Written answers

Wednesday, 26 January 2005

Department of Social and Family Affairs

Social Welfare Benefits

9:00 pm

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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Question 560: To ask the Minister for Social and Family Affairs if, in the context of the Finance Bill 2005, he will increase the household income threshold under the back to work enterprise allowance scheme; and if he will make a statement on the matter. [2111/05]

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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Social welfare programmes aim to be responsive to the needs of those who depend on income maintenance support while providing incentives to assist people to become more independent financially, particularly through employment.

A number of 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 special means disregards and tapered withdrawal of benefits as earnings increase, and employment support schemes such as the back to work programme. In addition, my Department's facilitators, based in local offices around the country, assist unemployed people and lone parents with the transition to employment.

The income limit referred to by the Deputy applies to people who take up employment under approved employment schemes and relates only to retention of secondary benefits, such as rent supplement. Such people are entitled to retain certain social welfare and other secondary benefits in total or in part for the duration of the employment scheme, subject to certain conditions. There is no income limit on the back to work enterprise allowance scheme itself.

For most people, the most significant secondary benefit is rent or mortgage interest supplement, which is paid under the supplementary welfare allowance scheme. An income limit of €317.43 per week applies to the retention of these supplements. While this income limit has not changed since its introduction, significant other improvements have been made to the means test.

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 income limit of €317.43 per week. PRSI and reasonable travelling expenses are also disregarded in the means test. In effect, this means that 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 limit in question and still qualify to retain 75% of their rent or mortgage interest supplement. For example, in the first year of his or her participation in the back to work scheme, a single person can have combined income from the back to work allowance and wages 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, that is, 75% in year one, 50% in year two and 25% in years three and four. In addition, the maximum payment limit of €317.43 per month on the amount of supplement payable has been abolished for people on approved schemes.

As a consequence of these improvements, many families retain more of their rent or mortgage interest supplement than they would have done prior to these changes being made. In addition, people availing of an employment support scheme may opt to be assessed under either standard supplementary welfare allowance rules or under the special retention rules, and will be entitled to receive payment under whichever option is the more favourable for them. In that context, I was glad to be able to increase the income disregard in the standard rules of the scheme from €50 per week to €60 per week in this year's budget.

I consider that the current eligibility thresholds and disregards, together with improvements in the standard rules of the supplementary welfare allowance scheme, ensure that people have a financial incentive to take up back-to-work opportunities. The effectiveness of these arrangements will be considered further in the context of a review of the supplementary welfare allowance scheme, which my Department will be undertaking during 2005.

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