Budget 2014:
“Further Hardship for Young People”
Post-Budget Analysis
Comhairle Náisiúnta na nÓg
National Youth Council of Ireland
October 2013
Budget 2014: NYCI Response
Introduction
At a time of high youth unemployment and high levels of youth emigration from Ireland, Budget 2014has delivered another devastating budget for young people. The budgetary measures announced in Budget 2014 are regressive, draconian and grossly inequitable. They target young people and will result in further austerity and hardship for young jobseekers, particularly the most marginisalised and disadvantaged young people.
In his budget address to the Oireachtas, Minister Noonan quoted W.B Yeats in the context of prevailing austerity - “too long a sacrifice can make a stone of the heart.” The Minister acknowledged the pain the Irish people have sustained to date and the sacrifices made as a result of successive austerity budgets. He proceeded to announce cuts that disproportionately affect young unemployed people and the services that support them by cutting Jobseekers’ Allowance for those under 26 years of age and cutting youth work services by €2 million.
Undoubtedly the most vulnerable in society will bear the brunt of the cutsin this Budget which are inequitable and regressive.
NYCI have analysed and assessed the provisions contained in Budget 2014 against the 5 key areas included inBeyond Austerity, NYCI’s Pre-Budget submission:
- Defending Youth Work Services
- Proposed Government cuts of €3million to youth work services for 2014 are cancelled.
2. Providing Support for the most disadvantaged Jobseekers
- Develop a strand within the Youth Guarantee scheme to support young people with limited qualifications who are long-term unemployed.
3. Reducing Child Poverty
- No further cuts to Child Benefit for those currently in receipt of social welfare payments.
- Provide enhanced services for children that will make a meaningful impact on the costs of raising children and will help to alleviate better child welfare outcomes.
4. Tackling Alcohol Related Harm
- Introduce a 1% social responsibility levy on drinks manufacturers to generate €25m to replace the sponsorship of large sporting and cultural events by the drinks industry and to support initiatives by the youth sector to reduce alcohol related ham among young people.
5. Emigration
- Allocate an additional €1million to provide pre-departure supports for prospective emigrants.
NYCI Analysis & General Commentary
Overall Budget 2014represents an unfair reduction in public expenditure with the imposition of devastating cuts in a most disproportionate and inequitable manner.
Although we expected this budget to be a difficult one given the economic context, the impact of the 2014budgetary cutswill have devastating consequences for many young people especially those living in low income families.
Although we acknowledge the efforts made by Minister Fitzgerald to reduce the proposed cut by €1m,we are extremely concerned at the further cut of €2m to the funding for youth work. A cut of another3-4% on a sector that has taken cuts of 30% since 2008 will bevery challenging for youth services and the young people they support.
The announcement in Budget 2014 to target young jobseekers through cuts in Jobseekers’ Allowance for those under 26, and the further €2 million cut to youth work services, sends out a very negative message to young people. These policy decisions will accelerate the numbers of young people emigrating.
While emigration may be considered by Government as a panacea to address youth unemployment and reduce the cost of social welfare expenditure, the long-term consequences of sustained youth emigration are devastating.
Rather than investing in Ireland’s future, the message conveyed is that emigration is the only option for young people. It is a further insult to injury to suggest that the cuts to Jobseekers’ Allowance for those under 26 will incentivise young people to participate in education and training, internships or apprenticeships when in reality the number of quality programmes currently available to meet the demand is inadequate. We estimate that these cuts will impact in 2014 on about 21,000 jobseekers.
The announcement that young jobseekers under 25 will qualify for Jobplus after 6 months unemployed rather than 12 months is welcome. We also welcome the provision of an extra 1,500 on Jobsbridge and extra 1,000 placeson Tus. We note that there was an announcement of an additional 2,000 places for those under 25 on Momentum, however, this is a continuation of an existing scheme which currently provides for 1,250 young people under 25. This means that in reality, there is only an additional 750 new places.Given the scale of the youth unemployment crisis, the proposals are inadequate to respond to the growing demand.
Since 2011, NYCI have advocated for the design and implementation of a youth guarantee which would offer a young person further education, traineeship, apprenticeship or a job within four months of leaving school or becoming unemployed. We believe the youth guarantee if properly implemented and funded can offer young people hope and a path from unemployment to work. Despite a Government endorsement of the Youth Guarantee, Budget 2014 only invested €14 million.The investment of €14 in the Youth Guarantee is only about 5% of the annual budget required to implement a comprehensive Youth Guarantee scheme.
We commend Government for not cutting Child Benefit.
The increase in excise duty on alcohol is a positive step and will serve to reduce the availability of cheap alcoholand provide additional revenue to offset the €3.7bn cost to the state of alcohol misuse. We are disappointed, however, that Government failed to introduce a social responsibility levy on the drinks manufacturers. We believe that drinks industry multinationals that profit substantially from alcohol sales should be made to contribute to the cost of reducing alcohol related harm.
Overall the decisions taken in this budget will contribute to further austerity for Ireland’s youth and far from preventing youth disengagement, is likely to further marginalise young jobseekers living in Ireland and encourage more young people to emigrate.
Summary ofBudget Measures
Defending Youth Work Services
NYCI have continuously campaigned for Governmentto support youth work services throughout the recession to continue to responds to the needs of young people in particular the needs of most vulnerable and marginalised young people.Our Pre-Budget submission 2014 called on Government tomaintain youth work funding at the current levels.
Prior to the Budget,there was a proposal to cut €3m from the youth work services budget for 2014 as part of the 2011 Comprehensive Review of Expenditure.
We have been lobbying against this cut for many months.
From the information provided on Budget day, this cut has been reduced to €2m instead of the proposed €3m.
While any reduction in the cut is welcome, we are still very disappointed that youth services have suffered a further cut on top of cuts of 30% since 2008.
We will be engaging with the Department of Children and Youth Affairs in the coming days and weeks to discuss the implications of this cut.
The impact of these cuts, if implemented, will be very challenging for youth work services and the young people they support.
The impact of the cut in funding will jeopardise frontline supports and projects for young people, especially those hit hardest by the recession. At a time when 37% of young people under 18 years are at risk of poverty and social exclusion - the highest in the EU15 - the State should be investing in services to support young people.
The Indecon economic assessment of the value of youth work provides clear and robust evidence that investment in youth work makes economic senses. The research confirms that for every €1 the state invests in youth work it saves €2.2 in the long run. The cuts in Budget 2014 to youth work do not make economic sense. Cutting youth work funding will cost the State more in the long-term in terms of supporting young people particularly the most vulnerable in our society.
Providing supports for the most disadvantaged young jobseekers
Ireland has the fourth highest percentage of young people (15-24) not in education, employment or training (‘NEET’). 18.4% of young people in 2011 were not in education, employment or training compared to EU average of 12.9%.
The provision for young people in need of education, employment or training in this year’s Budgetis inadequate. In our Pre-Budget submission, we highlighted the need for Government to develop a strand within the Youth Guarantee to support young people with limited qualifications who are long term unemployment.
We welcome the announcement that young jobseekers under 25 will qualify for Jobplus after 6 months rather than 12 months unemployed and the additional 750 new places for the Momentum programmefor young people under 25. There appears to be an anomaly in the Budget in that those aged 25 years of age are subject to a cut in the Jobseekers’ Allowancebut are also excluded from the reduced eligibility under JobPlus and from the ring fenced Momentum places. We hope Government will review this decision. Furthermore the commitment to provide an additional 1,500 places on JobBridge and the additional 1,000 places on Tus is a positive step.The investment of a meager €14m in the Youth Guarantee, however, is disappointing and falls short of what is required.
Given the grave and growing problem of youth unemployment, however, this response is far from adequate to meet the ever growing need.
Reducing Child Poverty
To eliminate child poverty it is essential that there is a combination of child and adult income supports and access to quality public services. In its Pre-Budget Submission, NYCI called on Government to ensure families in low paid employment are supported to prevent already pressurised households from falling into poverty and hardship. Our submission called on Government to:- maintain Child Benefit for those currently in receipt of social welfare payments,
- to provide enhanced services for children that will make a meaningful impact on the costs of raising children and help achieve better child welfare outcomes.
We welcome the additional €1.5m announcement as part of Budget 2014 for implementation of the Area Based Childhood (ABC) programme, a joint initiative between DCYA and Atlantic Philanthropies to improve outcomes for children in disadvantaged communities. Almost €30 million will be spent on this initiative during the period 2013-2016.
Furthermore we commend Government for the decision in Budget 2014 to maintain the current rate of Child Benefit.Tackling Alcohol Related Harm
In our Pre-Budget Submission, NYCI recommended the introduction of a social responsibility levy on drinks manufacturers to generate €25m. The revenue accrued from the introduction of the levy should be used to replace the money from drinks industry sponsorship of large sporting and cultural events and to support other initiatives to reduce alcohol related harm amongst young people.
Budget 2014increased excise duty on a pint of beer or cider and a standard measure of spirits is being increased by 10c and a bottle of wine was increased by 50c.
Restricting price and availability of alcohol is one of the most effective measures to reduce alcohol related harm and NYCI has consistently advocated for this policy measure to be adopted.
We welcome the increase in excise duty on alcohol, which will serve to reduce the availability of cheap alcoholand provide additional revenue to offset the €3.7bn cost to the state of alcohol misuse. We are disappointed, however, that Government failed to introduce a social responsibility levy on the drinks manufacturers. We believe that drinks industry multinationals that profit substantially from alcohol sales should be made to contribute more to address alcohol related harm.
5. Emigration
For many young Irish people, emigration is the only viable option open to them at the present time. Emigration is once again a prevailing part of Irish Life.
It is estimated that over the last five years, 177,000 young people aged 15-24 have left this country. Most of those emigrating are in the 15-24 and 25-44 age cohorts. According to a poll carried out for the National Youth Council of Ireland, over the past two years, over a quarter of our population has been affected by the emigration of a close family member and one in two of our 18-24-year-olds would consider emigrating themselves,.
As NYCI’s research Time To Go?,reveals it is important that emigrants considering emigration are aware of what to expect before leaving Ireland and are informed and prepared.
In our Pre-Budget Submission, NYCI recommended the allocation of an additional €1 million to provide pre-departure supports for prospective emigrants.
Unfortunately the Government’s decision to cut Jobseekers’ Allowance for those under 25 will serve to accelerate the numbers of young people leaving the country.
Other Budgetary Measures of Interest
- VAT rates are staying at 9%, 13.5% and 23% in 2014.
- No increase in income tax, USC in 2014.
- DIRT on bank savings rises from 33% to 41%.
- Free G.P care to be rolled out to all children aged five and under, at a cost of €37million to the exchequer.
- Tobacco excise duty rise by 10 cent on a packet of 20 cigarettes.
- Medical insurance tax relief capped at €1000 for adult, €500 for a child.
- Subsidised financial training programme for small businesses.
- Start Your Own Business scheme aimed at those unemployed for 15 months includes two-year exemption from income tax.
- Irish registered companies can no longer be stateless for tax purposes'100% committed to 12.5% corporate tax rate.'
- Home renovation tax incentive scheme gives a 13.5% tax credit to homeowners carrying out works on their homes in 2014 and 2015.
- Air travel tax to be reduced to zero from April 2014.
- 25 pro-jobs and pro-business measures.
- €2.5 billion in cuts and taxes.
- Rise in prescription charges from €1.50 to €2.50.
- Top rate cut in Maternity Benefit from €262 per week to €230 per week.
Conclusion
In our Pre-Budget 2014submission, NYCI urged the Government to deliver on a number of priority issues that affect the lives of children and young people in Ireland.
The key policy areas we identified include the need to maintainyouth work funding level at the current level, the introduce a youth guarantee scheme to prevent the onset of long-term unemployment, reduction of child poverty, reduction ofalcohol related harm amongst young people and further investment in pre-departure supports for young people facing the prospect of emigration.
In the main, our analysis of Budget 2014, however,is that Government have not made the right decisions and where budgetary cuts have been made, they have overwhelmingly affectedyoung people and the most marginalised in our society. Budget 2014has not provided adequately for young people. In the Budget, Governmentcut Jobseekers’ Allowance for those under 26 and in doing so will place many young people in a precarious position and will make it extremely difficult for them to survive on welfare. Inadequate funding to enhance access to quality education and training was contained in the budget and for many young people their only option will be to emigrate.
The pain has not been administered fairly across society. The young are one of the hardest groups affected in this Budget. Budget 2014 has diminished opportunities for young people leaving them very few options.
The impact of this Budget will have lasting repercussions for many young people and their families.
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National Youth Council of Ireland