Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I thank the Chairman and members of the committee for their invitation to attend here today to discuss the 2022 Revised Estimates for the Department of Social Protection. As we face into 2022, we must be conscious of how far we have travelled in overcoming the challenges that Covid-19 presented both for society and the economy, as well as for our people. We have experienced and dealt with waves of lockdowns and easing of public health restrictions since March 2020, which impacted all of us. We did this by developing and delivering innovative approaches to mitigate as far as possible the impact of Covid on people's lives. My Department played a critical role in supporting workers and their employers who were severely affected by Covid-19. The roll-out of the pandemic unemployment payment, PUP, for workers whose jobs were in cold storage during lockdown and the provision of funding to the Revenue Commissioners to support employers through the employment wage subsidy scheme ensured individuals, businesses and the economy generally could withstand the impact of restrictions.

In recognition of the need to ease the financial impact of Covid on the most vulnerable, measures such as flexibility in rent supplement and the Covid illness benefit were also introduced. The Government's announcement on 21 January 2022 of the lifting of most public health restrictions, allowing virtually all elements of society to reopen, is an indication we have moved into a new phase. The Revised Estimates, which the committee is to consider today, reflects the start of this new phase as we emerge from almost two years of a very dynamic and volatile environment into what we hope will be a more stable base for continuing to develop our social protection system.

Projected spending for the Department in 2022 is €23.3 billion, compared with an estimated outturn for 2021 of €30.3 billion. It should be borne in mind that spending in 2021 includes €8.5 billion directly related to Covid, comprising €4 billion for the PUP and €4.5 billion for the employment wage subsidy scheme. The provision of Covid measures in the 2022 Estimate is approximately €700 million, reflecting the fact that in 2022, my Department will return to focusing more on its traditional schemes and services.

As members know, the work of the Department is broad in scope, supporting people throughout the life cycle, from the payment of child benefit to the provision of income support when people reach pension age. The Department's expenditure, at €23.3 billion for 2022, is still one of the largest of any Department, representing more than one third of gross current Government expenditure. With this level of expenditure, we must ensure our social protection system is properly structured and provides support when people need it most. As demonstrated by our response to the Covid-19 pandemic, we also strive to ensure the system is flexible enough to deal with changes in the economy and society so that we can respond to challenges when they emerge.

The projected 2022 expenditure of €23.3 billion represents a normalisation of the pattern of social protection spending, but it is a new normal and a higher level of expenditure, incorporating budget day measures valued at €600 million on a full-year basis. This was the largest social welfare budget package in 14 years and included across the board increases for all welfare recipients at the same time as continuing the practice of recent years of implementing targeted measures to help the most vulnerable in our communities. Those measures include increases in the living alone allowance, qualified child payments and the back-to-school clothing and footwear allowance; the expansion of the hot school meals programme; improvements in income disregard for carers; and increases in the wage subsidy scheme for people with disabilities, to name just a few. These measures are reflected in the expenditure subheads presented today.

The biggest single block of expenditure in 2022 will be on pensions, which will amount to more than €9.1 billion or 39% of overall expenditure. Thankfully, people are living longer lives but that, of course, means an increasing proportion of the Department's expenditure is now providing income support for people in their older years. Expenditure on illness, disability and carer's payment amounts to €4.9 billion in 2022, representing 21% of expenditure.

With the phasing out in 2022 of the PUP, we will see a reduction in expenditure on working-age income support schemes. Working-age income supports will account for nearly 16% of expenditure in 2022, at €3.65 billion. This includes payments for jobseekers, one-parent families, maternity and paternity payments, and supplementary welfare allowance. Expenditure on employment supports continues to make a provision for the employment wage subsidy scheme, albeit at a significantly lower level. It also includes community employment, back-to-education allowance, Tús, the rural social scheme and the various employment and activation programmes. Employment supports expenditure amounts to €1.5 billion this year or 6.3% of my Department's spending.

Expenditure on children and families will account for over 11% of expenditure, or €2.6 billion, of which over €2 billion will be spent on child benefit and €350 million on the working family payment. Expenditure on supplementary payments like rent supplement and the fuel allowance is €907 million, or nearly 4%, of 2022 expenditure.

The live register at the end of January 2022 stood at just under 163,000, taking account of over 80,000 who received a pandemic unemployment payment, PUP, in that week. The total number of workers in receipt of unemployment-related payments stood at 243,000. My Department will continue to work in 2022 to encourage the movement from unemployment to employment through our activation services and employment programmes, and meeting our commitments under the Pathways to Work initiative.

The broad overview I have presented of social protection expenditure is developed in detail in the briefing material provided to the committee. I am sure the committee will agree it is a very comprehensive analysis of 2022 expenditure on one of the largest and most complex Estimates of expenditure. There is little doubt that 2022 will bring challenges for social protection spending, including evaluating how changes in the economy are impacting those most at risk of poverty. My Department has demonstrated its ability and flexibility to effectively support the most vulnerable, as evidenced in the last few years in particular, without which we would have seen a society where poverty and social exclusion increased. Due to the measures we have taken, incomes were protected, the risk-of-poverty rates fell and inequality reduced.

The recent Government announcement of the €500 million package of measures to mitigate the increasing cost of living is a further indication of our commitment to respond immediately to the needs of our citizens. As part of that package, an additional €125 lump sum will be paid to fuel allowance recipients next month and the Government also agreed to the earlier introduction of the €10 increase in working family thresholds. Both measures combined represent additional social protection spending of €53 million in 2022. The combination of the other cost of living measures and the significant improvements introduced in budget 2022 will provide further support to many vulnerable households faced with higher costs this year. The measures taken in response to Covid and increased living costs show our determination to protect and continue the progress we have made in the face of challenges, and the Estimates presented to date reflect this determination.

I look forward to hearing the committee's views and welcome any questions members have for myself or for the Minister of State, Deputy Joe O'Brien.