Godongwana announces major cuts to social grant allocations

Finance Minister Enoch Godongwana made big cuts in social grant allocations over the next three years as he scrambled to find money to finance the extension of the Social Relief of Distress (SRD) grant for a year.

The cuts were necessitated by the National Treasury revising the increase from the initial proposal of a 2% increase in VAT to the now proposed 0,5% increase for the next two years.

Tabling the budget, Godongwana revised the allocations downward for increases for all the types of social grants compared to what was proposed in the postponed budget.

This emerged when he announced that the social relief of distress grant will be extended by another year until March 31, 2026.

“The Covid-19 SRD, in its current form, will be extended by a year to the end of March 2026. R35,2 billion is allocated for this purpose,” the minister said.

Godongwana said as announced by President Cyril Ramaphosa in his State of the Nation Address, the SRD grant will be used as a basis for the introduction of the sustainable form of income support for unemployed people.

“The future form and nature of the SRD will be informed by the outcome of the review of active labour market programmes.”

He told MPs that they wanted the SRD grant to be sustained but that it should not crowd out other spending programmes.

Godongwana said the social grants were allocated a staggering R284,7 billion in the new financial year.

The grants will be increased as follows in April:

* The old age and disability grant increase by R130 to R2,315,

* Child support grant rises by R30 to R560 a month, and

* The foster care grant increases by R70.

However, a closer look at the Budget Review document tabled on Wednesday showed that the social grants were severely cut when compared to the documents presented at the postponed February speech.

This was despite the Budget Review stating that R422,3 billion has been allocated for social development services this financial year and will increase to R452,7 billion in two years’ time.

It said the social grant spending made up 81% of the allocation and that the number of social grant beneficiaries, excluding the social relief of distress grant, is expected to rise from 19 million in 2025-26 to 19.3 million in 2027-28, due to the growing population of older people.

“The sector’s operational budget will be subject to conditions, including the need to improve biometric verification of recipients to achieve savings,” the minister said.

The document stated that the budget for social grants was increased by R8,2 billion over the medium term to account for higher costs of living.

This was a drop from the R23 billion that was proposed in the postponed budget.

National Treasury director–general Duncan Pieterse blamed the change in the social grants’ allocation to the reduction in the percentage in VAT increase.

Pieterse said the social grants have always been inflation related.

Cape Times