COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 28 Feb 2008

Value for Money Report 56.

Ms Bernadette Lacey, (Secretary General, Department of Social and Family Affairs) called and examined.

Chairman

Witnesses should be aware that they do not enjoy absolute privilege. As and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee's proceedings. These rights include: the right to give evidence; the right to produce or send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written and oral submission; the right to request the committee to direct the attendance of witnesses and the production of documents; and the right to cross-examine witnesses. For the most part, these rights may be exercised only with the consent of the committee. Persons invited to appear before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with the transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House, or an official, either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions within Standing Order 158 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

I welcome Ms Bernadette Lacey, Secretary General of the Department of Social and Family Affairs, and ask her to introduce her officials.

Ms Bernadette Lacey

I am accompanied by Ms Siobhán Lawlor, principal officer in our accounts branch; Ms Maureen Waldron, who has responsibility, among other areas, for overpayment and debt management and who is a director in the Department; Mr. Eoin Ó Broin, director of regions; and Mr. Brian Ó Raghallaigh, who has responsibility for supplementary welfare allowance, core functions, transfers and activation.

Chairman

You have a certain level of flexibility. If questions are put and if you wish to delegate the responses to any of your officials, please feel free to do so in the interests of clarity.

Ms Bernadette Lacey

Thank you, Chairman.

Chairman

I welcome our Department of Finance official.

Mr. Fred Foster

Chairman, I am Fred Foster, Department of Finance, sectoral policy division.

Chairman

I invite Mr. Purcell to introduce Vote 38, chapters 9.1 to 9.5 and the relevant chapters from the Value for Money Report 56.

Chapters 9.1 to 9.5 of the Comptroller and Auditor General's report read:

9.1 Overpayments

The Department of Social and Family Affairs administers some 50 welfare schemes paid through Vote 38 and the Social Insurance Fund. Expenditure on assistance and insurance schemes was €7.02 billion and €6.11 billion respectively in 2006.

Tables 33, 34 and 35 outline overall expenditure on various schemes over the period 2002 to 2006, and for the same period, the amounts recorded as overpayments, the amounts of overpayments attributed to fraud or suspected fraud and the Department's cumulative record of recovery since 2002.

Table 33 Scheme Expenditure

	2002	2003	2004	2005	2006
	€m	€m	€m	€m	€m
Social Insurance	4,198	4,649	5,081	5,460	6,106
Social Assistance	4,940	5,460	5,821	6,296	7,019
	€9,138m	€10,109m	€10,902m	€11,756m	€13,125m

Table 34 Number and Amount of overpayments recorded for recovery (Numbers shown in brackets)

	2002	2003	2004	2005	2006
	€m	€m	€m	€m	€m
Social Insurance	9.72 (23,723)	10.60 (26,174)	12.12 (26,131)	11.02 (22,420)	11.20 (21,529)
Social Assistance	19.41 (15,084)	28.77 (17,459)	44.85 (20,000)	36.24 (17,126)	34.02 (18,216)
Total	€29.13m (38,807)	€39.37m (43,633)	€56.97m (46,131)	€47.26m (39,546)	€45.22m (39,745)

Table 35 Number and Amount of overpayments attributed to fraud or suspected fraud (Numbers shown in brackets)

	2002	2003	2004	2005	2006
	€m	€m	€m	€m	€m
Social Insurance	4.59 (8,121)	5.07 (9,606)	6.24 (10,771)	5.53 (8,587)	5.16 (7,877)
Social Assistance	7.43 (5,728)	8.88 (7,148)	12.69 (8,483)	13.13 (7,758)	15.19 (8,950)
Total	€12.02m (13,849)	€13.95m (16,754)	€18.93m (19,254)	€18.66m (16,345)	€20.35m (16,827)

The amount of overpayments attributed to fraud or suspected fraud compared to total overpayments since 2002 is summarised in Figure 4.

Figure 4

The Department's record of recovery of overpayments during the period 2002 - 2006 is shown in Table 36.

Table 36 Department's record of recovery of overpayments 2002 to 2006

	2002	2003	2004	2005	2006
	€000	€000	€000	€000	€000
Overpayments not disposed of at 1 January	65,452	70,621	85,953	115,993	131,250
Overpayments recorded for recovery	29,130	39,367	56,967	47,261	45,219
Less Overpayments recorded in prior years cancelled	(394)	(381)	(693)	(1,826)	(129)
Sums recovered in cash	(8,892)	(10,397)	(11,506)	(11,246)	(12,032)
Sums withheld from current entitlements	(6,734)	(6,521)	(8,332)	(8,715)	(10,509)
Net amounts written off as irrecoverable	(7,941)	(6,736)	(6,396)	(10,217)	(4,259)
Overpayments not disposed of at 31 December (€000)	70,621	85,953	115,993	131,250	149,540

Of the €149,540,338 overpayments outstanding at 31 December 2006 - €31,017,804 dates from 2006; €29,724,801 from 2005; €36,224,296 from 2004 and €52,573,437 from earlier years.

A new Overpayments and Debt Management (ODM) computer system went live in November 2006 and is expected to be in use in all relevant areas of the Department by the end of 2007.

The new system allows for

Recording of overpayments details by frontline staff.

Ongoing tracking of repayments including tracking of recovery by deduction from social welfare payments. This will require linking with the Department's legacy systems to allow for automatic transmission of data between systems.

Production of management reports.

Implementation of a new debt management strategy.

Expected benefits from the new system are

The elimination of duplicate data entry of debt transactions

Elimination of paper processing in reporting debt transactions

More collaborative working

More reliable and accurate debt information.

A major data clean up job was undertaken on the old overpayments system prior to migration to the new system. During this process it was decided to concentrate on the following categories of overpayments

Cases where there had been recovery activity in the last 3 years

Cases notified since 2000 where the outstanding debt exceeded €1,000

Large fraud cases (in excess of €5,000) regardless of the time period.

On this basis approximately 121,000 cases were migrated to ODM. Following this work it was decided that debt that was considered to be irrecoverable, either because of its age or value, would not be migrated to the new ODM system .

The debt remaining on the old system amounts to approximately 200,000 overpayments with a value of some €82m, the vast majority of which is pre-2000 and for sums of less than €2,000. Approval is to be sought from the Department of Finance to write off these debts definitively – over 99% of these debts have already been written off for accounting purposes.

The changeover to the new computer system is to be complemented by the implementation of a new debt management strategy. The Accounting Officer informed me that the new strategy is planned for implementation in the second half of 2007. The overall goal of this strategy is to actively pursue the recovery of debt to maximise recovery levels, with due regard to value for money and with particular emphasis on recovery from people no longer dependent on welfare payments.

The main thrust of the new debt management strategy is give the Central Overpayments and Debt Management Unit a role in the pursuit of debt. The unit will concentrate on debtors no longer in contact with the Department, in particular debtors with large overpayments that were obtained fraudulently.

9.2 Prosecutions

Cases involving abuse of the system are considered with a view to taking legal proceedings. Prosecutions are taken against employers who fail to carry out their statutory obligations and persons who defraud the social welfare payments system. Prosecutions can either be by summary or indictment proceedings. Civil proceedings are taken to facilitate the recovery of scheme overpayments or the collection of PRSI arrears. Such cases are only taken where there is an expectation that the debtor has sufficient means to discharge the debt.

During 2006, 348 criminal cases (2005 - 412 cases) were forwarded to the Chief State Solicitor's Office (CSSO) for prosecution as shown in Table 37. Forty five cases were not deemed suitable for prosecution (2005 – 10 cases) due to the time elapsed since the offence.

Table 37 Criminal Cases forwarded to the CSSO

	2006	2005
Unemployment Assistance	169	197
Unemployment Benefit	113	153
Disability Benefit	20	19
One Parent Family Payments	16	19
Other Schemes	7	10
Offences Committed by Employers	23	14
Total	348	412

A total of 256 criminal prosecutions (2005 – 256 prosecutions) involving social welfare recipients were brought to court in 2006. The total amount of overpayments assessed in these cases of persons who attempted to or obtained benefits/assistance fraudulently was €1,524,435 (2005 - €1,346,770). The results of these 256 court cases and the penalties imposed are given in Table 38.

At the end of 2006, the CSSO had 806 cases on hands awaiting prosecution.

Table 38 Results of Criminal Court Cases involving Social Welfare Recipients

	Unemployment Assistance	Unemployment Benefit	Disability Benefit	One Parent Family Payments	Other	Total
Fined	50	39	7	1	2	99
Community Service	5	3	0	1	1	10
Imprisoned	3	1	0	0	0	4
Probation Act	21	23	0	4	3	51
Suspended Sentence	8	6	2	0	0	16
Struck-out	5	4	2	2	0	13
Dismissed	0	0	1	0	0	1
Bound to the Peace	0	2	0	0	0	2
Liberty to re-enter	30	21	3	2	0	56
Withdrawn	1	0	0	3	0	4
Total	123	99	15	13	6	256

Prosecutions of 7 cases involving employers (2005 – 15 employers) were also finalised with 6 being fined and 1 given the benefit of the Probation Act.

The number of prosecutions dealt with by the courts since 2002 is summarised in Figure 5.

Figure 5

Between 2002 and 2006 a total of 70 civil cases were sent to the CSSO for the pursuit of civil proceedings. In this period, 71 cases (including pre – 2002 cases) have been finalised. The breakdown per year is set out in Table 39.

Table 39 Civil Cases sent to the CSSO

	2002	2003	2004	2005	2006	Total
Sent to CSSO in the year	11	21	17	13	8	70
Finalised in the year	11	14	12	21	13	71

Of the 71 cases finalised, settlement was reached in 10 cases without going to court (this involved recovery of €122,096), 4 were finalised in court (decrees awarded), 18 cases were not pursued due to the circumstances of the debtor, 10 cases were statute barred and 29 made arrangements to repay the debts in instalments. There are 73 cases that have yet to be finalised.

9.3 Payment of Child Benefit by Electronic Funds Transfer

Methods of Payment

Child Benefit is a universal payment paid every month in respect of qualified children. The scheme currently has some 570,000 customers in respect of approximately 1.1 million children. The cost in 2006 was €2.056 billion.

There are two methods of payment of Child Benefit - Electronic Funds Transfer (EFT) and Personalised Payable Order (PPO) - and it is up to the claimant to specify a preference. The EFT method of payment provides for the monthly lodgment of payment directly to a bank or building society account specified by the claimant. The PPO method of payment involves the issue of the PPO book to a specified address and monthly encashment by the claimant at a nominated Post Office.

The EFT method of payment of Child Benefit was introduced by the Department in 1992. A Government decision in December 2004 directed all Departments to use EFT to the greatest extent possible.

The Department has taken a number of steps to maximise the number of customers receiving payment electronically. The increased use of electronic payments has reduced administrative work for the Department, delivered cost savings and provided customers with a wider range of outlets at which to receive their payments.

The overall level of welfare recipients paid by EFT doubled in the five years up to September 2006 to 37% and had risen to 42% by February 2007. It has been the preferred method of payment in recent years and is currently increasing at a rate of 1% per month.

The method of payment to Child Benefit claimants in February 2007 is shown in Table 40.

Table 40 Claimants’ Payment Method

Payment Method	Number of Claimants	% of Claimants
EFT	273,771	48%
PPO	296,582	52%
Total	570,353	100%

Nationality of Claimants

The nationality of claimants on the Department's system is shown in Table 41.

Table 41 Nationality of Claimants

Country	PPO	EFT	Total
Ireland	208,333	164,328	372,661
EU	11,031	25,311	36,342
Non-EU	6,206	22,869	29,075
Other	69,864	59,674	129,538
Unknown 43	12	11	23
Blank	1,136	1,578	2,714
Total	296,582	273,771	570,353

Non-EU claimants include 4,186 asylum seekers and 3,881 work permit holders paid by EFT.

Control Initiatives

Specific control initiatives undertaken by the Department in the Child Benefit area in recent years included a fraud and error survey, mailshots and reviews of claims.

Fraud and Error Survey

A fraud and error survey of Child Benefit claimants was commenced in May 2004. A sample of 500 Irish nationals and 500 foreign nationals was randomly selected. The survey involved the completion of a questionnaire by those selected and follow up home visits by Department inspectors.

The results of the survey indicated that the level of fraud was 2.6% among Irish nationals and 14.4% among foreign nationals. Table 42 shows the breakdown of the fraudulent cases detected by the survey.

Table 42 Fraudulent Cases detected by Survey

Reason	Irish	Non-Irish	Total	EFT	PPO
Whereabouts unknown	12	59	71	61	10
Child left State	0	8	8	7	1
Family left State	1	5	6	5	1
Total	13	72	85	73	12

The Accounting Officer has informed me that the survey indicated an overall fraud level of 1.66% in monetary terms, translating into a potential €31.6m exposure annually. It was his opinion that, while this represented a considerable sum in absolute terms, the amount must be viewed in the context of the overall expenditure on the scheme of over €2 billion. He stated that it compared favourably with other schemes and internationally.

He informed me that the control activity undertaken following the survey consisted of

In April 2006 a mailshot issued to all claimants with children under the age of 6 – approximately 259,000. This mailshot was issued to inform customers of the introduction of the Early Childcare Supplement. Some 9,000 forms were returned undelivered and follow-up action was taken in these cases. Some 100 cases have been terminated and a further 770 have had payment suspended pending completion of enquiries.

In December 2006 a targeted mailshot issued to 322 EU nationals (non-Irish) where cessation of employment dates had been recorded by the Department. As a result of the follow-up investigations 12 claims were terminated.

A mailshot was currently in the process of issuing to 1,000 EU nationals (non-Irish) who had a cessation of employment date recorded between December 2006 and April 2007.

Social Welfare Inspectors, assigned to the Garda National Immigration Bureau, contact Child Benefit section regarding people about whom they had suspicions concerning residency or other qualifying conditions. On average 6-8 cases are identified each week and fully investigated. Suspected cases of fraud have their payment stopped immediately pending investigation.

Mailshots to all Claimants

Information leaflets informing customers of budgetary changes were issued to all claimants paid by EFT in the years 2002, 2003 and 2004. Following investigation of cases in respect of which mail was returned undelivered, 1,670 claims were terminated as the claimant was found to have either left the State or could not be located. Of these, 756 were Irish customers while 914 were foreign.

The Accounting Officer informed me that the Department makes use of mailshots both for information and control purposes. The control advantages and the frequency of using mailshots had, however, to be balanced against the cost and resource implications involved in terms of document preparation, postage costs, the work involved in processing replies and in dealing with non-replies. Between 2001 and 2005, a total of some 888,000 mailshot letters issued, of which 22,000 were returned undelivered and required investigation. As a result of the investigations, some 2,273 claims were terminated. There was a considerable administrative overhead involved in issuing and checking mailshots and this overhead had to be balanced against the control advantages that accrued. However, in view of the changing customer base of the scheme in recent years, the Department was considering how best the use of regular targeted mailshots might be increased and enhanced.

Reviews

There is no systematic review of claims. Reviews are undertaken only on receipt of information indicating changed circumstances that may affect eligibility to payment or alter the amount payable. The sources of information are notifications from claimants, Departmental inspectors, other sections in the Department, anonymous reports from the public and post returned undelivered. A total of 17,802 reviews, approximately 3% of claimants, was carried out in 2006 predominantly because of notified changed family circumstances.

The 17,802 control reviews led to the termination of 804 cases and reduction in rate in a further 751 cases, with estimated savings of €17.9m. The breakdown between Irish nationals and foreign nationals is not known.

Overpayments, amounting to €3.24m, were assessed by the Department in 1,912 cases.

The main reasons for overpayment were that the family had left the State (726), child had left the household (329) and child had left full-time education (234). Payment by EFT accounted for 56% of the overpayments.

In response to my inquiries as to why the Department had no systematic review process for claimants and particularly for claimants opting for payment by EFT, he informed me that traditionally the scheme had been regarded as a very low-risk scheme and a systematic review/control process would not have been regarded as necessary. The annual issue of mailshots to the claimant base would have acted as a form of de facto control and review measure. In recent years the claimant base had changed and, in line with this, the Department was planning a more formal and systematic review process for the scheme. As part of the Department's Action Plan commitments under Towards 2016, it had committed to drafting a review policy for each scheme. The review policy for Child Benefit would be drafted during the third quarter of 2007 and would take account of the control issues raised.

Risks and Advantages of EFT

I enquired what steps the Department was taking to manage the additional risks associated with the EFT method of payment. In response, the Accounting Officer maintained that the potential for fraud associated with any claim is primarily dictated by the risks associated with a particular claim, for example, the claim type and characteristics of the claim, rather than the payment method.

In view of the higher fraud levels, associated with payment by EFT, disclosed by the fraud and error survey and the reviews in 2006, I enquired whether any consideration had been given to limiting the availability of the EFT method of payment. The Accounting Officer informed me that there are significant overheads involved in the production of paper-based payment instruments. PPO books covered periods up to 12 months, and where there were changes to customer circumstances that affected the rates of payment, books had to be recalled and reissued to the customer. This was a time-consuming process.

Aside from the overheads associated with paper-based payment methods, there were a number of drivers for the Department in moving towards EFT and other electronic forms of payment. These included

The cost of EFT payments which was nominal at about €0.01 per transaction whereas PPO orders cost on average €1.21 and cheques cost €0.60

The growing use of electronic payments in business and society generally

The increase in the use of electronic banking and debit/credit cards on a personal level

The Department's customer service strategy of offering customers a payment option that suits their needs

Customer-driven initiatives in payment delivery agencies such as the recent launch of the An Post "Postbank" venture, providing expanded EFT outlets at some Post Offices.

Additionally, concerns have been raised recently regarding the high quality forgery of cheques. Although no forgeries have been detected in relation to PPO books, advances in technology mean that such forgeries may become a reality in the near future.

He stated that, at this juncture, there was no specific group of customers to whom the use of the EFT payment method was restricted. In cases where fraud/abuse comes to light, however, which was attributed to EFT as a method of payment, the facility to be paid by the EFT method might be removed.

Enhancing Control

Given the changes in the claimant base of the scheme, the Accounting Officer stated that the Department was considering a more segmented approach to both the control and review of its claimload and also the availability of payment options to some groups. The Department was currently enhancing its IT systems under the Service Delivery Modernisation programme to record the certification of non-Irish customers in terms of residency and employment status as appropriate. This would further enhance the scheme control capabilities in terms of non-Irish customers. These enhancements would be in place during the third quarter of this year and, coupled with the review policy being drafted would enable the Department to better focus control and review activity on selected areas i.e. EFT payments, specific customer groups, etc.

9.4 One Parent Family Payment Scheme – Control Activity

Introduction

The One Parent Family Payment (OPFP) scheme, administered by the Department of Social and Family Affairs (the Department), is available to parents/guardians bringing up at least one child without the support of a partner. The claimant must be unmarried, separated, divorced or the spouse of a prisoner with earnings of less than €375 per week. The income/assets of the claimant are subject to a means test.

Under the scheme, claimants are obliged to notify the Department if circumstances arise that render them ineligible for payment or that affect the rate at which they are paid.

Table 43 Annual cost and number of claimants since 2002

Year	Cost €000	Number of Claimants
2002	613,035	79,195
2003	660,586	79,296
2004	694,835	80,103
2005	751,102	80,366
2006	834,262	83,081

Up to 2001 the scheme was administered by the scheme office in SWS Sligo (SWS Sligo) using a claims registration and payments issue system known as the Penlive system. Since then, in the context of the Department's Modernisation Programme, a process of transferring claims to the Department's local offices (LOs) has commenced. Recording in these offices is on a more modern computer system – ISTS. This system has a mandatory requirement for a deciding officer to set a review date which falls within the following 12 months. In contrast, while the Penlive system has a facility to insert a review date, it is not mandatory.

41 of the 58 LOs are now processing new claims. In addition, existing claims have been transferred to 4 LOs and it is intended that all others will be transferred in the coming months. The number of cases being administered by LOs at the end of April 2007 was 28,697.

Departmental Control Activity

The Department's control programme for OPFP is influenced by the results of a fraud and error survey conducted in 2002/3 which showed that OPFP was highly susceptible to incorrect claiming. On the basis of the survey, it was estimated that 13.6% of the claims should not have been in payment while a further 15.8% should have been paid at a lower rate.

Table 44 summarises the outcome of particular control activities undertaken in this area between 2004 and 2006.

Table 44 Outcome of Selected Control Activity 2004-2006

Year	Number of cases reviewed	Number of Terminations	Number of Reductions
2004	4,024	2,300	779
2005	5,059	875	2,898
2006	5,586	1,075	1,216
Total	14,669	4,250	4,893

The Accounting Officer emphasised that these outcomes were based on very focused control activities conducted in SWS Sligo and that it had been anticipated that they would yield a high percentage of terminations and reductions. The projects included

An Earnings Review Project that matches earnings data from the Central Records System with OPF payments. Priority was given to the review of customers with earnings exceeding €19,500. An additional 120 cases have been finalised to date in 2007 resulting in 90 terminations and 21 reductions.

A Child Benefit Matching Project which involves matching child dependant data from OPF customers on the Penlive system with child data on the Department's Child Benefit System. Where mismatches are identified, claims are targeted for review. 30 terminations and 12 reductions have resulted from cases finalised in 2007.

General Register Office (GRO) that matches marriage data with OPF claimants on Penlive. 109 terminations have resulted from cases reviewed to end May 2007.

Local Review Projects undertaken or dealt with by outdoor staff. So far this year 131 terminations and 16 reductions have resulted from these reviews.

General Reviews of which a further 4,310 were completed in the period January to May 2007 resulting in 607 terminations and 1,612 reductions. The vast majority of these reviews involved issuing the customer with the self-declaration questionnaire and over 3,700 of the claims involved have been transferred to ISTS, and as a result, will be reviewed annually using the system generated review form.

Earnings Review

A major element of the control programme is review of earnings. A project was set up in 2003 to review the cases of Social Welfare claimants identified, as a result of the review of P35s, as having earnings in excess of scheme qualifying limits. The result of its work on the scheme is shown in Table 45.

Table 45 Outcome for OPFP of Earnings Review Unit Activity

Year	Terminations	Reductions	Assessed Overpayments
			Number of cases	Amount €m
2003	322	172	503	6.7
2004	1,597	82	1,339	16.9
2005	572	94	357	5.6
2006	499	55	281	3.6
Total	2,990	403	2,480	€32.8m

The average overpayment was €13,300 per case. 1,017 cases were awaiting review at the end of 2006.

Commencement of Employment Notifications

Another key element of the control programme is review of work undertaken on foot of notification of commencement of employment by the Revenue Commissioners (Revenue). Since 1997 the Department has systematically received information from Revenue on earnings and commencement and cessation of employment. There has been increasing usage of this Revenue data in recent years for control purposes through programmed matching with the Department's own client records.

A Commencement of Employment notification (COE) is forwarded by an employer to Revenue in respect of any employee starting employment. OPFP claims were included in the COE data matching exercise from September 2001.

This data matching exercise, to identify possible overlaps between employment periods and OPFP claims, is carried out monthly by the Department. Where an overlap is detected, and the employer details correspond with the Department's master file of employers, the Department writes to the employer. The Accounting Officer informed me that, due to resource constraints in SWS Sligo and the Department's decision to prioritise cases where the employer details were available, cases where employer details could not be matched were not followed up in that office prior to January 2007. He added that the numbers of cases where the employer's details were not available has dropped considerably since February 2007 when a problem in the notification programme was fixed.

Table 46 summarises the Department's activity in relation to overlap cases.

Table 46 Activity in relation to overlap cases 2004 to 2006

Year	No. of questionnaires issued to employers	No. of questionnaires returned	No. of cases referred to SWS Sligo	Weekly Earnings €160-€220 employed/no longer employed	Weekly Earnings >€220 no longer employed	Weekly Earnings >€220 employed
2004	15,642	13,656	7,372	3,989	1,007	2,376
2005	14,491	11,687	6,891	3,456	890	2,545
2006	13,076	10,858	6,477	2,741	990	2,746
Total	43,209	36,201	20,740	10,186	2,887	7,667

My examination found that referring the matter to the employer to confirm employment details leads to an average delay of approximately twenty weeks in initiating a review of the case. The process of case referral to SWS Sligo for review and contact with clients does not commence until confirmation of overlap and details of earnings have been received from the employer. The Accounting Officer has informed me that referring the matter to the employer is necessary to obtain details of earnings and to establish whether employment is continuing because the COE notification received from Revenue provides details of the commencement of employment date only.

I also noted that there were no arrangements for the follow up of cases where employers failed to respond to the Department's inquiries. The Accounting Officer informed me that, in the case of claims administered by the LOs, where the employer does not reply, the case is forwarded to Social Welfare Inspectors for further investigation. Prior to January 2007, cases administered centrally were not routinely pursued due to pressures of work and resource constraints. The Accounting Officer has informed me that, with effect from January 2007, all cases in which a reply is not received from the employer are reviewed and a questionnaire is issued to claimants to establish employment status.

The Accounting Officer has informed me that the difference of 15,461 between questionnaires returned by employers and cases issued to SWS Sligo for review is represented by cases where the claimant was no longer in employment or had earnings of less than €160 per week. He stated that these cases did not warrant further action as this level of earnings would not affect the rate of payment received.

Referred Overlap Cases

Review of referred cases commences by issuing a questionnaire to the claimant seeking information on all aspects of the claimant's continued entitlement. The claim is suspended if the claimant fails to reply within 21 days.

Referred overlap cases are divided into three categories as follows

Weekly earnings €160-€220, employed/not employed

Weekly earnings in excess of €220, not employed

Weekly earnings in excess of €220, employed.

Only cases involving continuing employment with earnings in excess of €220 were considered for review up to the end of 2006.

I asked the Accounting Officer why all claimants with overlaps identified from the data matching exercise were not reviewed in SWS Sligo. He informed me that SWS Sligo, due to the number of notifications involved and in order to maximise the use of available resources, prioritised activity on those cases where the earnings were likely to result in a termination or significant reduction in benefit. As a result, the section focused its work on cases where the customers were in ongoing employment with earnings in excess of €220 per week. He also informed me that all overlaps, on cases administered by the LOs, that affected the level of payment are pursued and, since January 2007, all cases in SWS Sligo identified as having earnings greater than €160 per week are reviewed.

He stated that, by its nature, the scheme raises significant control challenges in a number of aspects. The Department must use the resources available to best effect in addressing instances where claimants abuse the system and continue to claim payments to which they are not entitled. He was satisfied that, in present circumstances, the Department was doing all that it could in this regard. In relation specifically to the employment issue, he pointed out that for many employments where persons in receipt of OPFP are working, earnings would not be stable and would be subject to frequent fluctuations.

Backlog and Outcome of Reviews Undertaken

The Department prioritised 7,667 (Table 46) cases for review in the years 2004-2006. Just over 5,500 of these had been finalised at end 2006, leaving a backlog of 2,155 cases to be addressed. The outcome of the cases finalised by end 2006 is shown in Table 47 below.

Table 47 Outcome of Cases Finalised

Year	Total reviewed	Terminations	Reductions
2004	1,488	564	703
2005	2,212	755	891
2006	1,812	583	1,052
Total	5,512	1,902	2,646

The Accounting Officer has informed me that additional staffing resources have been deployed to deal with the backlog of cases on hands. At the end of June 2007 the backlog of 2,155 cases has been reduced to 1,162.

The average weekly saving, calculated by the Department, from terminated cases was €156 in 2005 and €173 in 2006. The average weekly saving in reduced cases was €37 in 2005 and €44 in 2006.

Audit Sample

The matching of COE data to the Department's client records and review of cases where there was evidence of concurrent working and claiming was examined by my staff. A sample of 40 finalised cases, 20 termination and 20 reduction cases, from 2005 and 2006 was selected for detailed examination and analysis of the results. Claimants' records dating back to 2002 were examined in the selected cases.

It was noted that no overpayments had been assessed by the Department in any of these cases despite the fact that in practically all cases payments had been made to claimants when they were not entitled to them under the terms of the scheme. As I was concerned that significant sums to be recovered were being forgone, I sought the views of the Accounting Officer.

He informed me that revised decisions are made by Deciding Officers and that, where a revised decision is made by reason of a customer giving false or misleading statements or by reason of the wilful concealment of a material fact, the revised decision may take effect from the date of the original decision. However where a revised decision is made in the light of new evidence or new facts being brought to the attention of the Deciding Officer, the decision is effective from the date the Deciding Officer considers appropriate. Consequently the question of whether or not an overpayment arises is determined by the provision of the Social Welfare (Consolidation) Act, 2005 (the Act) under which the decision is made by the Deciding Officer.

The Accounting Officer has informed me that the question as to whether a decision to revise the rate of payment in a particular case should apply from a previous date and, consequently, whether an overpayment arises must be decided by the Deciding Officer having regard to the circumstances of the case. A delay in matching earnings data already available would be a factor to be taken into account in this regard.

He also stated that not all cases coming to light as a result of COE matching are regarded as fraud cases and, in some circumstances, the Deciding Officer may decide that it would be appropriate that the revised decision would take effect only from a current date. In such cases, no overpayment arises.

It was the Department's experience that, in cases where the decision was applied from an earlier date and an overpayment raised, a large number of appeals were lodged against the overpayment. This delayed the process and absorbed a substantial number of staff resources, which would otherwise have been deployed on control work, in responding to these appeals.

New Review Policy

I enquired of the Accounting Officer if the Department had a comprehensive review policy for the scheme and, if so, how regularly it provided for all claims to be reviewed.

He informed me that the Department had introduced a formal review policy for claims administered in its LOs in May 2007. Furthermore, with effect from January 2007, all customers who were reviewed (including COE cases) were transferred to the ISTS system on completion of review. The ISTS system generated an annual review of all customers. In the context of the localisation of the scheme, enhanced control measures had been put in place, which included the issue of a questionnaire annually to ensure compliance. A further feature of the enhanced controls is the comprehensive review policy that provides for a face-to-face interview with each claimant once every three years.

Furthermore he assured me that, with effect from 1 June 2007, overpayments are assessed in SWS Sligo as warranted by the circumstances of each individual case. This brings it into line with practice in the LOs.

9.5 Advance payment of grant to Sustainable Energy Ireland

Background

Sustainable Energy Ireland (SEI), formerly the Irish Energy Centre, was set up in its present form by the Government in 2002 as Ireland's national energy agency. It operates under the aegis of the Department of Communications, Marine and Natural Resources. The Department of Social and Family Affairs' (the Department) relationship with SEI and its predecessor, the Irish Energy Centre, derives from recommendations made in the 1999 Green Paper on sustainable energy and approved by the Government at that time. These called for co-operation between the Department and the Department of Communications, Marine and Natural Resources in relation to fuel poverty.

Budget 2006 provided for a grant of €2m to SEI for fuel poverty research. The rationale for the grant was that, while the Department was making considerable payments to people to meet their heating needs through primary social welfare payments and the Fuel Allowance scheme, the benefit of these payments was considerably offset where people were living in poorly insulated homes. The grant to SEI was incorporated in the 2006 published Estimates as subhead W13 in the Miscellaneous Services subhead.

SEI's initial proposal for use of the grant was submitted to the Department in March 2006 and, following discussions, a revised proposal was submitted by SEI in July 2006. This proposal was approved by the Department.

The Budget grant was intended to complement the Fuel Poverty Action Research Project being carried out in Cork and Donegal in a joint operation funded by SEI and the Combat Poverty Agency. SEI proposed to utilise the grant by undertaking a project for owner occupied dwellings in Waterford city and county – an area regarded as vulnerable to fuel poverty. The work proposed included both insulation and heating measures. The grant was to cover the cost of setting up the project, arranging for remedial work to be carried out on approximately 460 houses, conducting research surveys, analysing the resultant data and submission of a formal report. Waterford was chosen because it provided a suitable population base for the project and also because SEI's main programme, the Warmer Homes Scheme, did not operate there.

Payment of Grant

Sanction was requested from the Department of Finance in August 2006 for full release of the €2m grant; it was received in early September and payment was made shortly afterwards. The bulk of the expenditure was to be expended on labour and materials required to undertake the remedial works. The grant was paid in one instalment as the project was viewed by the Department as a single, once-off programme. At the time of issue of the grant, it was anticipated that work on the programme would commence immediately. As it turned out, the research did not commence as quickly as expected and no expenditure on the project was incurred by SEI in 2006.

As Public Financial Procedures require that Departmental payment arrangements should have ensured that, prior to payment of the grant being made, expenditure would be incurred within the year, I asked the Accounting Officer why the grant was paid to SEI without any evidence that it was likely to be expended in 2006. I also requested a monthly schedule of all expenditure made to date by SEI on the project.

In reply the Accounting Officer informed me that he accepted that the correct process was not followed in regard to this payment to SEI. The grant should not have been paid until the work on the home improvements was about to commence. Furthermore, it would have been appropriate to pay these moneys to SEI on a phased basis as elements of the work were completed. The payment of the grant in this instance was an exceptional event and payment of grants was no longer a feature of the Department's work to the same extent as in the past. Nevertheless, it was important that the correct procedures be followed in all cases of this kind. He stated that he was arranging for the grant disbursement process to be revised to ensure that staff are aware of the requirements in this regard.

He also informed me that, as at the end of June 2007, €145,553 had been expended on the project by SEI with a further €49,164 committed. The installation work was, at that stage, fully underway with an expected finish date of August 2007. Final invoices were expected to be processed in September 2007 and a report would be compiled in late 2007.

Appropriation Account

As this amount of €2m was charged to Subhead W in the 2006 Appropriation Account originally submitted to me for audit, it was necessary to amend the account by reducing the charge to the subhead and charging the amount to suspense pending expenditure in 2007.

Mr. John Purcell

Thank you, Chairman. It is a long agenda so I will first give a short introduction to the two accounts before the committee. Expenditure on social assistance schemes and child benefit is met from Vote 38 and amounted to approximately €7 billion in 2006 while expenditure on social insurance schemes is met from the social insurance fund, which amounted to €6.1 billion in the year. Both figures exclude administration costs.

Turning to the fund, the income of the social insurance fund derives mainly from PRSI contributions collected by the Revenue Commissioners from employers, employees and self-employed persons. Health contributions and the national training fund levy are also collected by the Revenue Commissioners and are channelled through the fund but they do not form part of its accumulated income. Surplus moneys are paid over to an investment account which is managed by the Department of Finance. That account is part of the fund account before the committee today. Notes 8 and 9 to the account show the position under redundancy and employers' insolvency schemes. The committee will note that the fund had reserves at the end of 2006 of just over €3 billion. These reserves must be seen in the context of the latest actuarial review which estimates that the accumulated surplus will be exhausted by 2016.

Chapter 9.1 gives summary details of the number and amount of overpayments of social assistance and benefits over the five year period 2002 to 2006 and the extent to which the overpayments were attributable to fraud or suspected fraud. The figures for 2006 are very much in line with the pattern in the previous year. From 2007 onwards, the Department has changed over to a new computer system which will support more accurate recording of overpayments and facilitate better management of the debt.

A major clean up of the data on the old system has been completed and the Department obtained Department of Finance sanction for definitively writing off €82 million of old, uncollectable debt. The Department is now in a position to concentrate on the debt transferred to the new system. In parallel with this development, the Department has adopted a new debt management strategy designed to actively pursue the recovery of debt to maximise recovery levels, with due regard to value for money and with particular emphasis on recovery from people no longer in receipt of welfare payments, particularly those with large overpayments that were obtained fraudulently.

Chapter 9.2 records the prosecution action taken by the Department during 2006 against persons who have defrauded the social welfare system and also against employers who have failed to carry out their statutory functions. Clearly, with the extent of fraud outlined in chapter 9.1, the Department has to be selective about the cases it sends on to the Chief State Solicitor for prosecution. Members of the committee will see from table 38 that the Department has a high success rate in securing convictions in the cases put forward.

Civil proceedings are also taken on behalf of the Department where it is deemed that there is a realistic prospect of recovery of significant amounts from recalcitrant social welfare debtors. Table 39 reflects the level of activity in this respect.

Chapter 9.3 gives an overview of the Department's control activity on child benefit in recent years. Traditionally, child benefit has been viewed as a low-risk area in terms of fraudulent claiming but the advent of significant numbers of migrant workers, coupled with the availability of electronic funds transfer, have combined to increase that risk. At a meeting of the Committee of Public Accounts last March, I expressed concern that the Department's controls had not kept in step with the increased risk. Members of the committee shared that concern.

The risk associated with the changed circumstances was highlighted by a fraud and error survey carried out by the Department. The survey was conducted on a random sample of 500 Irish claimants and 500 non-Irish claimants. The results showed a level of fraud of 2.6% among Irish claimants and 14.4% among the foreign nationals. In the vast majority of the fraud cases, payment was being made by way of electronic funds transfer. Apart from the fraud and error survey, the Department also used mail shots for information and control purposes. In this case, forms returned undelivered were followed up to establish the residency status of the claimants. The other control activity centred around reviews undertaken on receipt of information indicating changed circumstances that might affect eligibility to payment or alter the amount payable.

To be fair, the Department has recognised that changes in the claimant base necessitated a revised approach to control. In the last few months, it has introduced a much more stringent control regime which, to my eye, is more commensurate with the current level of risk in the child benefit scheme. I will let the Accounting Officer provide the committee with details of that new control regime.

Chapter 9.4 outlines the Department's control activity concerning the one-parent family payment scheme. The scheme is high risk from a fraud and error point of view. On the basis of a survey carried out about five years ago, it was estimated that 13.6% of claims should not have been in payment, while a further 15.8% should have been paid at a lower rate. In order to counter this risk, the Department has undertaken a range of control reviews, including earnings reviews based on data supplied by Revenue, matching exercises with data on marriages from the general register office, and matching data on child dependants with the child benefit scheme, as well as general review activity involving the issue of questionnaires to claimants and follow-up on those replies. All of these checks confirmed that there is indeed a high level of inappropriate payment in the one-parent family payment scheme.

One of the main areas of concern was that claimants were not notifying the Department of changes to their income level as a result of taking up employment or increases in their pay. Using commencement of employment information from Revenue, the Department is able to identify cases where claimants may be in receipt of earnings in excess of eligibility limits or are being paid at the incorrect rate. My staff found that there could be considerable delays in finalising the Department's inquiries and that overpayments were not being raised from the date on which the changed circumstances applied. We also noted that there continued to be a significant backlog of cases awaiting review, including those where commencement of earnings notifications had been received.

Some improvement in the control framework is expected when all the claims are transferred to the local offices network where more sophisticated computer systems are in operation. Generally speaking, I am aware of the recent proposals to reconstitute the one-parent family payment scheme completely in the context of social assistance reform and supporting lone parents in participating in the workforce. It may well be that any such developments will also provide an opportunity to effectively address the level of control risk associated with this whole area.

Chapter 9.5 details the circumstances in which a grant of €2 million was paid by the Department to Sustainable Energy Ireland in 2006 to fund a heating and installation project for homes in the Waterford area. Work on the project did not start until well into 2007. Under Government accounting rules the grant should not have been paid out when it was, and it should not have been charged to the Vote in 2006. The Accounting Officer indicated that corrective action has been taken to prevent a recurrence.

Briefly, turning to the follow-up report on the earlier value-for-money reports of relevance, I believe it is fair to say that the integrated short-term schemes' computer system has served the Department well in the intervening years, and can be regarded as a signal success. Direct administration of the supplementary welfare allowances is now transferring to the Department. The Department sees the transfer as an opportunity for advanced customer service, the achievement of efficiencies and better co-ordination of controls. I have no adverse comments to make on either of these chapters of the follow-up report.

Finally, at last week's meeting, the question arose as to how the Department of Social and Family Affairs evaluates the impact of its training programmes. The question arose from the fact that no information was provided in a table to my follow-up report on the matter. To clear up any misunderstanding, the report should have explained by way of footnote that the Department uses a variety of evaluation approaches. I am happy to confirm that based on more recent information obtained from the Department, some of the measures used to evaluate the effectiveness of training programmes are quite advanced.

Chairman

I wish to thank Mr. Purcell and now call on Ms Lacey to make her opening statement.

Ms Bernadette Lacey

I thank the Chairman and other members of the committee for the opportunity to make this statement on the annual report of the Comptroller and Auditor General. I wish to address the issues in chapters 9.1 to 9.5 and, with the Chairman's permission, to comment on the issues regarding rent supplements and landlords, which the committee discussed in recent weeks with the Revenue Commissioners. The primary responsibility of the Department is to make social welfare payments effectively and efficiently. We have a good reputation for customer service, although this comes under strain from time to time as various factors can affect the quality of the service. In recent years the arrival of immigrants in large numbers has brought pressures in areas such as the PPS allocation and child benefit. Furthermore, growth in the population and labour force in recent years has led to increased claim levels, for example, in the family income supplement where the levels have almost doubled. We are taking measures to address these issues as they arise.

Allied to our customer service role is our responsibility to control expenditure by ensuring that payments are only made to those entitled to receive them, that they are paid the correct amount and where they are overpaid that the money is recovered. While every effort is made to avoid incurring overpayments it is inevitable, given the number of customers involved and the size of the budget, that overpayments will arise. The overpayments arise for different reasons. Fraud accounts for 45% of the total value. Errors arising from information supplied by customers or third parties account for 38%. Departmental errors account for 4% and, lastly, some cases refer to overpayments which come to light following the death of a customer.

Our approach to overpayments in the first instance is prevention or minimisation through control activity and eliminating error. Where overpayments arise our response is framed by the debt management strategy. The overall goal of the strategy is to pursue debt actively and to maximise recovery levels. Traditionally, recovery was primarily focused on people receiving a social welfare payment. However, from the middle of this year our primary focus will be on recovering overpayments from people who are no longer dependent on social welfare, having moved into employment or self-employment.

The success of the strategy is contingent on having an effective system for recording and reporting overpayments and recoveries. Until recently our overpayment system was not integrated and depended on manual input for each of the scheme areas. The new integrated computerised overpayment and debt management system has been put in place, which allows for more up-to-date, reliable and fully reconciled information on overpayments and recoveries. When the system has been implemented in all local offices the staff in the central unit will be freed up to engage in a case management approach in pursuing debtors who have re-entered the labour market. Localisation of debt control has been slower than anticipated because of the complexity involved and of the need for an extensive programme of data clean up before moving from the old debt register to the new computerised system. Nonetheless, all new overpayments are now recorded on the new system.

The Department, in deciding on cases to prosecute, takes account of the circumstances of the case, the nature of the offence as well as the strength of the evidence available. Factors taken into account in the decision to prosecute include: the duration of the fraud; the amount of the overpayment; the amount earned by the offender during the working and claiming period; any mitigating or aggravating circumstances involved; the strength of the evidence and the likelihood of success; and the deterrent effect a prosecution may have for others.

In 2007, 222 criminal prosecutions involving social welfare recipients were finalised. A further 16 cases against employers were also finalised. The number of criminal cases referred to the Office of the Chief State Solicitor continues to grow. Some 357 cases were referred in 2007, an increase of nine on the previous year.

Preparation of cases for prosecution is resource intensive. The number of cases cleared each year is fewer than the number referred for prosecution to the Office of the Chief State Solicitor with a consequent growth in cases awaiting prosecution. The number of cases on hand at various stages of prosecution increased from 531 at the end of 2002 to 988 by the end of 2007. This high volume has consequences for the Office of the Chief State Solicitor and for the Department's inspectors who appear in court as witnesses. Consequently, in recent years, greater emphasis has been placed on referring for prosecution serious cases and those with the best chance of success, reflecting the need for a targeted and efficient use of resources.

Over the years the Department has extended the range of payment options available to customers to allow them choose the method which most suits their needs. Electronic fund transfer, EFT, as a payment instrument, offers a level of flexibility that enables a speedy response to changes in customers' circumstances so that any delay in payment can be minimised. As the fraud and error survey referenced in the Comptroller and Auditor General's report showed, however, there are certain risks associated with this payment instrument. The Department has recognised these risks and has taken steps to support and strengthen the underlying controls in administering the scheme, rather than limiting the availability of the payment to any particular group. Needless to say, in cases where fraud comes to light which can be attributed to EFT, the facility can be withdrawn. In addition, the issues surrounding the payment method are kept constantly under review and additional control enhancements are applied as necessary.

The Department's control strategy is based around prevention, deterrence, detection of fraud and recovery of overpayments. Reviews of claims forms a key platform for detection of fraud and while not wanting to compromise the methods used in the Department, the following are some of the component parts of our review strategy: follow up on data matching programmes with internal and external databases; enhanced automated mailshots and investigation of the fallout; external liaison with organisations such as the Department of Work and Pensions; follow up on information arising from control operations in other scheme areas and control projects undertaken at regional level; initiatives on foot of notifications from customers; and secondment of investigative staff to the Garda National Immigration Bureau and the Criminal Assets Bureau.

Each of these sources of information has proved very effective in strengthening control of fraud across social welfare schemes, including child benefit. For example, a new automated mailshot facility was implemented for the child benefit scheme in September 2007. The system allows for targeted mailshots to particular groups of customers, for example, where children over 16 years of age are remaining in education or where children of EU nationals are resident abroad. The responses can be scanned and payments can be suspended automatically where responses are not received within a given timeframe. Initial mailshots have issued in respect of child benefit claims and we expect to extend it to other payment areas as the process matures.

The Comptroller and Auditor General set out in his report the position relating to control policy and status of the one parent family scheme. I will update the committee on the position regarding the transfer of this scheme to the Department's local offices and the improvements in control activity achieved in 2007. Currently, approximately 90% of new one parent family claims, equivalent to 1,500 claims per month, are processed in the Department's local offices and branch offices. A number of small offices, 17 in all, have not yet processed new claims. They will take on this work as the stock of existing claims is devolved to local level.

Work has commenced on devolving the stock of existing claims, 54,000, from the head office in Sligo to local offices. Stock claims for four offices have been localised and we anticipate localising the majority of claims during 2008. Progress on rolling out the stock of claims has been slower than anticipated as a number of issues, including staff issues intervened.

The benefits from administering these claims at local level includes the opportunity to case manage the claims as well as increasing the effectiveness of control and activation measures. Control of the scheme has been enhanced in recent years through the following: focused reviews, such as child benefit matching; review of earnings, including those where earnings were less than €220 per week; matching cases against the General Register of Births, Deaths and Marriages; and following up on commencement of employment notifications. Some 22,500 targeted reviews were carried out in the office in Sligo and a further 9,700 in the local offices during 2007. Overall, savings of almost €105 million were generated by such reviews in 2007.

The Comptroller and Auditor General found that, as no expenditure was incurred on the project, the money paid to Sustainable Energy Ireland during 2006 was an inappropriate charge on the Vote. I accept that the correct procedures were not followed in regard to the payment of €2 million to SEI. The money should have been paid only on a phased basis as the project progressed and stages of the remedial and research work were implemented. The purpose of the payment was to fund research into a project in Waterford called Whole House which is investigating the value of improved insulation in the homes of people in receipt of social welfare payments in order to maximise the benefit of the fuel allowance being paid to them.

During 2007, a total of €1.854 million was spent on the project by SEI. It is anticipated that a sum of €60,000 will be spent by it in 2008 to finalise the research on the project and €86,000 will be due to be returned to the Department. A report on the Waterford Whole House project is currently being finalised. The report will be a useful addition to ongoing research into fuel poverty issues.

I wish to address issues raised in regard to the rent supplement, which I understand were the subject of some discussion with the Revenue Commissioners in recent weeks. The scheme exists to provide short-term support to eligible people living in private rented accommodation whose means are insufficient to meet their accommodation costs and who do not have accommodation available to them from any other source. Application for rent supplement is made by the tenant. Payment is the entitlement of the tenant, not the landlord, and is usually paid to the tenant.

During 2006, the supplement was paid to approximately 80,000 tenants in respect of 97,000 tenancies. The tenant has the option of nominating the payment to another person. Some 13,000 recipients have opted to have their payment nominated to their landlord or landlord agent. Another 5,000 have opted to have the payment nominated to a person other than the landlord or landlord agent.

At the end of 2007, 60,000 people were in receipt of rent supplement with over half of these in payment for more than 18 months. Estimated expenditure for 2008 is €419 million, which includes €27 million to be transferred to the Department of the Environment, Heritage and Local Government under the rental accommodation scheme.

Section 888 of the Taxes Consolidation Act requires the Department to provide to the Revenue Commissioners, on an annual basis, details of payments relating to rent supplement. For some years now we have provided to Revenue, in a format requested by it, details such as the full address of the tenancy, the names and addresses and telephone numbers of landlords or agents and a statement of all payments arising from each individual tenancy.

Some 20% of rent supplement cases relate to letting agents and these are being pursued separately by Revenue. Of the remaining 80% of cases, approximately two thirds have now been matched, following further work by Revenue on cases not resolved in the initial data match run.

Section 123 of the Finance Act 2007 creates three new obligations. The HSE, on behalf of the Department, is obliged to seek the landlord's PPS number or other Revenue reference before rent supplement is paid and to pass the information to Revenue. It does not place an obligation to withhold payment until that information is received. The landlord is obliged to provide the reference number or confirmation of not having such a number in time for the HSE to have it before the first payment is made. The Department is obliged to specify cases in respect of which it cannot provide the relevant data because the landlord failed to provide the information requested unless it can otherwise provide the information.

A working group of officials from Revenue and the Department was established to examine the legal and technical issues relating to how landlord data will be sought, stored and collated and what other sources of information could be used for acquiring the required data. The group met on three occasions in 2007 and a further meeting is planned for early March 2008.

The Department is responsible for delivering services to 1 million customers affecting 1.5 million beneficiaries each week. We are conscious of our responsibility to deliver our services efficiently and effectively and to manage the expenditure of the funds entrusted to us appropriately. I would welcome any comments members may wish to make in that regard.

Chairman

May we publish Ms Lacey's statement?

Ms Bernadette Lacey

Yes.

Deputy Deirdre Clune

I welcome Ms Lacey and the officials accompanying her.

The issue of family income supplement, FIS, has arisen on a number of occasions recently. Ms Lacey stated that claim levels in this regard have doubled in recent years. It has been suggested that in the past those who were entitled to FIS did not claim it. Has the Department take steps to encourage people to take up their entitlements or is the increase in claim levels merely a natural progression? In my view, the uptake in respect of FIS is not sufficient and there is potential for more people to claim it. The figures indicate that the Department spent more money on FIS than originally estimated.

Ms Bernadette Lacey

Would the Deputy prefer if I answered each question as she asks it?

Deputy Deirdre Clune

Yes, that would make matters easier.

Ms Bernadette Lacey

That is fine. We ran a major PR programme to raise the profile of FIS in order to make people aware of their entitlements between 2005 and 2006. Over the following two years, there has been a substantial increase in the number of people claiming under the scheme. Changes were made in the disregards allowed under the scheme and more people can benefit from it as a result. Changes were also introduced in respect of the structure of the scheme so that the families in greatest need will benefit most.

Deputy Deirdre Clune

I am glad the Department engaged in a PR exercise in order to make people aware of the scheme. That was probably needed.

Ms Bernadette Lacey

We are very conscious of that. We are examining further opportunities in this area. We hope to complete by mid-year a review into cases where it appears people have an entitlement to the supplement but where they have not claimed it. The purpose of the review is to establish why people have not claimed.

Deputy Deirdre Clune

Are the Department's activities tied in with those of Revenue?

Ms Bernadette Lacey

We are tying in to the extent that we know what people's earnings have been in recent years. In light of such information, we can identify cases where it would appear, on the surface, that certain families may have an entitlement. All of the details relating to people's incomes and their household incomes may not be available to us. In addition, we may not have complete information with regard to their family establishments.

Deputy Deirdre Clune

On the social insurance fund and the redundancy and employer insolvency scheme, REIS, it appears that only €1 million was recovered from employers in 2006, while €10 million was recovered in 2004. Is there a reason for that?

Ms Bernadette Lacey

The role of the Department in respect of redundancies relates to the collection of payments. In general, the redundancy scheme is administered by the Department of Enterprise, Trade and Employment.

Deputy Deirdre Clune

Will the Department be pursuing that money? After all, it is responsible for making up the balance of payments if a full recovery has not taken place under the REIS.

Ms Bernadette Lacey

If payments have been made, they will have issued through the social insurance fund. Thereafter, it is a matter of recovering the moneys paid out. The figures listed relate to the write-off of unrecoverable amounts. If moneys are not recoverable, we are obliged to write them off. We are not able to pursue such moneys.

Deputy Deirdre Clune

So only €1 million was recovered in 2006, while €10 million was recovered in 2004. I accept that these figures may appear small in the context of the Department's overall budget. Does that reflect the fact that those funds were non-recoverable?

Ms Bernadette Lacey

I will be obliged to communicate further with the Deputy regarding the details relating to the difference in the figures for 2004 and 2006.

Deputy Deirdre Clune

The figure for 2005 was €4 million. Perhaps the Secretary General will communicate further with the committee in respect of this matter.

Ms Lacey referred to overpayments in her initial contribution. She stated that fraud accounts for approximately 45% of the figure relating to overpayments. The other 55% comes about as a result of errors that arise either out of the type of information provided by claimants or that held by the Department. The level of fraud appears to be increasing. The figure for 2004 was 34%, for 2005 it was 39% and for 2006 it stood at 45%. However, it appears that the number of cases being referred to the Office of the Chief State Solicitor is decreasing. Is there a connection between these two developments?

Ms Bernadette Lacey

Two issues arise. From 2004 to 2005, we engaged in an extensive earnings review programme in respect of one-parent family payments. We had not previously engaged in such a review. Very high levels of fraud were identified as a result of the review.

On the referral of cases to the Office of the Chief State Solicitor, two issues arise. The first is that the actual evidence one might need to ensure a successful prosecution must be of an extremely high standard. We are obliged, therefore, to examine all of the cases - in light of the resources available - and decide which ones we wish to refer. As the Comptroller and Auditor General stated, we generally enjoy good success when cases come before the courts. We want to ensure that the cases we bring to court will be successful.

The number of cases referred increased last year and the year before. A total of 361 were referred in 2007 and 26 were referred to the Garda in order that criminal prosecutions might be pursued. The overall figure is heading back up towards 400.

Deputy Deirdre Clune

I do not know if that is a good thing or a bad thing. Are the cases which are not pursued written off?

Ms Bernadette Lacey

Overpayments are always raised in respect of such cases. Such overpayments are recoverable and it is those cases we are now pursuing. We recover whatever we can from people who are still on social welfare payments. We are now pursuing a greater number of people who are no longer claiming and who have returned to employment or to self-employment. From the middle of this year, our centralised section will have a specific focus in respect of pursuing such individuals in order to recover overpayments.

Chairman

Ms Lacey stated that 121,000 cases had migrated to the overpayment and debt management, ODM, system. What would be the average value involved in each case? With regard to the write-off of €82 million, the average value was €410. Were there any major cases involved in this regard? What were the largest individual write-offs?

Ms Bernadette Lacey

The write-offs relate to cases that arose prior to the year 2000. They would, therefore, have been seven or eight years old. The overpayments in these cases was less than €2,000.

Chairman

Was that in all cases?

Ms Bernadette Lacey

These cases were pre-2002.

Chairman

Were there any cases in which the value of the overpayment was greater than €2,000 and which were written off?

Ms Bernadette Lacey

We do not write off cases in which the value of the overpayment is greater than €2,000. We examined the amount of these overpayments, the length of time for which they had been in existence and the likelihood of recovering them. Some of these overpayments date back 20 or 30 years. That is the information to hand. I do not have the average figure but will see if I can get it for the Chairman.

Deputy Deirdre Clune

I refer to the one-parent family payment. Ms Lacey has acknowledged that work has been done to deal with payments that should not have made or should been made at a lower rate. In 2003, when the Department began examining cases, 13% of payments should not have been made, while 16% should have been made at a lower rate. Seven years ago decentralisation of structures from Sligo to local offices was on the cards to deal with this payment. Why has it take so long to complete the transfer? It should have been relatively easy to do so.

Ms Bernadette Lacey

There were a number of issues, the first of which was the capacity of local offices to take on the information. We had to ensure we freed up resources in order that they could take on these payments. The Comptroller and Auditor General mentioned the ISTS system which has helped us to improve the processing of claims such as jobseeker's allowance and free up staff in local offices to take on claims. There were also technical issues. We were tested seven years ago about how moving responsibility for processing claims would work with the customer at local level. The IT network was not resilient enough to deal with all claims because there is a degree of interaction between it and other systems. Instead of basing it in one office in Sligo, it was to be based in 58 of our offices and almost 70 branch offices.

Deputy Deirdre Clune

Was the IT facility in local offices insufficient?

Ms Bernadette Lacey

The IT network was built to support the processing of unemployment claims at local level. We have had to rebuild our entire network in recent years. We also had to negotiate with staff unions and this formed part of the agreements under social partnership in the context of modernisation and changes in work practices. That was part of the process. A number of steps had to be taken. The system used initially for payment was the very old PENLIVE system which could only have been based in one or two local offices. It was only when the ISTS system was developed to move the one-parent payment to it that we were able to move claims to local offices. There was a variety of issues. It has taken a little longer than we expected but not hugely. These matters always take a great deal of time in planning. There are always technical, business, organisational and industrial relations--

Deputy Deirdre Clune

What stage is it at?

Ms Bernadette Lacey

We moved claims to the fifth office yesterday and expect that by the end of this year the majority of claims will be dealt with in local offices. Part of the process of localising payment is that we have conducted a major data clean up of claims in Sligo before sending them. That has yielded savings but it has taken time.

Deputy Deirdre Clune

Is Ms Lacey confident the upgraded ISTS system will cater for more information and track one-parent family payments that should not be made?

Ms Bernadette Lacey

We are confident we will have systems in place to support the processing of one-parent payments at local level.

Deputy Deirdre Clune

Will that reduce the level of fraud or overpayment?

Ms Bernadette Lacey

There are two reasons behind localising payments. One is to provide better support for customers at local level in order that we can engage with them when they come in initially. The second is that we will have a better handle on control issues. Much of the work we have done in recent years on data matching and so on has allowed us to strengthen our control processes.

Deputy Deirdre Clune

The Comptroller and Auditor General has stated some HSE and Revenue staff have access to the ISTS system. How does that affect confidentiality?

Ms Bernadette Lacey

The HSE staff have access to the system because they pay supplementary welfare allowance on our behalf and are required to have access to the system.

Deputy Deirdre Clune

Do all HSE staff have access?

Ms Bernadette Lacey

No, only community welfare officers have access to the system. Revenue has access to it to monitor transmissions of money between it and the Department and overpayments of PRSI and so on. However, this is all covered by the legislation governing us, Revenue and the Data Protection Commissioner. Where we give a third party access to any of our systems, we always check with the commissioner that we have clearance to do so.

Deputy Deirdre Clune

I am concerned from a security point of view but at the same time I recognise the value of sharing information.

Chairman

In 2001 the Department spent €7.5 billion on all schemes. In 2006 the equivalent sum was €13.125 billion. With regard to overpayments and fraud, in 2001 42% of cases were checked for fraud or suspected fraud and this increased to 45% in 2006. Despite all the advances and investment in technology, is it fair to say the Department is losing the battle against fraud?

Ms Bernadette Lacey

No, the opposite might be the case, as we are getting better at identifying overpayments and fraud. Because the ISTS system is integrated, it prevents people from claiming on more than one system for all short-term schemes. In addition, because we are data matching, say, child benefit with one-parent family payments, we are also matching information from the general register of births, deaths and marriages which provides information on when people get married or die in order that we are in a better position to stop claims at the earliest date. While the level of identified fraud in regard to overpayments has increased, I would put it down more to improvements in targeting rather than us losing the battle. We are improving.

Chairman

In 2001 overpayments totalled €26 million, which figure increased to €45 million in 2006. The percentages are 42% in 2001 and 45% in 2006. The figures indicate otherwise.

Ms Bernadette Lacey

That brings us back to what I said about what we had done on one-parent family payment. The figures for 2006 followed the year in which we did very intensive earnings matching, which had not been done previously. The matching turned up extensive information on people whose earnings had exceeded the minimum threshold for full one-parent family payment or the maximum threshold for a payment. That had contributed to the increase in overpayments.

Chairman

In what year was the matching done?

Ms Bernadette Lacey

We began the programme in 2003 but it ran into 2005 and affected returns in 2006. There was a knock-on effect from the programme. We are running the earnings review on an ongoing basis in order that rather than having arrears for a number of years on which to catch up, we are catching up on them on a year-by-year basis rather than waiting for them to accumulate. We are now running the earnings review on an ongoing basis so that rather than having a number of years' arrears to catch up on, we catch up with them on an annual basis.

Chairman

The figure for prosecutions or cases referred to the Office of the Chief State Solicitor in 2006 was reduced substantially. In 2004 it was 493 and in 2006 it was down to 356. That was a substantial decrease, was it not?

Ms Bernadette Lacey

It was. Our focus with regard to prosecution cases is to identify ones where the level of fraud is serious, the amount is large and we are satisfied the evidence we have will lead to successful prosecutions. We have reviewed our processes relating to prosecutions and have come to the conclusion that approximately 400 prosecutions a year is the appropriate target. We had 361 cases we referred to the Office of the Chief State Solicitor in that year. We also had 26 criminal cases which we referred to the Garda. Therefore, we were close to the figure of 400 cases we consider appropriate. We were also concerned that the backlog of claims awaiting prosecution was growing, but we felt there was no value in putting forward huge numbers to the Chief State Solicitor's office until we were aware they could be processed within a reasonable time.

Chairman

How many of those would involve employers?

Ms Bernadette Lacey

The number involving employers is relatively small. If I remember correctly, it is approximately 26. I will confirm that for the Chairman.

Deputy Seán Fleming

I welcome the officials from the Department of Social and Family Affairs. As Oireachtas Members we find the Department one of the better ones in terms of dealing with the public because it has good systems in place. That said, there are some issues I wish to raise.

First, the processing of applications is quite slow. It seems the Department takes the view it can take as long as it likes and if the person is stuck, he or she can go to the community welfare officer. The Department does not seem to care if an application takes ten or 12 weeks because it knows the person can go elsewhere. I am concerned that with the transfer of the welfare officer's function to the Department that the safety net of a community officer from the health board staff who could make spot decisions will be gone. Will the Department have that level of flexibility to make spot decisions? It does not operate in that manner currently but takes quite some time to deal with applications. I am concerned we will lose the ability to deal urgently with people's short-term needs.

Ms Bernadette Lacey

I appreciate we have had problems in some areas with regard to claims processing. It would be wrong to give the impression we do not care. We care very much and are trying constantly to improve our processes and resourcing of areas where difficulties arise. As I said in my statement, we have endured significant increases in a number of schemes. For example, we have had to address sudden growth in carer's allowance because of the introduction of the half-rate allowance. We have put additional temporary staff into that area and the backlogs that had arisen are being reduced. The same has occurred with the family income supplement.

Deputy Seán Fleming

I understand that and that it will always take a number of weeks to process an application. My question relates to short-term need. When a person is in dire need, he or she can go to the community welfare officer and come out with a cheque that day. How will the Department deal with such people? Some people cannot wait a couple of weeks, even if their claim is being handled in a reasonable time. How will the Department handle that?

Ms Bernadette Lacey

Let me explain the process. The transfer of the service to the Department will bring the service over to us as it is.

Deputy Seán Fleming

What about the staff transferring from the Health Service Executive?

Ms Bernadette Lacey

The staff have the option to transfer to us. The service will be resourced and operated in the same way. The transfer will improve matters because there will be better integration between the two sides.

Deputy Seán Fleming

Does the social welfare appeals office come under this Vote?

Ms Bernadette Lacey

Yes it does.

Deputy Seán Fleming

What percentage of cases that have been decided by the Department's deciding officers are upheld by the social welfare appeals office?

Ms Bernadette Lacey

Not every case that is turned down goes to appeal. Of the cases that go to appeal, approximately 45% are upheld.

Deputy Seán Fleming

I see that as very severe. This means that in general the Department's officers have not made a fair decision in 50% of cases. Some of the reason for this is that the officers prefer to close a case and let a person appeal rather than take extra time to follow a case through. In the approximate 50% of cases that succeed on appeal, appeals officers regularly obtain additional information that could have been obtained by Department officials if they had taken the time to do it. It is horrifying to think that the Department has experienced officers on the ground and that half of their decisions are being overturned on appeal. They are not making fair assessments if so many of their decisions must be overturned. The Department should have a success rate of 90%. What lessons is the Department learning from cases where its decisions are being overturned?

Ms Bernadette Lacey

I must disagree with the Deputy that the numbers are very high. The numbers of cases turned down is relatively low overall. Also, the number of those cases appealed is very low. The cases that go to appeal are ones where the individual feels he or she has a specific case. If, for example, the case relates to an illness benefit, we have a second review by a different medical assessor and get further reports, if available, from the person's doctors or specialists. Sometimes the person will provide information at appeal that we were not able to access when they first applied.

Deputy Seán Fleming

That is the gist of what I am getting at. Medical issues are not an administrative decision. Most of the decisions with which I am concerned are that the application is refused because of failure to provide adequate information. That is a standard reason for refusal, perhaps because the Department did not get a bank statement it sought. However, that information appears to be available to the appeals officer. There could, perhaps, be an element of the person being more willing to provide it under pressure. Why, if the appeals officer can get the information, does the Department's officer not go the extra mile to get it before making a decision to refuse payment.

Ms Bernadette Lacey

The officer has to make a decision at the time based on the information provided.

Deputy Seán Fleming

That is the question; what is the timeframe? I think the Department wants decisions made quickly so that it can close the file. It would prefer the claimant to make an appeal rather than take the time to find information. Perhaps the Department just wants to close the files.

Ms Bernadette Lacey

It is the opposite. It is easier for us to decide a claim and put it into payment than to turn one down and have to address the appeals issue. Where an appeal is received before the appeals officer has to address it, the deciding officer gets a chance to review the additional information--

Deputy Seán Fleming

That is correct. There are 21 days for internal review first.

Ms Bernadette Lacey

-- and may overturn the previous decision. In approximately 25% of cases, it is the deciding officer who overturns his or her previous decision.

Deputy Seán Fleming

I will move on. My general point is that when a significant percentage of cases are overturned on appeal, the Department should learn a lesson from that so that there will be closer links between it and the independent appeals officer.

Ms Bernadette Lacey

We keep in touch with the chief appeals officer and follow up with him to find out the specific issues he finds with regard to decisions. We apply what we learn to our guidelines.

Deputy Seán Fleming

Ms Lacey will understand that these are the kind of issues that we come across in our constituencies every week.

On the issue of electronic funds transfer, the report states that approximately 48% of claims are paid in this manner. I understand the Department issued letters this week informing claimants that child benefit will be paid from 3 June by electronic funds transfer only.

Ms Bernadette Lacey

No.

Deputy Seán Fleming

Who have the letters gone to?

Ms Bernadette Lacey

That is a misunderstanding. It is to do with electronic information transfer at post offices, or if they choose--

Deputy Seán Fleming

What is the difference?

Ms Bernadette Lacey

The electronic funds transfer is a payment into a person's bank account. Electronic information transfer is where, rather than going to the post office with a book of payment orders, they bring their swipe card and get their payment using the card.

Deputy Seán Fleming

Is it the case that from 3 June 2008 the Department will be discontinuing all child benefit payments from the smaller post offices which are not computerised?

Ms Bernadette Lacey

No, we are not.

Deputy Seán Fleming

I ask Ms Lacey to explain.

Ms Bernadette Lacey

I can explain what is going to happen. All payments will be made by card. In the post offices which are automated, the card will be swiped and the payment will be made. In a non-electronic post office the person will sign a voucher and the signature will be matched against the card and the payment issued on that basis.

Deputy Seán Fleming

How is the payment put on the electronic system after that?

Ms Bernadette Lacey

The payment is made in cash and the vouchers will be returned as they are currently.

Deputy Seán Fleming

People will have a card instead of a book.

Ms Bernadette Lacey

They will have a card.

Deputy Seán Fleming

They can still go to the manual, non-computerised post office.

Ms Bernadette Lacey

They can go to their manual post office, they will sign a voucher and that will be returned to head office.

Deputy Seán Fleming

My only comment is that all the people who received those letters this week would have been given the impression that payment would be by card only and one would not be able to go to the local post office. People had that impression from the letter they received. I am delighted the Secretary General is able to clarify this.

Ms Bernadette Lacey

I am surprised they thought that. We very clearly stated that they could go to their local post office and that the postmasters and postmistresses are all on board with this system and are very willing to help people.

Deputy Seán Fleming

The reference in the first sentence of the letter was to electronic payment and people were aware that their post office was not automated. This is the reason they thought a post office that was not automated would not be able to handle an electronic payment. The Secretary General can understand how people were a little upset by that letter received this week. I am happy she has clarified the situation.

I wish to raise a few other points. Is the early child care supplement payment handled on an agency basis? Does this come from the Vote of the Department of Health and Children?

Ms Bernadette Lacey

Yes it does. We pay it out and they reimburse us for the cost.

Deputy Seán Fleming

The appropriations-in-aid section of the Vote shows a figure of €1.9 million, receipts under liability to maintain family provisions. I ask the Secretary General to explain this. What kind of fee does the Department receive?

Ms Bernadette Lacey

The Department is reimbursed for the cost of the payment.

Deputy Seán Fleming

So that is the item to which I have just referred?

Ms Bernadette Lacey

Yes.

Deputy Seán Fleming

I read that figure and I did not know what it meant so I took a guess.

Ms Bernadette Lacey

We pay it out and they reimburse us for it.

Deputy Seán Fleming

In light of the publicity regarding other organisations I note that the Department must have the largest collection in the country of files containing citizens' details. Is it necessary for any of the Department's laptops or discs to be sent out of the country as part of an upgrade of systems?

Ms Bernadette Lacey

We certainly do not send discs out of the country. We generally do not allow laptops to have access to people's confidential information. Some officers would have a laptop--

Deputy Seán Fleming

The community welfare officers could have laptops with people's social welfare details on them.

Ms Bernadette Lacey

They cannot download information on people into their laptops.

Deputy Seán Fleming

They can view it on screen.

Ms Bernadette Lacey

They do so locally at their offices.

Deputy Seán Fleming

Is the Secretary General satisfied that the Department does not have that problem?

Ms Bernadette Lacey

We constantly review our security systems and we have encryption for files and so on. We are checking down to every last area.

Deputy Seán Fleming

My next question relates to the issue of potential losses resulting from payment by electronic fund transfer. The child benefit section of the report states that the Department makes monthly lodgment payments to the bank or building society specified by the claimant. Are any of those payments made to banks outside the State?

Ms Bernadette Lacey

No. They are all made to local banks.

Deputy Seán Fleming

So, under this mechanism they cannot be paid to a bank outside the jurisdiction.

Ms Bernadette Lacey

No, but the payment can be accessed.

Deputy Seán Fleming

I know one can use an ATM card in any country in the world.

Ms Bernadette Lacey

Yes.

Deputy Seán Fleming

It must be an account opened in a branch in Ireland.

Ms Bernadette Lacey

We make a payment to a small group of volunteer development workers but they are the only ones. All the major schemes are paid into bank accounts.

Deputy Seán Fleming

I will ask the Secretary General to give the committee an explanatory note on the procedures the Department has in place for making some of these electronic funds transfer payments to bank accounts that are not in bank branches in this State.

Ms Bernadette Lacey

Is the Deputy referring to schemes in general or in total?

Deputy Seán Fleming

In total from the Department. I suspect the Department would have no legislative basis for tracing money if it is paid into an account which is not in the State. I just ask for a note with this information on payments to bank accounts.

Ms Bernadette Lacey

The Department also makes payments to pensioners living abroad.

Deputy Seán Fleming

Does this same regime not apply to child benefit?

Ms Bernadette Lacey

My understanding is that our child benefit cases are all paid locally but I will check that for the committee.

Deputy Seán Fleming

Does the Secretary General appreciate the point I am making?

Ms Bernadette Lacey

Yes, I appreciate it.

Deputy Seán Fleming

It seems the Department's systems allow it in some cases. I would be happy to have some information on this matter.

Chairman

On that point, a condition of the payment of child benefit is that the claimant should be resident in the country. The fraud and error survey carried out by the Department in 2004 showed a randomly selected sample of 500 Irish nationals and 500 foreign nationals. The figures showed a level of fraud of 2.6% among Irish nationals and 14.4% among foreign nationals. Has a survey for 2007 been carried out and if so, what type of survey?

Ms Bernadette Lacey

We have not conducted a follow-up survey but as and from late last year we have introduced a process whereby people whose children are resident abroad will be required to certify on a three-monthly basis that they themselves are still resident in this country.

Chairman

Would that not be easy enough to do?

Ms Bernadette Lacey

Their entitlement is based on their residency in this country and the fact they are working here. If they are not in a position to certify this, we can stop the payment. We have already stopped some payments where claimants have not responded in time.

Chairman

I noted recent headlines in newspapers such as "Crackdown after immigrants claim €90 million in child benefits", "Tighter controls on child benefits for EU nationals", but the Secretary General is saying there is no current survey being carried out.

Ms Bernadette Lacey

There are ongoing contacts with various claimants in different ways but we have not carried out a fraud and error survey.

Chairman

Surely this should have been carried out if there are concerns. The figures are available for 2004 but there are no figures for 2007.

Ms Bernadette Lacey

No. We have not carried out a follow-up survey.

Chairman

Should the Department not have done so, in the Secretary General's opinion?

Ms Bernadette Lacey

The fraud and error survey is carried out to establish the level of error that exists. We then looked at each of the schemes to see what were the various risk factors. We are building in the type of controls most appropriate to each of the schemes that have a risk factor.

Chairman

With regard to the early child care supplement scheme introduced recently, I presume the Department invested large sums of money in software and electronic systems. What was the cost of introducing the software and administrative back-up for the scheme? Was any cost analysis carried out of this new scheme compared with just topping up the child benefit payment? I am not straying into the area of policy.

Ms Bernadette Lacey

We did not carry out any analysis on the topping-up of the child care benefit scheme because we were asked to administer the early child care supplement scheme. Once the policy decision was made, we were asked to implement it and this is the direction we took.

Chairman

There is no analysis of this scheme.

Ms Bernadette Lacey

It would not be something we would undertake. The policy given to us was a policy to pay the early child care supplement. The policy came from a different Department and because we already had a child benefit system--

Chairman

Where did it come from?

Ms Bernadette Lacey

The office of the Minister of State with responsibility for children is responsible for the policy on early child care supplement. The Department of Finance was also involved in the development of that policy. At that stage we were asked to provide a payment service for the early child care supplement because we already had the child benefit supplement. We were also in the process of building our service delivery modernisation system. What we did was to restructure the programme we were doing at that stage to deliver early child care payments. It cost approximately €2 million.

Chairman

What about the payments in 2007 under the scheme?

Ms Bernadette Lacey

Is the Chairman asking about the cost of it?

Chairman

No, the payments.

Ms Bernadette Lacey

I have not got them here.

Chairman

Does anyone have them?

Ms Bernadette Lacey

I will get them for the Chairman.

Deputy Seán Fleming

I want to move on to the social insurance fund. As I said earlier in my comments, the onus is on the person claiming a payment from the State to prove entitlement to it. I accept the Department is right not to make a payment without information. I am not criticising the Department for that. Sometimes the procedure to reach a decision causes an issue.

Regarding the social insurance fund, as per page 7 of the accounts, the Department paid out €56 million on the free telephone allowance scheme. Is there a breakdown of that?

Ms Bernadette Lacey

What does this relate to?

Deputy Seán Fleming

I am asking about the €56 million on the free telephone allowance scheme. Is there a breakdown of that showing how much the Department paid to Eircom, Vodafone, O2 and Meteor? To whom does the Department pay that?

Ms Bernadette Lacey

We pay it at the behest of the recipients.

Deputy Seán Fleming

This is done on the basis that they provide information regarding a phone.

Ms Bernadette Lacey

Yes.

Deputy Seán Fleming

The Department must know how much of that €56 million relates to mobile phones, landlines, etc., as it could not process the payment without knowing the phone number in respect of which it is making the payment.

Ms Bernadette Lacey

We have such information, but I have not got it with me.

Deputy Seán Fleming

Can Ms Lacey forward it to me?

Ms Bernadette Lacey

I can indeed.

Deputy Seán Fleming

Does the Department cover the full range of mobile phones?

Ms Bernadette Lacey

The scheme for mobile phones was introduced only in 2006, so it would not have appeared in this account. I can give the Deputy up-to-date figures. There are 9,000 people getting mobile phone allowances at the moment.

Deputy Seán Fleming

Are those people allowed to qualify on the basis of the ready-to-go top-up phones?

Ms Bernadette Lacey

Yes, when they are using ready-to-go top-up phones, we pay them a direct allowance rather than pay the company because we are not in a position to pay the company.

Deputy Seán Fleming

How does the Department know they have the phone?

Ms Bernadette Lacey

It is like anything else. This was an option brought in to allow customers to use a mobile phone.

Deputy Seán Fleming

Does the Department do any verification or does it just pay it out?

Ms Bernadette Lacey

There is no way we could verify.

Deputy Seán Fleming

It is too small an amount to verify.

Ms Bernadette Lacey

It is too small an amount and people can change their phones regularly.

Deputy Seán Fleming

Do all the Department's customers who are entitled to this allowance get that payment, if that is the general approach?

Ms Bernadette Lacey

The reason the mobile phone allowance was brought in was that it was noticed that a substantial number of people who would appear to qualify for telephone allowance did not take it up because they did not have a landline in their name.

Deputy Seán Fleming

There might not have been one in their houses either.

Ms Bernadette Lacey

That is the thing. To ensure there was full coverage it was extended to mobile phones.

Deputy Seán Fleming

It is a great scheme. We had been calling for it. I was just looking for details on it.

Ms Bernadette Lacey

There are almost 10,000 people. I believe it is 9,800.

Deputy Seán Fleming

I am surprised at the slow take-up regarding the overall scheme.

Ms Bernadette Lacey

That is where it is.

Deputy Seán Fleming

The Comptroller and Auditor General already said that the amount of the social insurance fund at the end of the year was €3.076 billion. I believe I need to direct this question to the Department of Finance officials. What was the rate of return on that fund for the year?

Mr. Fred Foster

I do not know if I have that information available. I know it is managed by the National Treasury Management Agency under guidelines agreed with the Minister for Finance. The risk profile is minimised, so it would not be in high-risk high yielding instruments. They distribute the fund according to proportions. There are A, B and C parts. The A part has approximately €200 million in it. The C part has more long-term investments of approximately €1 billion. Then there is medium term residual in B.

Chairman

I will ask Mr. Purcell to come in on that one. I also ask him to comment on the failure to have a survey on the level of fraud since 2004.

Ms Bernadette Lacey

May I come in on that? We have a rolling programme of fraud and error surveys which we have implemented since then. In 2004 we did two fraud and error surveys, one on child benefit and the other on family income supplement. In 2005 we did one on the disability allowance scheme. In 2006 we did two surveys, one on the personal public service number allocation process and one on illness benefit. In 2007 surveys commenced on the non-contributory State pension and the one-parent family cases that are administered through the local offices. We have a rolling programme. We are trying to focus on the larger schemes and to repeat where the risk is higher.

Mr. John Purcell

I might make a quick comment on the fraud and error survey. The Secretary General may be right that after a five-year period it is quite useful to carry out a new fraud and error survey to ascertain how effectively the control mechanisms that have been put in place have worked. It is important to renew them at least on a five-year basis.

I might be able to help Deputy Fleming. Of the €3 billion in the social insurance fund at the end of 2006, €2.7 billion was with the National Treasury Management Agency. That was made up of almost €1 billion in bonds and €1.7 billion in commercial short-term deposits with Irish and foreign banks. The balance of approximately €360 million was on deposit with the Central Bank.

Deputy Seán Fleming

I appreciate that and I see it in the account. I would like one of the witnesses to come back to me on this in writing. I am not a bit happy with that. The accounts show that the receipts from the investment came to €53 million on an investment fund of €3 billion at the end of the year, which represents a return of less than 2%. It would have been possible to get more than that in the local post office or credit union. That fund had an investment return, based on the accounts before us, of less than 2%. I consider that a wholly unsatisfactory rate of return. It is considerably worse than that. The €3 billion in the accounts is the original cost of the money given to the NTMA over a period of years. If a value is put on the fund at the end of the year, one would hope it is dramatically more than the €3 billion, the original historical cost of the investment. To come out at the end of the year with just €50 million is hopeless. I know some bonds have been issued. We will quiz the NTMA in due course on that matter. However, the primary responsibility is on the Department to ensure it is getting a proper return on that fund. I do not see it on the accounts before me.

Chairman

I ask Mr. Purcell to come in at this point.

Mr. John Purcell

I am sure the Department of Finance official could elaborate on the history. We raised this point some years ago. For many years and up to relatively recently, moneys in the social insurance fund were regarded as Exchequer moneys and the moneys were used to fund Government expenditure generally by ways of what were called ways and means advances. At one stage there was no interest paid on those advances. The fungibility of the funds in the social insurance fund for years was demonstrated some four or five years ago when there was a raid on the social insurance fund by the Exchequer of, I believe, several hundred million euro. That may have stemmed from a time when there was an annual deficiency in the fund and the deficiency has to be met in law from moneys voted to social welfare. The character of the fund has changed in recent years because it has surpluses. Previously there was always a deficit in it that needed to be met by the social welfare Vote. That demonstrates the change in the character and gives some context to the Deputy's comments.

On a specific matter and something that may need to be considered in the changing nature of the investment account, the committee will note that while it is compiled on a cash basis, there was interest accrued of €34 million at the end of the year, so it would not have been quite as bad.

Deputy Seán Fleming

It would have been balanced by the previous year.

Mr. John Purcell

It would have been balanced, but the interest would have been a lower amount. While it would be a relatively small factor, it should be taken into account.

Deputy Seán Fleming

I understand.

Mr. Fred Foster

I understand there is also an accrued dividend issue. When one purchases a bond, there is an accrued dividend which has to be balanced. There is a timing issue. One does not actually see the interest. That is the way it is presented.

Deputy Seán Fleming

I see the dividend. Taking all of that into account, it probably brings the return up to 3%. I still do not think it is a good return. Even if one adds everything in, it brings the figure from 2% to 3%. I would like more detail.

Mr. Fred Foster

We can certainly respond to the Deputy.

Deputy Seán Fleming

I would like to raise two minor points about the account. If the Department has a surplus of €650 million this year and €3 billion in the bank, why is it paying interest on a bank overdraft of €14 million? There is no conceivable reason it should need to pay interest on a bank overdraft. Perhaps some of it is offset. Why does it have a bank overdraft at a time when it has €3 billion in cash? If Ms Lacey wants to come back to me on that issue, it is okay. I am sure she understands why the overdraft facility jumped out at me.

The final point I want to make relates to the redundancy fund. I notice that less than 9% of the employers' default payments of €10 million was recovered last year. The recovery rate the previous year was 40%. I am sure Ms Lacey will say another Department is responsible. There has been a big change in the account. Are payments made from it to Irish employers who have decided to replace Irish-based workers with workers who are registered with foreign employers? I always understood the redundancy fund was used when the job was gone. Can it be used when Irish employees are replaced by lower paid workers who are registered with foreign employers as part of a restructuring or cost cutting exercise?

Ms Bernadette Lacey

That is a matter for the Department of Enterprise, Trade and Employment. We process the funds through to that Department. We do not have any involvement in drawing up the policies in relation to it.

Deputy Seán Fleming

I will have to ask that question at a later stage. I felt it was a reasonable question because the figure appears in the accounts of the Department of Social and Family Affairs.

Ms Bernadette Lacey

This difficulty has been raised in previous years also. It is awkward for me, if I can put it like that. I do not have any role in this regard other than in ensuring the correct amounts are passed through to the Department of Enterprise, Trade and Employment.

Chairman

I was at a meeting in Cork last Monday night organised by SIPTU. There were approximately 300 people at the meeting which concerned agency workers and agencies. Serious allegations were made that agencies were failing to pay basic contributions for workers. It was claimed that there was hard evidence of massive exploitation in the sector. Has the Department of Social and Family Affairs investigated the activities of agencies which seem to have mushroomed in recent years?

Ms Bernadette Lacey

Questions about the insurability of employment have been raised from time to time. Our scope section is responsible for examining such matters. The issue of whether agency workers are employed or self-employed, or fall under some other arrangement, comes up from time to time. The Department's special investigations unit, the Revenue Commissioners and the National Employment Rights Agency are taking a joint approach to the examination of the roles of various employers. The rights of people in vulnerable employment are being examined. We have extended the employer review system, on which we traditionally worked with the Revenue Commissioners, to consider how these issues should be addressed within the broader context.

Chairman

Will the Department furnish the committee with a report on the scope, number and depth of its investigations in 2006, 2007 and to date in 2008?

Ms Bernadette Lacey

Yes.

Chairman

There seems to be massive exploitation of very vulnerable workers by agencies.

Ms Bernadette Lacey

I will follow up that matter. It is not always clear whether a worker is employed or self-employed. That is always a specific issue to be addressed. We are doing this in conjunction with the Revenue Commissioners and the National Employment Rights Agency.

Chairman

Perhaps the Comptroller and Auditor General would like to respond to one of the issues raised by Deputy Fleming.

Mr. John Purcell

The Deputy spoke about redundancy and insolvency. The Office of the Comptroller and Auditor General has asked the Department of Enterprise, Trade and Employment about the effort it is making to recover what is admittedly often a very difficult debt. Insolvency involves a company going out of business. In many cases, such companies do not pay their element of the redundancy contribution because they are in trouble. One would expect a low return from that side. I have advised the Department to look at this debt. It is not realistic to allow it - accounts show there is a recoverable debt of €78 million - to grow. I am anxious to certify realistic accounts. My office has recommended that the Department should analyse the debt and make a submission to the Department of Finance for permission to write it down and have a realistic amount included.

I identify with the problem mentioned by the Accounting Officer for the Department of Social and Family Affairs. Sometimes, this element of the fund is the last piece of the jigsaw. Up to ten years ago there was a redundancy fund which was signed by the Secretary General of the Department of Enterprise, Trade and Employment or whatever it was called at the time. Legislation was then introduced to make the fund part of the social insurance fund. One of the unfortunate consequences for the Accounting Officer was that he or she had to carry the can for it. This is the second time questions of this nature have arisen when the committee has been considering the social insurance fund. It might be no harm if the committee were to ensure a senior official from the other Department was present when the social insurance fund was being considered. Perhaps the clerk to the committee might take that suggestion on board. The senior official could answer members' questions, etc. That may be the lesson to be learned from this debate.

Deputy Seán Fleming

That is a good idea.

Deputy Róisín Shortall

I welcome the Secretary General of the Department of Social and Family Affairs, Ms Lacey, and her colleagues and would like to ask a number of questions. The changeover from book payments to swipe cards for social welfare recipients has been mentioned. I am particularly interested in what will happen when a social welfare recipient is unable to go to a post office to collect his or her money. At present, social welfare recipients are able to nominate somebody to collect the payment in such circumstances. They do this with a slip in the book. What arrangements will be in place to facilitate such collections when the swipe card system is in operation?

Ms Bernadette Lacey

Three arrangements are to be put in place, the first of which will cover those who normally collect their own payments but are too ill to do so in a given week. Such persons will be able to nominate somebody to collect their money. The nominated person will bring identification with them to the post office before signing a statement saying they have been authorised to perform the collection. That arrangement will suffice for one or two weeks.

Deputy Róisín Shortall

The person collecting the money will sign a statement.

Ms Bernadette Lacey

Yes. Such persons will confirm that they have been authorised by the social welfare recipient to collect his or her payment for that particular week.

Deputy Róisín Shortall

Will the recipient have a role in this arrangement?

Ms Bernadette Lacey

The recipient will still have the card. He or she will get the money through the nominated person in the case of a once-off arrangement. That is what happens currently. If one cannot bring one's book to the post office, one can ask one's neighbour to collect one's money. We will implement a similar approach. If the social welfare recipient is unable to collect his or her money for a short period, the recipient and the person nominated to collect the money will be required to sign a statement of authorisation which will be returned to the Department and copied to the post office.

Deputy Róisín Shortall

In practice, the recipient will have to ask someone else to pick up his or her money from the post office and bring it back, and the form will have to be signed and submitted.

Ms Bernadette Lacey

That will happen if the social welfare payment needs to be collected by a third party on an ongoing basis, perhaps for a couple of months. If somebody is permanently incapable of collecting the payment, he or she will nominate somebody to do so, as is done currently, and that person's name will also appear on the payment voucher. The recipient will still get the money in the same way and there will not be any break in the process.

Deputy Róisín Shortall

I am slightly concerned about security in short-term cases. For example, a person may claim on behalf of a recipient that he or she is sick and have access to the swipe card. Is Ms Lacey satisfied the system is secure from the point of view that it will not be possible to exert undue pressure on recipients?

Ms Bernadette Lacey

It will mirror exactly the situation where somebody gives a neighbour a book to collect the payment because he or she is sick. The alternative is not to make the payment, which the Department would not want to do. The payment would be made once or for two weeks at most. If it goes beyond that, we will need a statement verifying that the person has been authorised by the recipient to collect the payment on an ongoing basis and until such time as the recipient tells us that he or she wants to stop that arrangement.

Deputy Róisín Shortall

This issue has been flagged by postmasters and postmistresses who are concerned that family members of recipients may take advantage.

Ms Bernadette Lacey

We had extensive discussions with An Post and the postmasters' union about this issue. From our discussions, they are satisfied with the procedures we are putting in place to ensure--

Deputy Róisín Shortall

This measure should be kept under review for the first six months.

I will move on to the social insurance fund. We know from the actuarial review that the fund is due to go into deficit in about eight years. There are two political issues relating to the fund, namely, the pre-election promises to increase pensions to €300 per week and reduce the rate of PRSI by 1%. While I accept that both promises are political initiatives, what analysis has the Department made of the impact of these Government proposals on the social insurance fund? If the two promises were honoured, would the fund be likely to go into deficit?

Ms Bernadette Lacey

As the Deputy says, both issues are policy matters and I am not in a position to discuss them.

Deputy Róisín Shortall

I am not asking Ms Lacey to comment on them but to state what analysis the Department has made of their impact.

Ms Bernadette Lacey

What we are looking at is not just their impact. As the Deputy knows, we are engaged in the Green Paper consultation process. We are looking at all aspects relating to pensions and different scenarios as to how one might fund this for the future and when the various arrangements would hit. The combination of the rate at which the payment was increased and the period when the PRSI rate would be reduced would have an impact on when the two would fall.

Deputy Róisín Shortall

The PRSI reduction was a pre-election promise. If it was introduced during the lifetime of the Government, as people have a right to expect, and the promised pension increases were made, at what point would the social insurance fund go into deficit?

Ms Bernadette Lacey

The reduction from 4% to 2%, as well as the self-employment reduction, would have an impact of the order of €685 million per annum on the fund.

Deputy Róisín Shortall

What would be the impact in terms of the solvency of the fund?

Ms Bernadette Lacey

I do not have the figure for the increase in pensions.

Deputy Róisín Shortall

Perhaps the Secretary General will get it.

I will move on to rent supplement, an extremely costly scheme. I am interested to note that the Minister referred to it as a short-term measure earlier this week. It is hard to consider it as such when more than 50% of those in receipt of rent supplement receive the payment for more than 18 months. Does the Secretary General agree that the systems the Department had in place in recent years for collecting data in respect of rent supplement and relaying this information to Revenue left a great deal to be desired?

Ms Bernadette Lacey

Up until the Finance Act changed the position in 2007, the Department was giving Revenue the information it requested from us in the format required. The issue of PPS numbers which came up as a result of the Finance Act raised legal and operational issues for us. We are engaging with Revenue to see how we can best identify the PPS numbers of landlords, which is the key, and transmit this information to it, as required.

Deputy Róisín Shortall

I note the statement that while the 2007 Finance Act requires the Department to request the PPS number, it does not place an obligation on it to withhold payment until the information is received.

Ms Bernadette Lacey

Correct.

Deputy Róisín Shortall

This appears to be a loophole in the legislation. What is the current practice? Will the Secretary General provide an overview of how the Department finds the 2007 legislation? In approximate terms, what percentage of PPS numbers is it managing to capture?

Ms Bernadette Lacey

We have not actually sought the PPS numbers as yet because we are discussing the matter with Revenue for the reason that legal issues arise in this regard. We cannot ask the tenant, our customer, to seek the landlord's PPS number under social welfare legislation regarding access to PPS numbers. We have been discussing with Revenue what additional information we can obtain. We also have to change our computer systems to store the information in order that we can transmit it to Revenue. We are in the process of doing this. What we are looking at is how we can contact landlords in a way that would yield these numbers. It is not a straightforward issue for us. It is extremely difficult to implement this measure.

Deputy Róisín Shortall

Under the rental accommodation scheme, payment is made directly to the landlord. In theory at any rate the Department is supposed to have details such as name, address and PPS number. It appears that more than three quarters of tenants in receipt of rent supplement have the payment made directly to them. I understand 13,000 landlords have the payment made directly to them or their agents. There appears, therefore, to be considerable scope for fraud.

Given that the rental accommodation scheme operates on the basis of making the payment directly to the landlord, would it not be a good idea for the Department to move to a similar system? When I raised this matter with the Minister earlier in the week, he stated the role of the Department was to provide income, housing support and so forth for its clients and that it did not have any role in tax collection. However, given that almost €420 million of taxpayers' money is expended on rent supplement, is there not a serious obligation on the Department to ensure this money is paid to people Revenue can identify in order that it can capture these payments in terms of the tax due on them? Does the Secretary General accept that the Department has a role in ensuring landlords are tax compliant in that regard?

Ms Bernadette Lacey

Our primary role and concern is to ensure the customers who come to us can access accommodation. As the Deputy is probably aware, many of them have difficulty in getting landlords to accept supplementary welfare rental allowance. Any additional barrier or implication which would make it more difficult for them to get accommodation would be a concern for us. We differ from the rental accommodation scheme in that the latter is an ongoing permanent arrangement with the local authority to house the individual, whereas the Department's scheme is intended to be short-term.

Deputy Róisín Shortall

It is not short-term.

Ms Bernadette Lacey

I appreciate that during the years it has grown into a long-term scheme, partly because it was difficult for recipients to get onto the housing lists. That matter is being addressed by the RAS. Our intention is that ultimately the scheme should come back to being short-term again. I agree with the Deputy that it is in our interest to ensure that where taxes are due to the State, we give whatever support we can. As I indicated, we are supplying Revenue with the names, addresses and telephone numbers of landlords. A total of 20% of all landlords are paid through letting agencies. Revenue is pursuing them. They are easily identifiable and Revenue has the power to require the letting agency to provide it with full information on the owner.

Regarding the other 80%, I am aware that when the Comptroller and Auditor General examined the issue originally, only 40% of cases had been matched but Revenue has followed up on that so that two thirds of the 80% have now been matched. That is part of what we are trying to do. We will continue to try to pursue landlords for PPS numbers. Probably the most we will be able to do in that situation is write to the landlord after the event, that is, after having provided a rent supplement to a tenant.

What we have to take into account is that many of the people who come to us are very mobile. There are 60,000 people on the scheme but there were 97,000 different tenancies last year. That means people are in and out of the scheme quite a bit, or even if they are on the scheme, that they are moving around quite a bit. If we had to stop the payment and start the new process every time that would cause a huge volume of work for us.

Deputy Róisín Shortall

Given the scale of public money involved, surely it is not adequate to say the Department will try to pursue the landlords. The same kind of attitude was apparent when Revenue was before the committee. It said it would try to pursue this issue but there was no system in place. If we had a system whereby the rent supplement was paid directly to the landlord it would get around that problem. We could make the payment contingent on the landlord making the PPS number available.

Another factor comes into play when one pays directly to the tenant. I refer to a scam in operation where landlords say the rent is, for example, €1,200 per month and they get a certain percentage from the Department and a smaller percentage from the tenant but a third percentage is demanded over and above what they declare the rent to be. That is the illegal top-up that increasing numbers of tenants are being asked to pay to landlords. An entirely illegal situation arises where the declaration is made in respect of the rent being €1,200 per month, for example, but the actual rent the landlord is getting and demanding from the tenant is in excess of that; it could be €1,300 or €1,400 per month. The approach I suggest would eliminate that illegal practice also.

Ms Bernadette Lacey

I do not see how it would work because even if we pay the landlord, he or she could still demand the top-up from the tenant.

Deputy Róisín Shortall

The Department or the HSE, on behalf of the Department, would deal directly with the landlord. The system is at arms length at the moment and it is at double arms length if an agent is involved. Currently, the system is wide open to abuse.

Ms Bernadette Lacey

The position is that a person looks for his or her own accommodation. The Department does not have that sort of--

Deputy Róisín Shortall

I know how the system works but does Ms Lacey agree that it is not satisfactory?

Ms Bernadette Lacey

I agree that there is an issue about landlords not making full tax returns but I am not sure that imposing certain obligations on the system, including let us say paying the landlord directly rather than the individual, would resolve this issue. In fact, it could make difficulties for people looking for accommodation.

Deputy Róisín Shortall

Does the Secretary General have any other proposals to close those loopholes?

Ms Bernadette Lacey

No. I do not necessarily see that as being the case. We are working with Revenue to see what additional information it can give us. The Private Residential Tenancies Board, PRTB, has access to landlord information also. We are examining the options to maximise identification between the three agencies.

Chairman

Does the Department have any contact with the PRTB to check whether, if the Department is paying an individual, who is often very vulnerable, the accommodation is legally registered or if it is in a totally illegal and slum-like condition?

Ms Bernadette Lacey

We provide the information to the PRTB on all of the applications we receive on a monthly basis. We tell the PRTB the tenancies that have been set up so that it is in a position then to pursue the landlord to ensure registration.

Chairman

Have there been any checks to see whether it follows this up?

Ms Bernadette Lacey

We do not follow up with the PRTB.

Deputy Róisín Shortall

I agree there should be a system in place if the State or an agent of the State is making significant payments. Surely there is a right to demand that landlords comply with their other legal requirements in terms of registration with the PRTB.

Ms Bernadette Lacey

We tell the PRTB and it is its responsibility to pursue landlords to ensure they register with it. We give the PRTB the information and it follows up to ensure the landlord has registered the tenancy. There are three separate areas. We are trying to work our way through legal issues to see how we can pull the three areas together.

Deputy Róisín Shortall

I tabled an amendment to the Social Welfare and Pensions Bill requiring tenancies to be registered with the PRTB for rent supplement to be paid but the Minister rejected the amendment.

In regard to the payment of rent supplement to non-resident landlords, it seems extraordinary that no system is in place to capture that information and that tenants are being asked to withhold 20% tax. When we raised this issue with Revenue, the reply was that the amount of money involved was small. That is not the issue. There is an important principle at stake. If there is a cohort of non-resident landlords receiving public money there should be a system in place to ensure that the proper rates of tax are paid on that income. Surely the onus should be on the Department to withhold 20% of those rent supplement payments rather than trying to put the onus on the tenant.

Ms Bernadette Lacey

I accept the Deputy's point but, again, it raises issues. For example, if a person gets accommodation for €1,000 per month and we pay €700 because we have withheld €300, there is a difficulty for the individual. There are 900 non-resident landlords for whom rent supplement is being paid. We only pay 150 of them directly. I understand Revenue is looking at the obligations of tenants to notify them about non-resident landlords. We will work with them to try to address the issue. If we were to oblige to withhold tax it would require a further development of computer systems to run a tax system on our schemes. This is not something we have in place to date.

Deputy Róisín Shortall

Why does the Department not have it?

Ms Bernadette Lacey

We have not required it to date.

Deputy Róisín Shortall

The phenomenon of non-resident landlords is not a new one.

Ms Bernadette Lacey

There are only 150 cases in which we are involved.

Deputy Róisín Shortall

One still needs a system to deal with that.

Ms Bernadette Lacey

We referred earlier to the issue of where our main responsibilities lie and what kind of resources we devote to particular areas. Developing a taxation system alongside the rent supplement scheme is a major cost that would not be justified by 150 cases of non-resident landlords. I understand Revenue is looking at this whole area.

Deputy Róisín Shortall

The backdrop to this issue relates to the view of the Comptroller and Auditor General that the approach to the taxation of rental income is haphazard and ineffective. That seems to be the impression I am getting from both Revenue and from the Department of Social and Family Affairs. If we get to a point, which I hope we will shortly, where the net closes in on resident landlords, one can be sure there will be a significant switch to non-resident landlords. In those circumstances, one would need to have a system in place to capture the tax due.

Ms Bernadette Lacey

We would address it at that stage.

Deputy Róisín Shortall

It would be a bit late. We should try to be one step ahead of them.

Deputy John Curran

I apologise for missing the first part of the meeting. I also apologise if some of my questions are repeat ones.

Chairman

We will tell the Deputy fairly quickly.

Deputy John Curran

I wish to continue on from the previous line of questions regarding rent allowance. Ms Lacey indicated there are approximately 97,000 tenancies at the moment, representing 60,000 people.

Ms Bernadette Lacey

There are approximately 60,000 tenancies currently but during last year there were approximately 97,000 different tenancies.

Deputy John Curran

Of the 60,000 tenancies, what proportion of payments is made directly to the landlord?

Ms Bernadette Lacey

Thirteen thousand payments are made directly to the landlord. Five thousand are made to a nominated person, an agent of the customer, and the balance, 42,000, are made--

Deputy John Curran

Why do the schemes differ?

Ms Bernadette Lacey

The payment is a payment to the customer from the Department. The customer can choose, for whatever reason, to pay it directly to the landlord or to an agent. The landlord might demand that the payment be made directly. It often happens that people are a bit chaotic in their financial management and thus, rather than make the payment, they would have it paid directly to the landlord or to a third person so they would at least ensure they would maintain a roof over their heads.

Deputy John Curran

I do not necessarily want to be seen to take the side of landlord. It was stated that landlords frequently do not want to take tenants who are in receipt of rent allowance. The main reason for this is that if the cheque is made payable to the tenant and the tenant withholds it, the landlord has no further recourse. However, if the cheques were made payable directly to the landlord, the landlord would have more comfort and the attitude might be somewhat different. As a public representative, I encounter cases frequently in which a prospective tenant states a landlord will not accept him because the cheque is not being made payable to that landlord. We need a better and more coherent policy on this.

It was said that the Department's function is primarily to provide rent support to the tenant, but that is not good enough. Given the amount of money in the private rented accommodation market, the Department is a very large player and it cannot divorce itself from that reality. The number of tenancies in any given year is very significant, as are the hundreds of millions of euro that change hands.

Ms Lacey said the Finance Act 2007 requires the Department to start looking for PPS numbers. How many requests were there from the Revenue Commissioners for information in this regard in 2006?

Ms Bernadette Lacey

For PPS numbers?

Deputy John Curran

Yes.

Ms Bernadette Lacey

We would not have had any. We had an arrangement with the Revenue Commissioners whereby we would, at the end of every year, supply the address of the tenancy, the name, address and telephone number of the landlord, and the amount paid over.

Deputy John Curran

Two thirds of the money the Department paid out went to the tenant. What checks were carried out to ensure the tenants were living where they claimed and whether they were giving the money to their landlords?

Ms Bernadette Lacey

There would be a number of checks. The community welfare officers would, from time to time, check to determine whether the tenant was at the given address. In general, if we paid an individual and he or she did not pay the landlord, either he or she would lose the accommodation or the landlord would contact the community welfare office. Where we were aware of this happening, we stopped the payment.

Deputy John Curran

What would happen to the tenant if he or she re-applied subsequently?

Ms Bernadette Lacey

We would examine his or her requirements on an ongoing basis. It is almost a scheme of last resort to keep people off the street. If tenants need accommodation and fulfil all the requirements of the scheme, we would have to pay them.

Deputy John Curran

In light of the Finance Act 2007, I am conscious of the requirement concerning the PPS number, of Ms Lacey's statement that legal issues arose and of the fact that the Department has not started collecting PPSN details to date. The Department seems to be doing only what the letter of the law requires and there is nothing preventing it from ensuring that every tenancy for which it makes a payment is registered with the Private Residential Tenancies Board. Community welfare officers impose other regulations in respect of the amount of money payable, and so on in different areas.

It is alarming that the Department is quite well prepared to pay the money without taking responsibility or examining the overall policy, which is to have a regulated market. The Department is not acting in the spirit of what we are trying to achieve, in spite of acting to the letter of the law. What checks is the Department carrying out to ensure all the tenancies are registered with the Private Residential Tenancies Board? If they were carried out, the arrangement between the Revenue Commissioners, the Department and the board would not be as fragmented as it is at present. Nobody is taking full responsibility in spite of the significance of the private rented accommodation market.

Ms Bernadette Lacey

When somebody sets up a tenancy, he or she has a month in which to register it. We must put the payment into position straight away.

Deputy John Curran

Correct.

Ms Bernadette Lacey

At the end of each month, we give the Private Residential Tenancies Board a list of all the tenancies.

Deputy John Curran

I accept that but the point I am making is that the Department is passing the buck.

Ms Bernadette Lacey

That is the role of the Private Residential Tenancies Board.

Deputy John Curran

I am not disputing that. I stated at the outset that the Department is prepared to do precisely what the letter of the law requires. However, does the Department not say at some point that it will not pay in respect of unregistered tenancies?

Ms Bernadette Lacey

If the Private Residential Tenancies Board comes back to us and tells us a tenancy is unregistered, we stop paying.

Deputy John Curran

The Department does not carry out the check although it is a significant player with 60,000 tenancies. It is a question of the signal this is sending out. The Department does not state that payment will cease if a tenancy is not registered within a given timeframe.

Ms Bernadette Lacey

The Private Residential Tenancies Board was set up for that purpose. If the Department were to chase up whether a tenancy is registered, it would only duplicate the work of the Private Residential Tenancies Board.

Deputy John Curran

No, the Department would not.

Ms Bernadette Lacey

We would. The board's job is to ensure tenancies are registered. Where it is known that a landlord does not register a tenancy, the board can notify the Department, at which point we stop the payment.

Deputy John Curran

In how many cases has that happened?

Ms Bernadette Lacey

I do not have the information but I can revert to the Deputy on it.

Deputy John Curran

Is it a significant number? Are there hundreds of cases?

Ms Bernadette Lacey

I am not aware of it.

Deputy John Curran

After what period does the board come back to the Department?

Ms Bernadette Lacey

I do not have that specific detail.

Deputy John Curran

The Secretary General can supply the information in correspondence. Can she understand what we are trying to do? Since rent allowance comprises such a significant aspect of the private rented accommodation market, the system needs to be well run. This includes the work of the Private Residential Tenancies Board and the work associated with the PPS numbers. I accept that the Department is complying with the law but I would like to see it operating more in the spirit of the law. It could be more proactive. An onus could be placed on landlords in receipt of rent allowance to provide proof that they are registered with the Private Residential Tenancies Board.

Ms Bernadette Lacey

I take the Deputy's point. I have a problem in that I have a particular role. I do not believe we just stick to the letter of the law; we try to co-operate and work with other agencies. I must apply the resources as they are given to me to the specific areas under my remit.

Deputy John Curran

When the Department makes a payment to a landlord and submits the relevant data to the Private Residential Tenancies Board, is there anything preventing it from asking the board to confirm whether the tenancy is registered?

Ms Bernadette Lacey

We can do so, but there are approximately 97,000 tenancies.

Deputy John Curran

That is my precise point. It is such a significant number that, if we do not have good procedures--

Ms Bernadette Lacey

It is a question of 97,000 additional contacts back and forth per year.

Deputy John Curran

I appreciate that. The landlords are obliged to register the tenancies. With computerisation, the figure of 97,000 does not have to present a problem. I refer in particular to the tenancies that are not registered and desire that appropriate action be taken in this regard in a timely fashion.

Deputy Róisín Shortall

One can check an address on the Private Residential Tenancies Board website to determine whether it is registered. There is no paperwork involved.

Ms Bernadette Lacey

My colleague, Mr. Brian Ó Raghallaigh, will answer that.

Mr. Brian Ó Raghallaigh

I can see where the Deputy is coming from. We have not outlined to the committee the degree of proactivity in which we have been engaged. The rental accommodation scheme--

Deputy John Curran

I am referring to the rent allowance. I do not want to move on just yet.

Mr. Brian Ó Raghallaigh

The rental accommodation scheme was created on foot of co-operation between the Department of Social and Family Affairs and the Department of the Environment, Heritage and Local Government. It took a long time to come up with that scheme but it showed sustained effort on our part to move to the kind of regime Deputy Shortall advocates whereby payments are made directly to landlords. The people going into the rental accommodation scheme come from the rent supplement scheme. We are working towards dealing with the long-term rent supplement people who need housing support, through the rental accommodation scheme. We co-operate closely with the PRTB, meeting regularly and sitting on various committees with it and the Department of the Environment, Heritage and Local Government to work through this type of issue.

Chairman

There may be co-operation but the system does not work.

Deputy John Curran

We do not see results.

Chairman

A well-documented recent case in my area involved four unfortunate guys living in a hovel for which the Department paid. Nothing was done about it until it was exposed. It had been going on for years. These were four of the most vulnerable people you could meet but nobody cared to check the type of accommodation on which the money was spent.

Whatever co-operation there is between the different agencies does not work. Not only are vulnerable tenants exploited but the people who own the properties get away scot free with the income they enjoy. The different Departments and agencies seem to take a compartmentalised approach to this and make very little effort to get their act together to protect the most vulnerable people and get at those who exploit them. That is the point Deputies Curran and Shortall are making.

Mr. Brian Ó Raghallaigh

There is quite a degree of co-operation. I have no doubt there are cases such as the Chairman has identified but we introduced legislation to provide for the discontinuation of rent supplement in addresses where the local authority finds such situations. We take someone who is receiving rent supplement out of inappropriate accommodation and put him or her into the rental accommodation scheme, RAS, in a different location.

Deputy Róisín Shortall

What is the situation for RAS?

Mr. Brian Ó Raghallaigh

May I make my point please? We have brought in legislation so that if some other poor unfortunate is offered that accommodation we will not pay for it. That is an example of how we are trying to close down the type of hovel the Chairman described.

Chairman

The PRTB should have done that.

Mr. Brian Ó Raghallaigh

It is primarily a matter for the local authority rather than the PRTB but we are working through these instances and when we find them we close them down.

Deputy John Curran

I know where the Department is going with RAS but the rent supplement exists and we will spend hundreds of millions of euro on it. A few weeks ago at a previous meeting we saw the number of landlords for whom we did not have PPS numbers. I do not want to go into the detail of that. I suspect we will always have short-term rental accommodation. I am not satisfied with the join up between the Department of Social and Family Affairs, the PRTB and the Revenue Commissioners. As a key Department which pays the money it has much greater responsibility for this matter.

I criticised the Revenue Commissioners too but the flow of information between the Department and the PRTB needs to be much better than it is and the Department needs to act on the information it receives. Mr. Ó Raghallaigh said that it has already acted on cases and that he can supply that information to the committee by means of correspondence.

Chairman

Mr. Ó Raghallaigh introduced a new element to the discussion when he said the local authority is responsible for closing down such a hovel.

Mr. Brian Ó Raghallaigh

Yes it is.

Chairman

What contacts exist between the Department and the local authorities to ensure that the money the Department spends goes towards accommodation of an acceptable standard?

Mr. Brian Ó Raghallaigh

This is one of the benefits of RAS---

Chairman

I am talking about rent subsidy.

Mr. Brian Ó Raghallaigh

I know that but people going on to RAS come from rent supplement and because RAS exists there are local and national meetings between those responsible for paying rent supplement and the housing authorities. It is for the local authorities to implement the standards of accommodation legislation. Until recently when they came across a hovel they had no assurance that if they took the person out of it some other poor unfortunate would not end up living there. We have changed our legislation to deal with that.

Deputy John Curran

When did that happen? I understand where the Department goes with the RAS but there are 60,000 tenancies today. What interaction does the Department have with the local authorities in respect of those to ensure they are at an acceptable standard? I am not referring to the RAS tenancies but to the short-term rent supplement tenancies. In my area a person must be in receipt of a rent allowance for 18 months minimum to be considered for RAS. I do not know if that is a nationwide policy. There are 60,000 short-term tenancies. How are we dealing with hovels for those tenants?

Mr. Brian Ó Raghallaigh

The 60,000 is an overall number that includes long-term as well as short-term tenants. It is a question of priority. We are prioritising the 34,000 that are on the supplement for 18 months or more and have given their details to the local authorities. We update that information quarterly. We do not do it for the short-term tenants until they have been on the supplement for a certain period. Our view, from talking to colleagues in the local authorities, is that they are struggling to cope with the numbers we have already given them without having to deal with the extra 30,000.

Chairman

There will always be a large pool of people who are totally exposed to exploitation and there seems to be a total breakdown in the system to protect them or to get at the people who exploit them. Nothing I have heard today satisfies me that the matter is being tackled in any meaningful way. The Department, together with the Revenue Commissioners, the PRTB and the Department of the Environment, Heritage and Local Government should come together and tackle this massive scandal. Will the Department please take that on board?

Ms Bernadette Lacey

I will. The Department is in consultation with the Revenue Commissioners and the PRTB and intends to continue that until it has come up with a reasonable solution to the problem.

Chairman

Thank you.

Deputy Brendan Kenneally

I too welcome the Secretary General and her colleagues. While I am critical of the Department in certain respects the service I receive as a public representative is very good. Other Departments might take a leaf out of its book in that regard.

I apologise for leaving the meeting for a while and the Chairman can stop me if I go over ground that has already been covered.

I have had a bee in my bonnet for a long time about the medical referees the Department employees. How many are there? Are they employed full-time? What do they cost and what qualifications do they have? I have come across many cases where three or four consultants will send in a report about a person's inability to work but when the person goes to a medical referee he or she looks at him or her for two minutes, asks him or her to lift up his or her arm and says he or she are fit for work. I am sure everybody around the table has had the same experience. This is total nonsense.

Ms Bernadette Lacey

We have 22 full-time medical referees and we hope to increase that to 25 soon. All of our doctors are fully qualified and have expertise in occupational medicine and are recognised as such. The former chief and current deputy chief medical officers are recognised internationally as leaders in their field. I do not know how much the system costs but I will get the information for the Deputy.

Deputy Brendan Kenneally

Are these people trained in how to interact with the people with whom they deal? By and large, they are dealing with vulnerable members of society. From some cases I have been involved with, many of them have an incorrect manner when dealing with the people in question. Is any training provided for them?

Ms Bernadette Lacey

All of the doctors are fully qualified and have at least five years experience. Once they join the service, there is ongoing in-service training and seminars are held. If the Deputy is aware of any specific instances, I would appreciate hearing about them. We would rather address any specific issues arising.

Deputy Brendan Kenneally

I have found that when I write to the appeals office in such cases, pointing out the overwhelming medical evidence, by and large the decision of the Department's medical referee is overturned.

Ms Lacey has indicated some areas where the Department has saved €105 million on one-parent payments. In most lone parent cases the child is with the mother. Are there any contributions made by fathers? What efforts are made by the Department to get fathers to contribute to the rearing of their children, as they also have responsibilities?

Ms Bernadette Lacey

A unit was set up to pursue recovery from the liable parent. In 2007 we contacted a total 11,000 parents.

Deputy Brendan Kenneally

Parents or fathers.

Ms Bernadette Lacey

It could be the father or mother. A better term would be "absent parent". Of the 11,000 contacted, in 1,700 cases there was no trace of the absent parent. In 1,900 cases the absent parent was in receipt of social welfare payments. In 1,800 cases the parent was unknown. Sometimes the mother is unable or unwilling to give us the information we need because there may be a violent background and we are not in a position to press the issue. In 4,200 cases the parent was working but no contribution was due because of the level of income involved. In 1,800 cases we issued a determination order for the father to contribute to the upbringing of his child.

Deputy Brendan Kenneally

In the latter case, I presume the money goes to the Department and the parent raising the child does not have to worry about it.

Ms Bernadette Lacey

Yes; we make the lone parent payment to the mother; reimbursement is made to the Department by the absent parent.

Deputy Brendan Kenneally

Even in a case where the absent parent is on social welfare, should the Department not make a small deduction from the payment to make him or her in some way responsible?

Ms Bernadette Lacey

The social welfare payment he or she receives is equivalent to the payment for a single person. Any deduction would bring him or her below the supplementary welfare or basic rate to which a person is entitled. Although we would be deducting, he or she would be entitled to be reimbursed.

Deputy Brendan Kenneally

It seems unfair that some absent parents are not prepared to take any responsibility and there is nothing we can do about it.

Ms Bernadette Lacey

Where their only income is the minimum social welfare payment, we would not be in a position to make a deduction.

Deputy Brendan Kenneally

Perhaps that is another welfare trap, in respect of which a person might be better off not working. If he or she was, a contribution may mean his or her income would be less than what he or she might receive by way of social welfare payments.

Ms Bernadette Lacey

There are a number of persons whose earnings are such they are not obliged to make a contribution.

Deputy Brendan Kenneally

Is the Department phasing out the PPO payment system for child benefit? Does it insist that new claimants must use the electronic funds transfer system? Will the old system be eliminated?

Ms Bernadette Lacey

Use of the PPO book will be phased out by the middle of this year.

Deputy Brendan Kenneally

That is because the Department is introducing a card system. What about making benefits payable through bank accounts only?

Ms Bernadette Lacey

No, we have absolutely no intention of moving in that direction.

Deputy Brendan Kenneally

To what grade are departmental staff paid overtime?

Ms Bernadette Lacey

Up to HEO level.

Deputy Brendan Kenneally

There have been difficulties with fraud. A little industry emerged of people making claims in different parts of the country on a weekly basis. I presume issuing PPS numbers at birth will solve this problem. What about EU nationals entitled to payments in Ireland? Are there any proposals to use modern technology to ensure they cannot draw welfare payments in more than one location?

Ms Bernadette Lacey

Is the Deputy referring to biometric technology?

Deputy Brendan Kenneally

Yes; a thumbprint, for example.

Ms Bernadette Lacey

We have no such plans. We will probably follow the example given by the Department of Justice, Equality and Law Reform on immigration. We have taken several steps to tighten the process of issuing PPS numbers. Rather than every local office issuing them, we have moved to a policy under which there is one issuing office per county. That has the benefit of ensuring staff in those offices become more expert.

We have provided training on the recognition of documentation from other countries. We have a central section which is in a position to examine and give expert advice on the validity of documents presented. We introduced the right to retain documentation. Previously, we had cases in which someone presented fraudulent documentation. If questioned, the person concerned could have taken the documents before we pursued the case. Now any documentation presented can be retained. It is an offence to present documentation with an intent to defraud.

Deputy Brendan Kenneally

Is the Department successful in eliminating fraud?

Ms Bernadette Lacey

We have made much progress in that direction. We have been able to clean up our databases in order that we can identify the approaches used in attempting to defraud with PPS numbers.

Chairman

The integrated short-term schemes computer system was identified as having serious deficiencies in detecting duplicate claims and claims made at different locations. A request was made seeking two specific enhancements, including the production of a warning report to identify cases where duplicate claims may be live at different locations. Has this deficiency been addressed? Have the abuses that took place because of those deficiencies been examined? Has the level of fraud that took place because of the deficiencies in the computer systems been estimated?

Ms Bernadette Lacey

The Chairman is referring to the initial assessment of ISTS by the Comptroller and Auditor General which took place about eight or ten years ago.

Chairman

That is right.

Ms Bernadette Lacey

On his second review of the system, the Comptroller and Auditor General was satisfied that we had made substantial progress in that area and all of our short-term schemes are based on the ISTS system. Therefore, there is no possibility of a person making two claims and having them processed at the same time. It would arise in the situation to which Deputy Kenneally referred, where somebody managed to establish a second identification which was fraudulent. We are now focusing on control over the PPS number and access to that.

Chairman

Was any assessment carried out on the level of abuse that took place?

Ms Bernadette Lacey

I am not specifically sure what kind of assessment the Chairman means. We had ongoing assessments on our schemes over the years, but it would be difficult to go back ten years and do an assessment on what was there and compare it with what we have now.

Chairman

I understand.

Deputy Thomas P. Broughan

I welcome the Secretary General and her team this morning. I apologise for missing a part of this morning's debate, but I had to act as a Whip for my party.

Does the Department intend to change the names of schemes any more? I notice that we have a tendency to follow the UK on this, with names likes unemployment allowance, jobseeker's allowance, disability and so on. Has the Department any more plans for the names of schemes, or is that the end of it?

Ms Bernadette Lacey

It would not be down to me to make the decision on the names of schemes. I am not aware of any plans at the moment. What is done is done.

Deputy Thomas P. Broughan

What will the unemployment level be like in 2008 and how does the Department intend to deal with it? We have had a very good economic climate, but how it will pan out in 2008?

Ms Bernadette Lacey

We are already seeing increases in the live register following the report at the end of January. It has been growing for the past year. I am not sure of the extent to which it will grow, but provision has been made for job assistance to grow by 17% and for benefits to grow by 13%.

Deputy Thomas P. Broughan

Will the overall level be at 5% by the end of this year?

Ms Bernadette Lacey

The assessment was that it would be an average of 170,000 per week, which is lower than what we have been experiencing to date.

Deputy Thomas P. Broughan

What proportion of those entitled to benefit is migrant workers?

Ms Bernadette Lacey

There are about 8,000 migrants permanently signing on for jobseeker's benefit.

Deputy Thomas P. Broughan

Did the Department have a problem regarding child benefit at the end of 2006 with the upcoming entry of Romania and Bulgaria? People from those countries complained that they came to the country before January 2007 under a different regime and were working from then on under the new regime. Does the Department have ongoing contacts with the tax and social welfare authorities in Sofia and Bucharest, Warsaw and Prague?

Ms Bernadette Lacey

There is a small cohort of people from Romania and Bulgaria who are entitled to be here to work. People from the EU who work here are entitled to receive child benefit under the relevant EU directive. The Romanians and Bulgarians who came here without the entitlement to work do not have any entitlement to access child benefit.

Deputy Thomas P. Broughan

From January 2007, their countries are European partners.

Ms Bernadette Lacey

Each country is a European partner, but the people here do not satisfy the second condition, which is that they must be workers.

Deputy Thomas P. Broughan

What about if they are workers?

Ms Bernadette Lacey

If they are workers here, then they are entitled to the child benefit.

Deputy Thomas P. Broughan

So their claim should not be held up from January 2007.

Ms Bernadette Lacey

There have been delays in child benefit claims for EU nationals simply because of the number of claims received and the complexity of the system related to it. We must establish that the people here are working and that the child exists in the home country. We must also establish which of the parents has responsibility for the child and which country has responsibility for paying child benefit. We then have to keep up that relationship on an ongoing basis. We exchange information with the home country authorities for that purpose.

Deputy Thomas P. Broughan

Why is the recovery rate of the redundancy and employers' insolvency schemes under the social insurance fund declining significantly year on year?

Ms Bernadette Lacey

It is not a matter for the Department. It is a matter for the Department of Enterprise, Trade and Employment. That was clarified here already.

Deputy Thomas P. Broughan

The action taken for prosecutions of employers is quite striking. There does not seem to have been a single instance where an employer was sent to prison for fraud involving the payment of social welfare entitlements. Is that the case?

Ms Bernadette Lacey

Is it the case that the employer is sent to prison?

Deputy Thomas P. Broughan

Yes.

Ms Bernadette Lacey

The sentence to be applied is a matter for the courts. The number of offences sent to the Office of the Chief State Solicitor is relatively small, but then the number of employers in comparison to the number claiming social welfare is small as well. Our surveys have found that more than 90% of employers are compliant with social welfare regulations. In 2007, 13 cases were referred to the Office of the Chief State Solicitor for follow up. The court will then take whatever action is appropriate.

Deputy Thomas P. Broughan

In any case of a jobseeker's allowance fraud, there had to have been an employer involved. Would that be the case?

Ms Bernadette Lacey

A person could be fraudulently claiming jobseeker's allowance without the employer being engaged at all.

Deputy Thomas P. Broughan

That is highly unlikely.

Ms Bernadette Lacey

It would be the norm, rather than the exception. Where somebody takes on an employee, that employment must be registered with the Revenue Commissioners, and they provide us with commencement of employment information on a monthly basis. We get information on new employment very quickly.

Deputy Thomas P. Broughan

The area of overpayment fraud has been covered. In the three years leading up to this year's accounts, was any member of staff in the Department involved in fraud?

Ms Bernadette Lacey

We had one incidence of fraud that we have identified.

Deputy Thomas P. Broughan

Was that in 2006?

Ms Bernadette Lacey

There was one in 2006 and one in 2007.

Deputy Thomas P. Broughan

Obviously, the Department tries to keep systems in place that would, as far as possible, eliminate any possibility of this. I realise it administers a huge staff and budget.

Ms Bernadette Lacey

In one case the guidelines were not applied as they were laid down, which allowed the person to commit the fraud. All of the people involved in that were sanctioned and have taken that very seriously. It was also an opportunity for us to raise the issue with the rest of the staff, which we do on a regular basis on these issues.

Deputy Thomas P. Broughan

The Vote outlines that the Department paid out merit awards of more than €400,000 in 53 awards of €500 to €1,000. The committee would support staff who take good initiatives. Did any of the actions of staff which resulted in merit awards lead to significant savings by the Department or the prevention of overpayments?

Ms Bernadette Lacey

The merit awards do not relate to special initiatives. They are awarded where staff have performed over and above what would be expected of them in the normal way. They would be nominated by their colleagues or bosses, or somebody else within the organisation. It is just one of the ways we have of recognising people who step outside the box. We also have an input scheme which relates to the sort of initiatives to which the Deputy refers. I cannot remember anything recent but we have achieved certain savings, not all directly quantifiable. For example, over the years we have saved substantial amounts in postage from recommendations that came from members of the staff on how we might manage the post.

Deputy Thomas P. Broughan

Would the Department undertake an analysis with regard to overpayments? Were staff errors involved? This is the final page on the prosecution side as I try to capture the data. Was there an analysis of staff performance with a view to finding whether staff could or should have been more vigilant with regard to making overpayments? The committee has been discussing all the checks the Department has made across the system. Is the liability in terms of staff making overpayments quantifiable and has any attempt been made to measure that?

Ms Bernadette Lacey

Yes, 4% of overpayments are down to staff error but we try to minimise that.

Deputy Thomas P. Broughan

Like the Revenue Commissioners, the Department has a vast amount of data on all of us, including all present in this room. In view of the disasters in other jurisdictions as well as with regard to data belonging to this jurisdiction in the health area, has the Department considered any checks with regard to the 2006 Vote? For example, there was a high profile case where a person won a large prize and his details became extensively and quickly known to the media. There were suspicions as to how that information could have leaked. What action has the Department taken with regard to its data systems and the protection of all our information?

Ms Bernadette Lacey

There are two issues. One is the bulk movement of data between the Department and other agencies. We continue to develop our security systems around that. The second issue relates to the type of question raised by the Deputy, where somebody abuses his or her position to access data on an individual. Given the nature of our work and as 4,800 people work in the Department, of whom a large number, though not all, need access to the data to deliver the services, as do community welfare officers, we have an ongoing and constant process of updating data protection training and education for staff. In the instance referenced by the Deputy, it was something I became aware of almost immediately as I read the article in a newspaper, and I immediately began the process of checking. We tracked down the people who had checked in, some for curiosity and others who genuinely had a reason to do so. We have had situations where we have dismissed staff for misappropriating people's data--

Deputy Thomas P. Broughan

In that high profile case of the lottery winner, was disciplinary action taken?

Ms Bernadette Lacey

Yes, it was taken against quite a number of people in the Department. The level of the discipline varied depending on the seriousness of their actions.

Deputy Thomas P. Broughan

Is Ms Lacey suggesting that the disaster suffered by the British Prime Minister some months ago, where discs containing the child benefit details of the whole population of the UK was en route from one part of the country to another by courier, could not happen in this jurisdiction?

Ms Bernadette Lacey

I would be very upset if I thought somebody had the whole database on a disc anywhere. Where we must move bulk information, such as when we move it to banks, post offices and various other institutions, we have the highest security levels and we are constantly seeking to upgrade these.

Chairman

Next week we will consider e-government and the value for money report. Under the new subhead E11 on e-government-related projects, there were three projects on which the Department underspent. Perhaps the Secretary General will have that information for us next week.

Ms Bernadette Lacey

We will.

Chairman

In regard to subhead N on the supplementary allowance, there was a provision of €734 million and a spend of €686 million. The explanation is that the number of recipients was lower than expected. Was the Department able to identify the factors behind the level of demand or was it a case of local community welfare officers taking a meaner approach to applications? Was it related to the abolition of the dietary allowance and did that kick in for the year under discussion or the following year?

Ms Bernadette Lacey

I shall pass that question to Mr. Ó Raghallaigh.

Mr. Brian Ó Raghallaigh

This is a good news story. We provided an amount that was greater than the need to pay SWA in cases where people were awaiting a payment from the Department. The primary reason for the saving was that we managed to get our payments out more quickly, in particular unemployment assistance and one-parent family payments. Therefore, we did not need as much money as we thought we would for these interim payments. Spending on the dietary supplement is of the order of €6 million in total and at its peak was €7 million, so it was not a major factor.

Chairman

The Department is the second highest spender of all the Departments on consultancies, having spent €11.6 million on 34 consultancies, which represents approximately 9.6% of all departmental spending on such consultancies. The average cost of the Department's individual consultancy contracts was €342,000, which is significantly higher than other Departments, where the average was €174,000. Will Ms Lacey explain who were the consultants and the purpose of the contracts?

Ms Bernadette Lacey

I would be happy to do that. As I explained, we have been upgrading our computer systems and networks for several years and our service delivery modernisation programme is ongoing. That was a fairly major programme to provide support for our schemes. It initially started with the child benefit scheme. We subsequently developed it for old age contributory pensions and it now also supports household benefits such as those available through the free schemes. It supports the transitional State pension, formerly called retirement pension, as well as a number of other schemes. As for the early child care supplement, we incurred a cost of €2 million in that year to develop the system. Overall, we spent €3.5 million on the service delivery modernisation programme, €2 million on the early child care supplement and almost €1 million on the overpayment and debt management system. That constituted major expenditure and major development in a single year.

Chairman

Turning to chapter 18 and the reports on the years 2004 and 2005, aggregated expenditure under subheads A7, A9 and A10 was €33.2 million, far in excess of the published estimate of €11.6 million. Does this mean the Department incurred €21.6 million--

Ms Bernadette Lacey

Sorry, to what does the Chairman refer?

Chairman

I refer to chapter 18.

Ms Bernadette Lacey

Of the Comptroller and Auditor General's report.

Chairman

Correct. I refer to chapter 18 of the value for money report. Aggregate expenditure under subheads A7, A9 and A10 was €33.2 million, far in excess of the estimate of €11.6 million published. Does this indicate that the Department incurred a cost of €21.6 million from its own information technology resources on these projects, or could the €11.6 million be an understatement of the actual consultancy costs for the period?

Ms Bernadette Lacey

I apologise but I am somewhat confused about what is being asked of me.

Chairman

I refer to the value for money report.

Ms Bernadette Lacey

Does the Chairman refer to paragraph 18?

Chairman

Chapter 18 or paragraph 18. I refer to subheads A7, A9 and A10. There was expenditure of €33.2 million, while the original estimate was €11.6 million. There is a gap of €21.6 million. From where did that sum come?

Ms Bernadette Lacey

I am sorry. Which paragraph are we reading?

Chairman

Chapter 18.

Ms Bernadette Lacey

Which paragraph?

Chairman

I refer to subheads A7, A9 and A10.

Deputy Thomas P. Broughan

We are all lost.

Ms Bernadette Lacey

I apologise, as I still am having difficulty in finding the--

Chairman

I may have the wrong chapter number, as I am reading from my own notes.

Deputy Seán Fleming

I believe the Chairman is referring to chapter 18, page 188.

Ms Bernadette Lacey

Is the Chairman referring to the breakdown of subheads under which expenditure was coded, which includes subhead A7?

Chairman

Yes. I thank Deputy Fleming.

Ms Bernadette Lacey

The figure on page 188 relates to consultancies in all Departments in 2006, rather than the Department of Social and Family Affairs alone.

Chairman

I may have the wrong chapter. I will revert to Ms Lacey on this question.

Deputy Thomas P. Broughan

Why, in relative terms, is expenditure in the Department of Social and Family Affairs so high?

Ms Bernadette Lacey

I refer to the size of the Department and, as I explained, the major programmes in place. They include the service delivery modernisation programme, which was extensive, the overpayment and debt management system and the early child care supplement. As discussed, the Department conducted a review of medical services. It also performed a risk management review and formulated a strategy on the future of the organisation's management of documentation, records and information. There were technical consultancies in respect of the network of which I spoke. In addition, our financial systems were upgraded. On the technical side alone, the Department engaged in a major programme of development, as well as ongoing maintenance during the year. If I recall correctly, subhead A7 pertains to technology consultancies. We also had other such consultancies on policy and so on.

Deputy Seán Fleming

The issue of prosecutions has been discussed extensively. How does our experience of prosecutions in this area compare with that of our EU partners or elsewhere? Does Ireland have major or minor problems in this regard? What is its place in the overall scheme of things?

Ms Bernadette Lacey

We do not have international comparisons in this respect because the systems in place across the European Union are not exactly the same.

Deputy Seán Fleming

I know that. However, I am sure the comptroller and auditor generals in other countries have addressed this issue. I do not refer to the Department's internal systems. I would have thought the Department would try to benchmark its activities against OECD reports, or reports from the European Union. Are reports on this topic available? I have the same question in respect of overpayments. Although members consider this issue every year, they have no idea whether this constitutes a major or minor problem relative to our EU partners. Perhaps the Comptroller and Auditor General might be of assistance. While I do not wish to put him on the spot, he understands the thrust of my question.

Mr. John Purcell

The Deputy is correct because I ask the same question. While I am not exactly fed up with reproducing this stuff every year--

Deputy Seán Fleming

It is the same every year and members cannot judge.

Mr. John Purcell

If one asks how good or bad it is, one can only judge by relating it to what happens in other countries. Some work has been done in Northern Ireland, where my counterpart did a similar job, and some material is available on the benefits agency in the United Kingdom. We have done some work on the issue and I had hoped to have some material for inclusion in this year's annual report to try to answer such questions. However, there are many variables such as the conditions attaching to some of the schemes, the fact that schemes are not directly comparable and what is regarded as an overpayment and fraud. In particular, fraud in one jurisdiction might be completely different from what we regard as such. For example, we made a change approximately five or six years ago in which estate cases which had been regarded as fraud were no longer so regarded. We are trying to establish valid comparators because I have exactly the same problem as the Deputy. I felt it would be very useful if we were able to ascertain how we were doing relative to others.

Deputy Seán Fleming

In fairness to the Comptroller and Auditor General, it is not his job. The Central Statistics Office, the Economic and Social Research Institute or similar bodies should be investigating this issue on an EU-wide basis. I pose this question and agree it should not be the Comptroller and Auditor General's job to check the positio in other countries to try to make comparisons. I am surprised no one has gathered such information.

Mr. John Purcell

As I said, we can try to carry out a high level comparison when we have data from other countries. It appears to be a standard reporting issue for my colleagues in neighbouring jurisdictions, with whom I am in contact. I am exploring opportunities with them to perform such work and present such information to inform the discussions the Deputy desires this committee to have.

Ms Bernadette Lacey

As for overpayments, when we were developing the overpayment and debt management system, the consultants tried to get information on overpayments from other countries, including the United Kingdom, Australia and New Zealand but were--

Deputy Seán Fleming

Which consultants did so?

Ms Bernadette Lacey

IBM was the consultancy firm involved in the overpayment and debt management system.

Deputy Seán Fleming

Was that in 2006?

Ms Bernadette Lacey

IBM was involved for a couple of years in developing the system.

Deputy Seán Fleming

I do not see IBM's name on that chart referred to by the Chairman. It relates to the main contractors.

Ms Bernadette Lacey

They were on the business end of it rather than the technology side.

Deputy Seán Fleming

Is there another list of consultants for business development and separate from information technology which we have not encountered yet?

Ms Bernadette Lacey

They are under two subheads - A7 and A11.

Deputy Seán Fleming

I hope the Chairman is listening. There might be another chapter somewhere.

Ms Bernadette Lacey

They could not get any comparable information from any of those countries.

Deputy Thomas P. Broughan

I have an addendum to Deputy Fleming's point. I was a member of this committee during the 27th Dáil. In respect of benchmarking us against ourselves, what percentage of the total social welfare-social insurance budget over the past four or five years was overpayment fraud? I am talking about 2003 to 2006, inclusive.

Ms Bernadette Lacey

We know that the figure for overpayments in 2006 was €45 million.

Deputy Thomas P. Broughan

What percentage was that?

Ms Bernadette Lacey

If I remember correctly, it was 0.34%. It was a third of 1%.

Deputy Thomas P. Broughan

I remember when the percentage was 1%. Comparatively speaking, that seems to be an improvement.

Ms Bernadette Lacey

We hope we are making progress.

Deputy Thomas P. Broughan

What was it in the previous year?

Ms Bernadette Lacey

It was €49 million in 2007, while it was €45 million in 2006. I think it was a bit lower but I am not sure.

Deputy Thomas P. Broughan

Would Ms Lacey be able to tell members the percentage of the total budget that was fraud? It is one third--

Ms Bernadette Lacey

It is around the same figure - 0.3% or 0.4%.

Deputy Thomas P. Broughan

One third of 1% of the social welfare budget is fraud.

Ms Bernadette Lacey

No, it is overpayments. In respect of the fraud and error surveys, we can give the committee the figures for the percentage for each of those schemes where we found fraud.

Deputy Thomas P. Broughan

Is there a global figure?

Ms Bernadette Lacey

Is there an overall figure?

Deputy Thomas P. Broughan

Yes, for last year.

Ms Bernadette Lacey

It would be a matter of adding up all these schemes. It would give an average but it would vary because we also have very high-risk schemes. For example, old age pension schemes are relatively low risk whereas the lone parent and jobseeker's schemes would be much higher risk. We could give the Deputy both sets of figures.

Deputy Seán Fleming

I have one or two points to make after Deputy Shortall's comments.

Deputy Róisín Shortall

I want to raise one aspect of rent supplement that has not been touched on, namely, the administrative practice that has developed over the years whereby the Department of Social and Family Affairs pays rent supplement in arrears whereas landlord-tenant legislation requires rent to be paid in advance. We spoke earlier about the difficulties faced by tenants in accessing accommodation where the landlord will accept rent supplement. We all accept that this is a major issue. I do not know whether Ms Lacey is aware of a recent survey of landlords carried out by Threshold which found that the reason they were slow to take rent supplement was because it is paid in arrears rather than in advance. Has the Department considered moving towards a system where the money is paid in advance as a means of freeing up more accommodation under this scheme?

Ms Bernadette Lacey

If it is acceptable, I will ask Mr. Ó Raghallaigh to answer that question.

Deputy Róisín Shortall

Yes.

Mr. Brian Ó Raghallaigh

Threshold raised this issue with us. We were taken aback by the cost of shifting from paying in arrears to paying in advance. I cannot recall the figure but it was several million euro, perhaps a two figure sum in millions. We recognise that many landlords state openly in their advertisements that they will not take rent supplement. They may cite this issue but they may have other reasons also, legitimate and possibly illegitimate, for not wishing to do so.

With 97,000 tenancies being supported and something of the order of 40,000 new tenancies each year, we concluded that there were options for people. It is not the case that this particular barrier is preventing people from accessing rent supplement.

Deputy Róisín Shortall

Given the difficulties that exist, is there a case to be made for trying it out with new tenancies to see whether this frees up more accommodation and if this is the actual reason?

Mr. Brian Ó Raghallaigh

Of course. It is a policy issue. Ultimately, it is up to the Minister to decide whether he wants to spend that order of millions of euro on this initiative rather than on any other.

Deputy Róisín Shortall

I am not suggesting that the Department switches all of them. I am suggesting that the Department pays in advance on a trial basis in new tenancies.

Mr. Brian Ó Raghallaigh

The Deputy will appreciate that even if one does it on a pilot basis, one is setting up a situation which could lead to a significant demand for money which would pre-empt the Minister's options in other matters.

Deputy Róisín Shortall

Is it not the same overall? The money is paid at the start of the month rather than at the end.

Mr. Brian Ó Raghallaigh

No, there would be an actual cost of millions, perhaps €10 million or €12 million.

Deputy Róisín Shortall

That would be the case if one was to switch everybody over straightaway.

Mr. Brian Ó Raghallaigh

Of course, but if we were to do a pilot test on it and discover that this was something that was going to be demanded by Threshold and others, that would pre-empt the Minister's options in spending that order of money on other things. We are not convinced of the extent of the problem that spending that amount of money would solve. A total of 40,000 new tenancies are created every year.

Deputy Seán Fleming

The issue of old estates was raised. How far back does the Department go in checking matters? I understand that before an estate can be cleared, matters can involve an old age pensioner who is on a State pension and perhaps had a few bob that came to light after he or she died at the age of 93. How far does the Department go in checking that? I have come across cases where the Department has checked matters going back to the 1950s. I am quite serious. What is the Department allowed to do?

Ms Bernadette Lacey

At the time the estate is being settled, the Department must be notified of the value of the estate. There are very generous disregards so we are not going after the most vulnerable. The issue arises where people who are on a means-assessed payment and who should have notified the Department of these matters have not done so. So we will go back and assess as far back as the claim goes to see at what point this issue arose.

Deputy Seán Fleming

Therefore, it could be 30 years.

Ms Bernadette Lacey

That would be exceptional.

Deputy Seán Fleming

I must have met a few of those. Can Ms Lacey forward the committee the details of the total amount of uncashed payments, as I would call them in layman's English, under all the payments the Department makes? I would not expect her to have the details with her. There must be many people who lost books or did not claim them or whose books were out of date. Could she provide information on a scheme-by-scheme basis? I can imagine this must happen for a variety of reasons. People can get sick or lose the book. The amount must be considerable. I presume the figures we have seen all day are net figures. Can Ms Lacey give the committee an indication?

Ms Bernadette Lacey

Is the Deputy referring to where we had to issue a repeat payment?

Deputy Seán Fleming

I suspect that Ms Lacey should know both. One will be for uncashed payments. In some of those cases the Department has been asked to make good the money and in other cases the person may not have come back to the Department or his or her family may not have known the book was in the bottom of the drawer and never cashed. Does Ms Lacey have both sets of figures?

Ms Bernadette Lacey

Yes.

Deputy Seán Fleming

I forgot to mention the letter sent by the Department the other day to people about using the swipe card in post offices from now on. The book that is currently in circulation says that the person has six months to cash his or her child benefit with the book, while the letter issued by the Department says that people have 100 days.

Ms Bernadette Lacey

Yes.

Deputy Seán Fleming

Is that a legislative or administrative change? Whose change is that?

Ms Bernadette Lacey

It is an administrative change.

Deputy Seán Fleming

Why did the Department make that change? Ms Lacey can see that there is the possibility of payments being uncashed. Up to now, people had six months to claim child benefit and from 3 June, that is being halved.

Ms Bernadette Lacey

I will get the information for the Deputy but my recollection is that this was based on our assessment of the rate at which payments were cashed. That appeared to be a suitable course of action.

Deputy Seán Fleming

Cheques are generally good for six months. People understand that things tend to be good for six months.

Ms Bernadette Lacey

If somebody does not collect his or her payment in time, we will re-issue the payment. It is not the case that the payment is lost forever. We would re-issue the payment.

Deputy Seán Fleming

According to the letter sent to the people in question, if payment was not collected within the timeframe, it would be returned to the Department. There is nothing in the letter to the effect that people would be able to collect the payment later. This matter will have an impact on some people because the period has been halved. To save up for Christmas or other times of the year, some families would have left their books build up for a few months. Did a statutory instrument allow the Department to halve the period on an administrative basis?

Ms Bernadette Lacey

No, it is an administrative arrangement.

Deputy Seán Fleming

As an Oireachtas Member, I am not happy that these measures are being taken on an administrative basis without statutory instruments or primary legislation. Despite our having just debated the Social Welfare and Pensions Bill 2008, significant changes that will affect people are being introduced on an administrative basis. We do not hear about them until someone contacts us. I would appreciate more information on the background of the decision to be supplied to the committee.

Ms Bernadette Lacey

While the payment is valid for 100 days, we will re-issue someone's payment on the 101st day. It is not that he or she has lost the payment.

Deputy Seán Fleming

What is the purpose of the 100-day deadline?

Ms Bernadette Lacey

There is an overhead on uncashed payments not collected.

Deputy Seán Fleming

What does that mean?

Ms Bernadette Lacey

They are still on the books. It is different when a PPO book is issued, which is either cashed or uncashed. There is an overhead in maintaining an increasing database of payments.

Deputy Seán Fleming

Is this is a cost-cutting measure?

Ms Bernadette Lacey

No. We are switching to the cards for the benefit of customers. When a customer on a book has a change of circumstances, as many do, it requires weeks to cancel and re-order the book. If a customer is on a card, the process is done nearly overnight or within a couple of days. The card prevents the loss of payments, which would affect a greater number of people.

Deputy Seán Fleming

Could the Department have done this without reducing the period?

Ms Bernadette Lacey

No. It would have affected the rate at which the payments would be processed because there would be a larger file of payments.

Deputy Seán Fleming

The Secretary General might give the committee more information.

Chairman

Why is there a six-month limit in respect of a person who discovers he or she did not claim a payment to which he or she was entitled? Upon realising, the person who did not claim because he or she did not receive enough information from the Department is told that the claim will only be backdated six months. A woman in Cork--

Ms Bernadette Lacey

It is specified in legislation and regulations and is a matter for the Oireachtas.

Chairman

Is it policy?

Ms Bernadette Lacey

Yes.

Chairman

That answers that, but it is unfair legislation and victimises people. However, there is a loophole, namely, if people can satisfy the Department that they were misinformed or given the wrong impression--

Ms Bernadette Lacey

If they can show that there was just cause, such as being incapable of making the claim through illness or another reason, the payments can be backdated further.

Chairman

The Secretary General did not give the full information. She did not qualify her statement that the period is set out in legislation by mentioning the provisions in respect of being misinformed or under the wrong impression.

Ms Bernadette Lacey

I apologise because I did not mean to mislead. I believed I answered the question.

Deputy Thomas P. Broughan

I have two questions for the Comptroller and Auditor General. Regarding the rent supplement allowance and payments that should be made to the State through taxation or so on, has the Comptroller and Auditor General conducted a cost-benefit or value for money analysis of the system's evolution vis-à-vis a proper housing programme given the large housing list, the many officials involved in making decisions and so on? Effectively, the system was abandoned 14 years or 15 years ago. Does the Comptroller and Auditor General believe there should be a more effective or dynamic housing programme? My party leader raised a similar issue in the Dáil.

Has the Comptroller and Auditor General reviewed the Dublin Port tunnel given the news concerning the significant liabilities the local authority may face?

Chairman

The Deputy is pushing it.

Deputy Thomas P. Broughan

The committee does not have an Order of Business.

Mr. John Purcell

We conducted a special report on the rent supplement system and considered the balance between the direct provision of local authority housing and the then nascent rental accommodation scheme. We focused on many aspects of the rent supplement. Much of the report remains valid and contains useful background information for anyone who wishes to delve further into the question, including the way the rent supplement went from being an emergency minor provision of supplementary welfare allowance to being a de facto part of housing policy. The report raised matters relating to the transfer of information with Revenue.

According to a representative of the National Roads Authority speaking on radio this morning, the cost of remedying the defects in some of the safety and control systems of the Dublin Port tunnel has been claimed from the contractors. There should not be a liability on the State. In our work on the roads programme, we included references to the overrun in the contracted cost of the tunnel in comparison with its estimated cost. I am aware of a claim for more than €100 million on the part of the contractor before the courts or at arbitration. The tunnel is an ongoing matter to which we have referred.

May I return to the issue of fraud and how well the Department is doing?

Chairman

I will leave Deputy Shortall speak before returning to that issue. I allowed the tunnel matter to be raised today, but let us be realistic in future and deal with the brief before the committee. Otherwise, we will be all over the place.

Deputy Thomas P. Broughan

We see the Comptroller and Auditor General only once per week.

Chairman

Questions such as this can be raised in another forum. Let us be realistic and relevant.

Deputy Róisín Shortall

The committee has been informed of a high level of inappropriate payments being made in respect of the one-parent family payment. There is a need to simplify the tapering system for the disregard of income from employment. Many get jobs and are delighted to be on their feet, but they do not notify the Department during the year that their incomes have increased. It is a matter of keeping the show on the road, not fraud. What percentage of the payments are inappropriate owing to cohabitation?

Ms Bernadette Lacey

Approximately one third.

Deputy Róisín Shortall

They are the subject of the changes proposed for later this year.

Ms Bernadette Lacey

For some years we did not conduct earnings reviews. When we did, people's salaries had increased substantially. Now that the reviews are ongoing, we are catching increases sooner and avoiding the same pitfall.

Deputy Róisín Shortall

What staff numbers have been allocated to the Department's involvement in the Criminal Assets Bureau? While I appreciate the wider objective of the involvement, is it cost effective from the Department's point of view in terms of detecting fraudulent claims and so on?

Chairman

The Secretary General will be delighted to know that this is the last question today.

Ms Bernadette Lacey

I can relax. We have four people allocated to CAB.

Deputy Róisín Shortall

Is that all?

Ms Bernadette Lacey

We find our involvement effective. Our involvement in the Garda National Immigration Bureau, to which we have allocated two people, is also beneficial.

Deputy Róisín Shortall

Is it regarded as adequate? I am surprised that only four people have been allocated.

Ms Bernadette Lacey

It is the number for which the Garda asked.

Chairman

Will Mr. Purcell deal with a number of issues that arose?

Mr. John Purcell

Fraud, prosecutions and overpayments in general comprise an important matter. Perhaps Deputy Fleming was not here earlier but the use of fraud and error surveys is one way by which we can determine if we are making progress. The Department has a rolling programme and we can compare the baseline of three years ago with how matters stand now. There is a high degree of investigation into the sampled case chosen for the fraud and error surveys. Normally, overpayments are detected. While people say this is the tip of the iceberg, there is no basis for saying this. Clearly, it is not fraud in all cases. We recommended the survey some years ago when we carried out a special report on the Department's control activity.

In making comparisons the problem is that in some jurisdictions administrative or intermediate penalties apply. Not everything is brought to prosecution. We do not have that type of instrument, perhaps because there is no point if the person in question is in receipt of supplementary welfare or a basic social assistance scheme payment. This difficulty is hard to overcome.

The Accounting Officer referred to a build-up of 900 cases with the Chief State Solicitor, which can give rise to other problems. Some cases are being dropped because of the time lag between the offence and prosecution. One is better off deciding what is a reasonable number of prosecutions and not shovelling cases onto the Chief State Solicitor, which is increasing the backlog from approximately 500 to 900. The Department should keep an eye on this.

The Chairman asked for information on the amount written off. There was a sum of €82 million, representing 203,000 overpayments. It depends on whether one considers these in value or numerical terms. In numerical terms, 86% of the overpayments occurred prior to 2000 but in value terms, this represented 94% of the total written off. 50% of the monetary value of the write off represented overpayments of less than €2,000. I have no doubt the Accounting Officer will provide the statistics for the committee and at a future meeting we can take the matter further.

Chairman

I thank everyone involved in this meeting. We received straight answers from the Secretary General. Is it agreed to note Vote 38 and the social insurance fund accounts for 2006 and that chapters 9.1 to 9.5 be disposed of?

Deputy Róisín Shortall

The issue of rental income is being held open. Obviously, rent supplement is a major factor in that regard. It is an issue to which the committee should devote early attention and, rather than signing off on the accounts that contain funding for rent supplement, I would like to hold it open and discuss in private session before the next meeting.

Deputy Seán Fleming

I listened to the Deputy and her queries relate to Revenue, not the social welfare side of the equation. When people pay rent, they may be entitled to benefits but following up tax issues is a matter for Revenue, not the Department of Social and Family Affairs.

Deputy Róisín Shortall

There are a number of issues in respect of ICT systems.

Deputy Seán Fleming

Okay.

Chairman

As members may remember, when Revenue officials appeared before the committee, the part relating to this issue was left open. The Accounting Officer was asked to meet the Revenue Commissioners, the PRTB and the Department of the Environment, Heritage and Local Government, introduced by Mr. Ó Raghallaigh as a new element. We expect the parties to address the exploitation of unfortunates and the ability of landlords to escape the tax net.

Deputy Thomas P. Broughan

We could meet them at another meeting.

Chairman

We have left open the chapter relating to this issue and can decide how to approach it in private session. We have sent a strong signal that the parties mentioned should get their act together. Is it agreed that these matters have been disposed of? Agreed.

The agenda for the next meeting includes the Vote for the Department of the Taoiseach and value for money report No. 58 of October 2007 on e-government. We have agreed that the Secretary General of the Department of Social and Family Affairs will attend next week's meeting to discuss this matter, particularly as it relates to the Reach programme.

Deputy Róisín Shortall

A nice surprise for the Secretary General.

Chairman

We shall also look at the report, Improving Performance - Public Service Case Studies, chapters 18 and 19.

The witnesses withdrew.

The committee adjourned at 1.40 p.m. until 10 a.m. on Thursday, 6 March 2008.