THE GOVERNMENT was examining massive spending cuts in the run-up to the budget which could have resulted in either reducing or axing a range of basic social welfare payments.
Records released under the Freedom of Information Act show the Department of Finance was seeking savings of up to €2 billion in social welfare payments just weeks before last October’s budget. This was aimed at keeping spending for 2009 at existing 2008 levels.
In response, the Department of Social and Family Affairs drew up a list of cuts to child benefit and unemployment benefit, and considered the potentially axing of some other schemes entirely.
However, it warned that such steps were not realistic and would have a major impact on people who were dependent on social welfare.
“You will appreciate that savings of this magnitude would require measures to be taken which would remove or restrict entitlements for large numbers of existing recipients, and not just future claimants,” a senior official at the Department of Social and Family Affairs’s budget unit told the Department of Finance.
“This would be a very significant departure from previous practice. Furthermore, given that a significant number of recipients of social welfare weekly payments are wholly or mainly dependent on such payments, any restriction in entitlement would have a significant impact on those affected by such measures.”
Briefing material prepared for the Minister for Social and Family Affairs Mary Hanafin at this time also warned that rising unemployment and its knock-on effects were posing considerable challenges for the department.
“The capacity of the department to implement changes of the magnitude proposed is severely constrained,” it said.
In addition, it said that while abolishing welfare schemes altogether was a possibility, such a step may not provide any net savings.
For example, while a change in eligibility conditions may remove a person’s entitlement to the jobseekers’ benefit, that person may have an underlying entitlement to the means-based job- seekers’ allowance, which is paid out of the social insurance fund.
Instead of drawing up a €2 billion package of cuts, the department put together a more “realistic” package of cuts worth around €750 million. Anything more, the department warned, would involve reductions in basic welfare rates across the board.
The department blacked out the details of most of these spending cuts in records released to The Irish Times.
However, some were ultimately adopted in the budget weeks later including restrictions to the entitlement of the jobseekers’ allowance, limiting illness benefit to two years and cutting off child benefit payments at 18 years of age. In contrast to the savings sought by the Department of Finance, the budget package for 2009 ultimately involved an increase in welfare spending of 15 per cent or €2.6 billion.
Most of this increase involved money being set aside for unemployment benefit, as well as minimal increases in welfare and pension rates. Spending cuts resulted in savings of just €125 million.