Joan Burton (Dublin West, Labour) | Oireachtas source

I express my appreciation to the select sub-committee for giving me the opportunity to present a Supplementary Estimate for the Department of Social Protection. I am seeking a supplementary sum of €685 million in 2012. This is necessary for two reasons: there is a need for a higher Exchequer subvention for the social insurance fund because PRSI contributions will be lower than expected this year and a higher live register figure than provided for in the Estimates. The figure of €685 million is made up as follows: €418 million for a higher Exchequer subvention to the social insurance fund owing to lower than expected PRSI receipts; €264 million to meet higher expenditure on Vote schemes and services and administration; and €3 million in respect of other balances.

I propose to provide further information on the composition of the first two items. The higher Exchequer subvention to the social insurance fund is made up as follows: lower social insurance fund income, with an estimated outturn of €6.63 billion in 2012, some €454 million or 6.4% less than the original estimate owing to a shortfall in PRSI receipts, offset by lower expenditure on social insurance fund schemes expenditure of €8.87 billion, or approximately €36 million or 0.4% lower than estimated. Arising from lower PRSI receipts and slightly lower expenditure, the Exchequer subvention will be €2.23 billion. This represents a shortfall of approximately €418 million or is 23% higher than estimated.

The excess on Vote 37 schemes, services and administration in 2012 is €264 million. There are two main elements: there has been an overspend of €271 million on jobseeker’s allowance arising from a higher live register figure, which is offset by an underspend of €7 million on all other schemes, services and administration funded from the Department’s Vote. There is expected to be an average live register figure of 437,300, compared to a figure of 425,000 provided for in the Department’s Estimate. The additional cost is expected to be €235 million, with the overspend of €271 million on jobseeker’s allowance being offset by an underspend of €36 million on jobseeker’s benefit. Apart from jobseeker’s allowance, expenditure on all other schemes, services and administration, when taken together, is expected to be just below target. While additional sums are necessary for a number of schemes, these are being compensated for by anticipated underspends on other schemes.

The relevant schemes are outlined in the Supplementary Estimate. Overall expenditure on schemes, services and administration provided by the Department in 2012 is expected to be just under €20.77 billion. It is expected to be €228 million or 1.1% more than the figure provided for in the Estimate.

I will now go through the programmes of expenditure of the Department in 2012. On the cost of administration, the estimated outturn is €585 million - €14.9 million, or 2.5%, less than the figure provided for in the Estimate. Administration is expected to make up 2.8% of overall Department expenditure this year.

On expenditure on pensions, the expected outturn is €6.28 billion - €28 million, or 0.5%, more than the figure provided for in the original Estimate. It is also just under €780 million, or 14%, greater than it was in 2008. The cost of funding pensions is expected to increase by a further €200 million in 2013, as the number of people of pension age continues to grow. This is the demographic bonus in that more older people are living longer. It ultimately reflects in social welfare and requires extra funding to fund pensions. The number receiving pensions has increased from 460,000 recipients in 2008 to 540,000 in 2012, an increase of 80,000 or 18%. A total of €5.3 billion of the €6.2 billion spent on pensions this year is funded from the social insurance fund, representing 60% of expenditure from the fund.

On expenditure on working age income supports, the expected outturn is just over €6 billion, which is €302 million, or 5.3%, higher and has costs associated with the higher live register figures mentioned. On expenditure on working age employment supports, the expected outturn is almost €960 million. This represents an underspend of €23 million, or 2.4%. Expenditure on illness, disability and carers payments is expected to be €3.4 billion. This represents an underspend of €84 million, or 2.4%. Expenditure on children, at €2.4 billion, is on target. Expenditure on supplementary payments, including household benefits, fuel allowance and free travel, is expected to be €1.18 billion, which is €20 million, or 1.7%, ahead of profile.

I hope my opening statement has given the committee a good overview of the Department's expenditure in 2012 and the reasons underlying the necessity to seek a Supplementary Estimate. The schemes and services operated by the Department benefit almost everybody in society, either directly or indirectly, and are the key platform for the provision of social protection. I look forward to discussing the Supplementary Estimate of €685 million with the committee.