National Audit Office: the procedure for granting subsistence benefits needs a uniform approach, inequality and bureaucracy must be reduced

1/20/2023 | 10:00 AM

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TALLINN, 20 January 2023 – The granting of subsistence benefits in a municipality needs a more uniform approach as the current procedure favours inequality and bureaucracy, the National Audit Office finds in its audit report published today. The Ministry of Social Affairs should intervene in the procedure for the payment of subsistence benefits in local self-governments. 

“The practice of paying subsistence benefits in different municipalities has been largely left to its own devices,” the Auditor General Janar Holm finds. “The result is that people living in different parts of Estonia, but in the same conditions of scarcity and in a similar overall situation, receive quite different amounts of subsistence benefit.”

Those whose net income, after the deduction of housing expenses from their income, is below the subsistence level are entitled to subsistence benefit. Even though subsistence benefits are a national support measure, municipalities have been free to decide the extent in which the housing expenses of those who need the benefit are considered. Municipalities have differing opinions on the size of justified housing expenses and often, the actual housing expenses are not considered when granting the benefits, which means that the benefit granted to those in need is not sufficient to ensure coping.

Housing expenses are calculated according to the limits established by municipalities, but the audit carried out by the National Audit Office revealed that often, the limit does not cover the actual expenses. As a result, each third recipient of subsistence benefit between January 2021 and January 2022 was in a situation where, after payment of the actual housing expenses, they were left with money below the subsistence level. Even though there is some unreasonable expenditure among the recipients of the subsistence benefit, which should not be encouraged when paying the benefit, housing expenses that were actually bigger than the limits generally indicated that the municipality has not been able to keep up with the rising housing expenses and respond to the price increases in time.

The differences in the limits of housing expenses between municipalities are manyfold. This is a problem in case of the housing expenses the price level of which does not vary regionally, such as the expenses on electricity and gas. The difference between the lowest and highest limit for expenses on electricity was 16-fold.

The National Audit Office finds that if, in case of a similar cost level, the actual expenditure on electricity is covered in one municipality but not in another, it is an unjustified inequality. In the implementation of a state support measure, such inequality should be ruled out. The effect of the payment of a benefit should be similar in case of similar circumstances and should not significantly depend on the place of residence of the person in need. Taking the highest electricity cost limit, for example, as a basis, approximately 2,050 households in the remaining municipalities could have received a higher benefit in the period audited. The benefit amount would have been larger by 121,000 euros in total and an average of 17% more per one application.

The National Audit Office is pointing out that municipalities are burdening those applying for subsistence benefit with excessive bureaucracy. For example, upon applying for the benefit, a detailed description of income and expenses is required although income is mostly considered based on the data obtained from state databases (78% of the income records), and in the case of expenses, the bills of costs attached to the application are relied on. Burdening the applicant by asking the information not actually used or not used in the form requested should be terminated.

The National Audit Office recommends that the Ministry of Social Affairs take a more active role in the future and intervene more in shaping the implementation practice of subsistence benefits in municipalities. The nature of granting and paying subsistence benefits as a state function presumes that, in addition to shaping the legal framework and funding the function, the state also monitors how the function is performed and intervenes if the practice revealed during the performance of the function deviates from the objectives of the function.

The National Audit Office proposes that the expenses exceeding the limit, and the relevance of the limits, be systematically monitored in order to avoid the previously described problems in the calculation of housing expenditure. According to the data from the Social Services and Benefits Registry STAR, municipalities should be offered more practical support to faster identify the unjustified differences in the limits for housing expenses. 

The National Audit Office suggests that the Ministry of Social Affairs develop a common format for the application for subsistence benefits. This would help harmonise the content and volume of the information collected upon applying for the benefit in municipalities, and avoid burdening the applicants by asking for unnecessary information. 

Background

The National Audit Office analysed how subsistence benefit as a social assistance measure has been managed at the state and local level in order to ensure a reasonable procedural burden and a common effect of the benefit in the comparison of municipalities. The audit covered the period from January 2021 to January 2022 and included all municipalities. In that period, approximately 65,400 applications for subsistence benefit were satisfied and approximately 10,800 households received benefits in the total amount of 17.7 million euros. The additional monitoring of data during the audit reaching up to August 2022 shows that due to the price increase and the Russo-Ukrainian war, the need for subsistence benefit has increased significantly. For example, the amount spent on the benefits in 2021 was paid out in the first half of 2022 already.

Subsistence benefit is a household-based benefit upon grant of which, the income and expenditure of the household (12 types) are considered, as well as the subsistence level established on state level. The subsistence level for the first adult of the household from June 2022 is 200 euros a month. The subsistence level for each underage member of the household is 240 euros a month. The subsistence level for the second and each following adult member of the household is 160 euros a month. Benefits are applied for and calculated on a calendar month basis.

Priit Simson
Head of Communications of the National Audit Office of Estonia
+372 640 0102
+372 5615 0280
 

  • Posted: 1/20/2023 10:00 AM
  • Last Update: 1/20/2023 9:57 AM
  • Last Review: 1/20/2023 9:57 AM

Those whose net income, after the deduction of housing expenses from their income, is below the subsistence level are entitled to subsistence benefit.

Arno Saar / Õhtuleht / Scanpix Baltics

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