Joan Burton (Dublin West, Labour)
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Question 163: To ask the Minister for Social and Family Affairs the threshold for the calculation of secondary benefits for retention purposes for community employee participants; when the threshold was last increased; if his attention has been drawn to the failure to increase the threshold is causing a great deal of hardship to participants on community employment places; if his further attention has been drawn to the fact that a large percentage of the group taking up community employment places are lone parents and that the failure to increase the threshold constitutes a significant poverty trap for community employment participants. [33737/05]

Séamus 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. For example, the standard rules governing rent supplement have been improved to ensure that a lone parent who takes up a community employment scheme place will be €60 per week better off for having done so.

People, including one-parent families, 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. Alternatively, they may qualify for secondary benefits under the standard rules of the scheme in question.

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. People with incomes above this limit are assessed and may qualify under the standard rules of the rent or mortgage interest supplement schemes. No income limit applies to the back to work allowance itself.

While this rent supplement retention income limit has not changed since its introduction, significant other improvements have been made to the means test subsequently. Back to work allowance and family income supplement, in cases where one or both of these are in payment, are disregarded in the assessment of the €317.43 weekly income limit. PRSI and reasonable travelling expenses are also disregarded in the means test.

Rent supplement may be retained for up to four years on a tapered basis, that is, 75% of supplement 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 was abolished for people on the approved schemes. As a consequence many families retain more of their rent supplement than had been the case prior to these changes taking place.

In effect, this means that people who commence employment through a back to work scheme or community employment, following a period of unemployment, can have a weekly household income significantly in excess of the €317.43 limit and still qualify to retain 75% of their rent or mortgage interest supplement.

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 is the more favourable option for them. A person on a community employment scheme or other back to work scheme whose household income is above the €317.43 weekly limit for retention of secondary benefits may still qualify for rent supplement under the standard rules. In that context, I introduced amending regulations in January 2005 to increase the income disregard in the standard rules of the scheme from €50 to €60 per week.

Lone parents and others who participate in community employment, CE, are not penalised for doing so. Up to €60 of weekly earnings is disregarded in the means test to ensure that a person is better off as a result of taking up a CE place, part-time employment or other such opportunities. There are also disregards for any family maintenance lone parents receive.

For example, a lone parent living in Dublin with one child and rent of €200 per week, whose sole income is a one-parent family payment of €168.10 per week, would ordinarily receive rent supplement of €184.50 per week, resulting in a net income after paying rent of €152.60 per week. If she takes up a CE place her total income before rent supplement and before paying rent would rise to €343.10 per week. In these circumstances, she would be entitled to €69.50 in rent supplement and her income after paying rent would be €212.60 per week. She would be €60 better off for having taken up a CE place. Overall, I consider that the current rent supplement 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. Nonetheless, the effectiveness of these arrangements is being considered further in the context of a policy review of the supplementary welfare allowance scheme which my Department is undertaking at present as part of its ongoing expenditure review programme.