I welcome the Tánaiste and Minister for Social Protection, Deputy Joan Burton, and the officials from her Department. We are meeting to consider the Supplementary Estimate for Vote 37 - Social Protection for an amount of €299 million. For these items under discussion the committee has an opportunity to review the additional allocations now being sought on an item by item basis, focus on the reason these additional allocations are now being sought by the Department of Social Protection, and review the targets set for the relevant items, the resources already made available for these items and the outputs and impact of the activities concerned. I invite the Minister to make some brief opening remarks.
Vote 37 - Department of Social Protection (Supplementary)
I thank the committee for the opportunity to present a Supplementary Estimate for the Department of Social Protection. I propose to briefly outline the overall expected financial position of the Department post the budget and the main reasons for the Supplementary Estimate.
I am seeking a Supplementary Estimate of €299 million for 2015. This is necessary for two reasons, first, to part-fund the Christmas bonus costing €198 million for around 1.25 million recipients and, second, to fund payments to pensioners and other recipients normally due on New Year's Day, 1 January 2016, to be paid in 2015 at a cost of €127 million. These two elements, when added together, are greater than the Supplementary Estimate being sought.
Overall expenditure on the Department's schemes, services and administration in 2015 is expected to be €19,894 million. This will be €516 million or 2.7% more than provided for in the original 2015 Revised Estimates. As I mentioned, €198 million is required for the payment of the Christmas bonus, €127 million is required to advance payments due to pensioners on 1 January 2016 to 2015, with the remaining €190 million due to higher expenditure on a number of schemes, as detailed in the Supplementary Estimate briefing template supplied to the committee secretariat.
Income from PRSI receipts during 2015 will result in Social Insurance Fund income in 2015 of an estimated €8,439 million. This will be over €200 million or 2.5% ahead of profile and will be €548 million or 6.9% ahead of the position in 2014.
Before making provision for the Christmas bonus and advance payments to recipients of Social Insurance Fund schemes, the net position of expenditure on the fund is on target when compared to the 2015 Revised Estimate. Approximately €200 million of the Department’s additional spending requirement in 2015 will be required to fund the Christmas bonus and advance pay day to Social Insurance Fund scheme recipients. This additional expenditure will be funded directly or indirectly from the higher PRSI receipts we are now receiving as a result of more people at work.
In this regard, it is worth noting that income from the Social Insurance Fund has increased from €6.7 billion in 2010 to more than €8.4 billion in 2015, an increase of €1.7 billion or 25.8%.
The current account deficit of the Social Insurance Fund peaked at €2.75 billion in 2010 and will have fallen to €180 million in 2015. The 2016 budget Estimate has provided for a surplus of €215 million in 2016, the first such surplus since 2007.
The live register is expected to average around 345,000 in 2015. This is a reduction of 40,000 on the average for 2014 or 100,000 better than the average for 2011. An additional €120.1 million is being sought for jobseeker's allowance in the Supplementary Estimate. However, €15.9 million of this will be offset by an expected underspend on jobseeker's benefit. Some €32.3 million is needed to pay the Christmas bonus and €11.6 million is required to advance the payments due to jobseeker's on 1 January 2016 to an earlier date in December 2015. The remaining additional funding is required for higher recipients due to a higher average live register outturn of 345,000 in 2015 than the average of 337,000 in the 2015 Revised financial allocation.
The 2015 Supplementary Estimate referred by the Dáil and the briefing provided to committee members lists the schemes for which additional sums have been sought as well as some underspends. We can go through the position of the individual schemes as required during this hearing.
To conclude, I hope my opening statement has given members a good overview of the Department's expenditure in 2015 and the reasons underlying the necessity to seek a Supplementary Estimate. The schemes and services operated by the Department benefit everybody in society, either directly or indirectly. The Christmas bonus will be a boost for low income welfare recipients, pensioners, retired people and carers in particular as well as people with a disability but it will also provide a boost to the domestic economy.
I look forward to discussing the Supplementary Estimate of €299 million with the committee.
Members have also received briefing material from the secretariat. Will the members refer to outputs and inputs when asking questions?
I am the only Opposition member present which reflects the lack of opposition to the Supplementary Estimate. I understand the reasons for it and I do not oppose it. I have a number of general questions.
There is a large under-estimate in respect of the jobseekers figures, nearly 7,500 people. Was that a surprise?
There is significant under-estimate for the overall figure for the number of people in receipt of lone parent's allowance, almost 3,400 more than anticipated at a cost of €55.32 million. Does that mean that the movement from welfare to work, which is supposed to occur among lone parents, is not actually happening?
The second part of the Estimate deals with the underspend. There is an underspend of €7.350 million on the family dividend. If memory serves me correctly, the projected expenditure for the family dividend was of the order of €22 million or thereabouts and that would mean that one in three people who should be entitled to take up the family dividend has not taken it up. Is there some reason for that?
I noted over the weekend a number of statements, one in particular by the Taoiseach, in which he referred to an extra payment, which the Government is planning to make to low income people to encourage them away from welfare and into work. Members will be aware of the family income supplement. The family dividend also falls into that category. Is the Taoiseach referring to the family dividend or is a new third payment envisaged? Would the Minister know about that?
My final question is a general one which might be more relevant for other Departments, which immediately spring to mind. As the Minister will know the rules have been changed and this is the last year for Supplementary Estimates, so should there be an over-spend next year, over and above what is anticipated what will happen? Will there be a substitute for this process?
I can only assume the absence of the rest of the Opposition is because by and large they are happy enough with the very positive changes in social welfare and they have left it in the good hands of Deputy O'Dea to speak for all of them. Many of the changes we made are positive for many people.
The additional money that is being sought for the jobseeker's allowance is €120.11 million but this is offset by an expected underspend of €15.9 million on jobseeker's benefit. The net figure is €104.2 million. Some €32 million of the €104 million is the payment of the Christmas bonus for people on jobseeker's payments. Some €11.6 million is for advance payments due to some of the recipients of jobseeker's allowance and benefit who would be paid on Friday, 1 January but the payment has been brought forward a day earlier to Thursday, 31 December. The balance of €60.3 million is due to higher numbers of jobseekers getting a payment and other factors such as higher average payment values.
The Deputy probably knows it from his own constituency that people who emigrated have been returning home, for example people who have been in Australia for two or three years. In many cases they were involved in construction. I know that in rural areas people might not get work immediately, they may have recourse for some period provided they satisfy the habitual residence condition, HRC, to jobseeker's and they may well qualify on income grounds.
The 2015 Revised Estimates Volume, REV, made a financial provision for an average live register of 337,000 but the outturn is expected to be somewhat higher because of returning emigrants. The figure will be approximately 6,700 higher than the provision in the 2015 REV, but I think there is a positive element because from my experience of going around the country, it encompasses a number of people coming home. Members may be aware of the Australian system of visas, where people will have exhausted their period at the end of two years.
There are 40,000 fewer people than the outturn in 2014 and 100,000 fewer than 2011, when the live register averaged 445,000. In fact today we have the CSO estimated figures for unemployment at the end of November, which is 191,000. Given where we started in these discussions some years ago, when everybody was forecasting that the Irish economy could hit an unemployment figure of 500,000, it is really positive news.
Expenditure on jobseekers will have fallen from just over €3.9 billion in 2011 to just over €3.1 billion in 2015. That is a reduction of €783 million or 20.1%. On the one-parent family payment, the extra €63.3 million, some €7 million is required to pay the Christmas bonus and €8.3 million is due to the freezing of the earnings disregard for one-family payments at the 2014 level of €90 from January 2015 - members may remember I introduced that in legislation earlier in the year. Some €14.5 million is due to the extension of the special provision for carers to those caring for another adult. It was always extended to people caring for children, but in discussion at committee meetings, we extended it to people caring for adults.
Those recipients remain on the one-parent family payment, while continuing to receive the carer's allowance at half rate. This provision applies until the youngest child is 16 years of age. Some €29 million is due to approximately 5,000 fewer people than expected having transferred to the jobseeker's transitional payment on 2 July 2015. In other words, the Estimate provided for 19,000 but only 14,000 people transferred. The €9.2 million is due to higher average payment values for those remaining on the one-parent family payment after July 2015. This is because recipients whose youngest children are younger than seven years of age are less likely to be working or they work less than those with older children. The remaining recipients are, therefore, likely to have less means. This is offset by €4.7 million arising from various offsetting factors.
The number of one-parent family recipients that transitioned from the scheme in July, at 25,500, was less than the estimated 29,400. In addition to the extension of the carer's special provision, this is due to a number of factors, including cases where lone parents had a child under the age threshold but had not made this known to their local offices, customers who are mid-way through a full-time course of education who are eligible to remain on one-parent family payment until such time as they complete their courses and special provision for customers in receipt of a blind pension which allows them to remain on one-parent family payment until their youngest child is 16 years of age. As noted by the Deputy, there has been a significant increase in family income supplement, FIS, arising from the reforms introduced in July. This has resulted in additional expenditure on FIS of approximately €630,000 per week to end July and approximately €760,000 per week up to end October. The impact on FIS could be approximately €40 million in a full year but I always anticipated that many people, once they transitioned through the reforms, would benefit from a significant increase in income.
The increase in the number of lone parents availing of FIS is a positive outcome of the reforms as this indicates that the people involved have increased their working hours or found employment. As of end November, approximately 7,200 former lone parent recipients are in receipt of the back-to-work family dividend, out of a total back-to-work family claim load of approximately 10,200. There were 10,760 qualified child beneficiaries associated with these recipients. The majority of former lone parent payment recipients are now in receipt of the back-to-work dividend and family income supplement. Members who are familiar with individual cases in this area will know that these people have received a significant boost to their incomes. I introduced this reform because I want the emphasis to be on people, once their children reach a certain age, being able to take up education and employment and boost their incomes. I think this is a view shared across Government, including by the Taoiseach.
On 1 January next the minimum wage will increase. Changes have also been made to the step-effects of PRSI such that all the benefits will be to the income earner. We have also increased the FIS allowance by €5 in respect of a first child and €10 in respect of a second and subsequent children. From January, the earnings of the families about which we are now speaking, many of whom are on low wages, should increase significantly. I think that is good. Provision of €30 million is also made for the back-to-work family dividend, which has proven very popular. There are now over 10,000 in receipt of this payment which we introduced in May. I am satisfied that people and employers are aware of this scheme and that many people are now taking it up. It is very beneficial. This cohort of people will also benefit from the increases in child benefit and, more than likely, from some of the changes to the USC, in particular the raising of the threshold in the case of those who work part-time.
The Tánaiste has made significant progress in the restoration of a whole range of payments in a very short timeframe, which the people on the street welcome. People in Ballyfermot have said to me that they did not expect an increase in their entitlements so quickly. It is appropriate that this is acknowledged and that the Tánaiste and her staff are commended in that regard.
I agree with the remarks made by Deputy Conaghan. I spent last Saturday in Thomas Street in the inner city. Despite that it was a miserable day the mood of stall holders and customers in the market was very positive, many of them looking forward to getting the increased Christmas bonus. The reason for this positivity among people is the fact that they are now beginning to recoup much of the money they lost over the last number of years.
I received a telephone call this morning from a young man in the 18 to 24 year age group who was told at his local post office that he is not eligible for the Christmas bonus because he has not been in receipt of social protection benefits for 50 months. Is that correct? If it is, I was not aware of that.
First, I thank Deputy Conaghan for his comments. On carer's benefits and restoration of the respite care grant, which I am pleased to have been able to provide for, expenditure on carers in 2012 was €772 million. Expenditure in this regard for this year was €866 million. It is estimated that expenditure in this area will be approximately €911 million, which is close to €1 billion. This was an issue of much debate during the early lifetime of this Government. In 2011, there were 50,600 carers in receipt of the carer's allowance. This year there were 60,000 carers in receipt of the carer's allowance, which is a 20% increase in the number of carers in Ireland during the term of office of this Government.
Members will recall that when I took up my position as Tánaiste and Minister for Social Protection, many problems were being experienced in relation to the IT platforms through which applications and payments for people such as carers are processed. Following a streamlining of these measures the number of people in receipt of carer's allowance has been increasing steadily every year and is now, as I said, 20% higher. In regard to domiciliary care allowance, while previously there were 23,900 people in receipt of this payment in respect of children this year the number of recipients increased to 27,990, which is an increase of approximately 4,000. There was much commentary at that time, although not by anybody present here today, to the effect that people were, somehow or other, being prevented from accessing the domiciliary care or carer's allowances. As I have just indicated, the number of recipients in respect of both payments has increased.
Members will be aware that the respite care grant is also being restored, which I welcome, and will now be called the carer support grant, the reason for which is based on the fact that many of the recipients are caring for people with whom they are living and are spending the grant on those people. In other cases, it is spent, without a doubt, on respite for either the person being cared for or the carer.
We are just going to call it the carer's support grant from now on. The number of people receiving this payment has increased from 76,700 to 90,550. There was a very significant increase in the numbers between 2011 and 2015. I assure those who know of cases involving people who should apply for carer's allowance or domiciliary care allowance that the new systems have worked very well. We are getting more people through by using these systems.
The Minister mentioned the positive trend in the Social Insurance Fund. She said it is 2.4% ahead of profile, etc. What are the implications of that for the future?
I did not answer the question that Deputy Byrne asked about jobseeker's allowance and the Christmas bonus. The Christmas bonus is paid under the same terms and conditions under which it has always been paid. It is paid to long-term recipients of social welfare payments. This means it covers the full range of social welfare payments. Obviously, people associate it most with pensioners and retired people, but it is also paid to carers, lone parents, people on disability and people who are long-term unemployed. There is no restriction on the age at which people can receive the bonus, but they have to be in receipt of a social welfare payment for more than 15 months. For example, a young person who transfers from the domiciliary care allowance, which is paid to his or her parents, to a disability payment at the age of 16 immediately qualifies for the bonus because he or she is deemed to have been on a long-term social welfare payment.
I thank the Minister.
Deputy Ryan asked about the Social Insurance Fund, which is built on people's contributions being sufficient to pay for their needs when they retire, particularly in relation to the State retirement pension, the payments made to widows and maternity benefit. This will also apply to paternity leave in the future. They are the principal payments out of the Social Insurance Fund. It is extremely important for the future stability of the fund, which is going to be there for people, that we bring it back into balance and eliminate the deficit. I have given some figures in respect of carers. Every year, we put aside an additional amount of approximately €200 million to cater for the increase in the number of people qualifying for payments like retirement payments, in particular, and the payments made to widows. This means we can say to such people with assurance that the deficit in the fund, which was just under €2.8 billion, has now been reduced to some €180 million. I anticipate on the basis of current expectations that when we get the final figure for December, it will be much lower than that. Obviously, as I said earlier, some of that is being used for the Christmas bonus. The social insurance forecast for next year is extremely good. There are challenges ahead as the number of people of pension age increases and those who come into retirement happily live a lot longer. Obviously, that is something we will need to address over the years ahead. To that end, I have been proposing the supplementary pension for people in work and I am anxious to make provision for that.
I thank the Minister for coming to this meeting. I would like to be fair to the Department of Social Protection by giving it credit as one of the Departments to have achieved the greatest transformation over the period of this Government. Unfortunately, the Minister does not need me to tell her that neither her nor her Department gets sufficient credit in the national media. I think the Department has made incredible steps. If one looks at the Pathways to Work document, one will see a huge list of significant, tangible and real achievements that have been made and steps that are being taken. I was talking to a young man of about 21 years of age the other day. I told him that as he is not on any payment, he would be entitled to jobseeker's allowance. When I advised him to make such an application, he said "do not talk to me, it would not be worth my while, I could not be doing with it at all". I asked him why not and reminded him that he was entitled to it. I suggested to him that he might as well get on the allowance so that we could get him on a scheme, but he said "no, they would wreck your head". He said that some of his friends who are on unemployment benefit are having their heads wrecked with schemes and activation measures. I said that what he saw as a challenge was really an opportunity to get off the live register. The figures speak for themselves. The steps introduced by the Government under the Pathways to Work scheme have shifted over 61,000 people from the long-term live register. I congratulate the Minister on that figure, which speaks for itself.
I want to ask the Minister about some of the schemes that have been mentioned, including the community employment scheme, Tús and Gateway. The biggest issue regarding these schemes that I have to deal with as a politician on the ground relates to people wanting to extend their stays on these schemes. There is not a week that goes by without my sending a letter to the Minister or someone else looking for people's schemes to be extended. Of course it is not possible to extend them and I understand why that is the case. I think there is an overarching issue here. The Gateway scheme, which was very much derided when it was introduced by those who suggested it was akin to slave labour, is hugely popular.
Yes, absolutely.
The point I try to make all the time is that it is identical to the community employment scheme, which is greatly lauded by the same people on the Opposition benches who knock the Gateway scheme. The only difference is that the Gateway scheme is managed by the councils and the community employment scheme is managed by private companies. There is a cohort of people who were victims of the downturn in the economy and lost their jobs on building sites, etc., when they were their late 40s or early 50s. Five, six or seven years on, there is no realistic prospect of them getting back into the workplace. As they are finding it hard to find work, they really appreciate the existence of these schemes. They are happy to contribute to and be part of something. There is a real scarcity of places on these schemes. Does the Department of Social Protection have any plans to extend the capacity of the existing schemes or develop new schemes to cater for people in their 50s and early 60s? Many people in this age group do not see themselves getting back into the workplace, and understandably so in some instances.
We keep all of the schemes constantly under review. We will set out our aims and ambitions when we are launching the next Pathways to Work programme within the next week or two. I appreciate that the composition of the schemes has changed to take account of two groups that need to be focused on - younger people under the age of 25 and older people who lost their jobs at the height of the difficulties, as mentioned by Deputy Daly, and are finding it difficult to get other jobs. We have some proposals on how to give better opportunities to such people.
I wish to stress another aspect of the community employment scheme and the other schemes. Sometimes economists do not understand that such schemes provide significant levels of service to people in certain rural and urban communities, particularly in areas that might be less economically well off. I refer, for example, to the impact of various schemes, such as the rural social scheme, on areas like Ballyhoura. The use of such schemes by strong community management teams has had a positive effect. I notice that in my own constituency, for example. I must give credit to Limerick, as I have done previously, because it was really the pioneer of the Gateway schemes in the aftermath of the awful floods a couple of years ago. I compliment the foresight of the management in Limerick County Council on giving many young men, in particular, including many in the area around King's Island who had not been working, an opportunity to take part in community employment and similar schemes. That was where Gateway was launched. It has proven extremely popular ever since. Now that a number of local authorities are beginning to recruit - I understand this includes the council in Limerick - I am glad to note that some of those who are being taken on as general operatives have worked on the Gateway scheme.
Essentially, they have the 12 or 22 months of experience that they can cite as their best reference working with the council. I thank also the people at council level throughout the country who have been involved in the scheme. I was out with my own people in Fingal County Council recently and some of the people working on the Gateway scheme. Much of the work is on historic parks and gardens. A huge number of skills are being learned and developed. The scheme is positively received by the local community and people are happy to be involved in something that is benefitting their local community. While we are reviewing all the schemes, I am conscious of older people. We did not have the resources up to now because the focus was to get people who were unemployed some experience that would get them back into work, but we have revamped the whole child care and care element of community employment to include a training module. I would like to see more of that on more of the schemes. Tús has also been very popular. The transition of people on Tús, which is a one-year scheme, to work has been surprisingly positive, given that some of the people have been out of work for a while.
Funds that are to be reallocated from the subhead arising from the saving or underspend-----
On what page is that?
I am referring to the tables on page six of the document. One of the savings, which is in pay, is €3 million. It states that one of the factors giving rise to the saving or underspend is slower-than-expected filling of vacancies. What is the issue there? One would have thought that in the current climate it would not be difficult to fill vacancies. How is that affecting the workload of the people who are there at present?
It is anticipated that there will be an underspend of €3 million in the Department's budget at the end of the year under this heading. This is because the Department was unable to source staff to fill critical posts that became vacant, primarily due to retirements. It is anticipated that about 170 staff will have retired by the end of this year and due to the moratorium on recruitment there were no panels from which to source staff. However, I am happy to say that following a number of Public Appointments Service competitions earlier this year, staff are now becoming available. We got the go-ahead from the Department of Public Expenditure and Reform in April. Filling the posts from the external panels was not easy. As one will appreciate, even last April a lot of graduates were applying for some of the jobs but by the time the panel came to be appointed many of those people had already found work. It is an issue in public service recruitment that the panel process, while it is very fair, it can be very lengthy. Obviously, if people are waiting for a long time and something else comes up, they may well take it. It is an issue generally across public service recruitment.
Are there many competitions?
Yes. We propose to continue them on an ongoing basis. The employment control framework figure at the end of the year is 6,350, and we also have 20 people from the Garda and 218 people working on the public services card, which gives a total of 6,588. The actual number at the end of October was 6,550. Even now we are recruiting in or around another 40 people. We expect that process to be ongoing.
There also appears to be a saving of €21 million under various subheadings - travel and subsistence, training and development and incidental expenses, postal and telecommunications services, office expenses and payment for agency services. Is it that there was an overestimate for these?
No. "Agency services" relates to JobPath. The original Estimate for JobPath for 2015 was €12 million. At the time it was thought that JobPath would commence earlier in 2015 than turned out to be the case. There were many complications around contracts, tendering and so on. Provision was made for a more aggressive roll-out schedule, with multiple locations going live over a shorter period. The contracts were signed on 5 June and the roll-out of services commenced on a soft launch basis in mid-July because that coincided with the holiday period. The soft launch approach was agreed in consultation with JobPath companies to allow more time to secure properties, recruit their staff and develop systems and procedures. The later start date and the soft launch roll-out has resulted in fewer fees falling due for payment in 2015. Currently, JobPath services are being provided to jobseekers from 32 departmental locations across the country, and some 5,000 jobseekers have been referred to JobPath so far, a significant number given that it meant setting up office points at 32 locations. We expect that will continue in 2016 and will be completed then. Obviously, the actual cost of JobPath will be determined by the number of jobseekers who are referred and the number who gain sustained employment. The contingency provision in the Department's accounts was more than €5 million. So far we have not needed any of it, and it does not appear as though we will, although these may be famous last words.
I have one final question in relation to PRSI and the extra money being received. A report was presented to this committee, and we have had a number of debates about the Social Insurance Fund and the deficit in it and the gap that needs to be filled. Where stands what was framed in that report? Does it appear that the hole and the future-----
The critical reason was that the actuarial review-----
Yes.
The last actuarial review was carried out by a big firm of accountants; I think it was KPMG. The review was carried out not long after I came into office, so it was at the height of the employment difficulties. Much of it was based on the then unemployment figures. The deficit in the fund had grown alarmingly at the beginning of our term, up to nearly €2.8 billion. We started the process of getting people back to work. After a period, if not immediately, anyone who gets back to work begins to pay PRSI, as does his or her employer, and people who go into self-employment pay their self-employment contribution. Once the balance is changed between people on the live register and people going back to work, which is what we are doing now, it has an enormous tonic effect on the Social Insurance Fund. Members will recall that when the troika presented its forecast of the position for this year it did not forecast anything as good as the outturn we have had. It still anticipated cuts, if I remember correctly, of about €1 billion this year. It anticipated interest costs of €11 billion this year, but we have got that down to less than €7 billion. Its forecast for unemployment was far worse than what we have actually achieved. The people doing the actuarial review would have been influenced, obviously, by those forecasts. The actuarial review will commence next year, as required by legislation. As we are coming into an improving period, it will show those improvements but it will also reference the fact that we are spending €200 million a year - that is, €1 billion every five years - for the extra retired people who have a retirement pension.
That will not change. In fact, if anything the cost of that will increase. We also have to factor in what I hope will be rate increases for pensioners. We were able to provide a rate increase this year of €3 per week which is the first rate increase since 2009. We were also able to bring back the Christmas bonus, again the first time since 2009. Also pensioners of a certain age or of limited income who receive the fuel allowance will also get an additional €2.50 per week from 1 January. It is quite a significant onward cost. Obviously, quite a few pensioners are carers. Carers will also receive the respite care grant which will be reinstated at €1,700. I anticipate that as economic progress continues we will continue to provide - that is my ambition - for rate increases for pensioners so that will be a charge on the fund. We must remember that money is spent largely in Ireland in the domestic economy. This is good in terms of retail businesses and services businesses in particular.
In the absence of any further questions, that concludes our consideration of the matter. I thank the Minister, Deputy Joan Burton, and her officials for attending today's meeting of the select sub-committee.