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Friday 19 September 2014

Unemployed parents to keep benefits when they get jobs

Published 20/08/2014 | 00:00

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Tanaiste Joan Burton
Tanaiste Joan Burton

A DOUBLE whammy of incentives is planned to make it worthwhile for parents to get off the dole and into work.

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Unemployed parents who get a job will be able to retain two key social welfare payments to support families for up to a year, under proposals being finalised.

The Government is looking at so-called poverty traps, which prevent people from taking up low-paying jobs because they will lose welfare benefits.

Movement is expected on allowances paid to parents to help cover the cost of raising their children, which are worth more than €3,000 for a family of two adults and two children.

Changes to rent supplement, which is worth an average of €4,500 a year, are also aimed at supporting parents trying to get back to work.

The plan is to allow people who go back to work to retain some of the key welfare top-ups they receive while on the dole and gradually wean them off the payments over time.

Aside from the child benefit paid to all, parents on the dole can qualify for a top-up payment known as Qualified Child Increases (QCIs), worth €30 a week per child.

The payments are viewed as being essential in safeguarding against child poverty. QCIs are paid up to the age of 18, but can be paid up to the age of 22 if the child is going to college.

But the payments are also a poverty trap as they are cut off when the parent gets a job.

"The loss of QCIs on taking up work can have significant disincentives for social welfare recipients with children. Research conducted by the ESRI points to higher replacement rates for married couples with children compared to single people," a report two years ago by the Advisory Group on Tax and Social Welfare found.

The Government is planning to reform the QCI system to allow parents on the dole to go back to work and keep the payment or a part of it for up to a year.

The move would make it more financially attractive to take up a job and is meant to help families avoid dependency on welfare.

Tanaiste Joan Burton (pictured below) is teasing out the details of the change, which has strong support from Fine Gael. The senior party in the Coalition has long been critical of the failure to address welfare traps.

Likewise, the changes to rent supplement, which is a subsidy on rent, are supposed to encourage people to take up a job. Rent supplement is normally paid only to people dependent on welfare. It is being replaced with a new Housing Assistance Payment, which will continue to be paid to those who return to work on low incomes.

Rent supplement is going to cost €344m this year. At the moment, there are around 77,000 people receiving it, working out at an average of €85 a week or €4,467 a year.

But over 50,000 people getting rent supplement have been getting the payment for more than 18 months.

Rent Supplement was never intended to be a long-term support. The point of the payment was to provide short-term support to help with reasonable accommodation costs of people living in private rented accommodation.

The idea is to transfer responsibility for people receiving rent supplement with a long-term housing need to their council.

The Department of the Environment will have the budget line for the new Housing Assistance Payment.

Rent Supplement will still be available, but it will return to its original purpose as a short-term income support.

The moves are part of a broader drive to get long-term unemployed people into work.

Private companies will be hired later this year to help unemployed people get off the dole and into jobs.

But the career guidance firms will only be paid the bulk of their fees if the job actually lasts. The firms will be paid by the Government to help long-term unemployed people to find a job by offering them advice, helping them get training, apply for appropriate jobs and prepare for interviews.

The companies will be obliged to accept all unemployed people referred by the Department and won't have a role in selecting people.

Irish Independent

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