Government grants loan of 10.19 billion euros to Social Security system to pay pensions

Moncloa Palace, Madrid

The Council of Ministers approved a loan to be granted by the State to the General Treasury of the Social Security system for a sum of 10.19 billion euros during this year in order to pay pensions on time in 2017. This loan is contained in the General State Budget approved by Parliament and granted without accruing interest to be repaid over the course of 10 years as from 2018.

The Minister for Employment and Social Security, Fátima Báñez, explained that the current situation, whereby the Social Security system is operating with a deficit, means that mechanisms must be established to defray the financial needs of the system, which amounts to 18.5 billion euros, until such time as employment recovers.

These needs, she added, increase in the months of July and December because more than 9.5 million pensioners receive their normal payment plus a bonus payment. On this occasion, because of the summer bonus, it is necessary to pay out 17.22 billion euros.

The system will combine two financing instruments to complete the payment of the July bonus. A total of 5.99 billion euros will be taken from the loan granted to the General Treasury of the Social Security and 3.51 billion euros from the Reserve Fund. The remainder, to complete the sum of 17.22 billion euros, will come from the funds collected by the system itself.

The minister specified that, once the two mechanisms have been used, 11.6 billion euros will remain in the Reserve Fund. She also announced that the government's forecast is to use the rest of the amount, granted on Thursday, 29 June (4.21 billion euros), in December this year.

Fátima Báñez recalled that the use of loans by the Social Security system is a normal instrument to ensure the "prompt payment of pensions which, thanks to the efforts and commitment of all of society are higher than ever and are being paid out to more pensioners than ever". She also pointed out that the average retirement pension amounts to 1,063 euros a month.

Report on entrepreneurs and independent contractors

Pool Moncloa/J.M. CuadradoThe minister reiterated that employment remains the main priority of the government and that "all the jobs corresponding to the self-employed that were shed during the crisis" have now been recovered. Fátima Báñez reviewed the measures that the government has pushed through since it came to power to help the self-employed. "We believed that jobs for the self-employed was a good route to help reduce unemployment in our country and supporting them from the outset was both our obligation and our responsibility".

Fátima Báñez highlighted that the Supplier Payment Plan has managed to reduce the commercial debt of all the regional authorities by 70%, and the average period to pay suppliers has fallen. She also pointed out that the fiscal reform has translated into a drop in the withholding rate for the self-employed to 15%.

As regards entrepreneurs, the minister recalled that they were allowed to capitalise their entire unemployment benefit, as well as to combine the collection of this benefit with the start of their entrepreneurial activity. The flat-rate contribution of 50 euros has helped 1,176,000 new independent contractors to start a project working for themselves. Furthermore, 662,000 permanent employment contracts to support entrepreneurs have been signed since February 2012.

The minister added that the result of the government's policy is that independent contractors are now playing a leading role in the recovery and have seen 44 straight months of rises in the number of contributors.

New steps

The Minister for Employment argued that the approval in the Lower House of the Draft Law on Independent Contractors will allow the rights and social protection of this group to be enhanced. In this regard, independent contractors can change their contribution base up to four times a year to better adapt it to their income. They will only pay for the periods actually worked and will be allowed to register and de-register up to three times a year.

The future legislation will double the effective period that the 50-euro flat rate is in force, which will be extended from six months to one year, thus directly benefitting 350,000 independent contractors. It will allow work to be combined with the receipt of 100% of a pension if the contractor has hired at least one other worker, which will potentially benefit up to 40,000 people. It will also recognise "in-itinere" accidents to independent contractors and a sub-committee will study access to partial retirement.

With the aim of boosting reconciliation between work and family life, a 100% discount in National Insurance contributions will be established for independent contractors during maternity and paternity leave and in the case of adoption. The age of dependent minors will be increased from seven to 12 years old, giving rise to an entitlement of a discount due to reconciliation, and there is a 100% exemption from the NI contribution for the self-employed when looking after minors or dependents, for a period of 12 months.

Summer 2017 Plan

Pool Moncloa/J.M. CuadradoThe Council of Ministers approved the measures and action plans for the summer period of this year. Eight ministerial departments are involved in what is known as the "Summer 2017 Plan", which is structured under five broad headings: citizen security; travel movements; Operation "Crossing the Strait of Gibraltar"; protection of health; and actions on immigration.

This operation will commence on Saturday, 1 July and will end on 31 August, except in the Balearic Islands, where it will run until 30 September. It will affect the autonomous regions of Andalusia, Asturias, the Canary Islands, Cantabria, Galicia, the Balearic Islands, Madrid, the Regions of Murcia and Valencia.

The Government Spokesperson, Íñigo Méndez de Vigo, explained that the actions contained in the Summer Plan are designed to "facilitate the life of Spaniards and those who visit us over the coming months.

Among the measures provided for on security are reinforcements for the National Police and the Guardia Civil in order to step up their presence at entertainment events and locations and in those areas that receive the largest number of tourists.

As is usual, the Directorate General of Civil Protection and Emergencies will develop the Special Plan entitled "Operation Crossing the Strait of Gibraltar" to tackle the movements of more than 2.8 million travellers and more than 620,000 vehicles in the period between 15 June and 15 September.

Actions are also planned on road safety and safety at sea and the control and aid for the arrival of vessels carrying illegal immigrants.

On another note, the Ministry of Health, Social Services and Equality will activate its programme entitled "Health also travels" on international vaccinations, the National Preventive Actions Plan to combat the effects of high temperatures designed to care for health, particularly of the most vulnerable groups, and the Programme to control the quality of bathing areas.

The Ministry of Foreign Affairs and Cooperation will reinforce the consular sections in those countries that are leading tourist destinations for Spaniards. In turn, the Ministry of Public Works will strengthen the services provided by Renfe, AENA, ENAIRE and the Maritime Rescue Service.

The Ministry of Education, Culture and Sport has called for ongoing training courses for teachers, subsidies for participation at the "Summer Science Campus" and will carry out linguistic immersion programmes in holiday resorts, among other actions. The cultural offer and opening hours will also be increased at State museums.

Prevention and fight against wildfires

Pool Moncloa/J.M. CuadradoThe Council of Ministers also approved the Action Plan to prevent and combat wildfires in 2017.

The Government Spokesperson recalled that extinguishing fires falls under the scope of the powers of the regional governments. However, he said, the government "will provide all the assistance it can" in order to avoid and combat wildfires, and has a specific budget of 85 million euros to this end. He also pointed out that this year the Ministry of Agriculture and Fisheries, Food and Environmental Affairs has a coordination centre from where it manages all the fire-fighting resources.

Íñigo Méndez de Vigo highlighted, from among the resources provided for in the plan, the increase in personnel from the Military Emergency Unit (Spanish acronym: UME) and of prosecutors tasked with imposing fines on those who breach the law in this field.

Drought in Duero river basin

The government approved a Royal Decree on emergency measures under which it has declared a situation of prolonged drought in the Duero River Basin and exceptional measures will be adopted to manage water resources.

Íñigo Méndez de Vigo explained that, as a result of the lack of rainfall, the current water reserve situation in the Duero river basin means that demand cannot be adequately met by the existing reserves. The Government Spokesperson added that this has forced temporary measures to be adopted to increase the volume of water available.

The Royal Decree grants the governing bodies of the Duero River Authority with powers to modify the conditions for the use of the public water domain, to establish the reductions in the water supply that are necessary and carry out the actions necessary for the capture, adaptation of infrastructure and control in the evolution of underground water.

Political balance

Pool Moncloa/J.M. CuadradoThe Minister for Education, Culture and Sport and Government Spokesperson, Íñigo Méndez de Vigo, took stock of the legislature upon the occasion of the anniversary of the holding of the general elections on 26 June 2016, which returned "security, confidence and political stability" to Spain. The results of these elections, he claimed, made it necessary to reach a "basic consensus in order to move forward" and see a legislature of dialogue in the future, "which we hope is long and fruitful".

Íñigo Méndez de Vigo stated that the lunch held on Tuesday between the President of the Government, Mariano Rajoy, and the leader of Ciudadanos, Albert Rivera, comes within this framework. "The aim was to continue working to the benefit of stability and economic recovery. They also spoke about the ceiling on spending, together with the government's intention to upwardly revise the growth forecast for the future of the European Union".

The Government Spokesperson added that in his talks with Albert Rivera, the President of the Government conveyed his intention to remain committed to free trade at the upcoming meeting of the G-20. They also spoke about "the defence of the constitutional order in light of the pro-independence challenge and the two party leaders commented on the failure of the strategy of the Regional Government of Catalonia after having had to declare the public tender null and void that had been put out to purchase ballot boxes".

Íñigo Méndez de Vigo summarised the "important legislative activity" developed during this term of office and called for parliamentary groups to support the ceiling on spending next Monday because "this is an obligation taken on by the State with the European institutions and is the first step in presenting a Draft General State Budget for 2018".

Current affairs

Pool Moncloa/J.M. CuadradoIn response to the refusal by Ciudadanos to offer its support to the government to approve the ceiling on spending unless a reduction in Personal Income Tax (Spanish acronym: IRPF) is implemented, Íñigo Méndez de Vigo asserted that the government is in favour of lowering taxes as and when this is possible. This happened in both 2015 and 2016, with a 9-billion euro reduction in IRPF and 3-billion euro reduction in Corporate Income Tax and the reduction in VAT on live performances, which has dropped from 21% to 10%. However, he pointed out that commitments exist that "we are going to meet": the payment of pensions, education, healthcare and the reduction in the public deficit committed to with Brussels.

As regards the absence of former King Juan Carlos from the events to commemorate the 40th anniversary of the 1977 general elections, which was not organised by the government, the Government Spokesperson stressed that the monarch was well represented in the speeches given by King Felipe VI and the Speaker of the Lower House, in which he was affectionately acknowledged and thanked for his work which was well applauded by the parliamentarians present.

In view of the reproach of the Minister for the Treasury and Public Function in the Lower House on Thursday morning, the Government Spokesperson reiterated the support of the President of the Government and of the government, and stressed the capability and negotiating powers of the minister who was "decisive in exiting the situation" left by the last government of José Luis Rodríguez Zapatero.

When asked about the possibility of a meeting in the near future between President of the Government Rajoy and Pedro Sánchez, Íñigo Méndez de Vigo confirmed that "when Mr Sánchez so desires, the President of the Government will be delighted to speak with him".