Welfare, child benefit to be cut

A 4.1 per cent cut in social welfare payments and a reduction in child benefit are among the measures introduced in yesterday's Budget.

Minister for Finance Brian Lenihan yesterday unveiled a range of cuts aimed at reducing the social welfare bill by about €760 million in 2010.

Speaking in the Dáil, Mr Lenihan told TDs we can "either safeguard the generous system we have by making these savings now, or we can put it all at risk by extending it beyond what resources will allow."

Mr Lenihan said that even with the cuts introducted in this year's Budget, social welfare spending would reach €21.1 billion next year due to the sharp rise in unemployment in 2009.

He stressed that in such a time of crisis all members of society had to play their part in helping to reduce expenditure.

"It is the Government's firm intention to maintain the comparatively generous level of social provision we have in this country. But we are in very difficult circumstances and everyone must make a contribution," said Mr Lenihan.

Social welfare rates are to be cut by 4.1 per cent on average while child benefit will fall by 16 per cent. There will be no reduction in old-age pension rates.

For new social welfare applicants, the rate of jobseekers benefit and supplementary welfare allowance for those aged 20 and 21 years of age who have no dependent children is being reduced to €100 per week. For those aged between 22 and 24 years, allowances will fall to €150 per week.

"Unemployment among the young is a particular concern to the Government," Mr Lenihan said. "We want to encourage them to stay close to the labour market while at the same time providing a rate of assistance that compares very well internationally, particularly with payments in Britain and Northern Ireland.

"We know from the bitter experience of the 1980s how a welfare system out of step with labour costs in the rest of the economy can trap people in protracted joblessness," he added.

Disability, widows' pensions, invalidity and carers' allowance are all to be cut by €8.20 to to €8.50 per week.

In addition, child benefits rates are to revert to 2006 levels with a cut of €16 in monthly payments. This brings rates to between €150 and €187 per month.

Welfare dependent families will be fully compensated for this move through an increase in the Qualified Child Allowance of €3.80 per week. Low income families in receipt of Family Income Supplement (FIS) are also to be fully compensated.

Minister for Social and Family Affairs Mary Hanafin said more than 420,000 children in welfare dependent and low income families would be protected from the cuts in child benefit.

She added that over €2.2 billion will be provided next year for child benefit payments to help over 600,000 families throughout the country.

"This Government is proud to have been able to deliver such significant increases in welfare payments when the resources were available. However, in the current economic environment, we simply cannot afford to keep spending at the same level as we did when our tax revenue was much higher," she said.

"If the Government doesn't take steps now to reduce overall public expenditure and restore stability to the public finances, we risk making the economic situation far worse for everyone - including welfare recipients - in the long term," she added.