Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the committee for allowing me to present the Supplementary Estimate for the Department of Social Protection. I am seeking a Supplementary Estimate of €109 million for 2016. The purpose of this additional Estimate is to fund the Christmas bonus, which is being paid to Vote 37 for social assistance recipients this week. Overall, the Christmas bonus is estimated to cost €220 million and, as Deputies will be aware, I am able to provide for an 85% bonus this year, which is up from 75% last year. It is being paid over the course of this week to approximately 1.25 million customers, thereby providing a significant boost for local economies throughout the country.

The cost is broken down into €106 million for Vote 37 recipients and €114 million for Social Insurance Fund recipients, mainly people in receipt of the State contributory pension. The Social Insurance Fund is funding the entire cost of the bonus being paid this week to people on contributory payments, such as the State pension contributory, invalidity pension and so forth. Accordingly, this element of the bonus does not impact in any way on the Supplementary Estimate, as the Social Insurance Fund is in surplus this year. Income from pay-related social insurance, PRSI, receipts during 2016 will result in Social Insurance Fund income of an estimated €9.15 billion. This will be €260 million or 3% ahead of profile for this year and will be €650 million or 7.7% ahead of the position in 2015. This is a very positive development and is clear evidence that the economy generally, and employment in particular, are on an upward trajectory.

Expenditure on the Social Insurance Fund schemes and administration is expected to cost €8.77 billion. This is €104 million or 1.2% ahead of profile, but that is entirely accounted for by the cost of the Christmas bonus of €114 million to Social Insurance Fund customers. Even with the payment of the Christmas bonus to social insurance schemes, the surplus is expected to be approximately €350 million this year. It will be the first surplus in the Social Insurance Fund since 2007, nine years ago. My intention is to keep running surpluses in the coming years because we must be prepared for the next downturn when it comes and for the jobseeker's payments which will follow. Obviously when there is a downturn, inevitably income into the fund goes down and expenditure goes up. We also must prepare long term for the ageing population and the rising cost of pensions.

Overall expenditure on the Department's schemes, services and administration in 2016 is expected to be €19.838 billion. This will be €213 million or 1.1% more than was provided for in the 2016 Revised Estimates. The higher expenditure is due solely to the payment of the Christmas bonus. The live register is expected to average at approximately 304,300 in 2016. This is a reduction of 40,000 on the average for 2015, or 141,000 better than the average for 2011. The estimated cost of paying the Christmas bonus of €30.2 million is being offset by underspends elsewhere in jobseeker's allowance allocation, so no additional allocation is required for jobseekers in the Supplementary Estimate. The improving labour market and the decline in the live register has also seen a decline in demand for employment supports.

The 2016 Supplementary Estimate referred by the Dáil and the briefing provided to committee members list the schemes for which additional sums are being sought, as well as some underspends. We can go through the position of individual schemes as required during the meeting. Members might wish to note that almost all of the expenditure incurred by the Department is demand-led. This demand is driven by demographic trends and economic factors such as developments in the labour market. Estimates of expenditure for any scheme for the following year are published in December as part of the Revised Estimate Volume. The individual Estimates are constructed on a scheme-by-scheme basis, using data on trends in recipient numbers, average payment values and other relevant factors as are available for that portion of the year in which the Estimates are calculated. Trends can, and do, change over the course of the year, resulting in expenditure being higher or lower than was provided for in the original Estimates.

Actual expenditure on most of our schemes will never be precisely on target because of these factors. The extent of any overspend or underspend only becomes fully apparent at the end of the year when the outturn for the year has been confirmed. Thus, for example, we expect a significant overspend on schemes such as the carer's allowance this year. This is primarily due to the continuing rise in the number of applications. In the first half of this year the number of new applications for carer's allowance increased by 19% compared with the same period in the previous year. We are also processing more claims for the scheme. As of the end of October, we had processed almost 26,550 claims so far this year. That compares with 24,190 in all of 2015 and 21,250 in 2014. The rising number of claims every year is part of the reason for the delays in processing the applications and it is also a cost to us.

I hope my statement has given the committee a broad overview of the Department's expenditure in 2016 and the reason for the necessity to seek a Supplementary Estimate.