, the counties of Cavan, Clare, Donegal, Kerry, Longford and Monaghan plus the congested parts of west Cork and west Limerick.
What is involved is a change in the notional basis of means assessment under the terms of the scheme. In a situation where farm income has risen by 250 per cent since the introduction of the scheme in 1966 there has been widespread and increasing criticism of the maintenance— unchanged—of means guidelines established ten years ago. Many objections have been made to the whole basis of assessment which is related to poor law valuation levels.
Under this scheme the yearly means deriving from the use of land in specified areas are calculated on the basis of £20 per £1 of the applicant's net rateable land-valuation, excluding buildings. Thus the means of a person with a valuation of £10 would be taken as £200 a year, or £3.85 weekly for unemployment assistance purposes and his entitlement to unemployment assistance—if he had no other means—would be the maximum weekly rate applicable to his family size reduced by £3.85. This "multiplier" of £20 has remained unchanged since the introduction of the scheme.
The amendment now proposed will leave the position unchanged for all smallholders assessed in this way whose valuations do not exceed £15 —that is, some 18,000 of the present total of approximately 23,500 smallholders in receipt of unemployment assistance under the scheme.
For smallholders whose valuations exceed £15 but do not exceed £20, a new notional "multiplier" of £30 will replace the present £20, that is the notional income will be increased by 50 per cent affecting some 2,500 recipients. For those whose valuations are over £20 the new multiplier will be £40, thus doubling the notional income of some 3,000 recipients.
I intend to give very detailed consideration to the long-term future of the smallholders' unemployment assistance scheme in the context of the planning of the reform of all assistance schemes which is included in my Department's development programme.
Under the terms of sections 5 and 6 non-contributory widows' and orphans' pensions are being improved in line with other allowances. The maximum weekly personal rate of widows' pension will be increased from £9.30 to £10.25 a week and the payment for qualified children will be raised to £3.40 a week for each child. Orphans' non-contributory pension will be increased from £6.05 to £6.65 a week. The details of these increases are given in the tables which form part of this section and, as in the case of old age pensions, provision is made to cover cases where means are not shown in the text.
The new rates of widows' non-contributory pension will automatically apply to deserted wife's allowance, to the social assistance allowance for unmarried mothers and to the allowance for prisoners' wives.
Section 7 raises the maximum weekly rate of payment to qualified single women over 58 years from £8.10 to £8.90 a week. The impact of these substantial increases can be more clearly understood by reference to the numbers of recipients involved. Some 153,000 persons will benefit from the increases in the rates of non-contributory old age pension; over 200,000 persons from the rise in unemployment assistance rates; 20,000 from the increases in non-contributory widows' and orphans' pensions; and about 16,000 from the new rates of social assistance allowances. This total of about 390,000 includes both adult and child dependants.
I now come to the increases provided for in the rates of pensions and short-term benefits under the social insurance system. In the case of retirement pension and old age contributory pension the personal rates will go up by £1.10 a week to £12.15 where the pensioner is under the age of 80 years and to £12.85 where the pensioner is aged 80 or over. The allowances for adult dependants are being increased by 70p for those under 67 years and by 85p for those who are 67 years or over. The allowance payable in respect of a prescribed relative giving full-time care and attention to a pensioner is to be increased from £5.20 to £5.70 a week. Thus, the pension for a couple, both over 67 years of age and not yet 80 years of age is being raised to a weekly rate of £21.30—106 per cent greater than the rate being paid three years ago.
The personal rates of widows' contributory pension and deserted wife's benefit are being increased by £1 to £11.00 a week, with the special rate for a widow aged over 80 years being raised to £11.85 a week. Orphans' contributory allowance will be increased by 75p to £8.00 a week.
Provision is made for a rise of £1 a week in the personal rates of disability and unemployment benefit and invalidity pension—the new flat rate will be £10.90 a week. Maternity allowance will be increased to the same weekly figure. All adult and child dependant allowances will rise in line with the general 10 per cent increase. Some examples of the effects of these changes may illustrate what the budget provisions mean to families who depend on social insurance payments.
The contributory widow's pension for a widow, aged under 80 years, with three qualified children will rise by £2.05 a week to £22.10 while a deserted wife with two qualified children will receive an additional £1.70 a week, bringing here benefit to £18.40. Flat-rate unemployment benefit in the case of a man, his wife and three children will be increased by £2.50 a week, from £24.30 to £26.80.
In line with the improvements in the general social insurance system, the Bill also provides for increases in the rates of the various benefits payable under the occupational injuries scheme. The increase in weekly rates will be broadly in line with those provided for in the various social insurance categories.
Provision is being made for increases in the special rates of unemployment benefit payable in certain circumstances where unemployment continues beyond 156 days. These rates are related to the urban levels of unemployment assistance increases which are dealt with in section 3 of the Bill. The increases which will come into effect in April are intended to retain the parity between the two rates. The basic rate goes up by 80p, that for an adult dependant by 60p with corresponding increases for qualified child dependants.
The total number of persons who will benefit from these social insurance increases amounts to about 490,000, including both adult and child dependants. Of these, some 138,000 will benefit from the rise in rates of sickness benefit and 133,000 from the increases in unemployment benefit. The number of contributory old age and retirement pensioners is in the region of 108,000 and there are about 81,000 recipients of contributory widows' and orphans' pensions. Some 3,500 maternity allowances will be paid at the new higher rates. There will be about 4,000 beneficiaries from the increased levels of deserted wife's benefit.
I have kept the operation of the unemployment benefit and pay-related benefit schemes under very careful review and, having regard to the overall unemployment situation, I made certain proposals to the Government which were approved. The proposals which the Government approved were that the maximum period for which unemployment benefit may be paid to persons who are at present entitled to a maximum of 312 days' benefit will be extended by a further 78 days to 390 days. The rate of benefit payable during this extra three months is to be the same as that which applied for the 156 days prior to the exhaustion of the 312 days' benefit.
Under the transitional provisions contained in section 11 this significant extension of the unemployment benefit scheme will apply to persons who had exhausted their 312 days' unemployment benefit entitlement within 78 days of the operative date of the extension and who are still unemployed when the extension enters into force. For instance, a person who exhausted 312 days' benefit 30 days before the operative date, will get an extension of 48 days' unemployment benefit. This extension of flat-rate unemployment benefit will provide badly-needed financial support for many families who continue to be affected by the prolonged economic difficulties.
The Bill also makes provision for an extension—by a further 78 days to 381 days—of the maximum period for which pay-related benefit may be paid. The proposed weekly rate of pay-related benefit during this further extension of the system is 20 per cent of reckonable weekly earnings between £14 and £50. Pay-related benefit is payable together with unemployment, disability and maternity benefit.
The extension will, in the same way as I have explained for flat-rate unemployment benefit, apply in the case of persons who have exhausted their full pay-related benefit entitlement within 78 days of the operative date of the extension and who still retain their entitlement to flat-rate benefit.
I am convinced that the success to date of the extended pay-related benefit system in terms of reducing the financial impact of sickness and unemployment has been of the greatest social and human importance. It is out of the question that we should allow our fellow-citizens who have in effect been betrayed by the inefficiency and unequal working of our economic system to suffer substantial deprivation.
In introducing the Social Welfare (Pay-Related Benefit) Bill, 1975, in the other House I stated that an analysis of the operation of pay-related benefit refuted absolutely the criticism that this system provided some form of serious disincentive to work. I pointed out then that the pay-related benefit scheme does not give the average unemployed man more than he could get if he were at work, but that it does keep his head above water for a reasonable time. It is the purpose of all income-maintenance payments to cushion a person to the fullest extent possible if he becomes unemployed or ill and this purpose is fulfilled by pay-related benefit under the present social insurance code.
Senators will agree that the progressive development of our social welfare services demands a continual process of review and, where necessary, of reform and change. We have, in three years, brought about a really major advance in social welfare provision and have established a new basic level of provision which cannot be reversed. Further improvements and structural changes in the system are being worked on in the Department of Social Welfare at present in active pursuit of the policy of the Government.
The continuing review of the system has led, in this year's budget, to a change in the arrangements relating to the range of benefits available to unemployed persons and section 12 of the Bill is designed to facilitate the making of regulations to implement this change by restricting the total amount of the benefit payable to a wholly unemployed person to 85 per cent of net current earnings.
This decision arises from a detailed study carried out by an inter-Departmental working group set up by the Government to investigate and assess the possible disincentive effects of benefits and concessions available to unemployed persons. The establishment of this working group followed a report prepared for me within the Department of Social Welfare on the working of the pay-related benefit system.
The study carried out by the working group was intended to look at the effects of the whole range of benefits and concessions which may be available to unemployed persons. These include—in addition to unemployment benefit, pay-related benefit and unemployment assistance which are the direct concern of my Department— the weekly redundancy payments scheme, tax rebates, relief from tax of social welfare contributions and, in certain cases, reduction of differential rent. If inequalities exist, if there are situations in which people can become caught in the "welfare trap" where an unemployed worker could suffer financially by seeking and accepting a reasonable job offer— then this can arise only through an interaction of a number of the available concessions. This was the general conclusion of the working group and one which gives rise to very serious implications.
The working group concluded that it is not possible to say whether, or to what extent, the levels of income available to the main groups of unemployed persons do act as disincentives to seek employment. Incentive and disincentive relate to personal attitudes as much as—and perhaps even more than—to money.
Research being carried out separately for my Department indicates clearly to me that unemployed men and women want to work and that there is little or no evidence that many unemployed persons see their situation as a tenable or lasting way of life, despite improved benefits. This is exactly what any reasonable person would expect.
The working group were of the view that the basic objective of the pay-related benefit scheme to which I have referred—to ensure that workers do not suffer a serious drop in disposable income on becoming unemployed—is being achieved even without the intervention of the other available scheme.
The study carried out revealed certain anomalies in the concurrent working of a number of schemes and the logical recommendation was made that there should be a rationalisation based upon the establishment of a unified wage-stop. This will now be introduced.
The new approach will be brought into effect by appropriate regulations which will be made shortly. In general, the procedure will be along the following lines. When a worker becomes unemployed, his or her average net weekly income prior to unemployment will be calculated on the basis of the income tax cessation certificate with appropriate deductions for tax and social insurance contributions. A figure equivalent to 85 per cent of this average will then become the wage-stop level.
The flat-rate unemployment benefit, pay-related benefit and redundancy weekly payments where applicable will be calculated in the normal way. Where the total of these payments exceeds the maximum permissible income the total amount payable will be reduced accordingly. Where, however, the person concerned is entitled only to flat-rate unemployment benefit no reduction in this amount would be made.
If the person concerned is entitled to a rebate of income tax an appropriate reduction in his total payments will, if this is necessary, be made to keep him within the maximum laid down. His position will have to be further reviewed on cessation of the tax rebates.
Subject to the other conditions provided for, the maximum weekly amount of benefit payable by way of flat-rate unemployment benefit, pay-related benefit and weekly redundancy payments to a person who is eligible for weekly redundancy payments, would then be £50.
The new approach will apply only to new claims received as and from an appointed day. It will do away with an anomaly which has arisen in a large part due to the operation of a number of relatively new schemes. It does not result from a widespread abuse and certainly does not represent a general level of benefits which is destroying the will and the incentive to find work. An adjustment is necessary and it is being made.
Much, indeed most, of the public criticism of the pay-related benefit system has been ill-informed, crude and confused. It has come in the main from persons and groups which have shown little or no concern for the poor or for the unemployed. I continue to be contemptuous of critics who have never faced, and who will never face, unemployment and its attendant stresses and strains. My job is to make provision for those who do face these personal hardships and it is my concern to ensure that they are given every reasonable help.
The purpose of pay-related benefit is to improve on the position under the old flat-rate system by relating both benefit and contributions to earnings to some degree and to provide rates of benefit which will better enable persons to maintain, during sickness and unemployment, a standard of living reasonably close to that to which they have been accustomed.
It is my opinion, based on an assessment of its working over a year and a half, that the pay-related benefit system has achieved that purpose.
The Bill contains one or two reform measures which have been designed to deal with gaps or anomalies in the existing legislation.
There is provision for the payment of a benefit, at a rate equal to the contributory widows' pension, to a widower whose wife immediately prior to her death had been in receipt of a retirement pension which included an increase in respect of him because he was wholly or mainly maintained by her because of his physical or mental infirmity. This will bring the retirement pension scheme into line with the contributory old age pension scheme.
Section 18 of the Bill deals with the payment of child dependant allowances to recipients of contributory widows' pension. At present these allowances are payable in respect of children who normally resided with the widow or the late husband prior to the date of the husband's death and also in respect of the children, grandchildren or step-children of the widow or of her late husband, or adopted children, who came to reside with the widow after her husband's death. The Bill provides for payment of allowances in respect of all qualified children normally residing with the widow regardless of the date on which they became normally resident with her. A similar provision is being made in respect of the scheme of non-contributory widows' pensions.
I come now to the question of the increase in the rates of social insurance contributions which cover all benefits of the social insurance system. The increase in the contribution this year must provide for the appropriate share of the increases in benefits and pensions provided for in the Bill and for the general improvements to be made in the social insurance scheme. It must also include an element for the part financing of the extension of the unemployment benefit scheme for a further three months to which I have already referred.
Provision must also be made for the increases in contributions arising from the decision announced in the budget statement to transfer £8 million of charges from the Exchequer subsidy to the social insurance stamp as part of a phased reduction of the Exchequer contribution.
The overall increase in the case of contributions which count for all benefits involved is £1.53, of which the employer will pay £1.03 and the employee £0.50. Lesser increases will apply where the rates of contribution do not cover all social insurance benefits.
The Bill provides also for the continuation this year of the special increase of 31p made in the Social Welfare Act, 1975, to meet the financial implications of the abnormal unemployment situation.
The ordinary rates of contribution covering the social insurance services administered by my Department, including the increase of £1.53 and the special unemployment increase of 31p, will thus rise to £5.64 a week for men, of which the employer will pay £3.50 and the employee £2.14. For women the new ordinary rate will be £5.56, of which the employer will pay £3.48 and the employee £2.08.
The rates of voluntary contribution will be correspondingly raised to £1.10 a week at the low rate and £2.83 a week at the high rate. Section 15 of the Bill provides for an increase of 39p to £1.73 in the new rate of voluntary contribution introduced in the Social Welfare Act, 1975, to cover the situation of a certain category of insured persons affected by the abolition from April, 1974, of the remuneration limit for the insurability of non-manual workers. Contributions payable in respect of occupational injuries insurance are to be increased by 2p a week to 14p for a male employee, and 11p for a woman— all borne by the employer. All of these new rates of contribution will be effective from Monday, 5th April, 1976.
The budget this year was framed by the Government in the context of the very real difficulties arising from what is by far the worst economic crisis faced by the nations of Europe for 40 years. In the present economic circumstances the major objectives of the budget might well have been restricted to tackling economic problems and at the same time seeking to achieve a reasonable balance in the finances of the State, and such considerations have indeed been fundamental to the budget strategy of the Government.
But from the beginning of the budgetary exercise the Government had another priority goal. It was made clear before Christmas that, whatever the difficulties, the interests of the less well-off in the population would be protected in the provisions of the budget.
That pre-budget commitment was of the greatest importance and by making it the Government were concerned that it should be understood and accepted in the national community. What was at stake was the maintenance of the basic position of many thousands of men, women and children who are deprived because of age, illness, widowhood or unemployment.
It was accepted by the Government that in a time of recession there is a special community responsibility to ensure that the poor are not called on to bear burdens which can be, and must be, borne by those in more fortunate circumstances.
I recognise that the Bill now before the House reflects the impact of the current economic situation. However by far the most important consideration is that the progress made to date in improving the level of payments should be maintained. This has been done.
I am confident that the Bill will be welcomed by Seanad Éireann and I ask for expeditious consideration of it so that its provisions can come into operation next week.
