Dáil Éireann - Volume 619 - 11 May, 2006

Written Answers. - Social Welfare Benefits.

Mr. Coveney asked the Minister for Social and Family Affairs his views on whether social assistance payments based on means tests are effectively targeting poverty (details supplied); and if he will make a statement on the matter. [17673/06]

  Mr. Brennan: The Report titled ‘Out of the Traps’ Ending poverty traps and making work pay for people in poverty” published by the European Anti Poverty Network and Open last December is a valuable contribution to the development of the Irish social protection system.

The Report focuses on a range of means testing and delivery issues, including, in particular, issues relating to rules and provisions governing the move from welfare to work.

In Budget 2006, I was particularly anxious to ensure that the Budget reflected the evolving new social agenda that has at its core a social welfare support system that is active instead of passive, that assists people to live with dignity and enables them to make a valuable contribution towards society. A key objective of this reform agenda is the removal of employment disincentives and the avoidance of welfare dependency.

In this context, I was pleased to be able to announce a number of significant and focused reforms and improvements to a range of means testing arrangements, as follows: I introduced a tapered withdrawal rate for disability allowance and blind pension recipients who engage in rehabilitative employment or self employment and have a weekly income over EUR120 and under EUR350. This measure which will take effect from June 2006 is specifically designed to incentivise those with a disability to take up employment; The income disregards for the means test for carer’s allowance are to be increased from next April to EUR290 for a single person and EUR580 for a couple. As a result a couple with two children can earn up to EUR32,925 and the carer will retain entitlement to the maximum rate of carer’s allowance. This increase in the means disregards also fulfils the commitment in the Programme for Government to enable all those earning up to average industrial earnings to qualify for carer’s allowance; The upper income limit for the one parent family payment will increase from EUR293 to EUR375 per week in June 2006. This substantial increase will encourage employment and ensure financial security for these parents and their children; A 50% tapered withdrawal of earnings between EUR60 and EUR90 per week was introduced for persons in receipt of rent and mortgage interest supplement from January last, thereby increasing the incentive to take up employment or training [715] or to pursue maintenance payments; There will be an increase by next September in the spouse’s income disregard for entitlement to the qualified adult allowance (QAA) from EUR88.88 to EUR100 a week, as well as an increase of EUR30 per week to EUR250 for entitlement to a tapered QAA rate; Significant changes in January last were made to the family income supplement (FIS) thresholds designed particularly to boost child income support for larger low income families. As a result of these improvements a family with 4 children has seen its weekly FIS payment rise by up to EUR64.80 a week while the payment for a family of 6 children has risen by nearly EUR117 a week; The qualifying period on the Live Register for access to the Back to Work Allowance was reduced to 2 years, from 3 years for the self employment strand and 5 years for the employment strand.

The EAPN/OPEN Report also highlighted the multiplicity of schemes and associated individual means testing arrangements. In this regard, I was anxious to make initial progress in reforming the social welfare system.

I announced the establishment, from next September, of a single standard enhanced non-contributory pension scheme (to be known as the State Pension non-contributory) with an improved means test, thereby simplifying the structure of supports for older people.

Key features of the new scheme will be a weekly means disregard of EUR20 per week, up from the EUR7.60 per week which dates back to the 1970s and a special earnings disregard of EUR100 per week. This latter measure is intended to facilitate those older people who wish to continue in employment. As a direct result of the enhanced means test arrangements, over 30,000 pensioners will benefit directly from increased payments of up to EUR12.50 per week and, where a QAA is in payment, by a further EUR8.30 per week.

The measures I have just outlined constitute a significant reform of the means assessment arrangements and I look forward to making further progress in future Budgets.

Question No. 37 answered with Question No. 8.

Ms Shortall asked the Minister for Social and Family Affairs if, in view of the fact that the proportion of contributory old age pensioners qualifying for the fuel allowance has decreased significantly, he will consider increasing the maximum amount which such categories are allowed to earn before losing entitlement to the fuel allowance as this limit has not been increased since Budget 2000; and if he will make a statement on the matter. [17389/06]

  Mr. Brennan: The aim of the national fuel scheme is to assist householders on long-term social welfare [716] or health service executive payments with meeting the cost of their additional heating needs during the winter season. Fuel allowances are paid for 29 weeks from end-September to mid-April and are not intended to meet the full cost of heating.

Budget 2006 provided for an increase in the rate of fuel allowance of EUR5.00 from EUR9.00 to EUR14.00 (EUR17.90 in designated smokeless areas). Some 274,000 customers (151,000 with basic fuel allowance and 123,000 with smokeless supplement) will benefit in 2006 at an estimated cost of EUR125.1m.

The main conditions that apply to the scheme are that a person must be in receipt of a qualifying payment, satisfy a means test and must either be living alone or only with a qualifying dependant. The household composition and means test rules for fuel allowance scheme qualifying purposes is to ascertain the ability of applicant households to meet their normal heating requirements out of their own resources and to ensure the maximum amount of support is targeted at those most in need of the fuel allowance support.

People who already qualify for means-tested pensions or allowances such as old age (non-contributory) pension, long-term unemployment assistance or one-parent family payment do not have to undergo a further means test to qualify for fuel allowance. The majority of people who receive fuel allowances qualify because they satisfy the relevant means test for their primary weekly payment.

In the case of contributory pensions such as old age contributory, retirement and invalidity pensions, which are not means tested, a person may have a combined household income of up to EUR51 per week, or savings/investments of up to EUR46,000, over and above the maximum old age contributory pension rate and still qualify for fuel allowance. The fuel allowance income limits increase each season in line with the increases in the old age contributory pension rate.

In addition to the fuel allowance, over 320,000 pensioner and other households qualify for electricity or gas allowances through the household benefits package, payable towards their heating, light and cooking costs throughout the year, at an overall cost of EUR109 million in 2005. These allowances are linked to unit energy consumption, so that these people are protected against unit price increases in electricity or gas.

Fuel allowances are incorporated in the recipient’s weekly social welfare payment and are not intended to meet heating costs in full. The Government’s objective is to ensure that the recipient’s total weekly income, including the fuel allowance, is sufficient to meet all of their income needs, including heating costs. Budget resources have been concentrated on providing significant real increases over and above inflation each year in all primary social welfare pension, benefit and assistance rates. This is a more costly approach [717] than increasing fuel allowances because the increase is paid for the full year and not just for the 29 weeks of the winter heating season. This approach delivers a better outcome for pensioners and others by substantially increasing their income in real terms over the whole year, to better assist them in meeting their normal basic living costs, including heating.

Any changes in the means rules or other conditions of the scheme would have cost implications and would have to be considered in the context of the Budget and in the light of the resources available to me for improvements in social welfare generally.