Regina Doherty (Meath East, Fine Gael) | Oireachtas source

I thank the committee for the opportunity to present a Supplementary Estimate for the Department of Employment Affairs and Social Protection. I am seeking a Supplementary Estimate of €139 million for 2018. Primarily, the purpose of the Supplementary Estimate is to fund the Christmas bonus for Vote 37 social assistance recipients. The Christmas bonus will be paid this week. For the first time in many years, it is being paid at 100%, which we all very much welcome. It is being paid over the course of this week to approximately 1.2 million customers. The bonus is a welcome contribution for people in receipt of long-term social welfare payments in the run-up to Christmas - because it finds its way into communities, local businesses and economies - and for families and individuals to allow them to prepare for the festive season, which is its overall aim.

The Christmas bonus is estimated to cost approximately €266 million. This cost is broken down into just over €120 million for Vote 37 recipients and nearly €146 million for Social Insurance Fund recipients. The Social Insurance Fund is providing for the cost of the bonus being paid to people on contributory payments such as the State pension contributory, invalidity pension, and so on. Accordingly, this element of the bonus does not impact in any way on this Supplementary Estimate application. The Social Insurance Fund is in surplus this year. In contrast, the bonus paid to people in receipt of payments from Voted schemes is met entirely by the Exchequer. The bonus is not included in the original Estimates for the Department and, unless savings are made that will meet the entire cost, a Supplementary Estimate is required in order to ensure that the bonus will be paid.

The Chairman suggested at a previous meeting that it is difficult to compare like with like when comparing the original Estimate with the Supplementary Estimate because of the inclusion of the bonus in the outturn position for the relevant schemes. For this reason, I have included an additional table, beginning at page 3 of the committee's brief, which shows the variance before the bonus is paid and the effect of the bonus on the outturn position. I hope the committee finds this approach helpful.

The income from pay-related social insurance, PRSI, receipts during 2018 will result in a Social Insurance Fund income of an estimated €10.6 billion. This will be €252 million or 2.4% ahead of profile for this year and will be €793 million or 8.1% ahead of the position in 2017. This position is a reflection of the continuing improvement in employment levels in the economy and continues the welcome trend that I presented to the committee here last year.

Expenditure on Social Insurance Fund schemes and administration, including payment of the Christmas bonus, is expected to cost approximately €9.5 billion.

This is €187.6 million, or 2% above profile, and €145.5 million of this is due to the payment of that Christmas bonus. Even with the payment of the Christmas bonus to social insurance schemes, the surplus of the fund is still expected to be around €1.1 billion at the end of 2018. The accumulated surplus in the fund at the end of the year is estimated at €2.32 billion. While all of this is good news, and it is welcome to see the social insurance fund in such a healthy state, it is worth noting that the fund was also running a significant surplus of €3.6 billion at the end of 2007, but that surplus was exhausted by 2010 when Exchequer subvention was again required because of the economic climate of the time.

The overall expenditure of the Department's schemes, services and administration in 2018 is expected to be €20.33 billion and this will be €320 million, or 1.6%, more than provided for in the original 2018 Revised Estimates. As I mentioned earlier, €266 million of this is due to payment of the Christmas bonus. The total expenditure for the Department, which includes expenditure from the Vote and the social insurance fund, comprises overspends on some schemes and underspends on others. For example, on the social insurance side there has been higher than anticipated expenditure on treatment benefits, which is very welcome, but lower than expected expenditure on invalidity pension. On that Vote, there has been higher expenditure on administration and on illness and disability payments but lower expenditure on the working age employment supports. When taken together, and excluding the Christmas bonus, the Department's expenditure on such schemes and services is expected to be €54 million ahead of the profile, less than 0.3%.

The live register is expected to average at around 221,300 in 2018, a reduction of over 39,000 on the average for 2017. Most of the estimated costs of paying the Christmas bonus of €25 million to jobseekers is being offset by an underspend of over €22 million in the jobseeker's allowance allocation. The ongoing strong performance of the live register is evidence that growth is continuing and that more people are continuing to make the move into employment. The live register is now well under 200,000, the first time it has been at that level in ten years and the CSO figures that came out this morning are welcome indeed. We will continue to work with jobseekers to ensure they are adequately prepared to enter the workforce and can benefit from the recovering economy.

In 2018, the Supplementary Estimate referred to the committee and the briefings provided to committee members list the schemes for which additional sums are being sought, as well as some of our underspends. We can go through the positions of individual schemes as required by members. The amount of the Supplementary Estimate is derived by estimating the outturn across all voted schemes, which includes underspends on some schemes and overspends on others and adds in the cost of the Christmas bonus. Nearly all the Department's expenditure is demand led and, as people apply for income supports when they meet particular circumstances such as ill health or unemployment or when they reach pension age, demographic trends, economic and societal changes and developments in the labour market all play a role in expenditure incurred by our Department.

Any estimate of expenditure for any scheme for the following year is published in December as part of our annualised Revised Estimates 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 information that is available at the time the Estimate is calculated. It is appropriate to note that the outturn position of the Department in the absence of the payments of the Christmas bonus would be €20.7 billion, or just 0.3% above our original Estimates. In this regard, I am satisfied that the Estimates process is working well. It takes account of all key trends and expenditure patterns and provides an accurate picture of the following year's expenditure. Trends can and do, however, change over the course of a year, resulting in expenditure being higher or lower than originally provided for. The actual expenditure on most of our schemes can probably never be precisely predicted and the extent of an overspend or underspend only becomes fully apparent at the end of a year when the outturn of the year has been confirmed.

I hope my opening statement, along with the briefing material which I sent over yesterday, provides the necessary information to the committee and supports the reasons given for the Supplementary Estimate. I am happy to take questions from members.