POSITION PAPER ON REFORMING CHILD INCOME SUPPORTS
A response to the Report of the Advisory Group on Tax and Social Welfare on Child and Family
Income Supports – April 2013
The End Child Poverty Coalition is deeply concerned about the impact of proposed reforms to child income support.
Child Benefit, basic weekly social welfare payments, including increases for children, and Family Income Supplement are
vital lifelines without which many families could not survive. Far too many children live in low income households and
are vulnerable to intergenerational poverty and social exclusion which leaves deep and lasting scars.
The facts speak for themselves:
Almost 1 in 5 children
are at-risk-of-poverty
A quarter of children
live in jobless
households
About half of families
rely on social welfare
or low paid work
1 in 3 children are
deprived of basic
necessities
1 in 10 children live in
severe poverty
Much greater attention needs to be given to examining how changes to child income support payments would affect
vulnerable families already struggling to make ends meet.
The End Child Poverty Coalition (ECPC) opposes any further cuts in child
income supports to generate savings to the exchequer in future budgets,
without compensation or reform to protect struggling families.
Cuts to child income supports have already yielded very significant
savings: since Budget 2009, over €450 million has been cut from the
range of social welfare payments for children. Many of the families
hardest hit by these cuts have also suffered other reductions in income,
through both cuts in adult rates of social welfare payments, as well as
pay cuts, loss of working hours, and tax increases.
Low income families can take no more.
Cuts to child supports have
already saved over €450m
€500
€400
€300
€200
€100
€0
2010
2011
2012
2013
What’s proposed?
The Advisory Group on Tax and Social Welfare1 proposes the introduction of a ‘second tier’ of child income support. The
first ‘tier’ is a reduced Child Benefit paid to all families with children; the second ‘tier’ is a means-tested top-up for
families on very low incomes. It is proposed that the second tier replaces the Family Income Supplement (FIS) which
helps to make work pay for low waged families.
The End Child Poverty Coalition is: Barnardos, Children’s Right Alliance, Focus Ireland, National Youth Council of Ireland,
OPEN, Pavee Point, Society of St. Vincent de Paul and Start Strong | www.endchildpoverty.ie
End Child Poverty Coalition Position
The Coalition welcomes the Advisory Group’s commitment to universal Child Benefit; we agree that it is important that
all families get support to help with the cost of raising children. The Coalition has also advocated for many years for a
more targeted approach to child income supports; however, the Advisory Group’s proposed model would be
devastating for many low income families. The Coalition has three key concerns with the proposals.
1.
Abolishing Family Income Supplement (FIS) means low paid working families suffer the greatest losses
Under the Advisory Group’s proposals, by far the greatest losses would be faced families currently in receipt of FIS.
Employment is critically important in tackling child poverty. FIS is an in-work benefit support specifically designed to
make even low-waged work pay. Although means tested, it provides greater income support for families who are
working than those who are not. The Advisory Group’s proposals don’t provide this extra support for low paid working
families. This means, for example, that a low paid married couple with two young children getting the full second-tier
payment would lose over 5½ times more than a high earning family with no entitlement to the means tested top-up.
FIS is not without problems: not all families who need, or are eligible for FIS receive it. Addressing these problems could
have a greater impact on child poverty; for example, ESRI2 research has found that full FIS take-up would reduce poverty
by 3 percentage points, much more than the 0.2 point reduction resulting from the Advisory Group proposals.
As an interim measure, the Coalition recommends that
FIS be retained alongside a two-tier child income
support system, until a more effective in-work benefit,
for example a working tax credit4, can be introduced.
2.
€50
€1,000
€900
€800
€700
€600
€500
€400
€300
-€50
€200
€0
-€100
Advisory Group proposal
ECPC proposal (two-tier + FIS)
-€150
Gross pay per week. Married couple, 2 children
The proposed income threshold for means-testing of the second tier payment is too low
Impact of raising the withdrawal threshold
€60
Advisory Group proposal
ECPC proposal (€35k threshold)
€45
€30
The analysis in the Group’s report shows that 45% of
losses from their proposals occur in the lower half of the
income distribution. The Advisory Group proposes that
the second tier of child income support should begin to
be reduced when gross household income is €25,000
per annum – even lower than the level at which a one
child family are currently eligible for FIS.
€15
Gross pay per week. Married couple, 2 children
€1,300
€1,200
€1,100
€900
€800
€1,000
-€30
€700
-€15
€600
€0
€500
Reform impact: € gain/loss per week
Impact of retaining in-work benefits for low
paid families
Reform impact: € gain/loss per week
The Coalition believes that in-work benefits need to be
reformed, not abolished. Neither does the Coalition
accept that a FIS ‘saver clause’3 for current recipients
would be an adequate response to these problems, as
this would still mean that the incentive to take up
employment, even if low paid, would be significantly
reduced in the future. This is an outcome that cannot be
justified. FIS or a better alternative must be available to
all low waged working families, both now and in the
future.
The Coalition believes this is simply not good enough.
We oppose any reform which will worsen the situation
of families who are struggling, either on social welfare or
in low paid employment. The Coalition proposes that
withdrawal of benefits should start at a higher income
threshold. For example, the impact of raising the
threshold to €35,0005 is illustrated here.
The End Child Poverty Coalition is: Barnardos, Children’s Right Alliance, Focus Ireland, National Youth Council of Ireland,
OPEN, Pavee Point, Society of St. Vincent de Paul and Start Strong | www.endchildpoverty.ie
3.
The need for clear proposals on how resources can be redirected to achieve better child welfare outcomes
We believe that hard pressed familes need better child services, which will enhance child welfare.
Having examined the Advisory Group’s proposals, the End Child Poverty Coalition opposes the model outlined in their
report. We propose the introduction of a modified two-tier child income support model, which will protect struggling
families and preserve employment incentives.
End Child Poverty Coalition Recommendations:
 The principal aim of reform to child income support payments must be tackling child poverty, rather than simply
generating exchequer savings. Consequently, any and all savings made from reforms must be redirected to better
services for children and families. The Group’s report makes no clear proposals on the extent of savings that could be
redirected, the services that could be funded, nor when they would be in place – all considerations which are critical
in determining the value of such a trade-off for low income families.
 To address low take up of FIS, an alternative in-work benefit to make low wage work pay should be introduced. This
should provide at least the same level of support as FIS, but ideally should enhance employment incentives. Other
countries successfully use a ‘working tax credit’ to achieve this goal; the Coalition believes a working tax credit
should be introduced concurrently with broader reform.
 In the event that such an alternative in work benefit such as a working tax credit is not introduced, FIS must be
excluded from the reform and retained while an alternative in work income support is developed. The two-tier
payment could then be used to ensure that low income families are fully compensated for any reductions to Child
Benefit. The Department of Social Protection could look at abolishing FIS when an alternative in work income
support is ready to be introduced.
 The threshold at which the means-tested second tier of child income support payment begins to be withdrawn must
be significantly higher than €25,000.
For ECPC the wholly unacceptable scenarios are the introduction of the two-tier payment without an in-work income
support or the retention of FIS OR an across the board cut to Child Benefit with no compensation for struggling
families through improvements in the Qualified Child Increase, Family Income Supplement or in the form of services.
Tackling child poverty through the provision of services
A combination of child and adult income supports and access to quality public services is required to end child poverty.
Countries with low rates of child poverty balance investment between income supports and quality services.
Any savings which are made from introducing reforms in the area of child income support payments must be redirected
into services for children. Some indicative costs for the types of services which could make a real difference to children
experiencing poverty and struggling families in Ireland include:
The End Child Poverty Coalition is: Barnardos, Children’s Right Alliance, Focus Ireland, National Youth Council of Ireland,
OPEN, Pavee Point, Society of St. Vincent de Paul and Start Strong | www.endchildpoverty.ie
 €45 million
The cost of providing free school books for every child in Ireland.
 €175 million
The cost of funding a second year of free quality-assured preschool care. With lower staffing
ratios, after-school care could be provided at even lower cost.
 €20 million
The resources to strengthen primary care services by recruiting public health nurses, registered
general nurses, occupational therapists, physiotherapists and speech and language therapists.
More information:
Email: contact@endchildpoverty.ie
Caroline Fahey | Society of St. Vincent de Paul | 01-8299095 / 086-0487535
Maria Corbett | Children’s Rights Alliance | 01-6629400
1
Advisory Group on Tax & Social Welfare (March 2012) First Report: Child & Family Income Supports. Dublin: Dept. of Social
Protection. Available at: https://www.welfare.ie/en/Pages/Advisory-Group-on-Tax-and-Social-Welfare-First-Report-Child-andFamily-Income-Support.aspx
2
Callan, T., Coleman, K., Nolan, B. & Walsh, J.R. (2006) ‘Child Poverty and Child Income Supports: Ireland in a comparative
perspective’. In Callan, T. ed. Budget Perspectives 2007. Dublin: ESRI. Available at:
http://www.esri.ie/UserFiles/publications/20061003150759/BKMNINT192_Callan.pdf
3
A ‘saver clause’ would protect families currently in receipt of FIS from losses, but no low-paid family would be eligible for an inwork benefit in the future.
4
Over half of all OECD countries use in-work benefits to help make work pay; working tax credits are used in many countries, for
example Finland, Hungary, South Korea, the Netherlands, New Zealand, the Slovak Republic, Sweden, the UK and the USA.
5
Which is just below average earnings in 2011
The End Child Poverty Coalition is: Barnardos, Children’s Right Alliance, Focus Ireland, National Youth Council of Ireland,
OPEN, Pavee Point, Society of St. Vincent de Paul and Start Strong | www.endchildpoverty.ie