Wednesday, 13 November 2013
Topical Issue Debate
Social Welfare Benefits Eligibility
I thank the Minister for Social Protection and her Department for the work undertaken so far towards securing social welfare provision for the self-employed, and I wholeheartedly welcome the report of the advisory group on tax and social welfare commissioned by the Minister.
During the general election campaign in 2011, I met many business people throughout my constituency who raised serious concerns about the complete lack of social welfare support for the self-employed. These were people who provided employment, paid PRSI, income tax and VAT, but whose businesses had collapsed following the economic downturn. I remember calling to one house in particular while canvassing and meeting a man who operated his business from the side of his house. He showed me details of numerous neatly-filled files of VAT, PRSI and income tax, which he had paid into the system correctly and on time. He explained to me that now that his business was no more, he was left to fend for himself, to pay his mortgage and feed his children with little or no support from the system he had paid into for so many years.
Therefore, it is heartening to see that in less than three years, since the Government came into power, the Minister has addressed this need by lowering the thresholds for the self-employed, and allowing them to be assessed for social welfare straight away on receipt of a letter from their accountant stating that the business has ceased trading. I also note that statistically, approximately 80% of self-employed people who have applied for social protection did qualify for a payment, which is proof of the Government's commitment to supporting our business community through good and through bad. However, we must now reinforce this provision by establishing proper system supports for the self-employed while our country comes out of the dark days of recession, as we are the only industrialised nation in the EU that has not got these features in place.
The first step is to implement the report I mentioned earlier and in doing so, introduce a new class stamp of 5.5% for the self-employed, which would automatically entitle them to sick pay and disability cover. The question is whether we make this a voluntary or mandatory system. As a previously self-employed person, I believe a mandatory system is the only way forward in order to be fair to all.
While it is encouraging that approximately 80% of self-employed applicants qualified for some form of social welfare support, it is in fact the PAYE worker who is footing this bill. Therefore, I would argue that it makes more sense to have the self-employed contribute the extra 1.5% themselves towards their own possible future social welfare needs. Revenue acquires income tax from the self-employed through their profits, or if the business is non-profit-making, it secures tax through their drawings. It therefore appears that paying a little extra on a stamp benefits the self-employed more and covers any eventual sickness or disability.
In respect of the collapse of a business and subsequent full unemployment, I have studied the British model whereby social welfare support comes in the form of an income-based jobseeker's allowance, which is of course means-tested. I believe this model best suits the needs of our self-employed.
It is fair to say that over the lifetime of this Government, the progress made towards supporting and recognising the social protection needs of the self-employed has positively evolved but more fool-proof foundations need to be introduced to ensure they are better protected in the future and further research on other European models needs to be explored and considered.