News item | 6/30/2023 | 13:15
The coalition agreement includes the ambition to abolish the allowance system. The current benefit system offers people targeted and up-to-date income support. At the same time, the system contains shortcomings that require fundamental adjustments. To enable the next government to make well-considered choices about adjustments, the government is developing concrete options for alternatives. This is stated in the interim report on the future of the allowance system, which the government has sent to the House of Representatives. With the interim report, State Secretary De Vries of Finance (Allowances and Customs) informs the House of Representatives, together with Minister Van Gennip of Social Affairs and Employment, Minister Kuipers of Health, Welfare and Sport and Minister De Jonge of Housing and Spatial Planning.
The benefit system works well for many people. But a number of complex problems are linked to the structure of the system and require fundamental choices. The government is providing insight into workable options aimed at abolishing the system or making fundamental adjustments to the current system.
State Secretary De Vries: “We want to move towards a simpler way of income support, in which working more pays more. We are working out options based on which the next step can be taken, with the ambition of abolishing the allowance system. This will enable the next cabinet to make a well-considered choice about the future of our benefit system.”
Although the system works for most people, benefit applicants can get lost in the complicated arrangements. Allowance recipients may also be confronted with high recoveries. In addition, there is non-use. The coalition agreement sets out the ambition to abolish the allowances. During this government’s term of office, steps are already being taken with a new financing of childcare and by simplifying the rent allowance.
In the reform, the State Secretary also wants to tackle the marginal pressure: some people have very little left over from the extra euro they earn. The current system means that working more does not pay off for everyone, because benefits are phased out when income rises. Moreover, for many people it is unclear how much an extra day’s work will yield them. It is important to work on that transparency.
The alternatives that are now being worked out will lead to lower expenditure for people on care and rent, or to higher disposable income. The latter can be achieved by increasing income, by lowering taxes or by financial support from the government via social security. The options are worked out under the direction of the State Secretary for Supplements and Customs, with other ministries, experts and stakeholders actively contributing ideas. In order to clearly visualize the advantages and disadvantages and the reality of the alternatives, the effects are described from three perspectives: the perspective of the resident, the perspective of the implementing organizations and the perspective of the government. The government wants to send the elaboration of the options to the House of Representatives in the first quarter of 2024.
In the meantime, the government continues to work on improvements to the current system. For example, people who use emergency shelter because of domestic violence can apply for an allowance separately from their partner from this year. The service to benefit applicants has also improved and the government is making efforts to ensure that everyone who is entitled to benefits knows how to apply for and receive the benefits.
Allowances help the Dutch to cover the costs of care, rent, childcare and the costs of children. As a result, benefits are essential for many people to make ends meet. Changes in the allowance system therefore always have an impact on the financial situation of residents and families. The Supplements service expects to pay out 19 billion euros to two thirds of Dutch households this year.