THE SOCIAL welfare budget for next year will be cut and significant changes in the child benefit system will be part of the package, Minister for Social and Family Affairs Mary Hanafin, confirmed yesterday.
“There will undoubtedly be changes in child benefit; there will undoubtedly be cuts in the social welfare budget,” Ms Hanafin said.
The Minister was commenting on the letter sent out by the Department of Finance last week asking every department for a detailed savings plan by September 11th, including a demand for about €1 billion in savings from her department.
She told RTÉ’s Morning Ireland programme that the €21 billion budget for her department was a huge drain on the public finances and it would be impossible to have budget cuts in public spending without reductions in the social welfare budget.
“Between now and September, we have to work out what savings can be made, while protecting people who are genuinely dependent on social welfare and are very vulnerable,” she said.
The letter from the Department of Finance asked each department to devise its plan for spending cuts based on the report of the special group chaired by economist Colm McCarthy.
The report identified potential cuts of €1.84 billion in the social welfare budget but the Minister said she did not expect the cuts for next year to be that severe.
The McCarthy report pointed out welfare spending had increased from €17.62 billion last year to a projected €21.27 billion this year, and would amount to 37 per cent of all current Government spending. It said social welfare rates had increased by between 90 per cent and 110 per cent since 2000.
The report recommended a cut in welfare rates of 5 per cent to give a saving of €850 million or a 3 per cent cut to save over €500 million.
It also recommended cutting child benefit to a standard rate of €136 a month, which would save €513 million for the exchequer.
Asked if she was going to resist cuts, the Minister said: “I’m going to fight to protect the vulnerable as much as possible, but I do accept that you cannot avoid cutting the social welfare budget . . . if you are going to get the type of savings that are needed.”
Ms Hanafin pointed out that an across the board cut in welfare rates of 5 per cent would mean a cut of €11.50 a week for old-age pensioners.
The Minister said that child benefit “has been a universal payment since 1941 and is closely guarded by mothers throughout the country”. She refused to be drawn on whether she favoured a new standard rate for child benefit or whether the payment should be means-tested or taxed.
“What I am trying to do is make out a system that is fairest to all . . . I don’t have a preference as yet. It cannot stay at the amount it is at, it has almost tripled over the last few years.” She said the options included cutting the payments, as recommended by McCarthy, and reducing payments for the third and subsequent children.
Ms Hanafin said she would present the Department of Finance with a list of options that would indicate what each scheme in social welfare would save and the impact the cuts would have.
