How officials justified welfare cuts in the budget

Advisers argued that some cuts were overly generous

One of the welfare cuts which was among the most controversial was the axing of the bereavement grant, a €850 PRSI-based payment aimed at subsiding funeral costs.

One of the welfare cuts which was among the most controversial was the axing of the bereavement grant, a €850 PRSI-based payment aimed at subsiding funeral costs.

Mon, Feb 3, 2014, 01:00

The cuts dug deep for many in the end – but they were nowhere near as bad as they might have been.

When negotiations on Budget 2014 began, Minister for Social Protection Joan Burton was initially requested to make expenditure reductions of €440 million.

Across-the-board cuts to social welfare rates or steep reductions in child benefit payments were privately flagged by Burton’s officials in light of the scale of savings being sought.

In the end, the expenditure reduction sought of her department was just over half the initial amount.

Yet again, she had won out in the elaborate game of political poker that surrounds budget negotiations. But this was of little consolation to those hit hardest as a result of welfare spending cuts – the young, the old and mothers-to-be.

Internal documents prepared by her officials reveal how these cuts were justified by her officials and ultimately signed off by Government.

In some cases, benefits were regarded as very generous by comparison with other EU payments, or unnecessary in light of other forms of social supports.

One of the welfare cuts which was among the most controversial was the axing of the bereavement grant, a €850 PRSI-based payment aimed at subsiding funeral costs.

It was justified largely on the basis of public ignorance over the payment and claims that some undertakers were factoring the grant into their overall bills.

“While the grant was useful at the time of bereavement, there is limited public awareness of it otherwise,” an internal briefing note reads.

“As with any subsidy/grant, the bereavement grant may have influenced a higher price. Undertakers are very much aware of the grant and advise families of it. Individual undertakers have also written to the department requesting that the grant be paid direct to undertakers, rather than to families; the department has rejected such suggestions.”

More vulnerable families unable to pay for a funeral would still be able to apply for an exceptional needs payment from the Department of Social Protection.

In the end, the grant – which would have benefitted about 20,000 people this year – was axed entirely with savings of €17 million this year.

Cuts to the maternity benefit also proved highly unpopular.

This measure, a reduction of €32 per week, combined with the taxation of the maternity benefit – introduced in the previous budget – meant the income for many mothers of newborns has fallen from almost €7,000 to just over €3,500.

The justification for these cuts was largely on the basis Ireland has “one of the highest birth rates in Europe and high participation by women in the labour force”.

In addition, officials advised the Minister that standardising the payment would actually improve the rate for those on low incomes by up to €12 per week.

However, this applied to just 268 women.

The full figures show that some 95 per cent of recipients – or almost 24,000 – would see a fall of up to €32 per week.

When it came to dole cuts to young jobseekers, the official advice was that it would be an incentive. The cuts involved a reduced €100 jobseekers rate to those aged up to 24 and a reduced €144 rate to 25-year-olds.

Officials advised that it would incentivise young jobseekers to avail of education and training opportunities and try to “avoid them becoming welfare dependent”.

Welfare cuts: what was considered

Bereavement grant

>Measure: Cease €850 grant, a once-off insurance-based payment

>Saving: €17 million

>Number of people affected: 19,000

>Rationale: “The average cost of funerals is estimated at between €3,000 and €5,000, but can be as high as €10,000 - especially in Dublin - when all costs are taken into account.

“While the grant was useful at the time of bereavement, there is limited public awareness of it otherwise...

“As with any subsidy/grant, the bereavement grant may have influenced a higher price. Undertakers are very much aware of the grant and advise families of it.

“Individual undertakers have also written to the department requesting that the grant be paid direct to undertakers, rather than to families; the department has rejected such suggestions.”

Jobseekers’ allowance

>Measure: Apply reduced €100 jobseekers rate to those aged up to 24; reduced €144 rate to 25-year-olds.

>Saving: €32 million

>Numbers affected: 13,700

>Rationale: “In order to incentivise young jobseekers to avail of education and training opportunities and try to avoid them becoming welfare dependent, the changes made to Jobseekers’ Allowance rate in 2009 are being extended.

“The decision was made on foot of ongoing consideration of unemployment and incentives policy by Government. It is not discriminatory but rather a targeted measure aimed at protecting young people from welfare dependency.

“... It may be argued in some quarters that this extension will result in increased emigration. I do not accept this argument – a lack of employment opportunities rather than any assistance rate is the key driver of emigration.”

Maternity benefit

>Measure: Standardise minimum and maximum rates of maternity benefit, leading to cuts of €32 per week for 95

per cent of new mothers.

>Saving: €30 million

>Numbers affected: 23,000

Rationale: “Given the numbers claiming maternity benefit and the significant pressure on the public finances... the rate of maternity benefit is being standardised.

“Ireland provides generous maternity leave entitlements of over 42 weeks currently – 26 weeks paid leave and a further 16 weeks unpaid. This is reflected by one of the highest birth rates in Europe and high participation by women in the labour force.

“... the reduction in the maximum rate payable, particularly when considered in tandem with taxation of benefit, is likely to face substantial criticism...”

Mortgage interest aid

>Measure: Discontinue mortgage interest supplement – worth €256 per month, on average – and wind down the current recipient base over a four-year period

>Saving: €12 million

>Numbers affected: 1,000 (or 10,000 over four years)

>Rationale: “The original purpose of the mortgage interest supplement was to provide a short-term income support to eligible people who are unable to meet their mortgage interest repayments in respect of a house which is their sole place of residence. However, approximately 45 per cent of customers currently in receipt of the supplement have been receiving it for three years or more. The payment does little to assist recipients in addressing the long-term difficulty

in addressing their mortgage problem

. . .”

and provides little incentives for the lender to provide sustainable longer-term solutions.

“The most appropriate way in which customers experienced mortgage difficulties can be supported is through engagement with their lender under the Mortgage Arrears Resolution Process....”

Phone allowance for older people

>Measure: Discontinue telephone allowance element of household benefits package worth €9.50 per month

>Saving: €44 million

>Numbers affected: 398,000

>Rationale: “The allowance was introduced in 1978 with the primary objective of ensuring access to help in an emergency and to provide an element of security... this was at a time when telephones were expensive and uncommon and a landline service was the only option available.

“The market has changed enormously since, with several companies providing a range of services and rates with bundled services including TV, telephone, broadband and pay-as-you-go mobiles.”

Free TV licence scheme

>Measure: Reduce annual transfer to the Department of Communications for free TV licences

>Saving: €5 million

>Rationale: “The Department of Social Protection provides more than a quarter of total TV licence revenue of €220

million.

“The reduction reflects the discount due to the Department of Social Protection on the basis that there is a significant administrative saving for the DCENR [Department of Communications] in not having to collect separate payments from 410,000 customers.

“ In addition, there are significant gains arising from such a large cohort of compliant customers given that the national evasion rate is approximately 16 per cent.”