I thank the Chairman and committee members for the opportunity to address the committee on the issues raised by the Comptroller and Auditor General. The Department of Social and Family Affairs administers services to the public through the provision of income supports and assistance with access to services which enable people to re-enter the active labour market.
The expenditure in the Department exceeded €20 billion in 2008 and €21 billion in 2009 in respect of some 50 schemes. During 2009, we processed 2.5 million claims and issued in excess of 83 million payments, an increase of 11 million or 15% on the previous year. In addition, 80,000 people were referred for activation to FÁS and other agencies. Control reviews were carried out in about 750,000 cases. However, although the number of reviews exceeded our targets the savings achieved of €484 million was only 79% of their target, due mainly to the drop in the level of savings on jobseeker schemes.
The Department came under a number of pressures during 2009 as the claims rose across the organisation continued to rise. The live registerincreased to 420,000 at the end of 2009, an increase of 266,000 in 24 months. Inflows increased from 284,000 in 2007 to 640,000 in 2009. The difficulties caused by the growth in the live register were exacerbated by the loss of 300 experienced staff in 2009 through retirement and other events. As the committee is aware it is not possible in the short term to replace the experience or expertise lost. However, we have recruited in excess of 600 staff during the past 18 months on redeployment from other Departments and we have redeployed a further 700 staff within the Department. We have also acquired additional accommodation and established six central decision units to meet the needs of the extra customers and staff.
I wish to comment briefly on the issue of savings and overpayments as they have a specific meaning in the context of their use by the Department. Overpayments arise in relation to a past event where a deciding officer has sufficient evidence that a person is paid an amount in excess of their entitlement for a given period, either through payment at a rate above that which they should receive or where they are paid beyond the relevant date. Savings on the other is an estimation of the additional payments a person would have received in the future had the particular control activity not taken place. A validated multiplier which varies from four weeks for short-term schemes to 136 weeks for longer schemes is used to assess the savings figures.
In his report the Comptroller and Auditor General raises concern that overpayments are not raised in all cases where payments are reduced. This situation arises because the deciding officer in revising a decision must determine whether the revised decision will apply from a current or earlier date. The deciding officer must consider whether there is sufficient evidence that non-compliance applied from an earlier date if a retrospective decision is being made. For example, in cases of cohabitation and medical assessment, it is not possible in most cases to make a retrospective decision. In cases where the revised decision applies from a current date no overpayment arises.
Turning to the chapters in the Comptroller and Auditor General's Report, chapter 30 examines the likely financial impact of five of the Department's schemes and the results of fraud and error surveys. The Department carried out a programme of detailed fraud and error surveys on individual schemes. Since 2003, 11 surveys across all major schemes have been completed and some schemes have been put through the survey process a second time. These surveys show that although the schemes such as the one-parent family payment and disability allowance are high risk at 7%, the majority of schemes are low risk at 1%, for example, illness benefit or contributory State pension. The purpose of the fraud and error survey process is to identify the level of risk associated with each scheme and areas in which a scheme is exposed to fraud or error. The outcomes provide scheme management with the basis for designing processes and control measures specifically targeted to minimise the level of future risk. Fraud and error surveys provide a view of underlying level of fraud or error on a scheme at a particular point in time. Surveys are carried out to a high standard and to this end the Department's statistician engages with the scheme managers in ensuring the appropriate rigors are applied, that the random sample is adequate to give a true picture of the scheme and in analysing the results.
Surveys take up to three months to complete and each case involves a home visit. They involve a comprehensive examination of the person's entitlement at a current point in time and the extent to which they are compliant with the conditions of the scheme. If it is found that the person's details differ from those originally supplied or that they are not compliant with the rules, the case is followed up to establish whether fraud or error is involved and to take appropriate action. In response, the Department has commenced a programme of carrying out two surveys per year on each of four schemes which show the highest potential for fraud, namely, jobseeker's allowance, one-parent family payment, disability allowance and child benefit, where non-Irish claimants have been identified as high risk. This will ensure that each of these schemes is reviewed each second year, while allowing time for the necessary changes identified in the surveys to be implemented.
Risks are mainly associated with not reporting changes in means during the lifetime of a claim and non-disclosure of other changes in circumstances. For example fraud in relation to one-parent family payment at 7% arises from non-disclosure of means and cohabitation. In response, the Department has instituted a number of activities to minimise these risks. One-parent family payment customers are required to declare on an annual basis that any changes in their circumstances and that they will still comply fully with the conditions of the scheme. Commencement of employment notices from Revenue are data matched against our payment systems. Claims are matched with earnings data received from Revenue and marriage data from the GRO. One-parent family payment and child benefit schemes are matched to identify any difference in the number of children being claimed on both schemes. At local level information is received from some but not all authorities on tenancies to establish potential cohabitation. In the case of jobseekers, the risks arise in the context of people working while claiming benefit and non-disclosure of means. Control activities include activities to follow up commencement of employment data and matching claims with earnings data from Revenue. In recent years, there have been new controls such as multi-agency vehicle checks and payment only through the post office to ensure that the person is still in the country.
In chapter 31, the Comptroller and Auditor General examined the sample of the larger overpayment cases previously identified by the Department in relation to disability allowance, carers and invalidity pensions schemes. He found that overpayments arose in the main as a consequence of the changes in the customer's circumstances not being notified to the Department. He expressed concern that in the schemes examined, certain overpayments could have been avoided or the amounts overpaid reduced, if the Department had followed up more quickly on information already available to it.
I accept the findings of the Comptroller and Auditor General in this matter and I can assure the committee that the Department has moved to address the issues identified by him. New risk-based review policies have been introduced for the disability allowance and carer schemes and a new policy is being developed for invalidity pensions. The new policies include regular data matching with our systems, particularly with earnings data from Revenue and with data provided from other organisations. In 2009, 12,000 disability allowance reviews resulted in savings of €14 million. Some 1,700 carer's cases resulted in savings of €9 million and 12,200 invalidity pension reviews resulted in savings of €2.7 million. Some of the actions taken include over 24,000 disability allowance cases have been risk rated on both medical and means criteria as part of the process of selecting cases for review on the basis of their risk rating. This year it is planned to review 5,000 high-risk cases, 2,000 medium-risk cases and 500 low-risk cases.
Savings of €79,000 were achieved from 40 disability allowance cases which were reduced or stopped as a result of earnings reviews, 250 out of 1,000 cases were found unsuitable, following a medical review, and 360 cases were stopped following a mailshot to 3,000 customers. The review of the payment to 4,600 carers resulted in savings of €148,000 and a mailshot to 3,000 customers yielded savings of €3.2 million, while a data match of earning is currently being followed up. Commencement of employment notifications are reviewed on a continuing bases, 3,000 disability allowance customers and 900 carers were reviewed in 2009.
Between 2006 and 2008, social welfare expenditure increased from €14 billion to €18.5 billion. The number of recipients increased from 1 million to 1.2 million. Total overpayments rose from €45 million to €55 million and recoveries amounted to €27 million in 2008. Overpayments identified amount to 0.32 % of overall spending in 2008, a slight reduction in the position in 2006, where it was 0.34%. The level of overpayments recorded in 2008 rose due to more accurate recording of overpayments on the new computer system, scheme specific variations and an increase in the scheme rates. Of this number, 38% were fraudulent of which some €10 million arose from concurrent working and claiming, 2.6% from means not disclosed and 1.3% from absence from the State. It transpired 43% of overpayments resulted from customer error, with €3.5 million arising from people being paid beyond their entitlement, €2.9 from means not being disclosed and €2.7 million paid by EFT after the death of the individual.
The figure of 6% arose from departmental error, arising from people paid beyond their entitlement or where they were in receipt of another payment or received a duplicate payment and 13% related to estate cases. Overpayments are recovered by way of deduction from ongoing social welfare payments or where a customer is not entitled to a payment by means of cash repayments or from the estate of deceased customers. Civil proceedings may also be taken to recover debts.
In 2006, a new debt management strategy was developed. The overall goal of this strategy is to actively peruse the recovery of debt to achieve maximum recovery levels with due regard to the value for money and with greater emphasis on recovery from people who are no longer dependent on social welfare payments.
Social welfare fraud is a criminal offence. The Department takes seriously the abuse of the system and may take prosecutions by way of summary or indictment proceedings. In deciding to prosecute, the Department takes account of the evidence of fraud and potential for success in court. During 2008, we referred 357 cases to the Office of the Chief State Solicitor and 328 cases were completed in court. In addition, 26 cases were referred to the Garda for investigation of personation. Civil proceedings were also taken to facilitate the recovery of the scheme overpayments or the collected of PRSI arrears. Such cases are only taken where there is an expectation that the debtor has sufficient means to discharge the debt.
We have recently reviewed and revised our prosecutions policy and the types of offences likely to be prosecuted include: false statements, false declaration or representations to obtain a payment to which a customer is not entitled; failure to notify the Department of changes in means or marital status; or concealing a material fact in order to continue to receive a payment. The prosecutions include failure by employers to maintain or produce prescribed records or to remit PRSI on foot of a demand.
The Department is currently facing serious challenges in balancing the need to deliver a quality timely service to our costumer while at that same time ensuring we have processes and procedures in place to minimise fraud and error in our schemes. In addition to implementing a multi-year modernisation business organisation and ICT programme to improve our service and controls, we have taken a number of other initiatives. Our new computer system enables our payment systems to talk to each other, to the central records and stand alone systems, thus minimising duplicate claims and payments. We undertake extensive data matching with Revenue, the Departments of Agriculture and Food, Justice, Equality and Law Reform, Environment, Heritage and Local Government, and Education and Science, as well as the Private Rental Tenancies Board, Criminal Injuries Assessment Board and the Taxi Regulator. We have introduced regular automated certification for one-parent family payment, child benefit, jobseeker's and pensions. Residency checks with home visits are carried out on those in high-risk categories. Special checks are undertaken at claim application stage for people with previous addresses in Northern Ireland. Multi-agency vehicle checks are carried out in co-operation with the Garda, Revenue and local authority staff. New mailshots have been introduced and frequency of the existing ones have been increased. People on means-based payments with earnings are reviewed regularly. Jobseekers are required to collect their payments at post offices and stricter identity checks were introduced in post offices for people collecting payments.
The special investigation unit which co-operates with each of the seven regions of the Department engages full time in the range of control activities and projects and works with the Revenue, NERA, customs and the Garda Síochána in addressing fraud. Currently it is being reconfigured as a national unit to ensure there is more integrated and consistent approach to control and that activity is being targeted at high risk categories of claimants and employers. The Department is conscious that the recruitment and redeployment of large numbers of staff in recent months may lead to potential for errors in claims, decisions and control activity. We are currently developing new approaches to training staff. This is being trialled in one area of the country and will be rolled out across the country as soon as possible. An innovative approach being examined in this context is the use of video conferencing to train staff in physically dispersed areas to minimise overheads and maximise the outcome.
I assure the committee that we in the Department take our responsibilities regarding the protection of funds entrusted to us very seriously. We have developed and continue to develop our programme of control activities to counter the ever changing and growing threats to our system.
