One Parent Family Payment  Adjustment  – A Lesson in welfare reform for the Northern Ireland Assembly?

In the Republic, the current Minister for Social Protection, Joan Burton, has introduced far reaching and controversial (to some) changes to One Parent Family Payment. In introducing these changes, she has tackled a particularly large payment made by her Department to those who are of working-age. She has done so against a concerted attack from Sinn Féin and the various brands of Trotskyite thought represented in the Dáil. The changes reflect a perspective, promoting participation in employment and ensuring that remaining on Social Welfare is not a long-term option.  This view does not seem to be reflected in the NI welfare discussion.

One Parent Family Payment was introduced by Frank Cluskey during the 1973-77 Coalition Government. It was originally called Unmarried Mother’s Allowance, changed to Lone Parent Allowance in 1990 and to its current title in January 1997, when the incumbent Minister was the junior Minister in that Department.

The cost of the payment had rocketed during the boom period when the number of claimants increased, despite ample work opportunities. It is possible to work and receive OPFP and indeed many claimants do so. The cost  had increased from €245M in 1995 to a peak of €1,121M in 2009.  Indeed it is possible to receive OPFP, work and also receive Family Income Supplement, depending on the claimant’s income.

 

table1
DSP Annual Statistical Reports  www.welfare.ie ,Expenditure Estimates, Vote 37 www.per.gov.ie

The growth in the number of claimants from the mid 1990s was incredible as the Irish birth rate was at its lowest apart from the issue of the availability of employment. The number of claimants in 1995 was 45,779, increased to 65,548 in 1998 peaking at 92,326 in 2010. The phased changes have already reduced the number of claimants to 78,246 in 2013.

Ms. Burton phased in a series of changes reducing the age threshold for entitlement to the payment, the final step will take effect from the 2nd July this year. Once the child reaches the age of seven entitlement to the benefit ends. The Table below sets out the timetable of the changes. If the parent is not in employment they are entitled to make application for Jobseeker’s Allowance.  There is also a series of transitional payments, via Back to Work Family Dividend, which cover the first two years of the move from Social Welfare.

Age Threshold reduces to:
01/05/12From 4 July 2013From 3 July 2014From 2 July 2015
If OFP payment commenced before 27 April 20111817167
If OFP payment commenced between 27 April 2011 and 2 May 20121412107
If OFP payment commenced on or after 3 May 201212107

One Parent Family Payment is a particularly problematic payment. Claimants remained on the payment for much longer than other benefits. Issues of cohabitation are notoriously difficult to prove and as the then communist, but now a gay green OBE, Beatrix Campbell detailed in her 1984 classic Wigan Pier Revisited relationships may not even be that permanent. The Irish position as such is not unique. The problem facing the Minister was an unwillingness by her predecessors to tackle the issue. But why should people of working-age be paid not to participate in the workforce?

Around 84% of those receiving the payment prior to the changes were Irish with those born in the UK making up 5.3% claimants, higher than would be expected based on the number of UK born mothers claiming child benefit. Ireland was suffering from UK benefit tourists!

 

Family Income Supplement

This payment is made to working households with children, whose income falls below certain thresholds, which are calculated on the number of dependent children.  The Table below shows the increase in FIS claims as people are encouraged back into the workforce.

20132012201120102009
Two Parent Family2294216908148141382811819
One Parent Family2121715399140621439514144
Total4415932307288762822325963

The cost of the supplement has also increased dramatically as activation tied with the increasing availability of work has made taking a job the logical choice for the vast majority. The Table below shows how the cost grew from €167M in 2009 to an estimated €349M in the current year.

table2

DSP Annual Statistical Reports  www.welfare.ie ,Expenditure Estimates, Vote 37 www.per.gov.ie

You can’t rush into welfare reform – it must be planned carefully. The problem is that Governments lack the will to tackle the issue in the good times. Irish Governments turned a blind eye to the development of a burgeoning underclass, even though there was a shortage of labour. It was far easier to invite tens of thousands of Eastern European workers rather than tackle the issue. Robin Livingstone in his now famous “Squinter” column placed the blame for the state of West Belfast squarely on the shoulders of the “Oprah Winfrey of Irish-America”, Gerry Adams.  It is a moot point as to whether the party, representing the most deprived wards listed here,  has a vested interest in their continuing  deprivation, or as “squinter” put it himself,

They hope nobody will think to ask whose job it has been for the past 20 years to get investment and jobs and to generate community confidence and optimism.”

This may equally apply to some of the unionist parties also in “their” areas. If the cap fits, they too should wear it

Ms. Burton has challenged the “welfarist” approach, making active participation in society the issue rather than  “I exist therefore I have a right to consume” views made popular by the likes of  Jacques Duboin  and André Gorz. The return to strong economic growth is fortuitous and should ensure that the move is reasonably smooth. Unlike the last time, there is no sign of mass immigration to take up the available jobs.

The challenge is so much harder for the Assembly parties. Having turned a blind eye to welfare reform when money was plentiful, they will now have to tackle the issue without the cushion of spare cash. However as Squinter pithily  put it, “whose job has it been for the past 20 years”?

Niall MacSuibhne is a retired Irish Civil Servant