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

  • Old Mortality

    ‘The problem is that Governments lack the will to tackle the issue in the good times.’
    But that would require too much political courage. Imagine the outcry if money was taken away from ‘the vulnerable’ while everyone else was enjoying rising incomes.
    In NI, Westminster should have taken the axe to the public sector before handing over the reins to the Assembly. Westminster was largely responsible for allowing the grotesque levels of dependency to occur in the first place. I don’t think it would have happened under ‘Unionist misrule’.
    SF’s hostility has for once makes strategic as well as tactical sense. The prospect that even their client constituency in places like West Belfast might reject unity because their benefits would be reduced must be horrifying.
    A very useful and thoughtful post from which I have discovered that dependency culture has some intellectual scaffolding, however rickety.

  • Abucs

    Another case of the morality of misdirected equality making a bad situation worse.

  • Abucs

    quote ……… Imagine the outcry if money was taken away from ‘the vulnerable’

    Outcry indeed but this belies the way people are taught to think about such things. It is really not taking money away from some people but not giving them as much as you did before. There is a huge difference but the morality of misdirected equality is so locked into the way we speak that there is an emotional defence built into such continued welfare spending. This applies to virtually every form of welfare spending.

  • Old Mortality

    It’s disappointing, but revealing, that this intelligent and cogently argued post has attracted so little attention. In particular, where are the SF camp-followers to explain why the party opposes the reform of One Parent Family Payment. Perhaps, they’ve decided (or been advised) that there is no coherent argument and that this post is best ignored.

  • NMS

    Old Mortality, thank you for the comments. There has been a movement in parts of the so-called left, from the primacy of participation to a sort of welfarism, based on a series of presumed entitlements. Fianna Fáil & Progressive Democrats were happy to throw money at such groups, as long as they kept out of the way. Rather than tackle the participation issue, it was easier to import workers. Ms. Burton reflects a different set of values, the more traditional trade union and socialist values of the primacy of work and participation. Those with a stake in society are more likely to vote and even think for themselves. The two clientalist parties of SF & DUP need a passive society, which their cadres can control.

  • NMS

    Abucs, I have to agree with you. Here is a link to a speech made by David Begg in November 2002 on Social Partnership, http://www.ictu.ie/press/2002/11/22/social-partnership-nci/, which reflects the misdirection to which you refer.

    David Begg is a decent Christian man, if slightly long winded. His personal faith drove his views towards Social Partnership. However in this speech towards the end he says “The greatest achievement of social partnership was the achievement of full employment.” Unfortunately, he was blinkered by his Christian charity. At that time, the Irish employment rate was approx. the same as that of Germany. In Germany, they had an unemployment crisis, in Ireland we were a growing number of working age adults detached from the workforce and massive net immigration.

    Obligatory participation has its opponents,however it is it the key to cohesion?

  • SDLP supporter

    A very comprehensive and thoughtful post. Welfare-dependent people, like most of the population, make largely rational economic choices when faced with the existential challenges of day-to-day living, hence ballooning of some benefits seen as being open to finessing. As a social democrat, I feel there is the challenge in that welfare fraud, which must be ground down, is paid out of taxes already collected. There is far more focus on welfare fraud than on the far more costly tax avoidance/evasion which doesn’t get as much attention as it is not directly coming out of tax payers’ pockets. I think Miliband made a very sound move when he announced the British Labour policy on non-doms. It got virtually no traction in NI, even from my own party, which takes its seats at Westminster. Economic reality, however slowly, is dawning on NI. The challenge is to leaven it with tax justice and fairness and initiatives on things like the Living Wage and zero hours contracts which, in fairness, some SDLP representatives have been pushing.

  • NMS

    I am glad you liked the post. There is a connection between working age SW payments and tax fraud, in that it creates a pool of workers for employers to prey on for casual and part-time work. I am not saying that those receiving support are all working full-time, but certainly a proportion are working with the connivance of employers.

    As a former tax inspector, I would respectfully suggest that most “tax avoidance” occurs with at least a degree of State support. The UK (& Ireland’s) use of domicile rules is one example, Ireland’s corporate tax rules and suitably weak companies’ legislation are further examples of State involvement.

    I wait to see what the British Labour Party will do.

  • Old Mortality

    NMS
    ‘The two clientalist parties of SF & DUP need a passive society, which their cadres can control.’

    However, SF’s principal objective is national unification. As a former, and presumably senior, civil servant in the RoI, would you not agree that the current level of dependency in NI is a fairly significant, if not insuperable, obstacle to that goal. Their wholesale rejection of welfare reform in NI is , in that context is, therefore, completely irrational.
    Meanwhile, the DUP present welfare reform as unfortunate but unavoidable, although I’m quite sure many of them privately support it on the grounds that it inflicts greater pain on SF’s electorate.

  • ElephantPark

    I got as far as Trotskyite, communist and gay green and quit, your love for one particular cabbage patch doll shines through.

  • NMS

    OM – I am not fully sure what Sinn Féin believes, other than in the maintenance of its various streams of income. Forthcoming cases between Gerry’s best friend Thomas “Slab” Murphy (the Good Republican) will perhaps test some of the “movement’s income streams.

    National unity, is also the policy of a wide range of parties. The alternative name of Fine Gael is the United Ireland Party. Brian Lenihan’s campaign for the Presidency was very much a 26 county campaign. The “unionist” candidate Mary Robinson ran an all-Ireland campaign and even had the temerity to raise rights of emigrants. FF & Labour support a “united Ireland” based on “consent”, knowing that it is unlikely to happen.

    Welfare reform becomes a clientalist issue at ground level. As none of the NI parties have any influence over the development of UK policy, implementation becomes the issue, though I agree most DUP reps would naturally oppose the size of the welfare spend, other than they need the “welfare” vote in some areas. They can all blame “Westminister” or the “Brits”. The only people in UKNI who don’t blame anyone vote for Sylvia Hermon, but they can afford to do so and let her support the Labour Party .

    Northern Ireland minus UK subvention = Moldova.

  • NMS

    EP – There are four separate streams of Trotskyite thought in the Dáil, SWP, SP, United Left Alliance and WUAG. Thankfully, in the best Trotskyite tradition they spend most of their time disagreeing. In the case of Beatrix Campbell, the core points of her book remain despite her personal change of views.

    I believe that the conditions that created Social Democracy are gone and that the failure of Social Democratic parties to see that, is why they are in decline through Europe. The failure of SD parties to produce an alternative analysis is striking. The CD parties have adapted their views. On a European level, the organised political left has failed to produce any serious thinker or leader since the death of Enrico Berliguer, over thirty years ago.

  • Louise Bayliss

    This offers poor analysis of the One Parent Family Payment reform. It is clear that there is a need for reform, but I would be loathe to recommend such ill thought out policies to be replicated in other jurisdictions.

    A basic analysis of the reforms will show there was no impact assessment nor clear strategy as to how the stated objectives would be achieved.

    The rationale for the reforms has been stated as labour activation for lone parents and to improve the financial well being of one parent families, who are consistently identified as the poorest group in Ireland.

    It is almost impossible for a lone parent to work full time, because of the high costs of childcare and therefore have overcome this barrier by working part time.

    According to the OECD, the average two-parent family spends 17% of net income on childcare. In Ireland, it is 34%. However, for a one-parent family in Ireland, the cost of childcare can be over half of net income. It is not feasible for lone parents to enter full time employment without affordable childcare.

    This was originally acknowledged by the government. When introducing this policy two years ago, Minister Burton admitted that “safe, affordable and accessible” childcare should be in place before the change is implemented. This is not in place, yet she continues to proceed.

    1. If this move is to activate lone parents into the labour market, why are only working lone parents financially effected?

    There is no change to the income for non working lone parents, but a working lone parent working 20 hours a week, on minimum wage will lose a total of €108 per week when the full incremental losses are realised. For many, this cut will make work unviable and they will be forced to give up work and go on to full social welfare dependency.

    The Department of Social Protection have already confirmed that lone parent employment rates have already started to fall as a result of the changes.

    2. Why are lone parents in third level education being effected?

    Lone parents in 3rd level education have already been forced to give up degrees as a result of the changes. Previously a lone parent in education, could keep their OPFA and also get a student grant. The student grant is either €45pw of €113pw (depending on distance from their college) and this money contributed towards the additional costs (travel/ childcare) of attending college.

    Lone parents already effected by these changes, have been forced to give up mid degree, which is counter intuitive to the intentions of the reforms. We have seen examples where parents have been forced to give up a level 8 degree course in their final year and were offered FETAC level 5 courses instead.

    Subsidised childcare is available for lone parents to take up FETAC level 5 courses, but there is no childcare support for lone parents who want to access diploma or degree courses.

    After strong representations, the Dept. has relented for lone parents losing OPFA in July, but for lone parents already effected or those coming after July, their access to third level education is being curtailed.

    3. Discriminatory nature of the reforms

    Lone parents will now be classified as Job seekers when their child turns 7, yet in a two parent unemployed family, only one of the claimants is subject to job seekers conditionality. An adult dependent claimant can remain indefinitely on this payment, regardless of the age of their children.

    4. The carers issue

    While this has now been reversed (after serious campaigning), it does serve to highlight how little impact analysis was carried out. Lone parents who were carers (to someone other than their own child), were due to lose €86 per week, purely on the basis their child turned 7. This has since been reversed for the 800 families due to be effected this July and also the 400 already effected, who are due thousands in back payments.

    5. Why are the absent parents being “let off the hook” ?

    In a supreme example of poor planning, the changes mean orders issued by the DSP to the “liable relative” (ie non custodial parent) and used to offset the cost of the One Parent Family Payment scheme wii now be invalid, when a child turns 7.

    In other jurisdictions, where the state withdrew support from one parent families, there was a simultaneous tightening of legislative and recovery mechanisms to secure payment from the non custodial parent. This has not happened in Ireland and leaves Irish children vulnerable to increased rates of poverty. According to EU SILC report 2013, almost 1 in 4 children in one parent families live in consistent poverty and with cuts to incomes of working lone parents, without the provision of mandatory support from noncustodial parents, this figure is likely to increase.

    The state has a mechanism to hold an absent parent responsible for costs incurred in maintaining a one parent family through the Maintenance Recovery Unit. The MRU has legislative powers to issue payment orders and have them enforced by the District Court if necessary. This legislation is solely for One Parent Family claims. and so these orders will be invalid once a child turns 7 and this will lead to an increase in the net cost to the state.

    We know children in one parent families are the poorest in society and it therefore seems perverse that this reform will increase child poverty and deprivation, increase net costs to the state yet financially benefit a non custodial parent who will now be released from MRU orders.

    Conclusions:

    As these changes have been introduced gradually, we have already seen proof of their failure.

    There has been a decrease in the numbers of lone parents in employment and education.

    More shockingly is the massive increase in the consistent poverty rates. 2013 is the first year we would see any impact of the effect of the policy. According to EU SILC 2013, consistent poverty rates for the general population increased from 7.7% in 2012 to 8.2% in 2013. This is not considered statistically significant. However, among lone parents the rate increased from 17.4% in 2012 to 23.0%. This is a massive increase of 32% in one year of the reforms.

    These reforms will increase child poverty, increase the net cost to the state and the only beneficiaries will be non custodial parents. This policy would never have passed any equality/ poverty proofing scrutiny that many jurisdictions would subject it too. It is an experiment in social policy, using children as collateral.

  • Brian O’Neill

    I don’t know enough about the issue to give an opinion either way but thank you for taking the time to post such a comprehensive response.

  • Anne Mullett

    Parents need support, especially lone, widowed or Carers. Carers could not receive family income supplement. Living on the poverty line is the new norm. A brutal attack on mainly, women and children. Women in general are treated as a non existential actor in the capitalist and in fact, socialist system too.. Now the progressives want to remove the special place of women as mothers from the constitution! No. Instead,include the special place of men as Fathers too. There is an attempt to obliterate the concept of parenting and family from society, from the Constitution, from public life, altogether. Then the State could live in a value free world. Madness, wake up.