The Order Paper contains an error. No. 4 should read "Committee and Remaining Stages" instead of "Report Stage". I am sure Senators understand.
Vol. 178 No. 29
The Order Paper contains an error. No. 4 should read "Committee and Remaining Stages" instead of "Report Stage". I am sure Senators understand.
I move amendment No. 1:
In page 3, before section 1, to insert the following new section:
"1.—The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of abolishing the means test for carer's allowance.".
I welcome the Minister to the House. This amendment reflects the points I made about carers on Second Stage last night. Along with many people, I firmly believe that the service provided by carers is second to none. Carers go above and beyond the call of duty. Unfortunately there are circumstances which do not allow people the opportunity to look after themselves to the fullest extent. In many cases neighbours, relatives and others are providing that care. While I accept it would be expensive to abolish the means test, we should contrast this with the ten millionaires who did not pay income tax. Potential exists to raise revenue to fund this initiative.
If what the Minister said on the television programme "The Political Party" is true, he should be willing to take a chance with this critical area. I believe his ministerial record will be judged on this issue. Eliminating the means test and allowing proper latitude in financial assistance from the State would be a powerful decision to take. Not only do carers do the State a service, they also save the State considerable expense. If these people were not looking after those who need care, it would be very difficult for the State to do so. All our community hospitals are full to capacity and have lengthy waiting lists. Thankfully not everybody needs to be hospitalised as they are receiving care from people who by their very nature are selfless. Subjecting them to a means test is unfair when we consider their work behind the scenes.
This is the third Social Welfare Bill to be taken in this Seanad. On the previous occasions when the former Minister for Social and Family Affairs, Deputy Coughlan, was here I tabled similar amendments. I will continue to do so to highlight the issue until we get a satisfactory conclusion and the means test is abolished. I hope the Minister will look positively on my amendment and I will be interested to hear his reply.
I support the amendment. There is nothing like a personal story to bring home how these rules impact on people's lives. I know a widow whose husband has been dead for 12 years. She has been caring for her daughter who is in her 30s and suffers from Down's syndrome. As a result of the fact that she is in receipt of a widow's pension she does not qualify for carer's allowance, which seems unfair. Such personal implications remind us how mean the means test is. Does the Minister know how many people are excluded form the carer's allowance because of the means test? How much would it cost to abolish the means test?
I thank the Senator for tabling this amendment, whose purpose is primarily to allow debate on the matter. It would not be normal to insert into legislation a requirement to issue a report. I have no difficulty in adhering to the spirit of the amendment requiring me to report to the Houses on the means test for carer's allowance, which I am happy to do. While it does not require an amendment in the legislation as such, I know it has been tabled more for technical purposes.
Some 23,700 carers are in receipt of carer's allowance and carer's benefit, which represents an increase of 157% since June 1997. Total expenditure has increased by 310% from €46 million to €190 million. Substantial resources have been given to carers and I am committed to this area. This budget produced more than €40 million for carers. Recipients of carer's allowance and carer's benefit are entitled to the rate increase of €14 per week announced in the budget. I also made provision in the budget for an increase in the income disregard for the carer's allowance from €250 to €270 for a single person and from €500 to €540 for a couple. We estimate this will allow a further 1,000 carers to qualify for the carer's allowance. Some 2,400 carers will receive an increased payment.
This increase will ensure that a couple with two children with a joint income of approximately €30,700 will qualify for the maximum rate of carer's allowance. A couple with two children with a joint income of approximately €49,200 will qualify for the minimum rate.
Both Senators asked me for the cost of abolishing the means test. It would cost an estimated €160 million each year to abolish the means test and pay the maximum rate of allowance, including the respite care grant and the free schemes, to the 9,170 who are estimated to be providing full-time care and are not currently receiving the carer's allowance or carer's benefit.
Members may be aware of a recent CSO study which provides a breakdown of the number of carers by the number of hours during which they provide care. The statistics provided are interesting and if my officials can supply them, I will place them on the record of the House.
I expressed the view on Second Stage that I am committed to the cause of carers and that I have produced a strong package this year which makes eight separate improvements for carers in terms of thresholds, allowances and the capital assessment. The level of capital disregarded before the means test comes into play has been increased from approximately €12,000 to €20,000. I would argue that we have made substantial efforts in respect of carers, particularly in terms of the new respite care grant of €1,000. The latter has been extended for the first time to people who are not in receipt of carer's allowance. Those who will qualify for the €1,000 are recipients of carer's allowance and carer's benefit, those who are in receipt of other social welfare payments and, most importantly, carers who are not currently in receipt of any payment.
Senator Terry referred to the example of a particular person. As I understand it, the individual in question will qualify for the €1,000 respite grant. I accept that this is not the same as the full carer's allowance. However, the allowance was meant for those not in receipt of other payments in order to enable them to provide care. We are considering how it might be possible to top-up the payments received by those on a widow's pension. I decided to deal with the matter this year by extending the €1,000 respite grant to people such as the individual to whom the Senator referred.
The Joint Committee on Social and Family Affairs informed me that the greatest need identified by family carers is the need for a break from caring in home respite and respite for the independent person. I took the committee at its word and decided to focus this year on the issue of respite. I have, therefore, chosen to give the respite grant to people in receipt of widow's or widower's pension and those who are not in receipt of social welfare benefits. As already stated, this will not be as good as their receiving the full carer's allowance. To extend the latter to them would prove extraordinarily expensive.
This matter needs to be studied carefully, particularly in light of the fact that almost 1 million people receive some form of weekly benefit from the Department of Social and Family Affairs. We must be careful in terms of moving towards a position where people would be permitted to claim multiple benefits. I am not stating that this cannot be done. I keep an open mind on these matters because I want to help the people we are discussing. However, we could not rush into paying multiple benefits because of the enormous implications it would have across the board. I accept that people play roles. One of the reasons for extending the respite care grant was to try to help them in this regard.
I wish to place on record a set of figures to which I referred in the Dáil. It has been variously stated that there are 150,000 or 50,000 carers in this country. The Central Statistics Office produced recent data which indicates that there are 84,000 carers providing up to two hours unpaid help per day, 15,000 carers providing care for over two hours but less than four hours per day, 8,000 are providing care for over four hours but less than six hours per day and 40,000 are providing care for over six hours per day. If one takes six hours as representing a good day's caring, the figure for carers is 40,000. There are currently over 22,000 people in receipt of allowances from the Department. The extension of the respite care grant will be paid to over 33,000 people which shows that we are almost there.
If one takes the figures for people who provide care for two or four hours per day, one will arrive at the figure of 150,000 carers which is so often quoted in the media. However, if one takes a sensible figure of six hours per day in respect of the provision of care, then there are 40,000 people who are providing care. If one includes the figure for those providing care four hours per day, it rises to 49,000. We are currently dealing with approximately 33,000 of these people so the gap is not as wide as is sometimes stated.
I do not have a major difficulty in keeping an open mind on the means test. I am of the view that I should keep an open mind on all these matters. I am not in favour of abolishing the means test this year. If one had €160 million, one could increase rates for people across the board, focus it on existing carers and provide these people with larger allowances or increase the thresholds to include additional carers. Does the Senator not agree that this is far more sensible than extending the allowance to people who clearly do not need the money, whose incomes far exceed the means test criteria or who are in receipt of salaries similar to mine and his? If I had €160 million to spend, I would prefer to focus it on people who clearly require it. The €1,000 respite grant, which will also be paid to people who are well off, is a recognition by the State of the work of carers.
In addition to other aspects, the means test issue involves an element of philosophical debate. Some people believe that everything should be means tested because the money will go where it is needed as a result. There are others who believe in universality. Child benefit, for example, is a universal payment and every child in the country is eligible for it, regardless of whether his or her parents are millionaires, members of the boards of the major banks, etc. There are still others, of whom I am one, who believe it should be focused. I will remain in that category until such time as I have adequate funds at my disposal to allow me to change my position. At that stage, I will certainly revisit this issue.
I thank the Minister for his reply. Keeping an open mind on something is certainly better than saying an outright "No". Since he became Minister for Social and Family Affairs, Deputy Brennan has stated on a number of occasions that he has the largest budget of any Department. I accept that €160 million is a great deal of money. In a budgetary context, however, it is not that great, particularly in terms of the amount of money available to the Department.
The Joint Committee on Social and Family Affairs published a report — on which there was all-party consensus — which recommended the abolition of the means test. The joint committee has done a great deal of work in respect of this area and it put forward a good case for abolition. After much debate and research, an all-party consensus was reached on the matter and that is a welcome development. In my view, the latter is a necessary step on the road to taking the ultimate step and abolishing the means test.
I welcome the increase in the income disregard. The increase is not adequate, however, particularly in terms of what I am seeking to achieve in the amendment. We need to go a step further and take matters to their logical conclusion.
There are a number of Members who have deep-rooted connections with left-wing parties in this country. The Minister probably falls into the category of social democrat. As his work in the Department progresses and he looks at and deals with various issues, I hope he will give strong consideration to abolishing the means test. This is an extremely worthy cause. When one witnesses what people who provide care endure, one realises that these individuals do not have access to organised industrial structures and conditions or enjoy the same protection as those in employment. They are driven by the spirit of generosity and feel they have a moral duty to provide care. Some of the cases with which one becomes familiar are extremely moving, particularly when one considers the sacrifices people make. We owe it to these individuals to achieve the objective of abolishing the means test, once and for all.
I move amendment No. 2:
In page 3, before section 1, to insert the following new section:
"1.—The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of extending the social welfare free schemes to widows and widowers who do not currently qualify in that regard.".
This amendment is self-explanatory. How many widows and widowers do not currently qualify for the free schemes or, alternatively, how many of these people are on such schemes?
What is proposed in the amendment would be a progressive step because many people are just outside the threshold. When decisions are made, two weeks later it is discovered that someone has been caught out. Those affected ran an organised campaign against the savage 16 cuts and a small group of widows did a great deal of lobbying. It was done to a much greater extent than normal because there is no one in the State who is not connected to someone who has been widowed or was affected by this. The amendment takes a common sense approach to this issue.
Is a widow or widower living with members of his or her family entitled to any of the free schemes?
I appreciate the intent of the amendment. The household benefits package, which is made up of electricity, gas, telephone and free television licence allowances, is available to people living in the State who are over 66 years of age and who are in receipt of social welfare type-payments or who otherwise pass a means test. The package is also available to carers and people with disabilities who are under 66 years who are in receipt of certain welfare-type payments. People aged over 70 years can qualify regardless of income or household composition.
Without a means test?
Yes. The free travel scheme is available to people living in the State who are over 66 years irrespective of needs. Widows and widowers aged from 60 to 65 years whose late spouses were in receipt of the household benefits package or free travel retain that entitlement to ensure householders do not suffer loss of entitlement. The allowances outlive the spouse.
The schemes exist to support people with a range of disabilities and elderly people living alone. The estimated cost of extending the overall package to those widows or widowers who were in receipt of a widow's or widower's pension or one parent family payments, and who are not currently receiving the household benefit package, is approximately €35 million annually. This cost, however, only applies to the widows and widowers who are in receipt of a widow's or widower's pension from the Department. It does not take account of widows and widowers who may be in receipt of other social welfare payments. I do not have precise figures for the number of people involved but I can get them for the Senator.
I move amendment No. 3:
In page 3, before section 1, to insert the following new section:
"1.—The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of increasing the fuel allowance and living alone allowance to take into account the increase in the cost of living since those allowances were last increased.".
The rate of inflation and the rise in the cost of living have affected us all but they have not been reflected in some payments, particularly in the fuel and living alone allowances. Consumer reports and surveys continually tell us that the cost of living is rising at a rapid rate. We can see the difference between goods purchased in Newry and Drogheda, an indication of the high prices we pay. The increase in the cost of living most affects those on the margins because the increases in their entitlements are immediately eroded. The Minister should look at this amendment and take into consideration that while these payments might seem small in an overall context, they are very important to those receiving them. It is important that increases reflect the increase in the cost of living.
Nothing is more important for the elderly than staying warm but, regrettably, we regularly go into homes that are cold. Unfortunately, many of the elderly mind their money and take care with how much heat they use. This is, therefore, an important allowance and one that the Minister should examine.
I accept that the pension has increased and the Minister feels this is a better way to provide pensioners with additional money which they can spend however they want but many elderly people like things to be categorised, they like them to be in boxes. If they have a fuel allowance, they know how much they can spend. By increasing the fuel allowance, we would ensure our elderly are kept warm during the winter.
My mother is 80 years old and I know exactly how she likes things to be kept in boxes. I looked at the fuel and living alone allowances. I cannot do everything in a first budget but I will keep things under review. With hundreds of millions of euro allocated to child benefit and increases in pensions and unemployment assistance rates it became a choice whether to put the extra funding into the basic rates or these allowances. The more choice we can give to the elderly, notwithstanding the point made by Senator Terry, the better it is. I shall try to devote future funding to increasing the basic rate so that additional funds will be delivered every week which the elderly can then spend as they choose. I will, however, keep the situation under review.
At present, there are 270,000 recipients of fuel allowances, of whom 118,400 receive the additional smokeless fuel allowance. That costs €84 million. There is also support for home improvements, such as installing insulation, from the Department of the Environment, Heritage and Local Government and local authorities.
Currently, 140,000 receive a living alone allowance every week, costing €55 million annually. That has not been changed for some years and we should examine if that is the right way to approach the situation. I have no plans to do anything other than leave the allowance in place and increase it if I can but I wonder about a society that pays people to live alone. It sends out a signal that if a person chooses not to live alone, he or she will lose a particularly important allowance.
In many parts of the social welfare system, one can lose important benefits if one chooses to do something that is totally natural, such as going to work, living with the father of one's child or allowing a companion to live in one's house. I do not want to put social pressure on those who receive a particular allowance to comply with rules and regulations which are not natural, sensible or reasonable. Perhaps we should examine the living alone allowance to see whether we can improve the message we are sending to elderly people, for example. Many people who have to live alone do not want to lose the allowance. In light of that debate, which has continued for a while, I decided to invest the money in the rate, so that people can deal with it themselves. Having said that, I should stress that I decided, when I was allocated this portfolio, to keep an open mind and to listen to what is said. I am determined to channel the substantial funds at my disposal to those who need them most. If that means that I have to change rules or make U-turns, so be it, provided that we channel the funds to where they are needed.
I move amendment No. 4:
In page 3, before section 2, to insert the following new section:
"2. The Minister shall, as soon as may be after the passing of this Act prepare and lay before both houses of the Oireachtas a report on the rate of relative income poverty in the State.".
This amendment has been proposed to help Members of the Oireachtas to keep tabs on the problems of the poor people of this country. What is the best way of measuring the number of people who are risk? I accept that people other than those who are unemployed can be at risk of poverty. We know that people with low-paid jobs can also be at risk. How can we measure poverty accurately? We need to focus on those who most deserve our attention. I would like to hear what the Minister has to say on this matter.
I will launch the first major annual report of the Office for Social Inclusion tomorrow morning. The office, which is based in the Department of Social and Family Affairs, was established in 2002. It has overall responsibility for developing, co-ordinating and driving the national anti-poverty strategy, which is the national action plan for combating poverty and social inclusion. The office is responsible for monitoring, evaluating and reporting on the progress that is being made in meeting the objectives of the plan across the various policy areas. Although the office is led by the Department of Social and Family Affairs, which is required to ensure that everything the Government does is "poverty-proofed", it cuts across all Departments because they are required to have a social inclusion focus. The Office for Social Inclusion will have a great deal to say about that tomorrow.
It is almost a cliché to say it, but it needs to be emphasised every time we discuss this matter that employment is the main instrument in the fight against poverty. The best tactic to use in that fight is to ensure that everybody who is able to work — I refer to those who want to work and are in a position to do so — can find paid employment. We need to focus on anti-poverty measures to assist people, and more importantly their children, who cannot get employment for various reasons, for none of which they can be blamed. A number of reports have indicated that poverty is prevalent in the households of those who are in employment but are low-paid.
The Office for Social Inclusion commissioned the recent ESRI report on relative income poverty, which emphasised that not all those below relative income thresholds are poor. Senator Terry is aware that the EU, which is working on fresh measurements of poverty, has described such people as being at risk of poverty. That is another measure. I urge caution when comparing different countries because the EU does not take account of other resources which people may have when it calculates income thresholds. Such resources are particularly relevant in Ireland because its level of home ownership — it is approximately 86% — is high, particularly among the elderly. Most other countries do not have anything like such a high percentage of home ownership. The EU's system of measurement does not take account of benefits in kind, such as electricity, fuel, television licences and travel allowances, which are received under various schemes which are almost unique to Ireland. I am proud that the Department of Social and Family Affairs holds the chairmanship of the EU's social protection committee. It will use that role to further its anti-poverty agenda.
The Government is committed to increasing the basic old age pension to €200 by 2007. The basic rate of social welfare will be increased to €150 per week, in 2002 terms, by 2007. Such measures are weapons that can be used in the fight against poverty.
I thank the Minister for his response. I agree that the current method of measuring poverty is not as good as it should be. I would welcome any improvements in that regard. I look forward to future discussions on the issue. I do not doubt that the families of people who are employed are still poor. I do not know whether that is caused by inadequate financial management, although I suspect that it is in many cases because some people do not know how to manage their weekly incomes. They cannot spend their money appropriately to get the best value for their families when they are shopping. I am aware that training in such matters is available, but we may need more of it. I thank the Minister for his reply.
I support Senator Terry's amendment. Economists of differing persuasions have had a long-running debate about the various types of poverty, an issue which deserves more than a cursory glance. The arguments made by both sides are particularly intriguing. I agree with the Minister that employment is a useful weapon in the fight against poverty, but education is also critical. The back to education allowance allowed people to attain education and to join the workforce. The Exchequer benefits from the taxes paid by such people when they enter employment. Many statistics have been revealed during the long-running debate on this subject. While I agree that we need to focus on investing in employment, it is more important to invest in education. Both areas are central in the fight against poverty. We need to be aware of the various types of poverty, such as consistent poverty and relative poverty, and the scales that are used to measure them. There are inconsistencies in some of the scales used by economists to distinguish the various levels of poverty. It is obvious that any level of poverty is unacceptable. This issue should be the focus of a number of Departments and, critically, the Minister.
I move amendment No. 5:
In page 3, before section 2, to insert the following new section:
"2. The Minister shall, as soon as may be after the passing of this Act prepare and lay before both houses of the Oireachtas a report on the impact of increasing, under the Act of 2003, the period where claims for Unemployment Benefit and Disability Benefit are linked with a previous claim from 13 weeks to 26 weeks.".
I want to hear what the Minister has to say on this amendment. What impact have the changes made to the recipients of these benefits? I do not want to delay the Minister further.
Senator Terry knows that two claims are linked if a claim is considered to be a continuation of a previous claim. If a person makes an unemployment benefit or disability claim within 26 weeks of the end of a previous claim, both claims can be linked. The recipient can enjoy certain benefits when claims are linked. The claimant can retain some or all of the entitlements established during the course of the first claim. The retention of previous entitlements may result in the payment of unemployment benefit at a higher rate than would have applied to a new claim. That the recipient made an earlier claim helps him or her in that case.
It was considered appropriate to adapt the short-term social welfare schemes to take account of the changing labour market and the consequent changes in work patterns. Many people are now employed in short-term temporary employment, for example. It is difficult to assess the impact of this change. While the number of linked claims increased by almost 16,000, to 35,000, by the end of August such an increase may be due to a variety of factors, including seasonal factors. There is no convincing evidence of particular hardship at present but I have stated that I will keep this under review. The measure in question is one on which I have yet to make a final decision. Claimants who exhaust their benefits earlier than they exhausted them previously can, depending on their means, qualify for a supplementary welfare allowance or unemployment assistance. I hope this information is helpful to the Senator.
Amendments Nos. 6 and 7 may be discussed together.
I move amendment No. 6:
In page 3, before section 2, to insert the following new section:
"2. The Minister shall, as soon as may be after the passing of this Act prepare and lay before both houses of the Oireachtas a report on the increase, under the Act of 2003, in the underlying number of paid contributions required from 39 since first entering insurance to 52 for entitlement to Disability, Unemployment and Health and Safety Benefit.".
Amendments Nos. 6 and 7 are similar to amendment No. 5 in that they provide that the Minister will prepare a report on changes that were made regarding entitlement to disability, unemployment and health and safety benefits. Perhaps the Minister will give his assessment of these amendments.
On amendment No. 6, to qualify for a social insurance payment a person must fulfil all the relevant conditions, including the social insurance contribution conditions relating to the particular benefit being claimed. These contributions rules exist to preserve a fair balance between the contributions paid and benefits received.
Certain principles are required when setting equitable contribution conditions, the first of which is that the claimant's record of contributions should be sufficient in terms of his or her initial establishment in the scheme and in terms of consistency. Another principle is that there should be a difference in the rules that apply depending on whether the candidate is claiming a short-term or long-term benefit. In the case of the latter, where a person is drawing heavily on the social insurance fund, it has been considered appropriate that the test be more stringent. At a time of very low employment and higher participation rates, it is not unreasonable to increase the minimum lifetime contribution record by 13 weeks. The measure strengthens the contributory principle in the social insurance system.
Short-term benefits such as disability benefit, unemployment benefit and health and safety benefit require the claimant to have paid a minimum number of contributions since first starting work and to demonstrate a recent attachment to the workforce by having a minimum number of contributions in a recent tax year.
We have not identified any obvious hardship but will address it if we do. In this regard, we are keeping all the measures under constant review. Claimants who now fail to qualify for a certain benefit can, depending on their means, qualify for a supplementary welfare allowance or unemployment assistance. It is also worth noting that employees can amass 52 contributions from a very limited attachment to the workforce. A contribution is awarded where earnings are as low as €38 per week, which would be earned in just over five hours if one were earning the national minimum wage. The employee does not pay a contribution and the total contribution by the employer is €3.23 at that level of earnings. Therefore, attracting a contribution is not very onerous.
On amendment No. 7, before the Social Welfare Act 2003, unemployment benefit was payable at the full rate for a maximum of 390 days, or 15 months. Effectively, the unemployment benefit scheme provided the same cover for periods of short-term unemployment, regardless of the number of paid contributions, subject to the minimum contribution conditions. For example, the same rate and duration of payment applied where a claimant had been in the workforce for either one year or 20 years. This was not the case in respect of disability benefit, regarding which the maximum duration of payment for persons with less than 260 contributions was one year.
The measure introduced last year brought the treatment of unemployment benefit more into line with the treatment of disability benefit in this respect. It was an equalisation measure, it supported the contributory principle of the social insurance fund and acknowledged that those with a longer employment record should be afforded more favourable treatment by way of extended entitlements. The measure was estimated to affect approximately 700 recipients per week in 2004 and is estimated to affect 2,500 in both 2005 and 2006. The estimated net saving amounted to approximately €5 million in 2004 and will amount of €14.8 million in both 2005 and 2006.
I thank the Minister for his response. How much is in the social insurance fund at present? The fund is obviously in a much healthier state today than it was some years ago.
I believe there is about €1.5 billion in the fund but I am open to correction. Although €1.5 billion seems like a lot, it amounts to only four months of payments. The Senator will appreciate that while the fund is solid, it has not been built up such that it will last for three or four years.
Does the Minister mean it includes the payments for four months?
If no more money was put into the fund, one could draw on it for four months.
Is the fund healthier than it was in other years? Can it be compared to that of five or ten years ago?
The good news is that it was never so healthy.
I move amendment No. 8:
In page 3, before section 2, to insert the following new section:
"2. The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the impact of the discontinuation of the crèche supplement.".
This amendment seeks information on the impact of the discontinuation of the crèche supplement last year. How many children or households did it affect? I believe it impacted on both the child and the family but I am not sure how this is measured. I thank the Minister for reinstating the supplement this year.
That certain communities have become very dependent on their community crèches, which provide a great service, demonstrates how much they are required in certain areas. We had a lengthy discussion on the cost of crèches yesterday and I will not revisit the issue. What changes will the Minister make through the reinstatement of the crèche supplement?
It is hard to estimate the number of children affected by the discontinuation of the crèche supplement last year because we continued to pay the supplement to existing recipients. We stopped accepting new applications and do not know how many people would have applied had they had the opportunity. There is no way to estimate this number accurately.
I provided €2.3 million for the provision of increased crèche supports in 2005. This provision will cover the continued support in 2005 of existing recipients and new cases referred by health sector personnel and social service professionals.
When I complete my discussions with the Ministers for Health and Children and Justice, Equality and Law Reform who play an important role in this area those funds will help to support community crèches as well. My objective is to help vulnerable families continue to have access to crèche supports where, for example, a social worker or public health nurse deems it necessary.
I said in the other House, and perhaps here, this crèche supplement was intended as a short-term assistance arising from social or medical reasons to provide interaction for disadvantaged children and to allow a parent, for example, avail of counselling services. It was never intended as the start of a national crèche network.
The Department of Justice, Equality and Law Reform has a leading role in child care and the Department of Health and Children also has an important role in this area as do health boards. It was intended as a short-term income support for people who needed crèche backup and I have restored it on that basis, focusing on the original intention. Anybody who needs crèche support for particular reasons will have access to it under this provision. The funds we put back in 2005 are ahead of the 2004 figure so additional funding has gone into the scheme. It is refocused on where it was intended to be.
If the country wants a national network of crèches as another social service it must be part of joined-up government. It would require a series of decisions. It is inextricably linked with the question of child care for which the Department of Justice, Equality and Law Reform has substantial funds and takes a lead role. I will work with that Department and the Department of Health and Children on a child care policy. Senator Cox spoke very well yesterday on the need for a child care policy that the country can afford and that it deserves. Part of that discussion will include the issue of crèches. My Department is determined to help anybody who requires crèche backup to avail of appointments and so on. We are progressing in that area.
At the end of 2003 a total of 1,738 crèche supplements were being paid and that grew by 150% in less than three years. One can imagine how that would grow if it took off as a national scheme under this Department. We have put extra funds into the scheme and opened it up but we have also refocused it on its original intention.
I will not press the amendment but I wish to comment on the Minister's response for which I thank him. I am surprised that he does not know how many children were excluded because of the cutbacks last year. People must take certain avenues to apply for this allowance so I am surprised the Minister does not have any figures or know the impact of this cutback.
While the Minister accepts that child care is the responsibility of three different Ministers, that is unacceptable and is very unwieldy. Maybe he could bring this up with his colleagues. It would be better if one Minister had responsibility for children and child care. This is a major issue and is frequently raised in this House. It is difficult to deal with when it straddles three Departments.
It straddles four Departments if one includes the Department of Finance.
That is even worse.
There are possible taxation supports which come within the remit of the Department of Education and Science too so it could involve five Departments.
That is very unsatisfactory.
I am sure the Minister will note the Senator's points.
Does the Minister have any idea how many applications were excluded because of the cutbacks last year?
Is this on amendment No. 8?
No. I am informed that the service continued in any case, funded by the Department of Health and Children. Those crèches received funding from the Department through the health boards and the Department of Justice, Equality and Law Reform. We paid 1,738 people by the end of 2003 but we do not have a figure for those who might have applied to us had the rule not been changed. We have no way of measuring that figure. The Senator could probably estimate how many might have applied had the rule not been changed. We do not have a way of getting that figure.
I move amendment No. 9:
In page 3, before section 2, to insert the following new section:
"2. The Minister shall, as soon as may be, after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the impact of the discontinuation of the entitlement to half rate child dependent allowance in respect of Unemployment Benefit and Disability Benefit where the claimants spouse/partner has gross weekly income in excess of €300.".
I would like to hear the Minister's response to this amendment which refers to the impact of this cutback, how many people it affected and how much money was saved last year as a result.
Child dependant allowance is an additional payment made to social welfare recipients in respect of each qualified child dependant. From January, full child dependant allowance is payable where a person's spouse or partner's gross weekly income does not exceed €220. From January the half-rate allowance will be payable where incomes in excess of that figure do not exceed €350. In the context of the 2005 budget I have decided to raise the threshold on spouse's or partner's earnings to €350 per week.
I have gone some way towards addressing the concerns about this measure, which was changed last year, by increasing the earnings threshold. That will help because persons may retain entitlement to half-rate child dependant allowance with family incomes of almost €26,000 when earnings and social welfare personal rates of €148 are combined. Where there is a non-earning or lower earning spouse or partner, on €350 per week or less, full or half-rate child dependant allowance as appropriate continues to be paid and approximately 4,600 families will benefit from this measure. I also estimate that most claimants affected by the threshold will be those with partners in full-time employment with earnings considerably in excess of the €350 threshold.
While I have not changed this completely by increasing the threshold fairly substantially, given the other demands on our resources, I have gone some way towards addressing the situation. I can keep these figures under review in the future.
I welcome the fact that the Minister has made improvements. He did not go as far as people would have liked and this allowance deals with the most vulnerable people in our society. I ask the Minister to keep this under review and improve it for next year because it is an area that needs our attention and on which we should focus.
I move amendment No. 10:
In page 3, before section 2, to insert the following new section:
"2. The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on pro-rata contributory pensions for those with less than 10 years contributions.".
I am asking for a report on pro rata contributory pensions for those with fewer than ten years contributions. I would like to hear what the Minister has to say about people who do not have ten years contributions and are disappointed when they reach pensionable age. Could this be improved or has the Minister any knowledge he could impart to us on how we can deal with this issue?
The qualifying conditions for pensions require that a person should have paid a minimum number of contributions at an appropriate rate and that he or she should enter insurance ten years before pension age and achieve a yearly average of between ten and 48 contributions over his or her working life. A yearly average of 48 contributions is required for a full-rate pension. Reduced pensions are payable for those with yearly averages of between ten and 47 contributions. In the case of retirement, a yearly average of 24 contributions is required for a minimum pension.
Provision is also made for the payment of pro rata pensions in cases where people have a mix of contributions from different classes on their record or insurance from other EU states or countries with which Ireland has a bilateral agreement. The conditions are designed to ensure that those qualifying have, as I said in my previous reply, demonstrated a fairly strong attachment to our social insurance system and that the payment they receive reflects their overall contribution. It is a contributory scheme, after all. A range of pro rata and special pensions is available to cater for cases where people have the insurance at different rates.
As the Senator will be aware, special pensions have been introduced to deal with perceived anomalies in the case of pre-1953 insurance and certain self-employed people. The pre-1953 and special self-employed pensions represent fairly good value for the level of contributions made when compared to the insurance records and payments received by other contributors. The range of standard, pro rata and special pensions is in most cases there to deal with mixed or reduced records. I am satisfied that the range of standard, pro rata and special pensions now available affords a considerable degree of recognition for the level of contributions individuals have paid into the social insurance fund.
Having said that, further developments in qualifying conditions will be considered in the light of the phase 2 report on qualifying conditions due in the new year. Among other things, that report will examine the possibility of replacing the system of averages with one based on total contributions paid or credited. Under the heading of that report, the system is evolving.
I thank the Minister for his response.
I move amendment No. 11:
In page 3, before section 2, to insert the following new section:
"2. The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the impact of the discontinuation of the diet supplement.".
When will the new scheme come into effect? In the meantime, while obviously continuing with those on the existing scheme, will we be unable to accept any new applicants? How long will it be until the Minister receives the report he has commissioned and, in the meantime, will people be excluded?
I provided an additional allocation in the 2005 budget of €2 million to enable us to press ahead with the new diet supplement. I have received the report to which the Senator referred. It is with the Department, and we have been considering it; we will continue to study it. We are pressing ahead with the diet supplement issue. The best assessment I can give the Senator of the timescale is that it will happen early in the new year. Diet supplements are subject to a means test, and the amount payable varies according to the several categories of diet prescribed by the applicant's medical adviser and the individual's income. The basis of calculation dates to 1996.
The report to which the Senator referred is from the Irish Nutrition and Dietetic Institute, which is doing some very good work seeking to establish what constitutes a standard, healthy, nutritional diet and how the cost of such a diet relates to the current rate of social welfare payments. The study examined the special diets currently prescribed in legislation that attract assistance in the form of a diet supplement and the appropriate level of assistance required to allow individuals to cater for any additional cost involved in providing for a special diet. It is intended to introduce the improvements to the diet supplement scheme at the earliest opportunity. It will certainly happen as early as possible in the new year.
Did the Minister ask the group writing the report to examine cost? I am wondering if it will be a little like the fuel allowance. By accepting the increases in the old age pension, the Minister left it up to the individual to decide whether to spend his or her old age pension on fuel needs. Will there be changes? I gather from what the Minister has said that he may be considering different ways of doing things, examining people's diet and how they should fund it. I suspect this will be a little like the fuel allowance and that the Minister will keep the supplement down in the light of increases in the rate of the basic pension. If that is how the Minister is thinking, I disapprove. I spoke earlier of how important the fuel allowance is to the elderly to ensure they keep themselves warm. In the same way, the diet supplement is also very important to those who need it. The risk is that the elderly will not go out and buy the essential foods they are now getting by way of the diet supplement.
When the Department initiated additional inquiries regarding the diet supplement, it commissioned the Irish Nutrition and Dietetic Institute to examine several factors, including the average cost of a proper, nutritionally balanced, healthy diet and how it corresponded to the current measure of cost relating to social welfare.
Diet supplements are paid to 12,700 people. It is worth reminding ourselves of what they are. They are paid to people who have been prescribed a specific diet and cannot afford the additional associated costs. That targeted supplement can be up to approximately €18 a week, depending on the person's income and the type of diet he or she has been prescribed. The formula dates back to 1996, from which time the basis for calculating the rate of the diet supplement has remained unchanged.
In commissioning the report, the Department wished to put in place a fresh formula that would take account of what a modern diet might be. Diets have changed considerably, even since 1996, and the range and requirements of specific diets have also changed in that time. It is therefore wise to use a professional institute to seek to recast that formula to see what now constitutes a modern diet in prescribed cases and link that with the affordability of the social welfare system.
I accept the Senator's point. Although, as I said, I keep an open mind on such matters, my current thinking is to continue to build a really good scheme for those with specific dietary needs under a modern formula. That is legitimate. The time may come when we get our basic rates to such an attractive level that we will not need to continue many of these schemes. That is the subject of a broader debate in which I will be happy to engage as time goes on.
Amendments Nos. 12 and 14 to 16, inclusive, are related to amendment No. 11 and they may be discussed together by agreement.
I move amendment No. 12:
In page 3, before section 3, to insert the following new section:
"3. The Minister shall, as soon as may be, after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the impact of increasing the minimum contribution all recipients of Supplementary Welfare Allowance Rent/Mortgage Supplement are required to make towards their accommodation by €1 per week to €13 per week.".
Will the Minister outline the impact that last year's cuts had and how many people were affected by them?
This amendment relates to the rent supplement debate, which has been protracted. I reviewed this scheme and made some changes to it. I only made those changes having met many groups, having listened to what was said in the Dáil and in the Seanad and having studied the matter in the Department with officials. I put a number of new arrangements in place. I have abolished the six months rule that applied for entitlement to rent supplement. It has been replaced by new measures to ensure that bona fide tenants who experience a change of circumstances are not disadvantaged but are eligible for rent supplement. The new criteria will be introduced in January 2005 after we have a chance to consult interested parties.
Applicants for rent supplement will be required to show that they could afford the rent when they took on the tenancy, that they had a reasonable expectation that they would be able to afford the rent into the future and that they have experienced a substantial change in their circumstances such as illness or loss of employment. Rent supplement will remain in payment in the case of a number of offers made from a local authority unless a third, as distinct from a second, offer has been refused. I have increased the number of offers in that respect from two to three. I also decided not to raise the minimum contribution for rent supplement this year, which would normally be expected.
There are specific provisions to ensure that the interests of vulnerable groups, for example, women who have crisis pregnancies, the homeless, the elderly and people with disabilities will continue to avail of rent supplement irrespective of whether they are on the housing waiting list. They are eligible to the rent supplement in their own right.
The new rental accommodation scheme operated by the local authorities provides for the long-term housing needs of those in receipt of rent supplement for 18 months or more. Rent supplement was not meant to be a permanent solution to housing needs. It is a short-term income support to get one through a period when because of illness or unemployment one can no longer afford accommodation.
The annual cost of the scheme this year is approximately €350 million. An economist said to me recently that if one took the amount we pay in rent supplement and paid a mortgage on it, we could probably raise €6 or €7 billion. We would build many houses for that amount. Getting from where we are to that point is not as easy as it sounds. The State is the largest single player in the private rented property market through this scheme. This scheme accounts for 40% of all the private rented property here. As a result of that, there are implications for rental prices and so on.
I am conscious that ultimately, housing, whether social, affordable or private, is the medium and long-term answer to the need in this area. At best, my Department can deal with the short-term situation by providing rent supplements but in the long term it is better if we provide houses. Conscious of that, I transferred €90 million in funding from the rent supplement scheme to the local authorities as an initial measure to enable them to start to put long-term housing solutions in place to meet the needs of people who otherwise would rely on rent supplement on a long-term basis. That is a fairly radical step and it will help to put the focus where it is needed to bring about a solution.
I have come to one conclusion from examining many such issues in recent months. It is not enough for me as Minister for Social and Family Affairs or my Department to simply take the view that we are there to administer schemes and to pay out the money. We have to examine the need behind the payment of the money to see if we can solve the problem in respect of which we are making payments. It is easy to get a problem to go away if one deals with it by paying money. Probably in most walks of life, one can buy one's way out of a problem. In many ways that is what we are doing with schemes such as this. We are buying our way out of problems and we can go home fairly satisfied that as long as we keep churning out the money the pressure will not build up. However, we must look at the issues behind the problem and solve it for the long term. Those comments come to mind in talking about the rental supplement scheme because fundamentally it is not a scheme on which in years to come a society like ours should rely. We should have houses for people who need them and not consign them to rental accommodation indefinitely into the future.
The changes we have made are for the better because people who need rent supplement will get it. It does not matter the number of months one is renting, but it does matter that one is able to demonstrate that one is bona fide in need of housing accommodation. I took the view that the six months rule should be removed because whether one is renting for two, three or fourth months, the issue is whether one is genuine and in need of such accommodation.
We wanted to stop abuse of the scheme that was taking place whereby the children of middle class families decided to move out of home because they fancied a nice pad in the Financial Services Centre or somewhere else and then began to claim rent supplement. There was no way they could have afforded the accommodation when they acquired it, therefore, they should not have done so and now they have fallen back on the State for support. That is from where that six months rule originated. I understand the thinking behind the policy to try to tackle the abuse in that way. I do not have any criticism of that but I choose to tackle it a different and better way, that is, by focusing on the individual and on whether he or she is genuine, should be in the apartment, could have afforded it in the first place and is in need of housing. The overall expenditure in terms of rent supplement next year will be €372 million. We are paying out rental payments of that order when perhaps we should be considering buying houses.
I thank the Minister for his reply. I greatly welcome that he abolished the six month rule that applied to eligibility for rent supplement. I can understand the thinking behind it, but perhaps it did not extend to the people on whom it would impact. As public representatives, we have all met, heard and received letters from people who deal with the homeless in particular. Homeless people have suffered as a result of that rule. There was no way many people were in a position to rent in the private sector. If they were able to rent in that sector for six months in the first place, one would expect that they should have been able to continue paying rent after the six month period. Therefore, it was an impossible rule to implement or it seemed impossible for people to work out how they would get rent supplement at the end of the six months period.
I agree with the Minister that the only way out of this problem is to provide housing. Expenditure under this scheme is a dreadful way to spend money, although it is essential at present. We need only think of all the other things we could do with that money, if it was not being paid out to private landlords. While we need private landlords at present in this context, if they were not there we would be in a worse situation as the Government would be forced to act. Only last week we saw the list of the number of houses local authorities had built for people on their housing lists. That was a shameful list. Many local authorities had not built the required numbers of houses, which is not good enough. While this is not the Minister's brief, it impacts greatly on his Department. If local authorities are not spending their resources and building the required number of houses, this impacts on the Department of Social and Family Affairs and means that money is being spent on rent supplement when it could be spent on other ways of tackling poverty. It requires a Government decision to force the local authorities to increase the number of houses they build each year. Perhaps 48,000 households are now on the housing list. It seems an impossible job to tackle this but we must quickly do so. I thank the Minister for his response.
I move amendment No. 13:
In page 3, before section 3, to insert the following new section:
"3. The Minister shall, as soon as may be, after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the impact of excluding Supplementary Welfare Allowance to a couple if one is in full-time employment.".
I ask the Minister to report on the impact of this cutback last year.
The amendment refers largely to rent supplement. Subject to certain conditions, the supplementary welfare allowance scheme provides for the payment of a weekly or monthly supplement in respect of rent to eligible persons whose means are insufficient. I have dealt with this question. With the exception of those participating in improved employment schemes, those engaged in full-time remunerative employment are excluded. Basically, if one has a job, one does not get rent supplement.
It was always the intention of the rent supplement that it would not be paid to households where one of a couple was in full-time, open market employment. However, a practice seemed to emerge in recent years where a spouse of a person in full-time employment applied for assistance on behalf of the household. In other words, the person in a relationship who was not working was, in effect, sent to claim the allowance, which was obviously not the intention of the scheme.
In August 2004 a working group reported to the Department in regard to the impact of the changes arising from this scheme. The working group met with a number of community welfare officers and came up with some interesting figures. The group considered 498 randomly selected rent and mortgage interest supplement applications which were refused since the measures came into effect in January 2004. It found that 11% of the refusals were due to the new measures, of which 1% were found to be in respect of the exclusion of the spouse. Therefore, the exclusion of the spouse, which was due to the new regulation, accounted for 1.2% of the refusals. That restriction has applied since the inception of the rent supplement in 1977.
The intention was that the supplement would be paid to one person of the couple. If both were unemployed they were entitled to apply but if one or other was in full-time employment, it was never the intention that the other person in the same household would get the rent allowance. Some 39,000 rent supplements have been awarded since January 2004, which is a significant number, whereas the change affected just 1.2% of refusals.
I will keep the matter under constant review. As I stated many times, if I am convinced there is hardship in any of these areas I will move swiftly to make amendments, as is my duty. For the present, I am satisfied that not paying this allowance in the case of the employment of one member of a couple was always the intention.
I move amendment No. 17:
In page 3, before section 3, to insert the following new section:
"3. The Minister shall, as soon as may be, after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the impact of the discontinuation of the supplement given to recipients of Supplementary Welfare Allowance who have been supported by MABS in brokering a deal with creditors.".
I ask the Minister to respond to the amendment.
The Senator's amendment refers to the Money Advice and Budgeting Service, MABS. MABS was established in 1992 with just five local projects. It now comprises 52 companies, employing 229 members of staff, and the service is now "almost nationwide", as a great phrase goes. The latest information available from the 52 companies of MABS shows that 12,000 people were availing of the service, which shows it is popular.
MABS does not provide direct financial assistance to its customers as this is not its business. Instead, it provides advice on practical budgets and how to manage budgets. It helps people to move permanently from dependence on moneylenders, which was the original idea behind the service, and to access alternative sources of low-cost credit. It is a hands-on service which offers more than just advice. Its staff make phone calls and arrangements, and reach settlements with banks, financial institutions, moneylenders and so on. It is an excellent service which has my 100% support, as well as that of Senators.
The service was allocated €13.62 million for next year. I want to put this figure firmly on the record as there was confusion in the other House that, somehow, it was getting just €700,000 for that period. The budget for next year is €13.62 million, a substantial increase of €2.22 million on the 2004 allocation. For 2005 I specifically decided to award an additional €700,000, which was the amount saved last year due to the curtailment of the supplement.
My predecessor acted from the best motives in seeking to curtail the spending of this €700,000 last year because the evidence was clear that this amount was going virtually directly from the Department into financial institutions, which were literally grabbing the funding because of the way the Department made it available. Its non-availability did not affect the 12,000 clients of MABS; it affected the institutions which no longer received it. Therefore, I decided to restore this funding of €700,000, but in a different way. In other words, I am making €700,000 available to the companies of MABS for them to help to develop more innovative ways of tackling indebtedness. I have great confidence that MABS will focus this special funding to help its clients. The service knows how to help its clients better than I do and I know it will spend the money wisely.
MABS provides a good service which has wide support in the Houses of the Oireachtas. It has a solid budget and has helped many thousands of people to extract themselves from debt and make a fresh start.
I thank the Minister for his reply. I congratulate MABS for the work it has undertaken. It provides a wonderful service. While 12,000 is a lot of people to help, there are many more who could possibly avail of the service. In recent days it has been brought to my attention that there is a noticeable increase in the number of loan sharks or money lenders operating in some areas of the city. Whether that is due to the time of year, I do not know but it is a matter of major concern. I only have anecdotal evidence but the Minister might keep an eye on the situation to see if there is anything he can do about it. I have no doubt that MABS will spend the additional funding wisely but perhaps a media or leaflet campaign could be undertaken to ensure that people are aware of the service and will avail of it. In that way, people could seek advice rather than getting themselves into debt with money lenders. People may be desperate for money at Christmas time, which is a particularly difficult period. They may be driven into the hands of moneylenders. We must do all we can to encourage people to avoid moneylenders because they will only end up paying them a fortune and getting themselves into greater debt.
Of the 12,000 people I mentioned, some two thirds are women. Obviously the matter affects women disproportionately, which is a cause for concern.
I welcome the allocation of €13.6 million to MABS. We are all aware of people in a financial vicious circle who have availed of the service. There was no light at the end of the tunnel for them until they consulted the local MABS office. This money is being well spent. The Minister said that this year's allocation related to 52 centres nationwide. Funding has now been allocated for an expansion of the service, which is a welcome move.
I move amendment No. 18:
In page 3, before section 4, to insert the following new section:
"4. The Minister shall, as soon as may be, after the passing of this Act prepare and lay before both houses of the Oireachtas a report on the operation of the Family Income Supplement.".
This amendment seeks to elicit information on how well the family income supplement is working. While the FIS is of great benefit to many families, I wonder how many are in receipt of this payment. Is the Minister aware that some families should be in receipt of it but, for one reason or another, are not aware of their entitlements? What steps is the Department taking to ensure that people know their rights in this regard? It is difficult to inform people of all their rights because there are so many different schemes and allowances. It is even difficult for families themselves to know what they are entitled to but we are talking here about the most vulnerable people. The FIS would be of benefit to them so I would like to know how many are currently in receipt of the supplement and how much it costs.
As of 3 December 2004, the number of families in receipt of the family income supplement was 14,611. They received an average weekly payment of €72.19. The scheme dates back to 1984 when it was established to assist low-income families. The measure is designed to help people move from unemployment into work, as well as supporting employees on low earnings who have families. The FIS ensures the option of employment is the most attractive one. The FIS is very much a welfare to work measure on which I am continually determined to focus.
Weekly FIS payments are made to families with at least one qualifying child aged under 18, or 18 to 22 in full-time education. The family income supplement is also available to couples and one-parent families. It is payable at a rate of 60% of the difference between the weekly income and the income limit for the family size. Once entitlement has been established and the claimant continues in employment, payment is made for 52 weeks. Where entitlement is established, the minimum weekly family income supplement payment is €20, which was increased from €13 in January 2004.
From January 2005, the income threshold will be increased by €39 at each point. This is one of the substantial changes made in the budget and will cost €15.53 million next year. The income threshold increase will add approximately €23.40 to almost all weekly family income supplement payments. I estimate the increased thresholds will enable 2,600 more families to become eligible for FIS as a result of the budget.
The Senator specifically asked me about drawing people's attention to their entitlements in this regard. The Department does undertake a number of proactive measures to ensure that people are aware of their entitlements. The measures include advising all newly-awarded one-parent family payment recipients. In addition, all employers are advised annually in PRSI mail shots. The Department examines entitlements in all awarded back to work allowance cases, so the recipients can be informed. Information on the FIS is also contained in all child benefit books and on the Department's website. Next year, I will take a special interest in strongly promoting the services of the Department so that nobody will be in any doubt about their entitlements. These are people's legal entitlements, not hand outs, so they should be able to receive all of them in a dignified manner.
I move amendment No. 19:
In page 4, before section 4, to insert the following new section:
"4. The Minister shall, as soon as may be, after the passing of this Act prepare and lay before both houses of the Oireachtas a report on the impact of the of the increasing of the Back to Education Allowance qualifying period from 6 months to 15 months.".
This amendment relates to the qualifying period for the back to education allowance. I welcomed what the Minister had to say about this yesterday, when he indicated he was willing to change the qualifying period back to nine months. While that would be welcome, I would like to see it reverting to six months. If someone lost his or her job in March or April, and the period remained at nine months, it would mean the person could not take up a college place in October of the same year. He or she would have to wait until October the following year to do so. If such people remain unemployed, they will lose out on another year. Does the Minister think people might purposely try to lose their jobs in order to be able to go to college and receive this allowance? I do not know if people would do that.
Was this scheme abused when the qualifying period was set at six months? Perhaps that is why the previous Minister increased it to 15 months. If there was no abuse we should keep it at six months so that somebody who is six months unemployed will have the opportunity to achieve a third level place and improve their education, something we should encourage. Getting out of poverty is difficult enough for people. We should do anything we can to improve their lot, and the best way is through education and on to employment. We should not put obstacles in their way. The proposed qualifying period is an obstacle. I ask the Minister to seriously consider bringing it back to six months.
While I welcome the indication that it may be reduced to nine months, somebody who loses their job in, say, March, will not be able to take up a place in college until September or October the following year. That is a long time and does them no service. What was the thinking behind the previous Minister's decision to increase the qualifying period to 15 months? Was the scheme abused? If not, can we revert to six months?
I note Senator Terry has asked this question. The Minister will know from our connections in Galway that the business in which I have been involved for many years is in the area of recruitment of people for jobs. I am personally aware of a number of people who abused the system and gave up jobs in order to go on the live register for a period of six months and benefit from this scheme in the following September or October.
While I accept Senator Terry's point regarding genuine hardship cases where people are genuinely unemployed and need education — we are agreed that education is the path towards employment and out of poverty — the benefits of this scheme need to be directed at people who are using and not abusing the system. The system was exploited and abused. If the qualifying period is reduced to six months there must be rigorous checking, and people must be aware that there will be rigorous checking, to ensure that anybody who voluntarily gives up a job and signs on the live register in order to benefit from rent and other allowances does not get away with it. It is not fair. As the Minister said yesterday, it takes money away from the system that could be spent on people who need it. My experience has been that this scheme was abused, and not by the poorest people and those most in need but by people who were not in need and wanted the benefit of the type of apartment in the IFSC that the Minister referred to and to go to colleges they wanted to go to. I therefore urge caution on this issue.
I reiterate that I have reduced the qualifying period from 15 months to 12 months. The reason is that it was originally intended to be an assault on long-term unemployment. Long-term unemployment is generally defined as 12 months. With unemployment at 4.4% and a long-term unemployment rate of less than 1%, it is very tightly focused. I thought 12 months made sense given where the scheme was originally intended to be focused.
I have said in this and in the other House that I would be interested in reducing it not to six months at this point but to nine months, I need to examine what funding would be required. I am told it would cost approximately €1.4 million, excluding a cost of education allowance. With that included the cost would rise to approximately €5 million over a three-year period. That is something I need to consider. I expressed the hope that I could reduce it to nine months, which would be a considerable improvement on 15 months.
I accept the principle referred to by Senators Terry, Cox and others that we must make it easier to move from unemployment to education and from unemployment to work. Education is a critical weapon in the fight against disadvantage. This refers to third level education. Second level is not affected — the qualifying period is still six months in that case. We are talking about a scheme that is very attractive to people. It will cost €40.1 million next year. That is taxpayers' money. We have choices as to how we spend it. We are spending it on this scheme. Someone who qualifies for this scheme will have funds available for a number of years through the duration of their period of education. It is, therefore, attractive.
Senator Cox recounted her personal experience and impressions from her professional background. What she says is borne out by the statistics available to me. Those who were nine months or less unemployed accounted for 36% of the people in receipt of the back to work allowance. If the qualifying period is 12 months that is another 14%. In all, 50% of those in receipt of back to work allowances from the €40 million would have been unemployed for less than 12 months. If the period is reduced to six months the percentages are even higher. There is considerable evidence to back up what Senator Cox says. Once the six months elapses the number of people in receipt of back to work allowance swells. That was the thinking behind my predecessor's decision. We are acutely conscious, as every Senator is, that every euro given out to people who abuse the system is a euro taken directly from the social welfare budget.
I am conscious of Senator Terry's point that people might miss out on the opportunity of a third level place because of the academic calendar. I am actively examining, and will report my finding within weeks, whether I can identify funding to settle on a period of approximately nine months, which I believe would be reasonable. We have made progress and we can examine these statistics as they evolve to see what basis there is for improving matters. I would not agree to reduce the qualifying period to six months at this stage, given the statistics. I would be interested in taking it to nine months if I can secure funding to do that and I will make an announcement regarding that in the coming weeks.
We are in agreement regarding the importance of this project, which is very beneficial to people who qualify for it. For many training schemes and so on for which businesses apply, a fairly detailed application process must be gone through. Members may be familiar with the Skillsnet programme of the Department of Enterprise and Employment under which proposals are made and evaluated by Government Departments or agencies regarding the benefit of the training being requested, the need for the training in the organisation and whether it is available elsewhere or through some other means of finance. Some people who have given up a job to be unemployed because of their personal circumstances are not in a position to fund themselves through a college education.
There are always genuine cases within the whole gamut of people we may think are exploiting the system, and there are those who are exploiting the system. It might be a good idea to create some kind of application process for 2006 in which people would go through what they hope to achieve. There could be an evaluation of people's family circumstances, their background, their financial circumstances and so on. Perhaps it would be a way of administering the scheme on the basis of need with very clear guidelines so that people will know what to expect. Under such a system those who are abusing the system will not qualify and people who are in genuine need and would genuinely benefit from will. There are FÁS schemes under which people apply for grant funding for training. There are also Department of Enterprise and Employment schemes such as Skillsnet, the one of which I am aware. This type of focus may afford a way of accommodating the opportunities and difficulties in this area.
Senator Cox has made my point for me. I accept what the Minister is saying. His reasoning for not returning the qualifying period for the scheme to six months relates to the people who have spoilt it for those who really need it. We all accept that the reason for last year's change was to prevent those not financially in need of the allowance from qualifying. However, by trying to deal with such people, we have made it more difficult for everybody and those who deserve to benefit from the scheme are suffering.
In this day and age, we should be able to identify those in need of this allowance. We should be aware of situations where a person gives up his or her job and becomes unemployed for six months in order to avail of the allowance. Anybody who gives up his or her job on a voluntary basis should not be able to draw any benefit. This and other schemes are there for the benefit of those who deserve the associated allowance, including the unemployed, disabled and elderly. The schemes are not designed to accommodate those who decide to have an easy life and let the State fund their existence.
We should be doing exactly as Senator Cox suggested but we must not wait a year to do so. By not changing this provision, we are depriving people in genuine need of an opportunity to improve their lot. They are being punished by the actions of other greedy people who wish to jump on the bandwagon and claim a benefit to which they are not entitled. Will the Minister reconsider this issue? I welcome that he has already made a change and may consider a further change. He should look at ways of reducing the qualifying period to six months to enable those in genuine need to improve their situation. There must be ways to ensure those not entitled to the allowance do not qualify. As the Minister observed, they may qualify for other schemes, such as the rent supplement scheme.
I will consider this issue before Report Stage. The contribution of Senator Cox, supported by that of Senator Terry, strikes a chord with me. This is an area that is difficult to administer because of the numbers involved. I have already said regarding the rent supplement scheme that we should deal with people on the basis of individual needs, not according to an arbitrary time restriction or set of rules. I still believe that, even in this case. For some schemes, however, in the absence of a system for making individual assessments, there must be rules like those that apply to this scheme.
Every deadline is crude by definition. It is tough if one falls a few hours the wrong side of it. This has happened to us all, depending on age and other factors, in that we me may find we are three or six months short of a particular deadline. This is part of our systems. In the area of social welfare, we should try to focus on individual needs as far as is possible. However, until we design the type of system about which Senator Cox has spoken, we must deal with the system we have. I will consider the points raised by Senators Cox and Terry.
I move amendment No. 20:
In page 4, before section 4, to insert the following new section:
"4. The Minister shall, as soon as may be, after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the impact of the discontinuation of the transitional half rate payment for lone parents where a recipient of the One Parent Family Payment takes up employment where earnings are in excess of the upper threshold of €239 per week.".
Will the Minister outline how many people have been affected by the removal of this benefit and the saving it has afforded the State?
In my review of the 2004 provisions, I concluded that some easement of this measure would be appropriate. Therefore, with effect from next January, the transitional half rate one-parent family payment will be made for a period of six months for qualifying recipients. Some 700 one-parent family payment recipients will benefit from this measure. The introduction of the transitional arrangement whereby a lone parent who exceeds the earning threshold receives 50% of his or her previous payment for a further six months will provide support for lone parents as they move off the scheme. Lone parents will, of course, be able to avail of the family income supplement if they comply with its eligibility criteria.
It is important to note that the means test for one-parent family payment makes provision for the exemption of a significant level of earnings and maintenance payment. The first €146.50 of earnings is disregarded and all further earnings up to a maximum threshold of €293 per week are assessed at 50%. This means that a person with earnings of €293 per week still qualifies for a partial one-parent family payment, plus a child dependant payment of €19.30.
The recent OECD report entitled Babies and Bosses states: "The existing system of earning disregards serves largely to encourage lone parents to top up benefit income with small earnings rather than help them back into regular employment." Our objective is to assist lone parents in entering regular employment. It is worth noting that Ireland has the highest percentage of lone parent families within the EU, with more than 11% of households headed by a lone parent. A relatively small number of those parents are in employment compared to the situation in other countries.
When the transitional payment was removed last year, a clause was inserted into the regulation to ensure those claimants already in receipt of the transitional payment would continue to receive it. Therefore, benefits were not taken from anybody in the sense that no payments were not renewed. With effect from next January, the transitional half rate payment will be made for a period of up to six months. This will help people return to employment, which is the focus of departmental policy.
I thank the Minister for his reply. However, I would prefer if the provisions of this scheme were returned to the situation that pertained prior to this year. The cost of full-time child care makes it difficult for lone parents to take a job. I do not know how they can manage it now. It seems it would be easier for them to stay at home than to take on the expense of child care and the other costs associated with going out to work. People is such circumstances may decide that going back to education to improve their prospects is a better option. It is extremely difficult for lone parents to return to the workplace. For those who make that transition, we must ensure that they receive assistance for as long as is possible or necessary.
I have no difficulty with the principle of helping lone parents. It is worth noting, however, that there are almost 80,000 people in receipt of one-parent family payments. The State's budget in this area is some €700 million, which is a substantial resource. Not all the recipients are lone parents in the traditional sense in that some may be widows and so on. It is also an area we need to keep under review to see how we can make it more human. I find some of the rules and regulations surrounding it somewhat ancient and these could be improved.
I thank the Minister and his officials for the way they have dealt with the legislation. During Second Stage most Senators complimented the Department of Social and Family Affairs officials on the way they do business and the ease of communication with them. This Bill represents the largest ever social welfare spend, which has increased by €1 billion. I compliment the Minister on his approach. There is a sense of agreement on all sides that the Minister has come to this portfolio with a particularly open mind. He has some deeply held philosophical beliefs on how to look after those who need our help. I look forward to future budgets in the hope that we will be able to expand on the work we have done this year.
I also thank the Minister for spending his time here throughout all Stages of the Bill. I thank his staff for their help and reiterate the many well deserved compliments paid to them yesterday. For many years the Department of Social and Family Affairs officials have been well known for the assistance they have given to public representatives.
While I tabled many amendments today they were essentially for the purpose of seeking information. We welcome the many improvements in the social welfare package since last year. We look forward to further improvements in coming years with the Minister for Social and Family Affairs, Deputy Brennan, at the helm. We live in a healthy economy and money is available. I am glad it is being targeted at those who most need it. Now is the time to make the improvements we have sought for a number of years. I am glad to give credit where it is due. This year those less well off in society have been looked after. We can always say that more could be done. I am sure it can and will be done in coming years. I again thank the Minister for his time and patience in dealing with the amendments today.
I thank you, a Leas-Chathaoirligh, the Cathaoirleach and the various acting chairpersons for the work done in helping us with the Bill. I thank each Member of the Seanad for the work they put in and the comments they made. I single out Senator Terry, who through all Stages assiduously pursued me on a range of issues, which gave me the opportunity to explain and expand. I know that the background work in preparing all those amendments is hard work, particularly when in Opposition. Such work gives us a better Bill. I listened carefully to what every Senator had to say. I came to the Department of Social and Family Affairs this year at short notice and had to organise a budget. I look forward to being able to work at a much more effective pace in preparing for next year's budget, which I hope will be equally impressive.
I say a special word of thanks to my officials. While I did not realise it until I got stuck into it, the Social Welfare Bill is one of the most complicated pieces of legislation put together. Senator Terry said that many people did not understand the schemes; she can include many of us in that. The schemes are technical and difficult. The officials work with the Attorney General's office and all their legal advice is exemplary. I am very fortunate to have arguably the very best officials the Civil Service can offer. Armed with those resources I hope we can make further progress next year.
I wish Members a happy Christmas. We cannot become complacent. While this Bill is good, I believe we can do better. In that spirit I thank Senators for their support for the Bill.
I take the opportunity to wish the Minister and his officials a happy Christmas.