Séamus Brennan (Dublin South, Fianna Fail)

I want to refer to matters raised by Deputy Gilmore and others. There is a case for reforming rent allowance because the reality is that the State is paying approximately €400 million per year on a temporary basis to house 60,000 people. The questions arising from that issue are obvious. For example, would it be preferable to put that money into permanent housing? If one went to the local bank with €300 million per year, it would probably write a cheque for €6 billion, which would build a lot of houses. What, however, is to be done with the people who have fallen on hard times without notice? They have to be looked after in some way. I am certainly open to reforming rent allowance in some way but it must be done in a practical and sensible manner.

When solving one problem, we do not want to create further trouble. For example, it is often suggested that people have to pay top-up payments because the rent is too high and, therefore, rent allowance is too low. However, we account for 40% of the rent in the State and much of the rent in Dublin is set by landlords at the rate we pay, so rental costs would be driven up if I raised the limits tomorrow. I am slow to increase the allowance because the landlord would grab it. I want it to be available to people for genuine purposes but I do not know whether a solution can be found by raising the caps ever higher. Reforms are needed but that on its own is not a good answer.

As the Minister of State, Deputy Noel Ahern, mentioned to me earlier, in some cases, such as single men in different parts of the country, the cap may not be as high as it should be. On the other hand, the allowance of approximately €1,200 in Dublin is as high as it can safely be without pushing prices through the roof. Maybe we can juggle it around between the two extremes but we have to be careful when doing so.

There were calls from the Opposition for more State support for private renters but the rental scheme exists to address just such a need. The solution is the provision of permanent housing rather than to condemn 60,000 to permanent rent allowances. It is a short-term income support measure. The Deputy's point about tapering is correct and we have been trying to deal with that issue. I am fully committed to putting that in place more aggressively. I accept that the higher the rent allowance, the greater the disincentive for people to go back to work. People visit my clinics who say that the rent allowance is very good but if they go back to work, they begin to lose the supplement. If we increase rent allowance further, that argument will be made to all Deputies in their clinics even more strongly than at present. A doubling of the allowance or a removal of the cap might be welcomed but it would mean that fewer people would be able to go back to work because the higher the allowance, the harder it would become to put effective tapering measures in place.

I want to ensure that we have an effective tapering mechanism in place and that rent allowance is a temporary measure rather than a permanent response. The allowance should help people through a difficult period and should be sufficient to help those who need it, in particular, lone parents for whom there is a higher than usual disregard.

My colleague, the Minister of State, Deputy Noel Ahern, has outlined Government policy in the housing area and we both accept that there is a need for joined-up Government in this area. We need more co-ordination between the Department of the Environment, Heritage and Local Government and the Department of Social and Family Affairs to get the balance right between providing physical housing, either private or social, and providing rent allowance for those who are in need. Among the 60,000 recipients of the allowance, many are in desperate need but there is some evidence of the system being played by a number of people. Such people move from one form of rented accommodation to another without tackling the fundamental issue.

In an ideal world, I would prefer to give the €300 million in mortgage support to people to buy their own houses. If I could organise that, I would prefer to do it, quite honestly, rather than giving it in rent to landlords who can take the money down to a bank and arrange their next project on foot of the rent roll which they can guarantee from my Department. It would make much more sense if I could say the budget is €300 million, we would buy some houses and put families on the property ladder. That would be a much better solution.

We want effective tapering in place and will not tamper with the cap until we are convinced that it will increase prices. We are trying to move towards a lasting solution and the Minister of State, Deputy Noel Ahern, has laid that out, namely, moving people out of the rent allowance scheme and onto the housing schemes as quickly as possible. That is the right road to take.

A number of Deputies referred to poverty traps and wedges. As earnings and rents increase, it becomes more difficult for the welfare system to keep up. As a result, we are constantly creating new wedges or traps and if we try to eliminate them with increases, the effect is a spiralling one whereby such traps become more acute but at a higher level. We must be careful that in solving a specific issue in this area, we do not create other problems, for example, making an allowance so good that people cannot possibly go to work. We must not send out a signal to people that we do not want them to go to work, back to education or to get themselves a house on the open market if they so wish. That is not the signal we want to send out. We want to help people in genuine need but we do not want to comfort people so that we cannot get them to a point where they can afford a house or to go back to work or education. All Members of this House know that housing, work and education are the permanent solutions in this area. Everything else is a stop-gap and a temporary solution. We must be very clear about that.

Like the Minister of State, Deputy Noel Ahern, I wish that the level of tenant placement under the rental accommodation scheme was higher but I note that the rate of transfer has increased over the past three months. That scheme is being pushed within the Department so there should be more progress in that area over time.

There is no question of people being left without housing support. We will continue to pay the rent supplement until we can find other solutions, but it must be remembered that the rent allowance is only a safety net within the overall social welfare system. It was never meant to be anything other than that. It was not meant to be a permanent allowance. The rent allowance scheme itself may be permanent but the day that we decide it is a permanent allowance for a family or an individual is the day we give up on them, which is not fair. We must activate such families if we can. If they have the option, we must genuinely try to move them forward into housing and employment.

Rent allowance is available to people who do not qualify for payments under other State schemes. Applicants must satisfy a means test to avail of the allowance. We are determined to provide incentives to assist people to become more financially independent, especially through employment, education and training. In that regard, a number of measures have been introduced to help those in the transition from welfare to work, for example, the back to work programme, the special means disregard and the tapered withdrawal of benefits as earnings increase. The means disregard is particularly important for people on rent supplement. The first €60 of additional income from part-time work, community employment or training is disregarded in full and half of the next €30 is disregarded. This means that a person can be up to €75 per week better off if he or she takes up part-time work, community employment or training.

Alternatively, people taking up employment or another opportunity may qualify to retain certain rent supplement and other secondary benefits in total or in part, subject to certain conditions. This is particularly beneficial to people taking up full-time work having been out of the workforce for 12 months or more. As Deputy O'Sullivan has said, an income limit of €317.43 per week applies in these cases and I appreciate that needs to be improved. The rent supplement retention income limit has not changed for some time and I will give it the attention it now deserves.

However, significant other improvements have been made to the means test subsequently which impinge on that. The back to work allowance and family income supplement, in cases where one or both of these are in payment, are disregarded in the assessment of means. PRSI and reasonable travelling expenses are also disregarded in the means test. Under these special arrangements, rent supplement may be retained for up to four years on a tapered basis, that is, 75% of supplement in year one, 50% in year two and 25% in years three and four. In effect this means that a person on a community employment scheme or other back to work scheme whose household income is above the €317.43 limit may still qualify for rent supplement under the standard rules. They may be allowed to earn above that limit because of certain rules and other disregards within the system, especially for those aged over 65 years.

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