The rate of jobseeker’s allowance payable to new applicants under 20 will be halved to €100 per week from May 1st and there will be no Christmas bonus for social welfare recipient this year, Minister for Finance Brian Lenihan said.
He said the Government had decided not to reduce rates of social welfare payments in this budget, but that it might be necessary to review them in the future.
He also announced that child benefit will be taxed in next year’s budget, as the Government did “not think that it is fair to pay the same level of benefit irrespective of the level of income of the recipient”.
The Minister said changes to the jobseeker’s payment would yield €12 million to the Exchequer this year and some €26 million in the full year 2010.
The removal of the annual Christmas bonus for welfare recipients will save €156 million this year and €171 million in 2010.
He said the change to the jobseeker payment would “incentivise the young unemployed to participate in training programmes”.
Mr Lenihan said it was right that “when times were good, we increased payments to those who are vulnerable”.
“Now that we are in recession, we must look at how we can use the €21 billion welfare budget to afford maximum protection to those most in need.”
The Minister said the Government had examined very carefully how it might make savings in welfare and
noted payments had been increased by about 3 per cent in the October budget.
But he said the Government had decided not to reduce other social welfare rates in this supplementary budget, “notwithstanding the fall in consumer prices which we expect to be close to 4 per cent this year”.
“However, it may be necessary to review rates of payments in future years if reductions in the cost of living materialise.”
Mr Lenihan said some savings needed to be made in order to absorb the additional expenditure of over €2.8 billion “due to the sharp rise in unemployment since December”.
“For this reason the Government is not in a position to pay the December bonus which it has been able to deliver in previous years.”
Some “limited” changes are also being made to eligibility to certain benefits, specifically the jobseeker’s allowance for those under 20.
Payments under the rent supplement scheme will also be reduced to reflect the fall in prices in the rental market.
“We will also intensify the campaign against welfare fraud by allocating increased staff to the Department and by targeting, in particular, the fraudulent claiming of child benefit and other payments by those who are no longer resident in this country,” Mr Lenihan said.
“We will continue to target the available resources on those most in need. The Government does not think that it is fair to pay the same level of benefit irrespective of the level of income of the recipient. For that reason, the Government has decided that child benefit will be means tested or taxed in the Budget for next year.”
Mr Lenihan said that over the past decade, the Government had provided "very significant increases in welfare payments”, including an increase in child benefit from less than €44 to €166 per month.
“The State contributory pension has gone from around €113 to more than €230 per week. And the weekly rate of long-term job seekers allowance was raised from €93 to €204. These payments compare very well internationally, particularly with payments in Britain and Northern Ireland.”