Michael Ring (Mayo, Fine Gael)
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Question 30: To ask the Minister for Social Protection his views on the fact that certain welfare rates and benefits available under the social welfare system inhibit a return to work; the action he plans to take on this matter; and if he will make a statement on the matter. [43939/10]

Éamon Ó Cuív (Galway West, Fianna Fail)
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The social welfare system supports people of working age by providing income and other supports and by facilitating them in taking up employment, training, education or development opportunities. A key concern in this regard is to ensure that social welfare payments provide adequate income replacement and maintenance for the customer and their family, while also providing that sufficient incentive exists for persons to progress from the social welfare system to the workforce. Return to work patterns are often a function of more than financial rewards and include such considerations as work availability, family commitments, travel to work time and the type of available employment. However, financial incentives are important and these depend on the balance between the individual or family's disposable income when employed and when unemployed.

The replacement rate for given income levels measures the proportion of out-of-work benefits received when unemployed against take home pay if in work. While there is no predetermined level of replacement rate which would influence every individual's decision to work, clearly the higher the replacement rate, the lower the incentive to work. In this context most literature on the subject of replacement rates works from the assumption that a replacement rate significantly in excess of 70% may be considered to be excessive, while a replacement rate significantly less than 70% may be considered inadequate. In particular, high replacement rates are usually considered to be unsustainable in the absence of relevant and timely labour activation such as appropriate education, training or job placement measures and sanctions where claimants do not engage with activation processes.

In July 2010 detailed analyses of the net incomes of 327,827 people on the live register, who received a payment for a full week of unemployment compared their social welfare income to the net incomes of typical household types in the workforce. This demonstrated that the majority of social welfare recipients have replacement rates of less than 70%. In particular, when measured against the national minimum wage, 91% of recipients have a rate of less than 70% and 9% have a rate of less than 80%.

Michael Ring (Mayo, Fine Gael)
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According to media reports, couples on welfare earn more than people on the minimum wage. Irish small and medium enterprises confirm that even when they offer rates of as much as €15 per hour, they cannot compete with social welfare.

At a time when 460,000 people are unemployed here, why did we offer 6,600 work permits this year to people from outside the EU? Does the Minister agree with the comments by his colleague, Deputy O'Rourke, that it is acceptable to cut young people's social welfare payments or to allow them to do nixers?

Éamon Ó Cuív (Galway West, Fianna Fail)
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As Deputy Ring knows, it is illegal to work while drawing social welfare benefits. Clearly I would not condone the practice.

The replacement rates compared to the national minimum wage are 64% for a single person, 70% for a couple with one earner, 73% for a couple with one earner and one child and 76% for a couple with one earner and two children. When compared to the average industrial wage, the replacement rate falls to 53% for a single person, 65% for a couple with one earner, 69% for a couple with one earner and one child and 72% for a couple with one earner and two children.

I have heard a number of stories about individuals refusing offers of employment but I think several factors warrant serious examination. If an individual earns an income he or she does not declare, the replacement rates are totally different, even presuming full employment and adherence to the law. This is why I am keen to progress the national employment action programme at a much higher level than heretofore. We have also enacted legislation which provides for sanctions to be imposed where an individual does not engage with that process. Replacement rates are also affected by the rent supplement.

Michael Ring (Mayo, Fine Gael)
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People on the minimum wage or low incomes do not qualify for the back-to-school clothing and footwear scheme but they have to compete with those in receipt of child benefit, rent allowance and other State payments. What is the Minister and his Department doing to encourage people to take up work rather than rely on State benefits? People want to work but they are caught by the social welfare trap. If they take poorly paid jobs, they will lose the medical card, rent allowance and other State benefits. The media claim people are better off on social welfare than in low paying jobs. I ask the Minister what he is doing about that issue.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Individuals on low incomes are entitled to the back-to-school allowance.

Michael Ring (Mayo, Fine Gael)
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They have to be in receipt of social welfare payments.

Éamon Ó Cuív (Galway West, Fianna Fail)
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No, they do not. The family income supplement will suffice in such a case.

Michael Ring (Mayo, Fine Gael)
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The problem is they are not receiving the family income supplement.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Anybody in employment who is earning a low income should be on the family income supplement.

Michael Ring (Mayo, Fine Gael)
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I am speaking about people who will not take the family income supplement because it is a social welfare payment.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Obviously, people on low incomes are short of money. The Deputy is making a contradiction in terms by asking me what I am doing. The family income supplement exists to help people on low incomes and we should encourage them to take it up. It would be preferable for the individuals concerned and for the State to pay family income supplement because it would make it more sustainable to those on a low income.

I acknowledge that the medical card is the key to other benefits. That issue has to be considered carefully. I am also investigating the issue of people being unable to take up part-time work because three hours counts for a day's work. We must examine atypical working patterns. These complex issues are being considered by my Department.

In respect of work permits, the Department of Enterprise, Trade and Innovation sets out strict guidelines. I suggest the Deputy should put down a detailed question to that Department on the matter. Work permits are not intended for positions which can be filled by the existing workforce.

Brendan Howlin (Wexford, Labour)
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We must move on to the next question.

Éamon Ó Cuív (Galway West, Fianna Fail)
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May I make a final point?

Brendan Howlin (Wexford, Labour)
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We are well over time on this question.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It is an important point.

Brendan Howlin (Wexford, Labour)
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The rules of the House are also important.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I am only trying to be helpful.

Brendan Howlin (Wexford, Labour)
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Of course.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I would not like to give the impression that the majority of unemployed people are unwilling to take up employment. I have repeatedly seen throughout a long career of creating employment that the majority of unemployed people will always take up reasonable employment. Only a small minority would not do so.

Michael Ring (Mayo, Fine Gael)
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That was not my question. My question was about people being better off on social welfare than at work.

Róisín Shortall (Dublin North West, Labour)
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Question 31: To ask the Minister for Social Protection his plans to reform rent supplement to remove obstacles to taking up employment [44052/10]

Éamon Ó Cuív (Galway West, Fianna Fail)
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The purpose of the rent supplement scheme is to provide short-term income support to eligible people living in private rented accommodation whose means are insufficient to meet their accommodation costs and who do not have accommodation available to them from any other source. Currently more than 96,400 tenants benefit from rent supplement payments, an increase of 62% since the end of 2007. More than 44,500 tenants have been in receipt of payments for 18 months or more.

Rent supplement is calculated to ensure that an eligible person has an income equal to the rate of supplementary welfare allowance appropriate to his or her family circumstances after the payment of rent, less a minimum weekly contribution of €24 which each recipient is required to pay from his or her own resources. Many recipients pay more than €24 a week towards their accommodation costs because they are also required to contribute a portion of any additional assessable means that they may have over and above the appropriate basic supplementary welfare allowance rate.

The existing rent supplement assessment provides for a gradual withdrawal of payment as hours of employment or earnings increase. Those availing of part-time employment or training opportunities can continue to receive rent supplement subject to satisfying the standard means assessment rules. Where a person has additional income in excess of the standard weekly rate of supplementary welfare allowance, the first €75 of such additional income together with 25% of any additional income above €75 is disregarded for means assessment purposes. This ensures that those returning to work or participating in training schemes are better off as a result of taking up such an opportunity.

Rent supplement is not payable where a person or his or her spouse or partner is in full-time employment, that is, 30 hours or more per week. However, a person on rent supplement who is accepted as eligible for accommodation under the rental accommodation scheme, RAS, may return to full-time work, subject to a means test, without losing entitlement to the rent supplement payment. The use of 30 hours as the part-time work limit for the rent supplement is designed to be as advantageous as possible to individuals returning to the employment market without including those in full-time employment, thus reflecting the scheme's original purpose of a short-term income support payment.

Róisín Shortall (Dublin North West, Labour)
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I asked the Minister his plans for reforming rent supplement but he made no attempt to reply to my question. There is a great deal of ill-informed discussion about people being better off on social welfare and I am concerned about the level of the debate in the media. Forfás is also engaged in ill-informed talk. The reality is that the majority of people are better off in work than on social welfare. However, does the Minister accept that a particular category of welfare recipients are better off on social welfare, namely, those who face high housing costs? For that reason, I ask him to give serious consideration to reform of the operation of the rent supplement scheme. At present a ludicrous situation obtains whereby a married man with two children who is in receipt of rent supplement would lose €60 per week by taking up full-time employment. That makes no sense. It is a specific problem which relates to the operation of the rent supplement scheme. Is the Minister prepared to take steps to reform rent supplement in order to make it worth that person's while? If he was to remove the 30-hour rule, that person would gain €90 per week and there would be a very strong incentive to go to work.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Yes, I agree the scheme needs reform in a number of areas. First, it was never intended to be a long-term scheme and, therefore, there are anomalies in that people are on it in the long term. As the Deputy knows, one of the problems with the scheme is that the €24 is paid irrespective of the make-up of the household. One will find people who are much better off on rent supplement than they would be, for example, in local authority housing, which should not be the case. I have spoken to the Minister of State with responsibility for housing on this issue. I believe it should once again become a time-limited scheme, which would deal with one of the traps to which the Deputy refers.

The second issue one could examine is whether it is right that there would be a fixed payment irrespective of household income because, as the Deputy said, one gets crinkles as it is withdrawn. I understand what the Deputy is suggesting in regard to the 30-hour rule. We have already committed to considering this in the context of mortgage interest supplement. I am open, subject to cost criteria, which is one of the issues, to looking at this whole issue because the scheme is not working for the purpose for which it was established.

Róisín Shortall (Dublin North West, Labour)
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The Minister should be gone beyond the point of looking at it. This is a critical aspect of the welfare system that works against people taking up employment. It is clear that the 30-hour rule is the problem, as well as the withdrawal rate. Will the Minister give an undertaking that he will tackle this problem in the upcoming budget? It is key to removing the poverty trap and unemployment trap that exists.

There are simple solutions. If the 30-hour rule is removed, it means that for every family on rent supplement where a family member takes up a job, the State saves €19,000. This is a win-win situation. If the Minister applies himself to considering those key areas of reform, everybody stands to win out of this. Will he give us an assurance he will tackle it in next month's budget?

Éamon Ó Cuív (Galway West, Fianna Fail)
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I assure the Deputy I am tackling this whole issue. I have had a number of meetings in regard to the rent supplement scheme. I have met all of the relevant bodies and I will consider the suggestions the Deputy has made. I have been considering suggestions such as that and I am working on a number of other issues in regard to the rent supplement scheme, one of which will be dealt with in the Bill we will be discussing this week, where, for example, we will be addressing the issue of the RSI number. I am reforming the scheme. Some issues are easier to deal with than others and I will move on all of these as speedily as possible.

Róisín Shortall (Dublin North West, Labour)
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The 30-hour rule is a very easy one.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The most fundamental change we need is to go back to where the scheme started. This was meant to be a scheme of short duration. It was never intended to be-----

Róisín Shortall (Dublin North West, Labour)
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It is not, however, so the Minister must reform it.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The most fundamental thing we must do is to get back to that situation. I am working with the Minister of State with responsibility for housing to get back to a situation where this scheme is of limited duration and does not become a semi-permanent arrangement. It was never designed-----

Róisín Shortall (Dublin North West, Labour)
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That is not a solution. The Minister needs to reform the scheme for the 100,000 people on it.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It is a major part of the solution.