Welfare cuts impact 'not severe'


Minister for Social and Family Affairs Mary Hanafin said today cuts in social welfare announced in Budget 2010 would not have a severe impact on people, as the value of the increases given in last year's budget still existed.

Speaking on RTÉ's Morning Ireland, Ms Hanafin defended the Budget.

"The euro is going further. Prices have come down for all groups of people including those who are unemployed and including those who are on social welfare," she said. "And, I know it is a difficult situation for them but the real value of the increases that we gave last year still exist. It won't make the situation any worse for them."

Overall, social welfare payments were cut by 4.1 per cent yesterday afternoon as Minister for Finance Brian Lenihan unveiled a range of cuts aimed at reducing the social welfare bill by about €760 million in 2010.

Ms Hanafin also rejected the suggestion that maintaining existing excise duties on alcohol rather than implementing a 4 per cent cut in social welfare would have been a more appropriate cost-reducing measure for the Government to take.

“There is no doubt that there is a problem with alcohol in this country, but the price of it is not the one thing that is affecting it. That is a cultural attitude,” she said.

“Reducing the excise on alcohol ensures that people are not attracted to leave the State to go across to the North to do their shopping, and if that can be secured then we can maintain more jobs in the retail sector,” she said.

Responding to criticism that the 15 per cent reduction in Minister’s salaries announced in yesterday’s budget was a cumulative figure rather than an outright cut of 15 per cent, Ms Hanafin said the Cabinet had shown leadership by taking statutory measures to reduce pay.

“Ministers have a very generous salary, but it is also important that we give leadership. Last October we voluntarily gave up ten per cent as one would expect from people in our position,” she said.

“The cuts now are formal, legal and permanent; there is a very big difference between doing something voluntarily and having something written in to the State finances. When you take the fifteen per cent pay cut on top of the ten per cent levy it is an effective cut for ministers of 25 per cent.”

Ms Hanafin said reform of the public sector was vital if further reductions in salaries were to be avoided: “We have introduced the pay cuts now for the public sector; the next stage is to get the reform of the public sector that we will need to give us the long term savings.

“If we can do that, then we will not have to come back again on pay and we look forward to working with the public sector unions on that.”

With regard to conditions imposed on the jobseekers allowance for those aged 21 and older, Ms Hanafin said that back to work course schemes had worked successfully in the past and that training courses will offer people a strong incentive to return to work.

“We have increased the number of training and education places available, whether it’s through specific skills training from Fás or the post leaving cert courses on offer, and there will be about 180,000 places available next year,” she said.

“This measure is there to support those people (in their early twenties) because they are the ones most likely to be long term unemployed. This measure, of all taken, is a real incentive to help young people not in employment,” she added.

Fine Gael's Leo Varadkar said the Budget will gain the approval of stockbrokers, economists and the market but that it had failed the test of 'fairness'.

"There aren't going to be very many new jobs created for the unemployed next year. I think that's a bit of a ruse. In fact, the budget projects that 72,000 jobs will be lost next year," he said.

“The biggest reduction in jobs will be because of the billion euro cut of capital spending: that’s jobs taken out of construction when they need it most,” he said.

“The scrappage scheme will actually cost jobs because 80 per cent of the money spent will go overseas, there are no internships available for young people, people who want to go back in to education will have their grants cut, and the reduction in VAT, while welcome, really should have happened at the lower rate,” he added.

"What we needed yesterday was a budget for ordinary people as well. We needed one that was a budget for jobs, one for competitiveness and a budget for fairness. And it really does fail all those tests," he concluded.

Social welfare rates are to be cut by 4.1 per cent on average while child benefit will fall by 16 per cent. There will be no reduction in old-age pension rates.

For new social welfare applicants, the rate of jobseekers benefit and supplementary welfare allowance for those aged 20 and 21 years of age who have no dependent children is being reduced to €100 per week. For those aged between 22 and 24 years, allowances will fall to €150 per week.

Disability, widows' pensions, invalidity and carers' allowance are all to be cut by €8.20 to to €8.50 per week.

In addition, child benefits rates are to revert to 2006 levels with a cut of €16 in monthly payments. This brings rates to between €150 and €187 per month.

Welfare dependent families will be fully compensated for this move through an increase in the Qualified Child Allowance of €3.80 per week. Low income families in receipt of Family Income Supplement (FIS) are also to be fully compensated.

Ms Hanafin said yesterday more than 420,000 children in welfare dependent and low income families would be protected from the cuts in child benefit. She added that over €2.2 billion will be provided next year for child benefit payments to help over 600,000 families throughout the country.