Coughlan unlikely to keep Child Benefit pledge

For welfare recipients, this year's Budget is likely to see the Minister for Social and Family Affairs making a modest amount of money go as far as possible.

Like many of her clients, Ms Coughlan will be robbing Peter to pay Paul as she endeavours to increase social welfare base rates as well as looking after her priority groups, the elderly, carers and disabled.

Last year the Department had €1 billion to fund welfare measures in a Budget assessed by the Combat Poverty Agency as "pro-the poor", achieving a reduction in poverty of about half a per centage point.

The theme of the agency's pre-Budget submission this year is "prioritising poverty at a time of economic uncertainty". Significantly, in addition to proposing welfare measures amounting to €1 billion, its submission also makes revenue-raising proposals.

"In previous years the Government has been able to deliver on welfare measures without doing anything on the tax side," says the agency's head of research and policy, Mr Jim Walsh.

"Last year it got a bit tighter. We clearly recognise this Budget will have to be far more distributive than any budget in the past five years in so far as money will have to be raised from other groups in society."

This theme is strongly echoed in the pre-Budget briefing paper of the Conference of Religious in Ireland, which focuses on an increased tax take to tackle educational disadvantage, improve the health services and reduce housing waiting lists.

It is clear Ms Coughlan will this year have a reduced sum at her disposal, and she has acknowledged that she has "harsh decisions" to make in the constrained economic circumstances.

The Minister, who finalised her negotiations with the Minister for Finance last Wednesday night, has already indicated that she is prepared to pay only part of this year's promised increase in Child Benefit to free up hundreds of millions of euro for other needy causes. Monthly Child Benefit for first or second children has already been increased from €53.96 per child in 2000 to the current rate of €117.60

However, under a three-year commitment given by Mr McCreevy, the rates should have increased this year to €149 for first or second children and €185 for third and subsequent children.

The annual cost of implementing this commitment in one phase would be about €400 million, so the Minister's decision to spread the payment over two years makes financial sense.

However, a failure to meet the much-trumpeted commitment on Child Benefit increases will be a deep disappointment to lobby groups, as the significant boost in the payment has been widely welcomed as an effective measure in lifting children out of poverty.

The Combat Poverty Agency, which gives policy advice to the Minister, argues that the resources for the benefit should be ring-fenced as it was part of a major Government undertaking to tackle child care problems and child poverty, and not just a welfare measure. This argument is unlikely to win the day.

Priority welfare recipients who are likely to see payment increases include widows, the elderly and carers. These groups are well-organised lobbyists and there is significant pressure from TDs to ensure they are looked after.

Those on the lowest social welfare benefits rates are likely to receive increases above the rate of inflation, but probably not as significant as anti-poverty groups would like in order to address the rich-poor divide.

The National Women's Council is among the many groups calling for increases of between €11 and €14 in the lowest social welfare payment of €118.80 per week for a single person. The Government has given a commitment in its revised National Anti-Poverty Strategy to raise the basic weekly welfare payment to €150 in current values by budget 2007. However, with four more budgets to reach this target, it is a safe bet that it will take only a baby step towards this target this year - and even that will depend on getting the rate of inflation under control.

There is some concern among anti-poverty groups that the money dispensed to the most needy in the Budget could be clawed back via increases in waste charges or ESB rates.

There is also the matter of a freeze on rent supplement payments which 52,415 welfare claimants receive. The Department is freezing the maximum amount of rent that can be incurred by people on social welfare benefits who receive State subsidies. It is also increasing the minimum personal contributions such tenants must make to their rent to approximately 10 per cent of the minimum social welfare payment. This contribution was effectively frozen in 1994 at around €7 a week. Even a €4 weekly increase in this mandatory contribution for someone on the basic social welfare rate will go far to neutralise any increases they may receive in the Budget.

In all, the welfare element of this year's Budget will inevitably not live up to last year's pre-election package, when welfare expenditure was clearly given considerable priority. However, while it may not offer much more than a holding position, it is understood that the Budget will contain some low-cost initiatives which will have long-term benefits for welfare recipients.