In 2022, it was not possible to accurately determine the number of households that could qualify for the guaranteed minimum income (GMI) benefit, the Ministry of Welfare says, commenting on the conclusions of the State Audit (VK) report on the request for unreasonably large funding for the costs of the GMI benefit.
According to the ministry, there are opportunities to improve the funding planning process, but insists that the forecast of the number of beneficiaries of the GMI benefit was made in the summer of 2022, “when the state of emergency declared due to Covid-19 was lifted just a couple of months ago, and which had a major impact on employment and personal income, as well as a sharp increase in energy prices”.
In accordance with the plan approved by the Cabinet of Ministers for the provision of state co-financing in the amount of 30% of municipal GMI benefit expenditure in 2023, EUR 1.35 million were planned, while less than EUR million or 74% of the planned amount was used.
According to the Central Statistical Bureau, in 2022, the income of 7.8% of the Latvian population was below the minimum income level – EUR 302 euros per person. Thus, the population with a very low income has been “significantly higher than the average number of GMI beneficiaries in previous years. In the ministry’s opinion, therefore, it was not possible to accurately determine the number of households with income in the amount of the increase in the GMI threshold in order to accurately conclude what part of the population could qualify for the GMI benefit.
According to the ministry, taking into account the listed external factors, assumptions were made that in 2023 a much larger number of residents would turn to social assistance, therefore, the estimated necessary funding was increased by further forecasts of the Consumer Price Index of the Ministry of Finance.
The ministry highlights the conclusion made by VK, which states that, in general, the municipal GMI benefit is granted in accordance with regulatory enactments and it is used in accordance with the goal, which certifies that the allocated funding has reached the target group.
At the same time, the ministry acknowledges that the findings and conclusions listed in the audit point to the need to improve the approach to planning additional funding requests and the understanding of municipal social services regarding changes in the legal framework. Among other things, it is necessary to promote cooperation so that information about the granting of social assistance reaches the responsible employees.
VK carried out random checks in six Latvian municipalities on the granting of the GMI benefits, found inconsistencies in the cases of household customers, which does not significantly affect the total amount of funding provided to municipalities.
Still, the ministry believes the audit was focused on one benefit provided as part of “Support for Increasing the Minimum Income”, namely, only on the planning and use of the funding of the GMI benefit, with less regard to the housing benefit component. The accusation of significant errors in the planning of funding too critical, the ministry believes, “considering that the funding for the payment of both basic social assistance benefits (GMI and housing benefit) has been used at 76% of the planned amount and in line with the objectives listed”.
Usage monitoring data was regularly analysed and re-directed to the disbursement of the GMI and housing benefit in line with actual spending and projected projections, thus providing low-income residents with financial support, which is the main objective of this priority measure, the ministry insists.
According to the ministry, the state budget for 2025 and the budget for 2025, 2026 and 2027 preparation process, when planning the amount of necessary funding for the co-financing of the GMI benefit for municipalities, the proposals from the State Audit have been taken into account.
The forecast of the state basic budget expenditures for 2025-2028 for the provision of state co-financing to municipalities for GMI benefit expenditures is based on the actual data of the implementation of the measure – the number of beneficiaries, the trends in the number of beneficiaries per month and the average amount of benefits paid, including the percentage to the maximum possible.
In the opinion of the ministry, the recommendations expressed in the audit report will improve the planning of funding and raise awareness of municipal social services in assessing the material situation of households.