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

I thank the Leas-Chathaoirleach and the committee members for the invitation to meet with them today and for their co-operation in ensuring we can present the 2023 Supplementary Estimate for the Department of Social Protection. I am seeking a Supplementary Estimate of €678 million for 2023, and the purpose of this is to address a shortfall in funding for my Department which is required because of additional expenditure on Vote 37 in 2023. The additional expenditure is as a result of the various lump-sum payments we provided in spring and the further package of lump-sum payments which will be paid out over the coming weeks to assist people with the cost of living.

I am deeply conscious of the cost-of-living challenges many people are facing right now. While the reductions of between 10% to 12% in retail prices for residential electricity and gas prices announced by many suppliers in recent weeks is a step in the right direction, there is still much further to go. It is incumbent on utility providers to mirror continuing falls in wholesale prices with the rates they charge their customers. The consequences of high utility prices are known to us all, and they have the knock-on effect in the cost of every household’s weekly shop. The CSO, in its latest release this month, notes that inflation moderated from 6.4% to 5.1% between September and October. While this moderation in inflation is welcome, it is still too high, and we all know that higher prices impact people in their pockets.

This Government wants to help people and that is why we acted decisively, earlier in the year, to provide a spring package which contained more than €402 million in additional social protection supports, including a €200 cost-of-living payment to long-term social welfare recipients, including those receiving the working family payment; a €100 child benefit additional lump-sum payment per child; a €100 once-off increase in the back-to-school clothing and footwear allowance; and the continued roll-out of the hot school meals programme. After the summer, as part of our preparations for the budget, we examined the situation afresh, and with continuing cost-of-living pressures, we again provided additional targeted payments for people. These additional payments, made through November and December, will put money into the pockets of older people, working families, carers and people with disabilities. The wide range of lump-sum payments will help to ease the burden on our most vulnerable over the winter months as an integral part of the comprehensive budget package to provide assistance to households in dealing with the cost of living.

In framing the budget, our aim was to ensure the support being given would be delivered in a timely manner, would benefit households throughout the State, and would be progressive in nature by targeting supports towards those on lower incomes in particular. I believe the overall package of supports represents a robust response to the substantial bills and expenses that households are currently facing, and this view is supported by independent ESRI analysis. In 2023, these supports are estimated to cost almost €1.3 billion, of which €832 million is for Vote-funded schemes. The cost-of-living supports that are paid to people in receipt of payments from voted schemes is met entirely by the Exchequer. As members will be aware, there is a current year surplus in the Social Insurance Fund. This means that the cost-of-living supports paid to those on social insurance schemes have been funded from the SIF without recourse to funds from the Exchequer. As the cost of the various lump-sum supports were not included in the original Estimates for the Department, and unless equivalent savings on other schemes meet the entire cost, a Supplementary Estimate is required to ensure these essential supports can be paid.

In the briefing material provided to the committee, we have separately included the additional expense of the cost-of-living supports, including the Christmas bonus, to be paid for each scheme, showing the effect of these supports on the requirement for a Supplementary Estimate. This table also provides the outturn position on the various schemes prior to the payment of the cost-of-living supports, which eases comparison between the original Estimate and the Supplementary Estimate.

I hope the committee finds this approach useful.

The balance of the Supplementary Estimate is required to meet a net overspend on the schemes and services delivered by my Department. In February of this year, a Revised Estimate of €23.9 billion was considered by the committee for projected 2023 social protection spending. This was based on Government decisions that had been made at the time. I have provided the committee with full details of all schemes, where the projected end-of-year Vote expenditure deviates from that projected in February 2023. I will go through the key issues behind that in a little more detail now.

On cost-of-living impacts, Government has provided a very significant response to support social protection recipients in the face of the cost-of-living pressures which manifested during 2023. Additional payments totalling almost €1.3 billion specifically focused on mitigating cost-of-living pressures have and will continue to be made this year. For example, earlier this year, as part of the spring cost-of-living package, my Department made the following payments: a €200 cost-of-living payment to long-term social welfare recipients, including those receiving the working family payment; a €100 child benefit additional lump sum payment per child; a €100 one-off increase in the back-to-school clothing and footwear allowance; and the continued roll out of the school meals programme. Following the cost-of-living package announced as part of budget 2024, my Department will pay the following additional payments between now and the end of the year: a €400 disability and carers support grant to be paid this month; living alone and fuel allowance lump sums to be paid in November; more than 46,000 working families to get a €400 lump sum payment next month and a €100 per child lump-sum payment for those receiving an increase for a qualified child; a double child benefit payment for 1.2 million children in December; and, of course, the Christmas double payment for more than 1.3 million people.

In the Revised Estimates for 2022, Government provided a non-core fund of €480 million to provide critical social protection supports to refugees fleeing the war in Ukraine who have sought shelter in Ireland under the protection of the EU’s temporary protection directive. As part of the Supplementary Estimate, I will be seeking an additional €25 million to support those fleeing the war in Ukraine, inclusive of cost-of-living supports. I have provided the committee with full details of all schemes, where the projected end of year Vote expenditure deviates from that projected in February 2023 due to the impact of the expenditure on payments for people fleeing the war.

On a positive note, the position of the Social Insurance Fund in 2023 is again very healthy. As a result of our exceptionally strong labour market performance this year, the Social Insurance Fund's PRSI income to the end of 2023 is projected at almost €15.8 billion. This is €650 million, or 4% more than was estimated in February. Fund expenditure is now projected to be just over €12.3 billion, which is €421 million or 4% more than had been projected. This means that no SIF subvention is required from the Exchequer in 2023, and the Social Insurance Fund will carry over an accumulated surplus currently estimated at €5.6 billion into 2024, a fact that is hugely welcome but vital given the future financial pressures we face in terms of our changing demographics.

Taking account of the additional cost-of-living measures the Government announced on budget day and the continued supports required to assist those under the EU’s temporary protection directive, it is now projected that overall social protection spending in 2023 will be €25.04 billion. This is a difference of €1.14 billion over the February 2023 Revised Estimate. Not all of this €1.14 billion is being funded through the Supplementary Estimate. There is €650 million in additional PRSI income over that previously estimated. This will more than cover the additional estimated expenditure on social insurance schemes. Taking account of this, the total Supplementary Estimate required to meet the shortfall on Vote schemes is €678 million.

This €678 million comprises an additional €715 million for schemes and services funded from Vote 37 and an additional €12 million on administration. Combined, this amounts to €727 million, of which €49 million is offset by additional appropriations-in-aid receipts. The need for this Supplementary Estimate is driven by additional expenditure of €832 million on cost-of living payments on Vote schemes. Excluding these once off measures, however, we estimate underlying savings of €154 million on a range of schemes funded from Vote 37, mainly due to a stronger labour market and lower live register figures. The net amount sought as part of this Supplementary Estimate is, therefore, as I have said, €678 million.

As we approach the end of yet another very busy year, I take this opportunity to acknowledge the hard work of the staff of the Department of Social Protection. Since 2020, the staff have gone above and beyond to ensure people were supported, first through the worst of the pandemic, then with the cost-of-living crisis, and then those arriving from Ukraine. This support is delivered with courtesy and helpfulness and quickly. As we have seen with last year’s autumn bonuses and are seeing again this year, the Department delivers repeatedly. Just this week we see bonus payments delivered for 46,000 working families, a fuel allowance lump sum paid to 410,000 households, and a further lump sum paid to people with disabilities.

I recognise the extraordinary efforts of the Department’s policy, IT and operational teams to ensure that, as we sit here today, these payments are made to thousands of people this week. This is in addition to all the normal work of the Department as it supports its customers day in and day out. I visited the IT centre about a year and a half ago. It is amazing what goes on there. The centre is the machine which drives all those payments into people's bank or post office accounts. I acknowledge the huge amount of work the team does. Sometimes we can take it for granted that all of this will happen on time and on schedule and the money will just automatically appear in the bank and post office accounts. That is not the case. It takes a huge amount of work by a lot of people. What the staff of the Department of Social Protection have done in recent years in the face of a pandemic, a war and a cost-of-living crisis is the definition of what public service is all about. I take the opportunity to record my thanks to the staff of the Department of Social Protection, in the local Intreo offices and HQ offices around the country. We all deal with them through our constituency offices, and while, no more than ourselves, they cannot solve every problem, they always do their best and I recognise their efforts.

I thank the Chair for allowing me the opportunity and I am happy to take any questions from the committee on the Supplementary Estimate.