I propose to take Question Nos. 479 and 483 together.
The Vincentian Partnership for Social Justice (VPSJ) developed a model of a minimum income standard (MIS). The MIS is defined by the VPSJ as “the gross income a household needs in order to reach their minimum essential standard of living”.
The VPSJ’s Minimum Essential Standard of Living 2016 (MESL) is derived from a negotiated consensus (based on focus groups with representative households, and discussions with policy-makers and experts e.g. nutritional standards) on what people believe is a minimum. According to the VPSJ, it is a standard of living which meets an individual's/household's physical, psychological and social needs, calculated by identifying the goods and services required by different household types in order to meet these minimum needs. The costs incorporate factors such as food, clothing, personal care, health, household goods, household services, communications, social inclusion, education, fuel, transport, personal costs, insurance, savings and contingencies.
The model developed by the VPSJ’s produces a minimum income standard which is dependent on whether the household is, among other factors:
(i) in a rural or urban location (the main differences are that transport and fuel costs are judged to be higher in rural locations);
(ii) composed of a single working age person, a couple, a single- or two-parent family, a single pensioner or a pensioner couple; and
(iii) living in private rented accommodation, social housing or is an owner-occupier.
It should be noted that the MESL for welfare households assumes that households are eligible for a medical card, and as such, health and insurance costs are reduced accordingly, although the cost of over-the-counter medicines and prescription charges remains. While the model assumes that pensioners have the Free Travel pass and the Household Benefits package, it does not assume this for working age. It should be noted that certain working age recipients of welfare payments do qualify for Free Travel e.g. all recipients of Disability Allowance, Invalidity Pension, and Carer’s Allowance.
The costing outlined below is based on the following assumptions:
(i) The minimum income standards used for the costings are those for urban locations;
(ii) Housing costs are not taken into account as these are provided for separately in the model and vary significantly depending on a household’s circumstances. It should be noted that weekly depending on housing types or costs. A range of schemes, such as Rent Supplement, the Housing Assistance Payment, Rental Accommodation Scheme and the differential rent scheme are available to assist with certain types of housing costs.
The Minimum Income figures used in this costing are from the Minimum Essential Standard of Living 2016 (the latest publication available), and its Appendices, and the costings are based on 2017 estimated recipient numbers. I understand that the VPSJ will publish a 2017 MESL update later this year.
Children:
The cost of a child in 2016 varies depending on the child’s age, according to VPSJ research (Appendix 3A). The VPSJ research places the cost of an infant at €82.81, a pre-school child at €50.20, a child in primary school at €84.66 and a child in secondary school at €132.58 per week. These costs comprise of food, clothing, household goods, health, social inclusion, transport, education, etc. The costs do not include childcare.
For the purposes of this costing exercise, a weighted average increase was calculated (based on the CSO’s 2017 estimated population distribution by age). Taking into account the value of the qualified child increase (€29.80 per week), child benefit (€140 per month) and Back to School Clothing and Footwear Allowance where appropriate (€100 or €200 per annum, depending on the age of the child), an average increase of €27.61 is required to the QCI to bring the payment in line with the VSPJ’s direct cost of a child.
- The cost of increasing the qualified child increase by €27.61 per week is €548.88 million in a full year. This includes the cost of increasing the Back to Work Family Dividend which is linked to the rate of the qualified child increase (€12.56 million).
Working Age:
The VPSJ research finds that the minimum income standard (MIS) for a single working age adult with no children is €218.64 per week (Appendix 4A). For the costing, all weekly working age personal rates were increased to €218.64 per week. The monetary increase varies depending on the current weekly personal rate. It should be noted that the value of increases such as the Living Alone Allowance and supplementary payments, where relevant, such as the Household Benefits Package, Fuel Allowance, and Free Travel, have not been taken into account in this costing.
The MIS for a working age couple with no children is €335.55 (Appendix 4A), which is an increase of €116.91 from the single person’s rate. The current welfare increase for a qualified adult is €124.80. Accordingly, the qualified adult rate was not changed in this costing.
- The cost of increasing all working age personal payments to €218.64 per week is €966.1 million in a full year. It should be noted that this cost also includes increasing the Jobseeker’s Allowance age-related reduced rates to €218.64 per week, at a total cost of €152.32 million in a full year.
Pensioners:
The MIS for a single pensioner is €221.43 and for a pensioner couple is €269.85 (Appendix 7A). Accordingly, there are no welfare increases required to reach the MIS for pensioners as current welfare payments are in excess of the MIS for this group.
The table outlined the cost of index linking the State Pension, and all weekly payments to pensioners aged 66 and over (i.e. State Pension Contributory, State Pension Non Contributory, Widow/er’s,, Surviving Civil Partner Contributory Pension, Carer’s Allowance recipients aged 66 and over, Deserted Wife’s Benefit recipients aged 66 and over, Death Benefit Pension recipients aged 66 and Incapacity Supplement recipients aged 66 and over).
The costings are based on 2017 recipient numbers, and include the cost of proportionate increases in reduced rates and the qualified adult rates of payment, where applicable. It should be noted that the costings do not take into account changing trends (increases or decreases) in recipient numbers from 2018 onwards.
The Harmonised Index of Consumer Prices used in the following table is sourced from the Department of Finance’s 2017 Budget Day book. This provides forecasts for inflation for the five years 2017 to 2021 inclusive; however, there is no projection available for 2022.
|
Pensions
|
2018–1.8%
€m
|
2019–1.9%
€m
|
2020– 1.9%
€m
|
2021–1.9%
€m
|
|
State Pension (Contributory)
|
84.5
|
101.5
|
117.4
|
133.9
|
|
State Pension (Non-Contributory)
|
20.2
|
21.7
|
22.2
|
22.7
|
|
All weekly pension payments
|
126.0
|
146.6
|
164.6
|
183.2
|
It should be noted that all of the costings are subject to change over the coming months in the context of emerging trends and associated revision of the estimated numbers of recipients for 2018.
