Budget 2016- Simple changes could make a big difference to families

Louise Bayliss is a mother and works with the SPARK campaign and Equality Budgeting Campaign. In the first of our new series looking at what Budget 2016 should do, she outlines exactly what Minister Noonan needs to address in order to meet the needs of many struggling families.

In Budget 2012, Minister Burton, as Minister for Social Protection, announced wide ranging reforms to the One Parent Family Payment. These changes have now been fully implemented and the effect on the lives and poverty levels of our poorest children has been devastating. It was clear in 2012, that there were problems looming, however, the housing crisis, has created a “perfect storm” that has meant many lone parents have now been forced out of paid employment and also out of their communities.

The One Parent Family Payment had been introduced in 1997 and was seen as a progressive payment. It offered financial assistance to parents raising children alone and attempted to treat all parents equally, regardless of their marital status or gender. It replaced previous payments such as the “deserted wife’s allowance” and “Single Mother Allowance”. When the payment was first introduced, it acknowledged the care costs of a lone parent trying to work and so, in the absence of an affordable child care scheme, there was an income disregard of 115 (€146.50) awarded to this payment. This was the amount a parent could earn without effecting social welfare entitlements.

50% of any income over the €146.50 and under €425 (the maximum income allowable to be entitled to One Parent Family Allowance) is deducted from any social welfare payment.There were issues with the income disregard as (i) it had not increased from 1997 – 2011 so in real terms, the value of the benefit was eroded year on year. (ii)The income disregard was the same regardless of the number of children that a parent had and the ages of a child i.e. a parent with three children under 6 was given the same income disregard as a parent with one child over 16.

Nevertheless, it did help keep lone parents working, and lone parents used the income disregard to balance care and paid work commitments. Minister Burton announced that she would gradually reduce the income disregard down to €60 per week, which is the income disregard of everyone, regardless of care commitments. Minister Burton dod relent slightly and the income disregard is €90 per week for lone parents with children 6 and under and is €60 for those with children seven and older.

The other major reform introduced in Budget 2012 was that a parent would cease to qualify for One Parent family Allowance once their youngest child turned 7. Parents could move to Job Seekers Allowance/ or Job seekers Transitional Payment. There is no difference in the payments rate on these payments, however, there are significant changes in how earned income and maintenance is treated. In reality therefore, only working lone parents or parents who had sought maintenance through the courts would be financially effected by the changes. Throughout the debate on these reforms, the government parties compared Ireland to international norms where a payment of this nature usually stopped when a child was younger. However, this ignored stark differences in the Irish Jurisdiction.

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 non-custodial 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 while simultaneously increasing poverty amongst our poorest families.

In other jurisdictions, when the payment ceases, there are incentives put in place to assist lone parents into work. For instances, in the UK a lone parent can avoid the benefit cap and get working tax credits and increased housing benefit if they work 16 hours per week. A couple in the UK would need to work 30 hours between them to access similar. In Ireland to access Family Income Supplement both a couple and a lone parent have to work the same 19 hours.

Ireland has the second highest childcare in the OECD and many families struggle due the lack of investment in our children. Lone parents have fewer options though, as they must choose to pay childcare on one salary or work in low paid precarious work around school hours. These options have been seriously curtailed by the reforms as the return from work has been hugely diminished by the changes. On April 18th 2012, Minister Burton acknowledged the childcare issue and committed not to proceed without an affordable childcare system in place. The changes proceeded and since 2012, a lone parent working 20 hours on minimum wage has seen their income drop by €108.72 from a modest starting point of €486.67.

Rent supplement is also a huge problem. 75% of all income over €75 per week is assessed against rent allowance, so for many lone parents the 25% they are allowed to keep from their earnings does not cover the cost of childcare and transport to work. This is a problem for all low income families who need rent supplement, however, it greatly exacerbated for lone parents as they need paid childcare to be able to work.

The changes made, have meant that many lone parents are now better off not working and receiving rent supplement than trying to pay rent and childcare on a drastically reduced income. The rationale behind these changes was to activate lone parents, yet sadly, they have done the exact opposite. This will harm children, parents and will eventually lead to increased costs to the exchequer as more parents are forced onto long term social welfare dependency
Simple changes in Budget 2016 could make a difference to our families.
(i) Restore the income disregard for all lone parents and ensure child maintenance is directed towards children.
(ii) Treat FIS (Family Income Support) as a supplementary welfare payment similar to child benefit so it is excluded from rent allowance and social housing rent

iii) Flexibility around FIS As many people are finding it difficult to access a guaranteed 19 hours and the legislation is not in place to guarantee minimum hour contracts, that greater flexibility around FIS is facilitated.

(iv) Subsidised Childcare
The situation is extremely dire for lone parent families. Changes brought in without the necessary supports, will have long term effects on our children and their outcomes. Although it is working lone parents that have been financially impacted, many lone parents who were hoping to get out of poverty through work, believe that the door has now been slammed shut. The treatment of lone parents by this current government has been shameful and Taoiseach Enda Kenny’s apology to the women incarcerated in the Magdalene Laundries, sounds hollow, if he allows a deprivation rate of 63% (EU SILC 2013)for a new generation of parents and their children.

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