An Bord Snip: Social Welfare

I’m opening this strand to facilitate more specialized discussion on the cuts in Social Welfare proposed by An Bord Snip, which amount to €1.8 bn or 9% of the €18 billion currently spent in this area.

Among the proposed cuts are an overall roll-back in rates of 3% or 5% nominal; a 20% reduction in Child Benefit; and some changes in eligibility (double payments).

14 thoughts on “An Bord Snip: Social Welfare”

  1. Social welfare entitlements are up roughly 100% since 2000 in nominal terms, and 67% in real terms. When unemployment was 4% or so this was probably sustainable, but with the rate now moving up toward 15% or so, we simply can’t keep shelling out such large amounts.

    While those against the cuts say “why should the unemployed and the poor have to pay for the recession etc”, I can only ask what exactly they did to justify the huge increases in the first place!? We have real outright deflation occuring in the country now, so a fairly small decrease (5%) in line with this seems reasonably fair in my mind.

  2. @Eoin

    I think it’s hard for anyone to argue that there shouldn’t be cuts across the board (as long as they are across the board and it’s not just the easy targets getting the hits). I agree that a modest cut of 3% sounds about right here too.

    However, when you hear some of the rants I have in the past couple of days from well off people about the ‘scroungers’ on the dole getting free handouts from the Stateof of a couple of hundred a week…… and you know for a fact they are getting about the same in pension contributions tax relief at their top rate………. you know darned well they would gouge your eyes out if you tried to take their ‘free State handouts’ away from them or reduce them.

    The other thing that confuses me is that we really need to take action on reducing spending now so why are we waiting until December before anything is likely to happen? Yes, yes.. I know they’ve got to get Lisbon 2 out of the way but that shouldn’t really be an excuse should it?

  3. @ Ciaran
    Given that Ed Walsh has not adjusted for price level differences (we all know that they do exist) the article is not worth talking about. These kind of half baked attempts at comparisons only make it more difficult to have a proper debate around the real facts.

    The big question here is not the change in rates but what it takes for people to live at an acceptable standard of living (we can clearly argue what is acceptable).

    What board snip has proposed is an adjustment, which given deflation is about neutral. In orther words they have either not questioned the levels or have considered them appropriate to meet the basic standard of living.

  4. One important aspect of any social welfare custs is that they will have an immediate effect on consumption. Very few people on social welfare (bar the well off pensioner) are squirrelling away their money. The wealthier are the first ones to stop spending. That’s why they’re wealthier I suppose!

    In truth, it is very hard to understand how the social welfare system works when all one does is pay into it. The debate is skewed by this lack of understanding. Given the huge sums involved, people need to know more about it. How many people understand the single parent income supplement or the job seekers allowance or the differences between social welfare payments and the dole or how children affect payments? I certainly don’t.

  5. @ Edgar

    well they have questioned the levels at least in relation to incentive effects.

    “For those of working age there are increasing indications that the level of welfare payments is creating disincentive effects for improved labour participation with relatively high replacement ratios for specific occupations and age rates.”

    They also questioned the levels under the very simple remit of affordability, when referencing the Christmas bonus:

    “The Group also notes the decision to discontinue the December bonus payment for 2010 and future years. The Group agrees that continued payment of this bonus is no longer affordable given the need to support new additions to the Live Register and other pressures on the social welfare budget. It would recommend against reintroducing the payment”

    I referenced this point in my earlier post above, that regardless of ‘acceptable standards of living’ type arguments, with unemployment now through the roof, and likely to stay high for many years to come, current social welfare levels are simply and completely unsustinable. Social justice arguments cannot be removed from the economic realities on the ground.

    @ Joseph

    i don’t at all think that social welfare recipients are ‘scroungers’ or whatever, though i would argue that many milk the system and are ruining it for the rest of those in need. Personally i’m very much in favour of a decent standard social “safety net” that stops those in need falling through the cracks in our economy and society. However, as Edgar alluded to, there’s probably quite a bit of debate as to just how comfortable this safety net should and needs to be.

    If the social welfare system is set too high, it becomes completely unsustainable when the economic cycle turns down, and therefore risks becoming a serious drag on the economy, rather than the ‘automatic stabiliser’ it’s supposed to be. At that point, we need to apply flexibility and reality to the system, or else risk complete implosion of the economy, and the entire social welfare system with it. Better that we guarantee we can give those in need x% of what they currently get, rather than risk them getting nothing at all.

  6. Just a quick comment on children’s allowance and comparisons with other countries. My wife and I have 3 small children, but to pay the bills we both need to work, neccessitating a childminder. The oldest fella goes to pre-school twice a week, so between the two, this is where the children’s allowance goes. In fact, it doesn’t even cover the cost.

    In the UK, by comparison the Nhs cover medical treatment for children – not 50 euros every time you go to the doctor with them. In addition, working families have a tax credit for each child born and heavily subsidised pre-school education. And as we all know, prices are lower. In many continental European countries likewise, childcare and pre-school is state provided at nominal cost to parents. Here, trips to the doctor, prescriptions, childcare and pre-school are all paid for by parents – this is where the children’s allowance goes.

    I always thought the early childcare supplement was a joke – it was introduced a year before the 2007 general election, we even got a letter from Brian Lenihan telling us all about it!! This money should have been spent on pre-school education (as they now propose to do). To suggest, as some do, that the children’s allowance is funding trips to the hairdresser and so on is rubbish.

  7. @ Ciaran Daly,

    Egar Morgenroth has already dealt with Ed Walsh, but your second link is even worse.

    The headline is: “Irish handouts are highest in Europe”. The opening paragraph reads: “Social welfare payments have grown at more than twice the rate of Britain’s over the past seven years, putting Ireland at the top of the European Union welfare league table.”

    So what follows? 14 paragraphs that are either solely about Ireland or compare Ireland with the UK.

    And then the last paragraph says: “Recent EU figures also show the level of Ireland’s welfare payments exceeds that in Germany, France, Spain and other EU nations, trailing only occasionally behind Luxembourg and some of the high-tax Nordic nations.”

    Brilliant! “EU figures” show us more generous than at least four countries and less generous than 3 – 5 countries. Therefore: “Irish handouts are highest in Europe”.

    QED.

  8. @ Eoin
    I do not disagree with you – ultimately it comes down to what society considers an acceptable living standard given the circumstances. In the context of not being able to afford the current levels, what is acceptable might need to be redefined. My main point was that the kind of comparisons especially if they are badly done as in the Ed Walsh article don’t add anything to the debate, they onle distract.

  9. We can house the indigent in partly and fully finished development sites. Workfare will be on the job training on the partkly developed sites for the able. Then we can reduce the payment to them as they will have rent free premises. The private sector then suffers the lack of tenants. The land is used and purchased at any convenient value (Hey NaMa works!) by means of a bond issued by the confiscating government. As done by the late, great Eamon de Valera with land unfairly held and not fully used……
    And then we can burn their babies for fuel ……

  10. I am unemployed now so is my partner not by our choice he is an electrician and I was the manager of a clothes store, we have a 9 year old and the small amount get you receive is silly in comparison to the cost of living, yes the unemployment benefit might be more than other country’s but then the cost of food and essentials are ridiculous. I would work in the morning if there was a job going I am not one of those people who does nothing and expects money for it, but I think that this thing of giving child benefit to people with lots of money doctors solicitors etc., that should be means tested and if they are reducing the money you receive they should do something about the cost of living. they should also do more about the people who have two claims or going to another country for a few months and only come back to sign on ever few months they should ban money in to the bank and make people collect it then they would have to live in this country to get the money, also this thing of people collecting money either through the unemployment or child benefit and sending it to the country they were from how can that be right people living here are getting cuts but people in other country’s are getting money for nothing.

  11. Will The Irish citizens,the Irish government,repatriate from Libia.. meet the social welfare, habitual residence clause..??? and be allowed to claim support.. ???

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