Written answers

Tuesday, 22 May 2012

Department of Social Protection

Social Welfare Code

9:00 pm

Photo of Stephen DonnellyStephen Donnelly (Wicklow, Independent)
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Question 428: To ask the Minister for Social Protection if, with regard to recent cuts or changes to supports affecting lone parents, she will list all such cuts or changes that have been implemented since she came into office, and which are scheduled for future implementation; if she will provide the estimated full-year saving of each of these measures; if she has any estimate of impact these changes be that for individual changes, or for the aggregate impact will have on the numbers of lone parent families and children in the following categories, or similar categories as may be used by her Department, in poverty at risk of poverty experiencing deprivation; and if so, if she will provide a definition of those terms as applied in her Department. [25463/12]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The One-Parent Family Payment (OPF) has played an important role in providing income support to lone parents. Changes have been made to the payment since its introduction in 1991, reflecting the changes taking place in society, the labour market and the expectations and realities of parents' lives, and, particularly, of mothers, in terms of work and care. Changes introduced in the last two Budgets continue these reforms. Changes were introduced to the OFP scheme in the Social Welfare (Miscellaneous Provisions) Act, 2010. These came into effect on 27 April 2011, and reduced the maximum age limit of the youngest child for receipt of the OFP to 14.

The Social Welfare and Pensions Bill, 2012, enacted on 1 May 2012, continued the reform process. The reduction in the maximum age limit of the youngest child for receipt of the OFP is being applied to new and existing customers on a phased basis and will not affect existing customers until 2013. For new recipients, from 3 May 2012, the OFP payment will be made until the youngest child reaches the age of 12. This will reduce further to age 10 in 2013 and to age 7 in 2014.

For existing recipients, there will be a tapered phasing-out period to enable them to access education and training and to prepare them for their return to the labour market. Specifically, for pre-27 April 2011 customers, the current tapering arrangement will remain in place until 2015 – after which the age limit will reduce to age 7. For customers in receipt of the OFP from 27 April 2011 to 3 May 2012, the current age limit of age 14 will remain in place in 2012. The age limit will then reduce to age 12 in 2013 and will further reduce to age 10 in 2014 and to age 7 in 2015.

The reductions to ages 10 and 7 will be considered in the context of the further development of relevant activation and support services. When fully implemented, it is estimated that the measures will yield full-year savings of €29.9 million.

Commencing in January 2012, the OFP scheme will see a reduction, over five years, of the earnings disregard from €146.50 per week in 2011 to €130 per week in 2012, to €110 per week in 2013, to €90 per week in 2014, to €75 per week in 2015, and to €60 per week in 2016, for new and existing recipients. When fully implemented, this measure will yield full-year savings of €76.1 million.

Until 31 December 2011, recipients of the OFP for 52 weeks, whose income exceeded the scheme's €425 weekly earnings disregard limit, were entitled to a transitional payment that was paid at half of the rate of their OFP payment for a period of 26 weeks, after which the payment would cease completely. From 1 January 2012, the transitional payment will no longer be issued to new and existing OFP recipients. Their entitlement to the OFP payment will automatically end if their earnings exceed the €425 weekly earnings disregard limit. Existing recipients of the transitional payment are not affected by this measure and will continue to receive the payment for the balance of six months. This measure will yield full-year savings of €1.03 million.

From 1 February 2012, and 2 February 2012, respectively, the entitlement to half-rate Illness Benefit (IB) and Jobseeker's Benefit (JB) for persons in receipt of the OFP has been discontinued for new recipients. This measure will yield full-year savings of €22.6 million.

With regard to the changes that were made to the Community Employment (CE) scheme, the following reforms are of relevance for those in receipt of the OFP and on CE:

· From 16 January 2012, a number of social welfare payments, including the OFP, are no longer payable concurrently with CE. This applies to new applications and will not affect existing recipients. This measure will yield full-year savings of €61.2 million across all schemes affected.

· Also, from 20 January 2012, for new and existing claimants, the payment of two Qualified Child Increases (QCIs) of €29.80 per week per child will no longer apply to recipients who are on a CE scheme and in receipt of certain social welfare payments, including the OFP. The QCI for CE will cease and one QCI will continue to be payable with the relevant social welfare payment. This measure will yield full-year savings of €6.25 million across all schemes affected.

The following changes will also impact on OFP recipients:

· From 1 January 2012, measures introduced in Budget 2012 increased the minimum contribution payable by all tenants under the rent supplement scheme from €24 per week to €30 per week. This measure will affect all of the approximately 97,000 tenants who are on the scheme – 15,900 of whom are in receipt of the OFP – and will yield full-year savings of €55 million in respect of all rent supplement recipients.

· From September 2012, the payment period of the fuel allowance will be reduced from 32 weeks to 26 weeks from the months of September until May of each year. This measure will affect all of the approximately 425,000 recipients of the allowance – 68,000 of whom are in receipt of the OFP – and will yield full-year savings of €51 million in respect of all fuel allowance recipients.

· The back-to-school clothing and footwear allowance (BSCFA) will be reduced from €200 to €150 for children aged 4 to 11 years, and from €305 to €250 for children aged 12 to 22 years, for the 2012 scheme. This measure will yield full-year savings of €17 million in respect of all BSCFA recipients.

· From 1 January, 2012, for new and existing recipients, income from employment as a home help funded by the Health Service Executive, will be assessed in means tests for social assistance schemes, including the OFP. This measure will affect approximately 2,000 people and yield full-year savings of €5 million.

The reduction of the Child Benefit rate for third and subsequent children, and the discontinuation of the Child Benefit grants on multiple births, will also impact on OFP recipients where relevant.

With regard to the impact of such changes, income support for people of working age, including lone parents, has been passive in nature, with little systematic engagement by the State with the customer. This is now changing. Long-term welfare dependency and passive income support to people of working age are not in the best interests of the recipient, of their children, or of society. Despite significant levels of State spending on one-parent families, as well as improvements made to the scheme over the years, lone parents and their children continue to experience high rates of 'consistent poverty'. Consistent poverty is the official measure of poverty used by the Government to set the national poverty target in the National Action Plan for Social Inclusion 2007-2016. Consistent poverty is a targeted measure that identifies the population that is both at-risk-of-poverty (income below 60% of median income) and experiencing basic deprivation (lack of two or more basic necessities). EU-SILC figures show that, in 2010, 9.3% of lone parents in Ireland were experiencing consistent poverty. The comparable rate was 16.6% in 2009 and 17.8% in 2008. However, the rate of consistent poverty among lone parent households continues to be one-third more than that of the population as a whole. The Government recently revised its national poverty target to meet Ireland's contribution to the Europe 2020 Strategy and its commitments in the Programme for Government. The revised target is to reduce consistent poverty to 4% by 2016 and to 2% or less by 2020, from the 2010 baseline rate of 6.2%, which will lift a minimum of 200,000 people out of the risk of poverty or exclusion between 2012 and 2020.

As indicated, the OFP payment has played an important role in providing income support to lone parents. It is, however, recognised that the best route out of poverty and social exclusion is through paid employment. Work, and especially full-time work, may not be an option for parents of young children. However, supporting parents to participate in the labour market, once their children have reached an appropriate age, will improve both their own economic situation and the social well-being of themselves and of their families. The reforms introduced into OFP scheme will require a whole of Government response with regard to the provision of the appropriate education, training, employment and child care supports, including the provision of appropriate after-school care. The development of the National Employment and Entitlement Service (NEES) and the profiling of jobseekers, which is already underway in my Department, will lead to a better identification and understanding of the supports that individual customers need and the extent to which these are available and affordable.

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