The Ministry of Social Affairs and Employment has made a calculation error in purchasing power figures for example households | News item

News item | 08-03-2024 | 2:15 PM

The Ministry of Social Affairs and Employment has made a calculation error in the purchasing power figures for a number of sample households. Minister Van Gennip of Social Affairs and Employment and Minister Schouten for Poverty Policy, Participation and Pensions have apologized to the House of Representatives for the error. This means that the figures for single people on social assistance or on minimum wage in particular are lower. The government is coming up with a proposal to improve the purchasing power for the relevant groups this year.

Origin of error

When drawing up the budget in August, the government wanted to strengthen the purchasing power of people with a low and middle income and reduce poverty. It now appears that the rent allowance was too high for a number of household types as a result of an incorrect assumption in the computer model. This should have been manually adjusted in the model, but was not done. As a result, the purchasing power figures for a number of household types have been overestimated. When the ministry processed the new CPB figures from February 22, the error came to light.

Purchasing power measures

If the correct figures had been on the table at the time, the cabinet would have based its decision-making on them and possibly made different choices. For this reason, the government has now decided to take measures for groups whose purchasing power was estimated too high due to the calculation error. The government is allocating €66 million to increase the rental allowance, on top of the increase that was already included in the Budget Day plans. This brings the purchasing power development for these household types back into line with the principles that the cabinet had in mind on Budget Day. This requires a change in the law and is now being further elaborated. Coverage will be found incidentally in the SZW budget in 2024. Structural coverage is found through an increase in the rate of the 1st income tax bracket. The design of the coverage (on the income side) can still be reconsidered during the August decision-making during the integral weighing of the purchasing power picture. At that time, the government will, as usual, reflect on the purchasing power picture of 2025.

Current figures

Current purchasing power development now looks better for all groups – regardless of these additional measures – because the new CPB figures of February 22 estimate lower inflation and higher wage developments. The figures have also improved because these recent figures include the additional increases in the minimum wage and child benefit (see letter to Parliament).

Own calculations

The error concerns calculations of sample households that the ministry makes itself, based on the data provided by the Central Planning Bureau (CPB). The incorrect assumption about housing allowance only played a role in calculating the purchasing power figures of sample households with housing allowance. No errors were made in the other purchasing power figures and the sample households are separate from the CPB’s purchasing power and poverty figures. These remain the same. The general purchasing power picture also remains the same: on average, most households have more money left in their wallets than last year.