Money Times - August 11, 2015

Posted by Jill Kerby on August 11 2015 @ 15:54




Inevitably the call goes out from children’s charities and community organisations at this time of year for more money to be spent by the State on assisting families to kit their children out for the new school year.

Barnardos Ireland, the children’s charity want another €103 million a year allocated to the primary school budget in order to provide a genuinely free education with the provision of free books, uniforms, transportation, lunches and other services.

Out of an annual Department of Education budget of €8.8 billion for 2015, that €103 million doesn’t sound like a lot. Especially since the Minister for Finance claims that he has at least another c€1.5 billion in excess tax to dole out to interested parties (including Barnardos) in next October’s Budget. (He seems to be favouring a universal social charge (USC) tax cut.)

There’s much to argue in favour of entirely free primary education since most people accept such expenditure is an investment in the nation’s future. But with the election looming, it will be an entirely political decision as that €1.5 billion is fought over by every Cabinet minister, each of whom believe their claims are just as worthy.

Where they may have more leverage than the Minister for Education is that parents already receive about c€2 billion in annual Child Benefit (CB) payments, theoretically for the use of their children’s needs that include school expenses like new books and uniforms.

A survey in July by the League of Credit Unions found that about a third of parents said they would have to borrow money to meet the c€250-€450 cost of kitting out their primary and secondary-going children respectively this year. But they were never asked whether their monthly tax-free child allowance of €135 per child or €1,620 per annum (€3,240 for two children, €4,860 for three) was being allocated.

While a small number said they would have to cut back on food for themselves to meet the €250-€450 expenditure, or even go to a moneylender for the money, others admitted that the back to school costs would prevent the family from taking an annual holiday.

To me, this points to a budgeting crisis, not a solvency crisis for many of the parents surveyed. Unless you absolutely need the €1,620+ to put food on the table or pay the rent (and if that is the caseyou definitely need to seek help from MABS, the DPS, Barnardos) the majority of parents should be able to meet the cost of books and uniforms out of their annual CB payment. School clothes and books are essential budget expenses and like rent, food, heat, should come before all discretionary spending.

Meanwhile, in addition to the €2 billion collectively paid to every school going child to age 18 (whether they have to wear a uniform or not), the Department of Education pays out another €44.3 million to the lowest income families at €100 per primary child and €200 per secondary going child. 

The reasons why parents have difficulty meeting the cost of books and uniforms are not explored in the surveys, but in vox-pops many cite high child-care costs, mortgages and rents as the main reason why Child Benefit (CB) payments are not used to meet their children’s’ individual needs.

Which points to a whole set of other issues - like why the huge mortgage debt legacy since the 2008 crash has still not been resolved post 2008; the reluctance by the State to raise taxes (or redeploy existing taxes) to fund State-sponsored universal childcare; and why it is unable to formulate the right policies to meet the urgent need for more affordable housing, especially in the greater Dublin area.

Will these issues be resolved in the October Budget? Not likely.

But in the run-up to the 2016 election parents might see their monthly CB go up by another fiver; free pre-school hours extended and the Uniform and Footwear Allowance widened for the 2016 school term. They may also see a drop in the universal social charge they have to pay for 2015-2016.

Meanwhile, for next year, in case none of this happens, be a little more pro-active: if you can, set aside a portion of the Child Benefit every month into a separate book and uniform account at the local post office, credit union or bank.

If you have three children, one in primary and two in secondary school, you should set aside €101 every month to meet what the League of Credit Unions claimed in its July survey will be the annual cost of three sets of books and uniforms: about €1,206 out of the total CB payment of €4,860 a year.

If you have a personal finance question for Jill, please email her at jill@jillkerby.ie or write to her c/o this paper.




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