Regina Doherty signals end to €5 increases in social welfare payments

Minister for Social Protection Regina Doherty has signalled an end to blanket €5 increases in social welfare payments with plans for a new index-linked welfare system.

Ms Doherty said she wants to “take the politics out of what we pay” and to bring in security for welfare recipients, “to know that it isn’t within a row between a Fianna Fáil and a Fine Gael politician of what the increase should be in the next budget”.

She added: “We can’t keep adding four of five hundred million to the social protection budget every year because we will never get some of the larger ticket items done if we keep increasing every scheme by €5 per week every single year.”

She said that under a new index-linked welfare system, “payments won’t drastically increase, but they are not going to drastically decrease”, and that she is open to linking payments to the consumer price index or the minimum wage.

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Huge issues

“There are other huge issues that need to be tackled,” Ms Doherty said.

In an interview with The Irish Times, Ms Doherty also said that she wants to see free school books given to all children in the State.

“Why should certain children get free school books and other children not get free school books. If we are going to talk about having real free primary education that we have been talking about in this country since 1937 apparently, it is about time we actually did it. I think it should be universal.”

Proposals for a new auto-enrolment pension scheme were “ripped to bits” during a public consultation, she said, which could change the shape of the plans.

Auto-enrolment is due to be introduced on a phased basis from 2022. Under the original plan, the scheme would see workers contributing up to 6 per cent of their wages, with that amount matched by employers. The State will contribute €1 for every €3 put in by workers.

IBEC has called for the 6 per cent rate to be cut to 3 per cent, however Ms Doherty said she was not open to changing this. “We didn’t pull the figures from the sky.”

She acknowledged that a hard Brexit could also halt the plans.

“If there’s a hard Brexit then obviously that will impact, businesses can’t afford to do everything and take the impact that a hard Brexit might cause them so I think we have to be cognisant of that.”

Ms Doherty also said there will be no increase to the child benefit payment this year.

“I can be honest and tell you no is the answer to that, because it does not direct the money specifically to where it is crucially needed.”

Resistance

Ms Doherty has also signalled that she will introduce legislation for a new so-called “contractor’s tax”.

“There are an awful lot of people who are contracted whether they are doing it voluntarily or involuntarily. I want to make it less attractive for employers to take on people on a self-employed contracting basis.

“There is a huge loss of revenue there. If it is something that people enter into willingly, that is great, I am not trying to restrict that, [but] there still can’t be a loss of revenue to the State.”

She said she expects resistance to the plan but expects support from the Revenue Commissioners.

“There are great examples for argument’s sake in Portugal or Montreal where they have what is called a contractor’s tax, so people who work for a single company for maybe more than 70 or 80 per cent of their working week or month or year, that single company practically is that person’s employer for all intents and purposes and shouldn’t be able to escape the 10 per cent plus employer’s social insurance contribution.”