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

I thank the Chairman and members for their invitation to attend the committee today to discuss the 2023 Revised Estimates for the Department of Social Protection.

As we face into 2023, it is timely to recap on the challenges Ireland has faced over the past 12 months. We entered 2022 under Covid restrictions but, thankfully, then saw a significant easing of Covid-19 pressures on our society, with a resultant fall of €5.6 billion in my Department’s expenditure year on year between 2021 and 2022. However, the war in Ukraine has led to an unanticipated, but very significant, impact on spending since February of last year. My Department spent over €246 million in 2022 to provide direct financial supports to people fleeing Ukraine covered by the temporary protection directive. Up to the middle of last week, over 72,500 personal public service numbers, PPSNs, had been allocated, with 34,000 income support claims and 13,000 child benefit claims currently in payment to people who have fled the war.

Looking forward, the Department was allocated €480 million for supports for Ukrainian refugees as part of its Revised Estimates Volume for 2023. This figure will be kept under close review with the Department of Public Expenditure and Reform as the situation develops through 2023.

The war in Ukraine has also added to more general price pressures. After decades of low inflation, increases in the costs of oil, gas and other goods sourced on global markets have hit households in Ireland and around the world hard. The Government responded through a number of measures. In my Department, budget 2023 delivered the largest social protection package in the history of the State. This package, valued at €2.2 billion, provided for a range of eight cost-of-living supports delivered by my Department in quarter 4 of 2022 and for targeted ongoing measures effective from the start of this year.

In framing the financial Estimates position for 2023 and comparing it with the outturn for 2022, my officials have sought to provide the committee with a like-for-like comparison between the two years. We have done this by setting out the monetary value of the Christmas bonus, all of the other cost-of-living supports, the residual Covid measures and the cost of temporary protection Ukraine measures in the extensive briefing document before members. The Revised Estimates, which the committee is to consider today, reflect the financial provision for 2023. It is a year in which many potential challenges may arise for our economy and society, not least the continuing war in Ukraine and its ongoing impact on prices, especially for such staples as energy and food. Projected spending for the Department in 2023 is €23.9 billion, compared with an estimated outturn for 2022 of €24.6 billion. It should be borne in mind that spending in 2022 was inflated by the inclusion of €1.2 billion of Covid-related measures and a further €1.2 billion in once-off cost-of-living supports.

As members know, the work of my Department is broad in scope, supporting people throughout the life cycle, from the payment of child benefit to the provision of income supports when people reach pension age. The Department's expenditure, at €23.9 billion for 2023, is still 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.

The projected 2023 expenditure of €23.9 billion hopefully 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 of over €1 billion on a full-year basis.

I am proud to have delivered the largest social welfare budget package in the history of the State, providing a targeted mixture of once-off and ongoing measures. The ESRI’s post-budget analysis has shown this will be effective in protecting most households from rising prices, especially the most vulnerable in our society.

We acted quickly, providing eight lump sums across a vast range of social protection supports in the last quarter of 2022. Then, from the start of January, we have introduced a wide range of social protection increases which were announced as part of budget 2023. This includes a €12 across-the-board increase to weekly rates, the largest increase to those rates since the mid-2000s.

I was pleased to announce a major expansion of the fuel allowance scheme as part of the budget. I was particularly pleased to extend the eligibility criteria for those aged over 70 so that more older people will qualify for the fuel allowance. We have already seen more than 20,000 additional households avail of the scheme since the budget changes were announced. As part of the budget, we also disregarded the half-rate carer's allowance payments from the fuel allowance means test, which is something this committee had raised with me previously.

We have brought in other increases, such as a €40 increase in weekly income thresholds for the working family payment; a €20.50 increase in the monthly rate of domiciliary care allowance, bringing the rate to €330; and another increase in payments in respect of children of social welfare recipients, bringing the payment to €42 per week for children under 12 and €50 per week for children aged 12 and over. These measures are reflected in the expenditure subheads presented today.

The Government will closely monitor the economic situation during the year and stands ready to respond to further support our citizens as and when required, as we did in 2022.

The biggest single block of expenditure in 2023 will be on pensions, which will amount to more than €9.8 billion or 41% of overall expenditure.

This is up by almost €360 million, representing 39% of total expenditure, from the 2022 outturn, with €280 million of this increase linked to additional recipient numbers. This reflects the ever-increasing demographic challenges unfolding for this programme. 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 payments amounts to €5.1 billion in 2023, representing 21.6% of expenditure, and is slightly down on 2022, reflecting the elimination of Covid illness benefit expenditure in this programme. Furthermore, with the phasing out in 2022 of the pandemic unemployment payment, PUP, we will see a levelling off in expenditure on working-age income support schemes. Working-age income supports will account for more than 16% of expenditure in 2023 at €3.87 billion. This includes payments for jobseekers, one-parent families, maternity and paternity payments, and supplementary welfare allowance.

Expenditure on employment supports has reduced significantly, thankfully no longer requiring the very significant, necessary expenditure on the employment wage subsidy scheme, EWSS, that was required last year. We plan to provide significant support to community employment, CE; the back-to-education allowance; Tús; the rural social scheme; and the various employment and activation programmes. These will be particularly important in 2023, a year when the Irish economy and the labour market face many downside risks. Employment supports expenditure amounts to €712 million this year or 3% of my Department's spending.

Expenditure on children and families will account for more than 11% of expenditure, or €2.7 billion, of which over €2.1 billion will be spent on child benefit and €363 million on the working family payment.

Expenditure on supplementary payments is €950 million or 4% of 2023 expenditure. This includes significantly increased provision for the fuel allowance scheme, which is crucial at this time of high energy prices.

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 2023 expenditure on the largest and, potentially, most complex set of Estimates. There is little doubt that 2023 will bring challenges for social protection spending, including evaluating how changes in the economy are impacting those most at risk of poverty.

I thank the staff of the Department, particularly those working on the front lines, who have worked through Covid, worked to support our citizens with cost-of-living pressures, and worked to help those families finding shelter in Ireland after being driven from their homes in Ukraine. In the past, it has been the case that key social protection budget changes would usually take effect in January and, sometimes, in recent years, in March. The fact that the staff of the Department managed to administer eight separate lump-sum payments, set up a new system to administer the fuel allowance and also ensure that the increases to weekly payments were all in place for the start of January took a huge amount of effort.

The one thing I have learned in the Department of Social Protection is that making any change is not as simple as just flicking on a light switch. The work required behind the scenes to develop the IT systems and make sure everything runs smoothly takes a significant amount of time and effort. As Deputies, it is only when something goes wrong that it is brought to our attention. However, we should not take for granted the efforts by the staff of the Department to make sure people receive their payments on schedule every week. Our people, systems and schemes have all shown huge flexibility in responding to what have been unprecedented challenges in recent years.

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