Audit Office: Subsistence benefits granted unequally across Estonia

National Audit Office.
National Audit Office. Source: ERR

The procedure for granting subsistence benefits to households needs a uniform approach, while inequality and bureaucracy must be cut, the National Audit Office (Riigikontroll) says, at a time of soaring inflation and energy and security crises.

The National Audit Office made its comments as a result of analysis conducted January 2021 to January 2022.

Subsistence benefit comprises a household-based benefit upon grants which take into account income and expenditures of a household, across 12 categories and also on the basis of the subsistence level established on state level.

As of June 2022, the subsistence level for the first adult of a household from June 2022 stands at €200 a month, and at €240 per month for each underage member of a household; €160 a month for the second and each subsequent adult member of a household.

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

The National Audit Office finds in its audit report, published Thursday, that the Ministry of Social Affairs needs to intervene in subsistence benefits procedures held at local government level.

Auditor General: Local government 'left to own devices' in subsistence benefits

Auditor General Janar Holm said: "The practice of paying subsistence benefits in different municipalities has been largely left to its own devices."

"The result is that people living in different parts of Estonia, while in the same conditions of scarcity and in a similar overall situation, receive quite different amounts of subsistence benefit," Holm went on, via an audit office press release.

While a national support measure, municipalities have been free to decide the extent of housing expenses, and differ on the justifiable size of these benefits.

Realistic housing expenses are often not used when granting benefits, meaning those in need receive an insufficient amount, the audit office finds.

Around a third of benefits recipients in 2021 still below subsistence level

Every third recipient of subsistence benefit between January 2021 and January 2022 found themselves in a situation where, after payment of the actual housing expenses, they were still below the financial subsistence level, notwithstanding "unreasonable expenditures" on the part of some householders.

Soaring energy prices and the general cost of living has exacerbated this.

At the same time, some expenses, such as on electricity and gas, remain constant nationwide, and yet the range between the lowest and highest local government limit for expenses on electricity was as high as 16-fold.

A situation where actual expenditure on electricity is covered in one municipality but not in another, is an unjustified inequality, the office finds, one which should be removed and not significantly depend on the place of residence of the person in need.

Approximately 2,050 households could have received a higher benefit in the period audited, which would have totaled €121,000 in total, or an average of 17 percent per single application.

Audit office: Benefits system unnecessarily bureaucratic

Excessive bureaucracy is also an issue for applicants of benefits, the National Audit Office says.

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 and in the case of expenses, the bills of costs attached to the application are used.

Burdening the applicant by asking for information not actually used or not used in the form requested ,should cease, the office says.

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.

When a subsistence benefit is a state function, that state should also monitor how the function is performed, and intervene if and when that performance deviates from objectives, the office adds.

The National Audit Office proposes the use of data from the Social Services and Benefits Registry (STAR) in monitoring matters, and offering municipalities more practical support, to faster iron out housing expenses inequalities. 

The office suggests that the Ministry of Social Affairs develop a common format for the application for subsistence benefits which, the office says, would help harmonize the content and volume of the information collected upon applying for the benefit in municipalities, and avoid burdening the applicants with bureaucracy. 

The National Audit Office's analysis covered the period from January 2021 to January 2022 and included all 79 municipalities in Estonia.

During that time frame, around 65,400 applications for subsistence benefit were satisfied and approximately 10,800 households received benefits, totaling €17.7 million.

Additional data monitoring reveals that inflation and also the effects of the Russian invasion of Ukraine has increased significantly the need for subsistence benefit

Benefits expenditure for the whole of 2021 was met in the first half of last year, for example.

Benefits are applied for and calculated on a calendar month basis.


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Editor: Andrew Whyte

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