Willie Penrose (Westmeath, Labour)
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Question 2: To ask the Minister for Social and Family Affairs if he will take steps to increase the income limit his Department has put in place for the receipt of various benefits from €317.43 to €420 in view of the fact this limit has not been adjusted for several years; if his attention has been drawn to the impact this limit has on lone parents and others in availing of secondary benefits; and if he will make a statement on the matter. [23516/05]

Séamus Brennan (Dublin South, Fianna Fail)
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I am conscious of the need to facilitate persons in receipt of social welfare payments to take up employment opportunities and to ensure the social welfare supports are structured to support this objective. I am aware of the specific issue raised by the Deputy, which was also raised in the recent discussions at the committee on social affairs that he chairs.

Several measures have been introduced in recent years to remove disincentives to taking up employment and to assist in the transition from welfare to work. These measures include easing of means tests through income disregards, tapered withdrawal of benefits as earnings increase and employment support schemes such as the back to work programme.

The income limit referred to applies to people who take up employment under approved employment schemes, and who, because of their employment, do not qualify for rent supplement under the standard rules of the supplementary welfare allowance scheme or for other secondary benefits. People in those circumstances may be entitled to retain these secondary benefits, in total or in part, for the duration of the scheme, subject to certain conditions.

For most people the most significant secondary benefit is rent or mortgage interest supplement, which is paid under the supplementary welfare allowance scheme. While the income limit of €317.43 per week has not changed for several years, other significant improvements have been made to the means test since then. Back to work allowance and family income supplement, in cases where one or both of these are in payment, are now disregarded in the assessment of the €317.43 limit. PRSI and reasonable travelling expenses are also disregarded.

People who had been unemployed and who commence employment through the back to work scheme can have a weekly household income significantly in excess of the €317.43 weekly limit in question and still qualify to retain 75% of their rent or mortgage interest supplement. For example, in the first year of their participation in the back to work scheme, a single person can have combined income from the back to work allowance and earnings of €429 per week while a couple with two children can have a weekly income of €528.25.

Other improvements have also been made to the retention arrangements. The period for which rent or mortgage interest supplement may be retained has been extended to four years on a tapered basis; 75% in year one, 50% in year two and 25% in years three and four. As a consequence of these improvements many families retain more of their rent or mortgage interest supplement than had been the case.

Additional information not given on the floor of the House.

Participants in the back to work and community employment schemes are assessed under either standard rules or under retention rules and will be entitled to receive payment under the more favourable option. Alternatively, people who do not qualify under these retention arrangements can apply for rent supplement under the standard rules of that scheme. Under these rules, rent or mortgage interest supplements are calculated to ensure that an eligible person, after the payment of rent or mortgage interest, has an income equal to the rate of supplementary welfare allowance appropriate to his or her family circumstances, less a minimum contribution of €13 which each recipient is required to pay from his or her own resources.

Family income supplement is now also disregarded in the standard means test. In addition where the employment is part-time, that is, fewer than 30 hours per week, up to €60 is disregarded in the means test thus ensuring that a person is better off as a result of taking up such an opportunity.

I am aware that the income level of single parents who take up community employment places exceeds the €317.43 weekly income limit. However, this does not exclude them from receipt of rent or mortgage interest supplement as they have the option of being assessed under standard supplementary welfare rules. One impact of the changes means that more people qualify for support under the standard rules of the schemes in question and are not subject to the thresholds that apply to the special rules governing retention of secondary benefits. They are also financially better off than they were before taking up the community employment or other opportunity. The arrangements I have outlined are designed to encourage and assist people in the transition from reliance on welfare payments to full-time employment. I will continue to keep all of the employment incentives under review.

Willie Penrose (Westmeath, Labour)
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We must stop talking illusory economics where the psychology is that if one keeps repeating that it will be all right on the night, it will be. Is it not the position that the community employment scheme participants are disqualified from receiving rent allowance once their income exceeds €317.43? Is it not the position that this rule acts as a complete disincentive to lone parents to seek employment or training?

The best way out of poverty is through employment. Schemes, such as the community employment scheme, have provided a marginalised section of the community with the chance for further education, training and the opportunity to enter the workplace. If we are serious about bridging the gap between rich and poor, we need an imaginative approach to education, training and employment opportunities. This means the income eligibility threshold must be increased to €420 as it has not been raised for several years.

Community employment scheme participants have written to me, claiming they are the victims of the latest Government scam to reduce rent allowance greater than 50% and yet receive an increase in the scheme's benefits of €14 per week. How can anyone be satisfied with this? How could anyone have the gall to claim the peoples lot is improving? This is arising as a direct result of the failure of the Department of Social and Family Affairs to raise the income limit for tapered rent allowance.

A lone parent on a community employment scheme receives €350 and is automatically over the limit. Conditions attached to participating in the community employment schemes are strict. A participant has to be in receipt of low income to be eligible for the scheme. People in need of help are being forced to drop out of the scheme to qualify for rent allowance. Is this right? Is it right that we have not ensured those disregards have been adjusted in line with inflation to facilitate people's transition into the workplace, particularly when in the past seven years, the Department of Social and Family Affairs has returned €850 million to the Department of Finance. Some of these moneys could have been used productively for the back to education allowance and the community employment scheme.

Will the Minister undertake a review of all disregards that have been static for several years? They have only served to exclude people because of the failure to index link the bands and limits, leading to automatic deprivation of eligibility for those schemes. It is no use giving a person a coat if one proceeds to cut the buttons off it; it will not keep him warm. Let us stop the codology and raise the limits to ensure participants in these schemes get an opportunity to participate productively in the economy. We will see the fruits of it in the future.

Séamus Brennan (Dublin South, Fianna Fail)
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Limits are adjusted from time to time, often in the budget. I will keep these income limits under review. However, it is a battle of choices where sometimes we need to increase rates rather than move limits. It is often a trade-off. I have given the Deputy the overall increase in welfare expenditure. This year we have tried to target it at increasing the rates rather than moving the limit. I take the Deputy's argument that one has to continue working on both issues.

I am aware the income level of single parents who take up community employment places exceeds the €317.43 weekly income limit. However, this does not exclude them from receipt of rent or mortgage interest supplement as they have the option of being assessed under standard supplementary welfare rules.

A lone parent can retain the one parent family payment in addition to receiving the community employment payment. That puts him or her in a more favourable position than an unemployed person whose community employment wage replaces his or her social welfare payment. I am conscious of the effect of these thresholds in getting people back into employment.

I saw the figure of €850 million in a recent newspaper article. The Department is not sending back money as such. The reason it did not spend what it was budgeted for is that unemployment was not as high as estimated. In that sense, it is good news rather than bad news.

Willie Penrose (Westmeath, Labour)
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I want to redistribute the fruits of that good news to those most in need.

Catherine Murphy (Kildare North, Independent)
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Question 3: To ask the Minister for Social and Family Affairs the way in which the poverty trap inherent in the payment of rent assistance will be addressed when the rental accommodation scheme is fully rolled out later in 2005; if it was considered in the context of the national anti-poverty strategy; if so, the conclusions which were drawn; and if he will make a statement on the matter. [22707/05]

Séamus Brennan (Dublin South, Fianna Fail)
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The purpose of the supplementary welfare allowance rent supplement scheme, administered on my behalf by the community welfare division of the Health Service Executive, is to ensure that private sector tenants who are not in full-time employment or full-time education have a guaranteed minimum amount of income with which to meet their basic day to day needs after paying rent. It is a short-term income support measure, rather than a long-term housing measure.

The scheme includes a variety of income disregards in determining the amount of assistance to be provided in individual cases. It is flexible, particularly for unemployed people who seek to get back to work or into community employment or training under the various relevant State schemes. That will remain the position after the new rental accommodation scheme arrangements commence for longer-term recipients.

While the objective of rent supplement is to provide short-term income support as opposed to addressing long-term accommodation needs, a significant number of people had come to rely on rent supplements on a long-term basis over recent years. The Government announced an initiative in July 2004 aimed at meeting these long-term housing needs. The new system gives local authorities responsibility for meeting long-term housing assistance needs, including the needs of those people on rent supplements for 18 months or longer. These needs will be met through a range of approaches including the traditional range of social housing options, the voluntary housing sector and, in particular, a new public private partnership type rental accommodation scheme.

The aim of the new system is to minimise ongoing dependence on rent supplement by progressing to a situation where suitable long-term accommodation is available for all who need it. The rent supplement scheme will continue to meet the short-term needs of people for accommodation. This will be achieved within three years from commencement of the new arrangements in each local authority and in any event no later than September 2008.

The level of rent charged by local authorities under the new scheme is a matter for each local authority. Arrangements in that regard have not been finalised but are well advanced. Rent levels will be set in a manner broadly consistent with the current local authority differential rents system. This system does not distinguish between sources of income in determining the appropriate rent payable in each case.

Additional information not given on the floor of the House.

Accordingly, while the overall income level of the household will determine the rent payable under the rental accommodation scheme, there will be no specific restrictions on employment. Participants on rental accommodation schemes will be free to take up work or extend their employment hours as they wish, with some appropriate adjustment made by the local authority to their rent levels to reflect their increased income.

The new arrangements for people with longer-term accommodation needs will be fully in accord with the thrust of the national anti-poverty strategy. Similarly, I consider that the rent supplement scheme remaining in place for people with shorter-term needs is an assistance towards poverty alleviation for low-income households.

Catherine Murphy (Kildare North, Independent)
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My experience of rent supplement is that it deters people from going to work. I do not have a problem with the concept of local authorities taking significant responsibility for what is a housing issue. However, I want to ask some questions regarding problems with the scheme or perhaps to elicit more information about it.

The public service embargo will have a bearing on the ability of local authority staff to turn the voids, or housing stock that has remained vacant for longer than six months, around quickly and to find accommodation. People may be caught between both systems. People may be obliged to travel distances or to spend long periods waiting for officials on the telephone, which will add to their costs. In cases where people currently visit health board offices, will the Minister consider using those offices to cut down on that cost or will he ask local authorities to do so?

Many aspects of this scheme could be problematic for particular individuals. For example, if a family goes over the income threshold which entitles it to be on the housing waiting list, presumably it will be automatically cut off. However, the situation may arise whereby elderly parents or parents on low income have children living with them who could push them over the threshold, so that they suddenly disappear off the Richter scale. Will the scheme also be a way of stating that a person is accommodated, so that he or she disappears from the housing waiting lists without the State ever providing a permanent home for that individual?

There are also difficulties about the voids being turned around quickly and local authorities could end up with a sizeable bill. It is difficult to figure out what will happen. Will the Minister respond to this point? After three years, when the scheme is rolled out, will local authorities be provided with the resources to continue this scheme? There appears to have been silence on that point and there are all sorts of legal difficulties. Basically, the Minister has told the House that people who currently cannot get rent assistance if they are in employment will be able to go to work if they are on the list for 18 months and join this scheme. They will pay a differential rent, a portion of the rent that would normally apply. Is this the change in how housing applicants will be considered? If so, it will result in the possibility of some applicants going to work, which is something from which they have been excluded. Is my understanding of the new scheme correct in this regard?

Séamus Brennan (Dublin South, Fianna Fail)
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I thank the Deputy for the question and her helpful suggestions, which I will consider. I would be happy to arrange for senior officials to meet the Deputy to take her through the details of the scheme if she wishes. As to her question, this is a new scheme. I expect 4,000 households will be facilitated under the rental accommodation scheme by the end of 2005. This year, I have transferred €19 million from my Department to the Department of the Environment, Heritage and Local Government to enable the process to get under way. I am disappointed that no one has yet been housed under this scheme. However, I am assured that this will begin in the coming weeks and I urge all concerned to make better progress than is currently being made.

The evidence I have on file demonstrates that there is an increased reliance on rent supplements. In a sense, the numbers are frightening in that the number of people who are in receipt of rent supplement has increased by 35% in four years, from 42,000 to almost 60,000. The taxpayer is now paying €370 million into that scheme, compared with €150 million in 2000. The evidence behind those figures shows that people are beginning to rely on rent supplement as a permanent means of housing.

Therefore, it was decided that once a person spent 18 months in receipt of rent supplement, the Department would transfer him or her to the Department of the Environment, Heritage and Local Government who would have responsibility for finding permanent accommodation by whatever means possible, principally through a more permanent type of rental scheme.

Some 30,000 people, which is a large number, have been in receipt of rent supplement for more than 18 months. Therefore, through the funding I provided, I expect the Department of the Environment, Heritage and Local Government as well as local authorities to move on and start to facilitate those people. The number of 4,000 is the target for the end of this year, but we have some distance to go.

Catherine Murphy (Kildare North, Independent)
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Local authorities already have problems delivering the housing programme. In the absence of extra staff, I believe this simply will not happen. No additional resources were provided in the budget and the embargo has not been lifted so I am seriously concerned that these funds will be returned without anyone being housed by this scheme.

Séamus Brennan (Dublin South, Fianna Fail)
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I will consider the Deputy's point.