Revised Estimates 2016 - Statement by Minister Varadkar

Opening Statement by the Minister for Social Protection Leo Varadkar, T.D in relation to the 2016 Revised Estimate Volume, (Vote 37 and Social Insurance Fund)

Wednesday 22nd June 2016

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I am pleased to open this debate on the 2016 Revised Estimates for my Department.

The Revised Estimates which are before the House provide for an allocation of €19.625 billion in 2016 for my Department. This represents 38% of all gross current Government expenditure.

The major element of Social Protection spending by far is expenditure on a wide range of schemes which are paid on a weekly basis.

Each week, some 1.37 million people receive a payment from my Department.

That’s in respect of 2.1 million beneficiaries.

It includes payments for pensioners, people with disabilities, carers, and jobseekers.

In addition, over 625,000 families receive Child Benefit each month for almost 1.2 million children.

The wide range of payments and services provided by my Department has an impact, either directly or indirectly, on the lives of almost every person in the State. We also have a huge impact on the Labour Market.

Payments or social transfers play a crucial role in alleviating poverty and are essential in providing adequate incomes to live.

Social transfers freed over a fifth of the population from risk-of-poverty in 2014, representing a poverty reduction effect of 56 per cent. This is among the best poverty reduction effects in the EU.

It is not always fully appreciated in public debate as to who benefits from welfare expenditure.

There is a misconception that most payments go to the unemployed. This is not so.

Accordingly, as a starting point today, it is useful to outline the Department’s expenditure on its various programmes in 2016.

• the biggest single block of expenditure in 2016 will be Expenditure on Pensions, which will amount to almost €7 billion, or 36% of overall expenditure
• expenditure on Working Age Income Supports – including Jobseekers, One Parent Family Payment, Maternity and Paternity Benefit – accounts for some €4 billion or 20% of overall expenditure
• expenditure on Working Age Employment Supports, including Community Employment, Back to Education/Enterprise and various employment supports, amount to €1.1 billion, or 6% of my Department’s expenditure
• expenditure provision for Illness, Disability and Carers will amount to over €3.5 billion or 18% of expenditure in 2016
• expenditure on Children and Familieswill account for nearly 13% of expenditure or €2.6 billion, of which €410 million will be spent on the Family Income Supplement paid to low income working families
• expenditure on Supplementary Payments, Agencies and Miscellaneous Servicesaccounts for €867 million or 4% of expenditure. Supplementary payments have four main elements: Rent Supplement, the Household Benefits Package, Fuel Allowance and Free Travel

It is worth highlighting that expenditure on Pensions and Children alone will account for almost €9.6 billion or 49% of the Department’s overall expenditure in 2016.

Deputies might note that in order to enable an accurate year on year expenditure comparison to be made account must be taken of two items in 2015,

• first €135 million to enable pensioners and other recipients, who were due to be paid on Bank Holiday Friday, 1st January 2016 to have their payments brought forward to Thursday, 31st December 2015, and
• and €197 million to pay out the Christmas Bonus last year. I will return to the Bonus in a few minutes

When these two items are excluded, the 2016 allocation is over €52 million higher than the net out-turn in 2015.

Indeed, the allocation in 2016 is over €1.6 billion greater that what was spent in 2008 or over 9%.

It is important for the House to note that, given the demand led nature of most DSP expenditure, the allocations for the vast majority of schemes varies from year to year based on emerging trends.

These variations can result in a higher or lower requirement. The very welcome reductions in expenditure on jobseekers, due to falling unemployment, means that we have been able to meet expenditure pressures in other areas.

Deputies will be already familiar with increased spending on pensioners as the number of seniors rises but there are two other areas I would like to highlight:

• payments to carers will amount to almost €912 million in 2016, an increase of 18% since 2012 due to a higher numbers of carers being supported , and
• similarly, expenditure on disability and invalidity payments has increased by 13% or €232 million since 2012, again, due to increased numbers of people on the schemes

As already outlined, the 2015 outturn included expenditure of €197 million on the payment of a Christmas Bonus.

The Christmas Bonus was introduced in 1980 and was abolished in 2009.

The last Government re-introduced it partially in 2014 with the payment of a 25% Bonus, followed by a 75% Bonus in 2015.

As happened in 2014 and 2015, when a bonus was subsequently paid, there is currently no provision for a bonus in the Department’s allocation for 2016.

In both 2014 and 2015 the Government was ultimately in a position to proceed with a bonus given the continuing improvement in the State’s financial position.

The State’s financial position is improving again in 2016 and I will therefore be seeking approval from my Government colleagues in the coming months for the payment of a Christmas Bonus once again this year.

An announcement will be made on Budget Day in October.

The job of the last Government was to fix the economy and save Ireland from national bankruptcy.

Unemployment had reached a crisis peak of over 15%; CSO data published recently shows that the monthly unemployment rate has fallen to 7.8%.

Long-term unemployment has fallen below 5% for the first time since the financial crisis, and youth unemployment has fallen from its peak of 33% to 16.9% last month.

At the end of May, there were approximately 38,500 fewer people on the Live Register than the same time last year.

There continues to be a strong decrease in the Live Register, with an 11% decline in numbers in each of the past two years.

Recent CSO data shows strong increases in employment.

Employment has increased by 47,000 people in the past year and it is particularly welcome that the construction sector experienced one of the largest rates of increase.

As I said earlier, the ongoing drop in the Live Register is freeing up resources to meet rising demand for pensions, people with disabilities, carers, among other areas.

A growing economy creates more jobs for more people. However, some people are still struggling to break into the workforce.

There is evidence of rising levels of people who have been unemployed for more than five years.

This is where my Department’s Pathways to Work Strategy comes in, which aims to ensure as many of the new jobs as possible go to those on the Live Register, particularly the long-term unemployed.

It also aims to gradually expand access to activation services, as resources allow, to other non-employed people of working age, in order to promote active inclusion, participation in the economy and society. Having a job is not just good for one’s financial wellbeing, it’s also good for a person’s welfare, their family and community.

The Intreo integrated employment and support service marks a fundamental transformation in how the Department of Social Protection supports and assists jobseekers, representing a move away from a passive payer of benefits, to actively engaging with jobseekers and employers.

In 2015, my Department provided group information sessions to 189,000 jobseekers, including 47,500 long-term unemployed.

It also provided initial one-to-one guidance interviews with 126,000 jobseekers.

In addition, in 2015, my Department commenced JobPath.

JobPath is a payment-by-results contracted service whereby long-term jobseekers receive intensive individual support to help them overcome barriers to employment and to assist them in finding jobs.

Referrals started in July.

It is expected that 60,000 referrals will be made to JobPath providers in 2016.

I am pleased to report that my Department is phasing in a full activation support service to people with disabilities who wish to avail of the service on a voluntary basis.

To this end, Intreo will become a gateway to employment activation for people with disabilities, with people with disabilities being case managed along with the live register cohort.

Moving on to additional expenditure items announced in 2016, the social protection Budget for 2016 has four keys aims:

• to increase income for pensioners aged 66 and over
• to strengthen supports for families with children
• to further hasten momentum in helping jobseekers back to work; and
• to provide targeted assistance for vulnerable groups

Weekly personal rates of payment for all those aged 66 and over were increased by €3 per week with proportionate increases on qualified adult and reduced rates.

In addition, all of those eligible for the Fuel Allowance, including jobseekers and people with disabilities, gained from the increase of €2.50 per week, from €20 to €22.50 per week over the fuel season.

Funding for the Free Travel scheme, which benefits a large number of people with disabilities, carers and pensioners, was increased by €3m, from €77m to €80m, to meet increased numbers eligible for the scheme, access new services and therefore fully protect entitlements under the scheme.

Families with children benefited from a €5 increase in the monthly rate of Child Benefit while lower income working families also benefited from increases in the Family Income Supplement thresholds.

The Respite Care Grant was renamed the Carer’s Support Grant to better reflect the usage of the grant, and was increased by €325, from €1,375 to €1,700 per annum.

I’d like to briefly touch on the area of fraud and control. It is essential that we maintain public confidence in the welfare system by vigorously tackling any fraudulent activity.

My Department implements a range of measures to prevent and detect fraud, and also ensures that effective debt recovery and deterrence measures are in place.

Data exchanges between the DSP and other state bodies, including the Revenue Commissioners, are being enhanced on an ongoing basis.

The Department is now acting on information received through these links in a timelier manner.

For example, Commencement of Employment information from Revenue is now received weekly and acted upon automatically, and prisoner data is now exchanged weekly.

Predictive analytic projects on Jobseeker, Disability and One Parent Family Payment controls should result in better targeting of cases for review.

Some 1.1 million reviews were carried out in 2015, achieving €463 million in savings, which was 91% of the Department’s target. The target for control savings in 2016 remains unchanged at €510 million.

Looking ahead, the Programme for Government contains a number of commitments in relation to social protection, such as:

• increasing pensions and the living alone allowance
• protecting Free Travel for pensioners and people with disabilities
• support a rate increase for people with disabilities and for carers

We want to reinforce the contributory principle by strengthening the social insurance system. I will extend the treatments available under the Treatment Benefit scheme, which was significantly cut back during the austerity years. Importantly, I will extend the level of social insurance coverage available to the self-employed.

This will form part of the Government’s ‘new deal’ for the self-employed which will encompass tax as well as welfare changes.

I am delighted that the paternity leave and benefit legislation is before the Dáil this week.

I am sure that all Deputies from all sides will welcome this innovation and once enacted, my Department can commence the payment of paternity benefit from September to social insurance contributors, including the self-employed.

This concludes my overview of the main areas of expenditure and associated activity for my Department for 2016. I look forward to hearing your views in the debate over the next few hours.

ENDS