Kieran O'Donnell (Fine Gael) | Oireachtas source

I welcome the Minister. I commend Senator Butler for putting this motion before the House. It is a topic that has been around since time immemorial and it must be dealt with. I will discuss it in a practical way. I was self employed for many years and, as an accountant, I worked with the self employed. They were my bread and butter, my business.

There are anomalies that must be dealt with. The stamps we are discussing are the S stamp for the self employed and the A stamp for an employee. One can basically boil it down to that. If somebody is on an S stamp, the only benefit they qualify for is the old age pension. It is not correct to say that if one is on an S stamp one qualifies for nothing, because one qualifies for a contributory old age pension. That is similar to somebody on an A stamp. If one is on an A stamp, which means one is an employee, one qualifies for the contributory old age pension, and rightly so. In addition, one qualifies for other social welfare benefits. One of them is jobseeker's benefit, which means that if one loses one's job one is entitled to receive up to €188 per week, depending on one's family circumstances, for either six or nine months, depending on the level of contributions over a period of time.

Equally, one is entitled to invalidity pension. One must be on an A stamp for that. One can qualify for it if one can never work again. There is a small anomaly here. It is called "invalidity pension", but in essence somebody can receive it at a much earlier age. However, one must have stamp A contributions and up to 48 in the previous year.S stamp contributors do not qualify. Equally, one qualifies for disability benefit. With an A stamp, one will qualify for anything that is stamp-related, but with an S stamp, one does not qualify. If we look at it on a basic human level, with an S or an A stamp, one qualifies for the contributory old age pension, which is fine. They involve the same payment of €560 over one's lifetime, plus an average minimum payment of €10. However, one does not qualify for jobseeker's benefit.

Many small businesses have been incorporated into limited companies for various reasons. In many cases, this is because the level of income is sufficient to warrant becoming a limited company. In this case, a proprietary director with more than 15% of the share capital must make S stamp contributions. There is no employer's PRSI to be paid. Below 15%, one makes A stamp contributions, like everyone else. A company may have two directors, one with 14% of the share capital and the other with 15%, of whom one qualifies for everything with an A stamp, while the other does not. I have come across many people with more than 15% of the share capital of a company who would be willing to make A stamp contributions. There should be a scope decision.

Another category is the self-employed who include someone operating a small business who does not sufficient money to justify it becoming a limited company. They can only make S stamp contributions. In a limited company, where someone has an A stamp, the employer's share of PRSI is tax deductible and qualifies for tax relief. If one is self-employed, one just makes S stamp contributions at the rate of 4%. We have all met people in small businesses which have failed. In many cases, they have spouses or partners and young children. Effectively, they are left with and qualify for nothing. They qualify for jobseeker's allowance, but it is means-tested and takes a considerable period of time to receive in many cases as it involves assessment after assessment.

The Manning report mentioned disability and incapacity. We need to look at job losses and ensure the payment of jobseeker's benefit for self-employed persons. For an employee, the employer pays at the rate of 10.75% or 8.5%, depending on the level of income, to be able to claim benefits, including jobseeker's benefit and an invalidity pension. There might be a way to create a hybrid with a low rate. The Manning report mentioned a figure up to 5.5%, but it would only cover disability, incapacity and illness. Perhaps there might be another rate. Perhaps someone who is self-employed might qualify for jobseeker's benefit only for three months.

I find that the biggest problem in the case of people whose business goes is that they have fought for month or years with banks and Revenue to hold onto the business, that they have done everything possible to keep the business going and that by the time it fails they are the end of the line. They are financially and emotionally wrecked. Suddenly they must go to the local community welfare officer and make a claim for jobseeker's allowance at the local labour exchange. They are put through something which needs to be costed but at which we need to look.

Senator Alice-Mary Higgins made reference to the 20,000 people who qualified for jobseeker's allowance. It is of varying amounts and means-tested. They might be receiving a nominal amount. The devil is always in the detail. Senator Kevin Humphreys also made reference to this issue which has been raised by Deputies since time immemorial and it has always come down to cost. What is the cost of providing for the self-employed? If more than 20,000 self-employed persons were to claim jobseeker's allowance, we would need to look at the net cost of putting in place jobseeker's benefit in some form. Qualification for invalidity pension could also be examined.

I very much welcome the motion tabled by Senator Ray Butler. It is also welcome that the Government is committed in its programme to providing for it, but the devil is in the detail. The Minister may not need to bite it off all in one big chunk; he could do it on an incremental basis, but he should provide for the payment of jobseeker's benefit in some form to the self-employed. I am speaking about people throughout the country who employ one, two or three people.

We must remember that if we want to foster an entrepreneurial culture, we need a person working for Google or a small business somewhere in Limerick to seek to become self-employed, but if they have small children, they cannot afford to take the risk because if the business fails and they have invested in equipment or property, they may not qualify for jobseeker's allowance because of the means test. The system must have a benefit in creating employment and encouraging people to set up as entrepreneurs. It must also have a benefit for people already in the system. If they run into hardship by the time the business fails, they will have gone to the ends of the earth to avoid it happening.

I very much commend the motion and have no doubt that something positive will come of it.