Further social welfare savings required

Friday 08 April 2011 22.00
Social Welfare - Accounts for almost 40% of current expenditure
Social Welfare - Accounts for almost 40% of current expenditure

Further savings in the social welfare budget are going to be required in future years, according to Department of Finance briefing documents.

The documents for Minister for Finance Michael Noonan also say that social welfare transfers to higher earners through child benefit are difficult to justify and the system needs to be amended to target those dependent on welfare and low earners.

However, they also state that ongoing entitlement to concurrent payments of more than one principal social welfare payment will also require review.

For example, the introduction in 2007 of an entitlement to half-rate carer's allowance payment in conjunction with another primary welfare payment had a ‘relatively complex’ impact on the number of recipients and overall expenditure.

They say the payment of half-rate jobseekers benefit or illness benefit to recipients of One Parent Family Payment also requires review.

Social welfare accounts for almost 40% of current expenditure - with a 2011 allocation is just over €20.6bn.

Exchequer income from PRSI has fallen due to the rise in unemployment and the fall in wages.

As a result, the social insurance fund will need a subvention from central Exchequer funds of €1.8bn this year.

The notes point out that in the medium- to long-term, the increasing number of pensioners compared to the number of active workers will require structural change to sustain State pension provision from the Social Insurance Fund.

The Department of Finance also envisages other structural changes to eligibility criteria for State pension entitlement.

The documents say that employment must be incentivised and long-term dependence on social welfare must be discouraged.

The Department notes recommend a single social assistance payment for the 500,000 recipients of working age, as well as increased participation in labour activation measures, and streamlining of means testing.