COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 29 Apr 2010

Social Insurance Fund Annual Accounts 2008.

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

Vice Chairman

We are dealing today with the 2008 annual report of the Comptroller and Auditor General and Appropriation Accounts: Vote 38 — Social and Family Affairs: chapter 9, Termination of Major ICT projects; chapter 29, Expenditure on Social Welfare; chapter 33, Review of Jobseeker's Payments; chapter 34, Transfer of Welfare Functions; chapter 35, Money Advice and Budgeting Service; and the social insurance fund.

I draw everybody's attention to the fact that while members of the committee enjoy absolute privilege, the same privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses appearing before it. Furthermore, I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside of 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 also 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 Lacey, the Secretary General of the Department of Social and Family Affairs, and ask her to introduce her officials.

Ms Bernadette Lacey

I am joined by Ms Siobhán Lawlor, principal officer in our accounts branch, Ms Niamh O'Donoghue, director general, Mr. Eoin Ó Broin, director of regions and Mr. Brian Ó Raghallaigh, assistant secretary in charge of finance and personnel.

Vice Chairman

Thank you. Will the officials from the Department of Finance introduce themselves please?

Mr. John Conlon

I am John Conlon, a principal officer in the sectoral policy division.

Mr. David Denny

I am David Denny, a principal officer in the personnel and remuneration division.

Mr. Tim Duggan

I am Tim Duggan, assistant secretary in CMOD.

Vice Chairman

We also have an official from the Department of Enterprise, Trade and Employment.

Ms Anne Coleman-Dunne

I am Anne Coleman-Dunne, principal officer in the redundancy and insolvency payments area.

Vice Chairman

I welcome all of our witnesses and call on Mr. Buckley to make his opening statement. The full text of Chapters 9, 29, 33, 34 and 35 can be found in the annual report of the Comptroller and Auditor General or on the website of the Comptroller and Auditor General at www.audgen.gov.ie

Mr. John Buckley

This is a resumed session which follows on from a session in February which reviewed issues such as the importance of establishing benchmarks using fraud and error surveys, the use of those approaches to quantify the underlying level of fraud and error in welfare payments, the extent to which incorrect payments are listed for recovery by the Department and the need to use information which was already available to the Department to identify incorrect payments earlier. In the course of the meeting, the Department signalled that it estimates the overall level of irregular payment at around 3%. It also signalled a move to risk rate claims and to use those ratings to determine the frequency of reviews.

Turning to the matters to be considered in this session, almost half of the funding required in 2008 was provided through the social insurance fund. Its reserves, which stood at €3.6 billion in 2007 have been steadily depleted since then and, I understand, currently stand at approximately €347 million. Subvention of insurance based benefits from general taxation is an inevitable next step and no doubt the Accounting Officer will be in a position to provide information about arrangements made by the Department in that regard.

Chapter 33 deals with the result of audits conducted by my office of jobseeker payments at two local offices. The key finding was that normal control activity had been substantially reduced or suspended in a number of areas. These reductions applied, in varying degrees, to controls such as signing on — which reduced in frequency — means reviews, genuinely seeking work reviews and debt control. This pattern also applied in other offices which were not the subject of audit. While steps taken by the Department to address the new demands it faces in the current economic environment have primarily focused on customer service, it is important that control activity is maintained at a proportionate and effective level. It should be possible to address this as the claim load stabilises.

Chapter 34 deals with progress in the transfer of functions between the HSE and the Department. As part of the process of reform of structures and administrative arrangements in the health sector, it was considered appropriate to realign certain functions between Departments and agencies. Historically, these non-core activities had rested primarily with the Department of Health and Children and, subsequently, the HSE. In addition, responsibility for areas such as dental and treatment benefit had come within the remit of the Department of Social and Family Affairs. The chapter reviewed progress made in implementing the relevant Government decision. Progress in this respect has been somewhat mixed. The General Register Office transferred to the Department of Social and Family Affairs in early 2008 and the transfer of responsibility for the domiciliary care allowance was completed in October 2009. No date has been set for the transfer of the blind welfare allowance scheme or the mobility allowance scheme to the Department of Social and Family Affairs.

The community welfare service continues to be administered by the HSE, while the Department of Social and Family Affairs is responsible for policy, regulation and funding of the supplementary welfare scheme. As a result, some overlaps exist, for instance, in means testing claimants with attendant cost implications. A feasibility study into introducing a single social assistance payment is due to be completed shortly. This, in turn, is linked to the introduction of a single means test by the HSE and the Department of Social and Family Affairs. Given that the transfer process originated in 2003 and was approved by Government in 2006, ongoing delays in implementation suggest there may be change management lessons for the wider restructuring programme now being carried out.

The Department of Social and Family Affairs headed up a major e-Government project called REACH. This aimed to develop an on-line broker to serve as a platform for holding citizen information centrally and for processing and delivery of a wide range of services. The history of the project was set out in an earlier special report which we published on e-Government. This report found that the project did not operate in the way originally envisaged and there were overlaps with other services. Nevertheless, it also recognised that the broker had some potential for benefit, if it were more used.

Following a detailed review of the rationale for the project, it was decided to transfer responsibility for the project to the Department of Finance, which subsequently wound it down. As outlined in chapter 9 of the report, the elements of the project retained were estimated to have a capital value of €5 million and therefore, an effective write off of €27.3 million of the accumulated capital value of broker.

The Money Advice and Budgeting Service was established in 1992 under the aegis of the then Department of Social Welfare. Since July 2009, the Citizens Information Board is responsible for that function.

The principal role of the service is to provide free, confidential and independent debt advice and debt management services to families already in debt or at risk of getting into debt. The service is provided at local level by 51 companies which are overseen by boards of directors, typically drawn from local statutory and voluntary organisations. Two national companies deal with central support and information, one of which assists the Traveller community.

The service cost €16.62 million in 2008 and €17.63 million in 2009. In 2010 it was allocated €18 million as part of the overall Citizens Information Board budget of €45.87 million. At the end of 2009, 271 staff were employed. In 2008, the service dealt with a total of 16,600 clients. A total of 73% of these clients availed of support to deal with existing debts and avoid recurrence, while 13% of clients were provided with information. A further 14%, the balance, received enhanced support, under which special accounts are operated in conjunction with credit unions. In these cases clients enter into an agreement through which money advisers are authorised to manage their credit union accounts and make repayments to their creditors.

The audit concluded that while a reasonable amount of information is available on the profile of clients, there needs to be more focus on the generation of relevant standardised information as a basis for reliable indicators of performance in the area of cost, timeliness and quality. It also concluded the service would benefit from the adoption of a national strategy. From an effectiveness viewpoint, areas which we considered needed to be taken into account in any review of strategy included whether the service was reaching all those with debt management problems; whether education to prevent debt issues need to be enhanced — we found that approximately 5% of staff time in the companies we visited went on educational activities; and whether the referral process could be improved — we found that most referral was self-initiated.

The assignment of the Money Advice and Budgeting Service to the Citizens Information Board provides an opportunity to develop a strategy for the service and some potential for savings through identifying opportunities to integrate the Citizens Information Board and the Money Advice and Budgeting Service into a coherent and streamlined operation. However, there are factors that may militate against achieving synergy, including the fact that the money advice function within the Citizens Information Board will continue to be a separate function.

Vice Chairman

I invite Ms Lacey to make an opening statement.

Ms Bernadette Lacey

I wish to make a slight amendment or correction before I begin. I referred to the Department of Social Protection in my report but I think I was a little ahead of time as the Department is still called the Department of Social and Family Affairs.

I thank the committee for the opportunity to address it on the issues raised in the Comptroller and Auditor General's report. I will address the issues in chapters 9, 29, 33, 34 and 35 in the report and I will respond to a number of specific issues raised following my appearance at the committee in February of this year.

Regarding jobseeker's payments, the comptroller was concerned to establish the extent to which the increase in the live register was impacting on services to clients and the controls being applied to ongoing customer payments. Questions of control, overpayments and prosecutions were discussed with the committee at the end of February.

In 2007 the live register stood at 170,000; by 2008 it had risen to approximately 290,000 and in December 2009, it was some 430,000. The number of new claims processed in each of those years was 290,000, 450,000 and 660,000, respectively, an increase of 370,000 claims. The growth in claim numbers put enormous pressure on the Department, resulting in a drop in the quality of service to customers and a substantial increase in the number of claims awaiting decision. As well as deploying additional staff and enhancing claim processing procedures, it was necessary to curtail certain control activities and to divert staff to claim processing for a number of months. As a result, claims awaiting decision reduced from over 82,000, or 17% of the claim load, to about 47,000, just 9% of the claim load currently. As claims awaiting payment were brought to normal levels over the final months of 2009, it was possible to resume control and debt management activities in January 2010.

In 2006, the Government decided to transfer certain functions from the HSE to the Department of Social and Family Affairs. Considerable progress has been made in effecting this decision. The General Register Office and domiciliary care allowance scheme from the HSE have transferred to this Department.

Planning for the transfer of the community welfare service involving the transfer of close to 1,000 staff from the HSE to the Department is well advanced. Negotiations with the unions representing the community welfare service staff, which is the responsibility of the HSE, have been protracted. However, officials from this Department have worked with and will continue to work with the HSE, the Department of Health and Children and the Department of Finance, to resolve their IR issues so that the transfer of the service can be effected as soon as possible. An examination of the feasibility of transferring the treatment benefit scheme and ophthalmic services from the Department of Social and Family Affairs to the health sector, has been concluded. However, the matter is being re-evaluated in light of the changes to the scheme in budget 2010.

The Money Advice and Budgeting Service is highly valued by the public with the result that the service has expanded over the years and it now addresses a wide range of debt issues for people from various areas of society. In recent years the number of people seeking support has increased and the nature and depth of the indebtedness has grown. The current economic environment has caused an upsurge in the number of people visiting their local Money Advice and Budgeting Service, with some 5,500 new clients seeking support in the first quarter of 2010. This compares with over 19,000 in 2009 and 16,000 in 2008.

The telephone helpline received over 24,000 calls in 2009 and has received a further 7,500 calls for the first quarter of 2010. The telephone helpline continues to assist 90% of the cases presenting. The remaining cases are referred to the local MABS company to deal with more complex issues.

Since the drafting of the 2008 Comptroller and Auditor General's annual report, responsibility for the administration of MABS transferred to the Citizens Information Board, as provided for under the Social Welfare (Miscellaneous Provisions) Act 2008. The transfer was completed in July 2009. There are many commonalities between the roles of the CIB and MABS in that they both engage in providing information, advice and advocacy supports. In the medium to longer term, efficiencies may be achieved through the integration of support services such as administration, accommodation and IT.

In addition to its role in supporting individuals, MABS has a role in education on debt with communities and schools. At a national level, MABS has agreed an operational protocol, Working Together to Manage Debt, with the Irish Banking Federation. This aims to improve the operational relationship between MABS, IBF members and MABS clients and includes a commitment that no legal action will be taken so long as there is compliance by the client with an agreed repayment plan. Fourteen financial institutions, including the main banks and building societies, have signed up to the protocol and it has been fully operational since September 2009.

MABS has actively engaged with other lenders that are not members of the IBF, such as sub-prime mortgage lenders, to secure better terms for MABS clients in managing the repayment of debts. Discussions are currently at a relatively advanced stage with one major sub-prime lender. In 1999, following a Government decision REACH was set up as a special unit within the Department of Social, Community and Family Affairs to deliver e-Government to support services for citizens. The unit had an initial mandate to expedite the integration of public service delivery systems across the public service as part of the information society action plan. The mandate was subsequently broadened when the Department of the Taoiseach and the Department of Finance developed the idea of a public service broker. The public service broker was a complex and innovative strategic business and ICT modernisation programme. It incorporated new business processes, and sharing of data and services across Departments, and new approaches to ICT development and implementation. The programme was ambitious and its many achievements were recognised nationally and internationally through a number of awards which it received.

REACH delivered a technological infrastructure as per its mandate which supported a robust hub-based public service broker with interoperability standards and PPS number-based identity management services required to deliver on-line public services.

However, delays in the initiation of the project meant that, by the time the project got under way in 2005, a number of Departments had begun developing their own web-based services. Following the report of the Comptroller and Auditor General on e-Government and the reconstitution of the board in 2007, it was decided to undertake a review of the REACH programme. Significantly it concluded that while the broker should continue as an important provider of shared services, its role should be set within the context of an updated e-Government strategy being developed by the Department of the Taoiseach and that it should be firmly located within the structures with responsibility for driving the central e-Government. In line with this recommendation, responsibility for REACH transferred to the Department of Finance on 1 April 2008.

As identified by the Comptroller and Auditor General it is in the nature of large projects, such as REACH, to be overtaken by technical developments and the decision to abandon projects which are not working is the correct course. With the benefit of learning from REACH and in line with current Government policy, in future smaller pilot projects to validate concepts and technology and to minimise exposure risks would be adopted in addressing such strategic, innovative initiatives. Our Department has adopted a gateway approach to large development programmes whereby small, self-contained projects are developed and integrated into the larger programme.

I will now turn to PRSI and the social insurance fund. The social insurance fund is moving from a period when income exceeds expenditure to one, in 2010, when the fund will exhaust its accumulated cash surplus. The operating deficit of the fund at the end of 2010 which is estimated to be €1.55 billion will be borne by the Exchequer by means of a subvention.

The legislation covering the social insurance fund established a tripartite funding arrangement with the Exchequer acting as a residual financier to contributions from employees and employers. Historically, the Exchequer contribution to cover funding shortfalls was the norm from the establishment of the fund in 1953. For example, the State contribution to benefits paid from the fund was 38% in 1967 and almost 29% in 1985.

The question of non-compliance in respect of employee PRSI collected but not returned by employers was raised at the February meeting. Non-payment of PRSI duly collected or owed is a criminal offence. The PRSI pays for social welfare benefits and also goes towards funding statutory redundancy and insolvency payments.

The Revenue Commissioners act as an agent for the Department of Social and Family Affairs in the collection of PRSI. In order to ensure compliance with the law, inspectors in the Department undertake an annual programme of employer inspections. In addition to ensuring employers comply with the law in terms of maintaining records, deducting the correct rate of PRSI and returning it to the Revenue Commissioners each month, they also carry out checks to ensure that employees are not claiming benefits to which they are not entitled.

During 2008, more than 3,200 employer inspections were undertaken by social welfare inspectors. Non-compliance was 14% overall and some €5.829 million was identified as outstanding. The number of employer inspections dropped in 2009 but a more targeted approach was adopted with attention concentrated on high-risk employment sectors. This is reflected in the increased non-compliance rate of 20% overall for 2009 and €4.235 million determined to be outstanding in PRSI. At the end of 2009, 17 cases against employers were with the Office of the Chief State Solicitor.

The committee asked for information on the numbers of Irish people working abroad with children living in Ireland who are claiming child benefit from another EU country. We are not in a position to know how many people fall into this category as many of them would have no engagement with the Department. However, we are aware of just over 400 people receiving family benefits from another EU member state in respect of children residing in Ireland. The Department is paying a top-up to 377 of these people to bridge the difference in the rate payable in Ireland and the other EU member state. Another 37 customers are receiving family benefits from the other EU member state at a higher rate than is payable in Ireland.

Provisional figures, for which the committee asked, for overpayments during 2009 amounting to €65.5 million were recorded for the year ended 31 December 2009 in respect of just over 42,000 overpayments. The total value of overpayments recovered during 2009 was €32.9 million. The number of overpayments recorded decreased by almost 6,700 or 14% over 2008. The value increased by €11 million or 20% and recoveries increased by 22% from 2008.

Social welfare expenditure through programmes and schemes under the Department of Social and Family Affairs was nearing €18 billion in 2008. This was an increase of 15% on the previous year. For 2010, provision is made for expenditure of nearly €21 billion — an increase of €526 million or 2.6% over last year. In addition, as recently announced by the Government, the Department will take on responsibility for a number of additional services, including the rural support scheme, community employment, community services programme, placement services, and redundancy and insolvency payments. We are working within the Department and with other agencies to ensure that we are in a position to deliver satisfactorily on the remit given to us.

Vice Chairman

May we publish the statement?

Ms Bernadette Lacey

Yes.

Deputy Jim O’Keeffe

Obviously we need to explore a few issues in some detail. Before I do so and in case I might be seen to be critical in my examination, I wish to say to those in the Department that we realise the enormous pressures to which they have been subjected with the explosion in unemployment and other claims in recent years. It is fair to acknowledge the efforts of the vast majority of the staff who have knuckled down to try to cope with such pressures so that people have not been unduly delayed in getting their claims. I make that as an opening remark.

I come to issues about which I might not be so complimentary. What does REACH stand for?

Ms Bernadette Lacey

It was a title, a name given to the project.

Deputy Jim O’Keeffe

Is it an acronym?

Ms Bernadette Lacey

It was not an acronym. I think it was to suggest reaching out to the citizen or something. It is so long ago, I am not quite sure.

Deputy Jim O’Keeffe

My slight concern based on my reading of the brief here is that it seems to have ended up as reaching into the taxpayer's pocket. Effectively €27.3 million has gone down the drain, which is an issue of concern, particularly when it is coupled with €180 million down the drain in the PPARS project and €60 million down the drain on electronic voting. We seem to have been incredibly bad as a country in getting these projects under way or at least in having a proper analysis and evaluation in advance before such enormous sums were spent. Am I right in saying that the REACH project was not subject to a detailed project plan before it began? To a large degree the Department was flying blind in getting involved in this enormous expenditure. Would that be correct?

Ms Bernadette Lacey

There was not a project plan. It was at a time when there was great pressure and great excitement, I suppose, about the whole idea of e-Government and development. There was, sort of, more a vision of what people wanted to achieve rather than a specific nailed-down business objective. The concept was of a single hub — a single gateway — for the citizen to access wider services, not just social welfare services but other Government services. The difficulty, as the Deputy said, was that there was not sufficient thinking and planning and a specific design beforehand with the result that it took a number of years. There was a change in what REACH was going to deliver. Early on it delivered on some concepts around the PPS number, etc. Over time its focus changed. The technology was advancing. There should have been greater emphasis on engaging with other agencies and Departments to make sure they bought into and used the service when it was delivered.

The Deputy mentioned a figure of €27 million. REACH provided and continues to provide a service. For example, it has developed an inter-agency messaging service which is used by the Department to transmit information between the General Register Office, the Department and other agencies. A particularly important use of the service is the notification of death facility which enables us to ensure we stop paying pensions and making other payments. We also provide information for the Department of Finance and the Office of the Paymaster General in order that pension payments are stopped, where appropriate. In that way REACH has provided a service. All of the cash has not been put down the drain.

Deputy Jim O’Keeffe

Would it be fair to say that if the Department had its money back, it would not build such a castle in the air again?

Ms Bernadette Lacey

I do not believe it is a castle in the air. We are continuing to use the inter-agency messaging service. If we were to start again, we could consider the lessons we have learned from this——

Deputy Jim O’Keeffe

Expensive lessons.

Ms Bernadette Lacey

We could have got more benefits from the system. We did gain some from it.

Deputy Jim O’Keeffe

At the time did the Department have the ICT capacity it needed to become involved in a project of this nature?

Ms Bernadette Lacey

The Government decided that the Department should get involved in it.

Deputy Jim O’Keeffe

Did the Government inquire whether the Department had the capacity to become involved in it?

Ms Bernadette Lacey

I do not recollect. It was over 11 years ago. As we did not have the capacity, we had to engage external consultants to support us in developing the project. That is one of the lessons that can be examined in the Department and the public service as a whole.

Deputy Jim O’Keeffe

I assume the external consultants were paid expensive external fees.

Ms Bernadette Lacey

They were paid for the service they provided.

Deputy Jim O’Keeffe

Did they point to the problems or difficulties encountered?

Ms Bernadette Lacey

The problems arose as time passed. By the time we had actually developed the service, other Departments and agencies had moved on. The technology had advanced and the vision was probably too big. As I said, even if we had the big vision now, we would probably consider a series of smaller projects to move us in that direction.

Deputy Jim O’Keeffe

The Department has learned some lessons.

Ms Bernadette Lacey

That is what we are doing under the service delivery modernisation programme.

Deputy Jim O’Keeffe

When I spent a couple of years as Minister of State at the Department of Finance, I found that every bob to be spent anywhere had to be cleared by the Department. Did it clear the expenditure of all of this money? Did it engage in a proper examination of the expenditure that ultimately amounted to €27 million?

Mr. Tim Duggan

The Department of Finance sanctioned the expenditure. A couple of factors need to be appreciated in that context. A delegated sanction arrangement was in place at the time under Department of Finance Circular 16/1997 which was agreed with this committee in 1997. The project was sanctioned under that delegated arrangement.

Deputy Jim O’Keeffe

Did that approach provide for a fast-track way of spending money?

Mr. Tim Duggan

I suppose the approach to the examination of the detail of expenditure proposals was less invasive at the time.

Deputy Jim O’Keeffe

Was it less invasive in the sense that proposals were not examined in the detailed fashion that might have been required?

Mr. Tim Duggan

I would not accept that. This was a Government priority project which was always regarded as highly innovative and novel. Therefore, REACH was operating in uncharted territory, so to speak. There was nothing like it anywhere in the world. There were no analogues that REACH could use to work out how to do this. Therefore, it had to innovate, try things, conduct research and test, etc. The expenditure was sanctioned in the knowledge that there were many unknown factors and that a great deal of learning needed to be done.

Deputy Jim O’Keeffe

The Department was flying blind, to a large degree.

Mr. Tim Duggan

The programme was new and innovative. It was entirely different from anything that had been done before. It was ambitious and there was nothing like it in place. At the time Ireland was trying to be a leader. The committee might remember that in the early years of the 2000s Ireland was the leader when it came to e-Government.

Deputy Jim O’Keeffe

Was it not an expensive flying lesson?

Mr. Tim Duggan

Like the Secretary General, I would not accept that. The functionality developed in the broker is still being used today. The word "terminated" is too strong to use to describe what happened when the Department of Finance took it over. We re-engineered it significantly to take modern day developments into account. The functionality delivered by the broker is still being delivered in the re-engineered approach. One has to remember that it was operating from the time it was first released 2004. Therefore, when its value was transferred, it was not capitalised in the Department of Social and Family Affairs because it was considered to be under development. When we took over and started to re-engineer it, we considered that the appropriate accounting practice would be to capitalise it. In doing so, we had to take a whole range of factors into consideration; for example, that it had been in operation for four years, that it had been used by the general public and that between 250,000 and 300,000 customers were registered to use it. Consequently, one could not simply transfer the development costs to the asset register because one would have to take certain matters such as the costs incurred in research and testing and depreciation in value over its four years of operation into consideration.

Deputy Jim O’Keeffe

These are all accounting processes.

Mr. Tim Duggan

It is good accounting practice.

Deputy Jim O’Keeffe

That does not take from the fact that the final bill to the taxpayer was €27.3 million.

Mr. Tim Duggan

That is the bill in the sense that it costs money to develop these things. One has to apply good accounting practice if one is to come to a valuation of an asset. One has to take depreciation, etc., into account in such circumstances.

Deputy Jim O’Keeffe

We do not want to see it happening again.

There is an issue with landlords' PPS numbers in the context of the rent supplement system. I understand a previous reply we were given suggested the Department had landlords' PPS numbers in respect of just 21% of claims. I gather that processes and procedures are being put in place to try to improve this. From the correspondence I have read on the issue, I am familiar with the difficulties. Is Ms Lacey satisfied with the progress that has been made in ensuring there is access to the PPS numbers of landlords who receive public money and that, correspondingly, the Revenue Commissioners receive their fair share of it? Landlords should render unto Caesar that which is Caesar's. It should not go into the black economy. Is Ms Lacey satisfied with the progress her Department is making to remedy what appeared to be an unsatisfactory situation?

Ms Bernadette Lacey

We have made a great deal of progress in this regard in the last couple of years. We have developed our computer systems twice. We registered landlords' details — their names and addresses, etc. — as we were authorised to do under law. Subsequently, when the legislation changed, we made provision for accepting PPS numbers. The rent supplement forms have been changed in order that landlords' details are contained on them.

Deputy Jim O’Keeffe

Does that apply to new claims?

Ms Bernadette Lacey

Yes. Provision has also been made for landlords to insert their PPS numbers. They are not obliged to include them in their forms. When rent supplement is awarded, an automated letter is issued to the relevant landlord seeking information on his or her PPS number. He or she has 21 days in which to furnish the information to the Department which transfers the information it receives to the Revenue Commissioners. We transferred the information for 2008 to the Revenue Commissioners in January this year. We will transfer 2009 information in November of this year at the request of Revenue. The change process came into effect in November 2008. We have a very small period where we have information. There were just over 4,200 awards in that period and 79% of those cases have the landlord's PPS attached to them. I am reasonably confident that by the end of this year we will have achieved that. We have had a substantial increase, from 21% up to 79%.

Deputy Jim O’Keeffe

The effort will continue.

Ms Bernadette Lacey

We will continue to try to follow up. We notify Revenue of those who do not provide their number so that Revenue can target them specifically for investigation.

Deputy Jim O’Keeffe

I am concerned by an issue I see at the coalface, namely, the transfer of the community welfare service from the HSE to the Department. When someone comes to me with a problem I do not know whether I need to deal with the HSE, the Department of Health and Children or the Department of Social and Family Affairs. The transfer of the CWS function is taking forever. The process started in 2003 with a considered recommendation produced by an interdepartmental group. The recommendation was adopted by the Government a couple of years later. It is like something from "Waiting for Godot". Ms Lacey need not tell me about the position in the past six months. When a Government takes a decision of this nature why can it not implement it?

Ms Bernadette Lacey

There were a lot of issues to be addressed because it is not simply a transfer of functions. The measure changed the status of the staff working in the HSE. They are public servants who will become civil servants. There were also many other issues to be addressed in terms of finance, accommodation, resources and so on.

Deputy Jim O’Keeffe

Did the interdepartmental committee not examine those issues before the Government decision was made?

Ms Bernadette Lacey

It did not look at the detail. A committee was set up, initially chaired by me and subsequently by the director general, with the HSE, Department of Health and Children and Department of Finance, to work through a programme to move forward. The biggest issue in all of this has been engagement with the staff affected. As we are not yet the employer, we have only been able to come at the issue from the side and to work with the other agencies in moving forward. There was huge resistance within the community welfare service to the move and many concerns. We moved along substantially and were pretty hopeful of getting fairly early resolution. Unfortunately, as the Deputy says, recent events have put a stop to that.

Deputy Jim O’Keeffe

The transfer is all over the place; it is in limbo.

Ms Bernadette Lacey

Its status has not changed.

Deputy Jim O’Keeffe

Does that not mean the system is not as effective as it should be and is costing more?

Ms Bernadette Lacey

That is one of the reasons we would like to bring it in but the status of the community welfare service has not changed. It is still part of the HSE and still provides a service to the Department, as it did before. The issue is that we were told to transfer them in and as they are dealing mainly with a scheme that is funded by the Department, one would have better oversight of the scheme and better opportunities to achieve efficiencies from it. However, the negotiations on the human resources and industrial relations sides are a matter for the HSE and Department of Health and Children. As I stated, we have been working alongside them to achieve that.

Deputy Jim O’Keeffe

A Government decision was taken without being properly thought through in advance and legislation was introduced three years ago. Could the legislation be applied to new appointments? Could new community welfare officers be appointed by the Department which is supposed to be the employer under the law of the land?

Ms Bernadette Lacey

There is a commencement to come in on the Act. We could do as the Deputy says but if we move forward like that, having made so much progress on the industrial relations issue, the danger is that by pushing in a different way, one loses all the ground one has gained. I am hopeful that we will be able to resolve the issue this year.

Deputy Jim O’Keeffe

As a democrat, I see the will of the Government being thwarted, although perhaps that should not trouble me. More important, the will of the Oireachtas, which passed this legislation, is being thwarted.

Ms Bernadette Lacey

I appreciate that. If the Deputy understands my position, I have no control over the people in question. Aside from what we have been doing to date, we are working on action plans so that when people come in, we will have a changed approach to how we address this.

Vice Chairman

If it is still a matter of discussions and negotiations and industrial relations issues arise, one cannot delve into it too much because the Department is not the employer at present.

Ms Bernadette Lacey

No, it is not.

Deputy Jim O’Keeffe

I will address another issue, namely, the pressure on the Department. I opened my contribution by complimenting the many staff who are working beyond the call of duty to try to cope with the explosion in demands for services. A couple of issues occurred to me. Could payments be made in a more efficient manner?

I deal with the problems experienced by people at the coalface. I came across a chap who had been working for years and then had to claim jobseeker's benefit. He contacted me after spending 16 weeks waiting for a payment. I nearly blew my top when I heard this. It transpired that he had been told at his local branch office that his application appeared to be okay and would be sent on to the control office. It subsequently lay in that office for 16 weeks. The branch officer is a competent individual dealing with an issue that is not rocket science. His conclusion record will have been checked, presumably by computer, yet the applicant was left languishing for 16 weeks without payment. Surely this is entirely unacceptable.

Around that time, I heard the Minister refer to fast-tracking such payments. Fast-tracking will only apply to offices run directly by the Department as opposed to the branch offices which were previously known as employment exchanges.

Vice Chairman

Perhaps the Deputy will allow the Secretary General to respond on that point.

Deputy Jim O’Keeffe

There are 64 such offices around the country. Why are their services not utilised to a greater degree?

Ms Bernadette Lacey

I agree that 16 weeks is unacceptable. As I explained, we have brought the backlogs down substantially. The position was that branch managers, who are not public servants but work on contract to the Department, were not authorised deciding officers. We have been in negotiation——

Deputy Jim O’Keeffe

Why not?

Ms Bernadette Lacey

That was just the way it was under the legislation. They were not designated as deciding officers. We had moved in that direction and are moving in that direction. There were also union issues about work being outsourced.

Deputy Jim O’Keeffe

Outsourced to branch managers.

Ms Bernadette Lacey

Outsourced from Department staff to the branch managers. We have been through an IR process with that and we are very hopeful that in the near future we will be in a position to have the 64 branch managers' offices authorising claims for the future.

Deputy Jim O’Keeffe

Some of these people are very able and have years of experience.

Ms Bernadette Lacey

I fully agree. We are moving in that direction and we hope to get there.

Deputy Jim O’Keeffe

On the issue of the backlog, anecdotal evidence was provided to me that in some offices a system of quotas and caps was in operation and the environment was such that staff who wanted to work a little harder were unable to do so without ruffling the feathers of their colleagues. Is a system in place to measure or compare work in and between offices?

Ms Bernadette Lacey

Yes.

Deputy Jim O’Keeffe

To put it bluntly, does a quota operate in some offices, a threshold that staff are not either required or expected to exceed?

Ms Bernadette Lacey

If there are quotas in operation, they are unofficial. Certainly, we have detailed statistics for each office around the country in regard to its workflow. We also know the number of resources in each office. It is not only the local office manager but also the regional manger and area manager who would have access to that information. That would be addressed with the office. We can see if an office is out of line with its colleagues and we pursue this to ensure there are not poor practices in the office.

Deputy Jim O’Keeffe

The Department has a system of active management.

Ms Bernadette Lacey

We have a system of active management.

Deputy Jim O’Keeffe

Is Ms Lacey satisfied it is working effectively?

Ms Bernadette Lacey

I am satisfied it is working effectively. I cannot say I will never find an instance where somebody has stepped outside the area. We deal with a very large number of transactions per year. By and large, the staff of the office are very keen to provide a good service. They have done so, even——

Deputy Jim O’Keeffe

By and large, I accept that, but there may be some who might not be keen.

Ms Bernadette Lacey

We have the detailed information on what the processes are in an office. These can be addressed either by the local office manager, area manager or regional manger. We can delve into what is happening in each area.

Deputy Michael McGrath

I welcome Ms Lacey and all her colleagues. I will start with the REACH project, which Deputy O'Keeffe spent a few minutes discussing. How much cash was spent on the REACH project and the public service broker? The Comptroller and Auditor General points out in his report that, under the Department of Social and Family Affairs, "total expenditure on Reach, from its establishment in 2000 to its transfer to the Department of Finance in April 2008, was €71.4 million. This included the costs of developing and supporting the Broker." Where he deals with the accounting for the termination of the project, he states: "The total amount capitalised up to the end of March 2008 was €32.3 million." It is stated that the residual assets of the broker were valued at €5 million, effectively leading to a write-off of €27 million, as Deputy Jim O'Keeffe said. How much was spent between REACH and the broker? The project seems to have mutated since 1999 when it was first announced.

Ms Bernadette Lacey

The total spend was €71.4 million.

Deputy Michael McGrath

In the Department of Social and Family Affairs?

Ms Bernadette Lacey

Yes.

Deputy Michael McGrath

On REACH and the broker.

Ms Bernadette Lacey

Yes. The broker was part of REACH.

Deputy Michael McGrath

Fine. After the transfer to the Department of Finance, how much was spent from April 2008 to the point of termination?

Mr. Tim Duggan

The word "terminate" is too strong because we just re-engineered how the project worked. The re-engineering process took from three to six months. Over that time, we continued with some of the contractors that had been engaged by REACH to help us with the re-engineering approach. We paid for that and also wound down a number of contracts that existed with managed service providers. Since they were long-term contracts, there were buy-out provisions in them that we had to negotiate. We had to spend some money on that and on development work to do the re-engineering. In total, we spent just over €4.2 million.

Deputy Michael McGrath

Will there be ongoing costs following the re-engineering? Some aspects of the system have been retained and I presume there will be recurring operational costs.

Mr. Tim Duggan

There are not because of the way we have done it. We have brought it all in-house, into our own computer rooms. Consequently, the costs of operating it are essentially the cost of my staff, of whom there is a very low number, and the cost of providing power.

Vice Chairman

Was the €4.2 million for a three-month period?

Mr. Tim Duggan

It was for a period of three to four months.

Vice Chairman

How much of that sum is related to buying out contracts?

Mr. Tim Duggan

Including VAT, it was just under €1.5 million.

Vice Chairman

The termination of the contracts cost €1.5 million.

Mr. Tim Duggan

Yes.

Deputy Michael McGrath

The total spend to date on REACH, which includes the public service broker, is approximately €75.5 million. What have we derived from that expenditure? Ms Lacey mentioned an inter-agency messaging service, which includes notification of debts and relaying information to the Paymaster General. That is one tangible example of what has been delivered as a result. Is that all? Can Ms Lacey elaborate on what we are yielding in return for the investment?

Ms Bernadette Lacey

It is not always easy to put it into financial terms because it actually provides a service. However, with regard to debt notification, in 2008 we would have estimated that we had saved €57 million on our programme expenditure by terminating the payment of pensions early. That is because we had the information. We continue to benefit from that. The savings from that element would have offset what we would have spent on the broker and REACH itself. We will continue to make those sorts of savings.

Other issues, such as those associated with information on births, are passed to the Department, which initiates child benefit payments. There is a big saving administratively in that regard. This also applies to other agencies that would engage with families, particularly with new parents. A service value is still achieved from the project. It is wrong to think REACH finished and everything disappeared. We are still getting value from it.

Mr. Tim Duggan

To add to what the Secretary General said, there are numerous things outside the arena of the Department of Social and Family Affairs that are being used. If one has seen the Revenue on-line system and the "PAYE anytime" system, one will note there is an identity management part built in whereby one logs on and is authenticated. That originally stemmed from the REACH project. When we took it over, we simply moved it into the "PAYE anytime" system with the assistance of the Revenue Commissioners. That is still operating.

There are many message transfers around the system. For example, the Garda Síochána transfers information to the courts, and vice versa, over the messaging fabrics that were developed during the period of the public services broker. There are numerous other instances.

Deputy Michael McGrath

With regard to the example of the PAYE on-line service, which is excellent, the report of the Comptroller and Auditor General states:

The main operational elements of the Broker were subsequently dealt with as follows.

[...] Identity authentication for Revenue on-line PAYE services was replaced initially by a lower-cost service developed by the Department of Finance, and subsequently was integrated into the Revenue PAYE Anytime service.

He is referring to the broker element. It was actually included.

Mr. Tim Duggan

Yes.

Deputy Michael McGrath

My reading of that is that it was replaced by a lower-cost service developed by the Department. Was the identity authentication service delivered by the broker not actually used and instead replaced by a lower-cost service developed by the Department?

Mr. Tim Duggan

It was just the technology piece that was replaced. The actual processes and systems designed by REACH are still being used to offer the "PAYE anytime" service of Revenue. For example, one part involves identification by checking with client identity services in the Department of Social and Family Affairs. I refer to the identity details being submitted by an individual choosing to register with Revenue. That process still occurs. All the processes still happen. The only piece that was changed was the technology used to deliver the system. The reason was that when REACH initially developed it, it did so to a high industrial strength level. The view we had in the early 2000s was that such a level of strength was required to carry out the project for a nation. It turns out that, as products become commoditised over time, we are able to use more commoditised software than was available in the early 2000s. Since cheaper software had become available to us, we decided to leverage it because it managed to cut our maintenance and operational costs.

Deputy Michael McGrath

How much would it cost to develop from scratch the technology to provide the services that REACH and the broker are providing, including the interagency messaging service and the technology being used by the Revenue Commissioners. I suspect it would not be anywhere near €75 million.

Mr. Tim Duggan

The Deputy cannot draw that conclusion as it is an incredibly difficult question to answer. No country in the world has yet succeeded in putting a public services broker in place and yet every country, particularly in Europe, feels the need to do so.

For example, one original concept for the broker was the data vault in which people could store their personal information and, therefore, would not have to re-supply it to different government agencies every time they used a broker. Vaults were developed but never put into production. All European countries now face the need to do this because the latest version of the European action plan suggests legislative provision be made to require member states to facilitate the once only provision of information to the state. Given no country has ever done this, it is not clear how we could make it operable.

The Deputy cannot conclude that to develop what the broker has delivered would be any less expensive than it has been to date.

Deputy Michael McGrath

Have we learned any lessons? From an accounting point of view, €27 million of the capitalised amount was written off. In hindsight, how much of the €75 million need not have been spent? Was there any aspect of the project that should not have been advanced?

Ms Bernadette Lacey

In hindsight it is very difficult to say because at the time proofing concepts, for example, which needed to be done also cost money. A huge amount of money simply went into developing the theories and researching the backgrounds. If one were doing it today, one would do it differently. Taking today's technology and applying it to something 11 years ago is impossible.

We have learned other lessons. The service delivery modernisation programme has been going on in the Department for some years. We develop small projects, all of which fit in with the rest of our modernisation programme, so that we do not have a project that is so big that it is difficult to manage and large amounts of moneys are committed to it. We have learned the customer we think is there really does want these services.

Deputy Michael McGrath

I assume the delegated function arising from the 1997 circular has been superseded and the Department of Finance has a much tighter rein on similar projects.

Mr. Tim Duggan

It was superseded by circular 209 at the start of 2009 following the decision. The delegated arrangement no longer applies and this is an entirely different type of arrangement.

Vice Chairman

Before the Deputy moves on to another area, can Mr. Duggan go back over the aspects of REACH the Department is not using?

Mr. Tim Duggan

The customer-facing piece is not being used in PAYE.

Vice Chairman

Are we using functionality from REACH in the revenue system?

Mr. Tim Duggan

The messaging piece is being used.

Deputy Michael McGrath

Members are acutely conscious of the work done by the Money Advice and Budgeting Service, MABS. Is synergy being achieved in its 53 companies? Are payroll and HR costs dealt with centrally or individually by each of them?

Ms Bernadette Lacey

Each of the 53 companies is an independent company limited by guarantee.

Deputy Michael McGrath

Who are the shareholders?

Ms Bernadette Lacey

There is an overall strategic plan for the service which will set out its direction over the next five years. Now that it has moved into the Citizens Information Board, CIB, the Department is engaged in plotting out its future. IT and other supports are provided centrally for the companies.

Often MABS and the CIB are in the same town and even on the same street. In such cases, there are opportunities to share accommodation and training. For the long term, we are examining if a shared-service approach can be taken in processing salaries and payments.

Deputy Michael McGrath

What is the average time a person will have to wait between making an appointment and having an interview in a local welfare office?

Ms Bernadette Lacey

About 90% of cases can be dealt with on the first telephone call. In most instances, there is up to a four-week wait. The current average waiting time is four weeks. That does not mean that every area is the same. In some areas, it is one week and in others it can be up to 20 weeks. There are ongoing reviews of these waiting times.

Deputy Michael McGrath

Are the issues being addressed in areas where it is 20 weeks waiting time? For somebody with his back to the wall that is a long time to wait.

Ms Bernadette Lacey

Up to 19 advisers were put into MABS last year, for example. The role at the centre is to identify where these difficulties arise and why. One often finds that these areas have the greatest disadvantage and, therefore, a greater demand on services.

Deputy Michael McGrath

I know there has been an improvement with processing times. However, I have a constituent who applied for a one-parent family allowance on 3 September 2009 but it was not decided on, almost eight months on, until last week when the constituent was finally interviewed about it. Replies to parliamentary questions, however, state processing times on average are 16.66 weeks. It does not bear any resemblance to the example I have. Similarly in terms of the State non-contributory pension, I have an example of somebody who applied in October 2009 and has not heard anything back. It has been confirmed that the application was received, but no decision has been reached since October 2009.

When I look at the information in the parliamentary reply, I see that 77% of claims are being awarded within ten weeks and there is no backlog. I do not fully understand how one in four claims not being dealt within ten weeks is not regarded as a backlog. What does Ms Lacey regard as a backlog?

Ms Bernadette Lacey

A backlog is where the number of claims awaiting decision exceeds what the norm should be. Claims awaiting processing are not always in a backlog. In the case of a non-contributory pension, say, there is an examination of the person's means and whether all the information has been made available, whether the person has income from elsewhere or he or she might have had some type of work history in other countries and so on.

The Deputy has raised two particular cases that are way outside the norm and I would appreciate getting the details of those and we shall follow up on them. However, we have worked really hard to bring the workload back into line. Our norm for lone parents, for example, was about nine weeks, last year — to process a one-parent family payment. However, the one the Deputy has given me is way out of line and I do not understand it.

Deputy Michael McGrath

I shall be happy to provide the details after the meeting. I have one final question and it relates to the issue of child benefit, which Ms Lacey addressed in her introductory comments. She said the committee had asked for information on the numbers of Irish people working abroad, with children living in Ireland, who were claiming child benefit from other EU countries. According to the records that are available, she is aware of just over 400 people receiving family benefits from another EU member state in respect of children residing in Ireland. The reverse of that has often attracted a good deal of publicity, where EU nationals, living and working in Ireland whose children have returned to the home country, are claiming child benefit from this State, under EU law as such. Last year, I believe, payments under that heading were made for about 10,000 children at a cost of around €20 million.

Under EU law, are we obliged to pay the Irish rate for child benefit in such a case?

Ms Bernadette Lacey

Yes, we are. It is EU law that the same rate is paid for children of EU nationals, regardless of where they are.

Vice Chairman

For clarification, the last time Ms Lacey came before the committee, just recently, we covered that aspect in some detail. It is actually in the transcript. We went into numbers of cases as regards both EU and non-EU claimants.

Ms Bernadette Lacey

For the committee's information, since January the number of customers whose children are living abroad has dropped by 200. That would indicate that the numbers seem to be depleting

Deputy Michael McGrath

On REACH and the public service broker project, I believe the lessons from that should be documented. Perhaps there needs to be a value for money report or study carried out into that particular project. Ultimately, some €75 million of taxpayers' money was spent and from listening to the services that have been provided from that project, I am not convinced that it was well-spent and I believe those services could have been provided at a much lower cost. There should be a value for money review of that particular project.

Deputy Deirdre Clune

I should like to cover just a couple of areas. From my viewpoint the REACH area has been dealt with extensively this morning.

In her opening statement, Ms Lacey says the deficit in the social insurance fund is estimated to be €1.555 billion this year, an alarming figure. That is a major change and represents a big hole in the fund, does it not? Looking at the 2008 report one sees that the fund met its expectations that year. However, the €1.555 billion shortfall this year is enormous. I know we can go back and look at the years in which the Exchequer had to contribute, and I realise, too, that this is a sign of the times and the income side of the social insurance fund is down. However, this is yet another major contribution that the Exchequer will have to make this year.

Ms Bernadette Lacey

The Deputy is right in saying that it is a large amount that has to be transferred. However, it is simply down to the fact that the income stream into the social insurance fund through PRSI is down substantially. Then there is the demand on the fund itself from increases, say, in jobseeker's allowance claims and so on, which are higher and this is why the fund has been depleted. It was always anticipated that it would run out, but not for a number of years. However, recent changes in the economic environment have caused this to happen sooner than was anticipated some years back.

Deputy Deirdre Clune

What was the situation last year?

Ms Bernadette Lacey

There was a surplus at the end of the year of just under €1 billion — €934 million.

Deputy Deirdre Clune

That means there is a gap of some €2.5 billion.

Ms Bernadette Lacey

That is correct, yes.

Deputy Deirdre Clune

What percentage is the €1.555 billion of the estimated spend?

Ms Bernadette Lacey

The income to the fund is estimated to be €7.074 billion this year. Then one needs to add €1.555 billion onto that to cover total expenditure for the year. The expenditure for the year will be of the order of €9.5 billion.

Deputy Deirdre Clune

That will require a major top-up from the Exchequer. The Revenue officials were before the committee recently and told us their income was down by more than €33 billion. This will take a chunk out of that, too, so it is very stark news on top of the previous bad tidings we have had in that area.

To return to MABS for a moment, which essentially tends to deal with crisis management, are any efforts being made to focus on debt management before situations reach crisis point? I appreciate the enormous emphasis being placed at the moment on the role of MABS, but given that it is now under the aegis of the CIB, perhaps there is room for development in this area.

Ms Bernadette Lacey

Some work is being done and we should like if there were more resources available. However, within the context of what we have, some work is being done on the education side, say, with transition year students, to educate them as regards managing money and avoiding getting into debt. Some work is also being done with some of the communities. The original concept of MABS was that it would help people who get into debt and show them how to avoid getting in even deeper. People tend to wait until they are in difficulty before coming forward. However, MABS has done a good deal of work with the Irish Banking Federation and other lenders towards addressing the issues of those who are in debt, people with mortgages and so on.

Deputy Deirdre Clune

Ms Lacey's opening statement also indicated MABS is engaged with some of the sub-prime lenders. Those of us who have had dealings with people in major default situations, tend to find that there is a sub-prime lending element involved, in my experience at any rate.

Ms Bernadette Lacey

MABS has been in talks with sub-prime lenders with a view to establishing the same sort of approach, namely, the setting up of a repayment structure that an individual could manage, for example. If the person continues to pay in line with the agreed repayments structure, it is hoped that agreement can be reached so that the company will not move against him or her. So far, the sub-prime lenders have not agreed to that. However, we are negotiating with at least one company in this regard, to see what may be achieved.

Deputy Deirdre Clune

Is it purely voluntary on the sub-prime company's part?

Ms Bernadette Lacey

It is, yes.

Deputy Deirdre Clune

Will Ms Lacey please comment on the statement in the Comptroller and Auditor General's report to the effect that the MABS service cost €16 million in 2008? A total of 16,600 clients were dealt with, which works out at an average of two per week per head of staff. Has anything been done to improve that dispersal rate?

Ms Bernadette Lacey

The Comptroller and Auditor General gave a figure of 16,000 new claims. These were new customers coming to MABS, but there was an active claim load during the year of 30,000 people. Someone coming to MABS will have more than one engagement with the adviser who may need to negotiate with the utility companies or the mortgage-holding company to come up with a repayment plan for the individual in question. One might need to spend more time with him or her, working through his or her budget and so on. While the figure of 16,000 new claims is correct, the active claim load is 30,000.

Deputy Deirdre Clune

How much does the Department spend annually on rent supplement?

Ms Bernadette Lacey

The estimate for the current year is just under €500 million.

Deputy Deirdre Clune

What steps have been taken to improve the position on landlord regisration and PPS numbers? Figures show that only 21% of claim forms display the landlord's PPS number.

Ms Bernadette Lacey

The process changed in November 2008. We now issue a letter automatically to the landlord seeking his or her PPS number. We have also changed our IT systems to hold the landlord's details and PPS number. In respect of 79% of the 4,200 rent supplements awarded in that short six or seven week period, the landlord's PPS number was attached. I expect there will be the same outcome for 2009. We are continuing to engage with landlords on the matter.

Deputy Deirdre Clune

Is the information available to the Revenue Commissioners also?

Ms Bernadette Lacey

We will transfer the information for 2009 to the Revenue Commissioners in the fourth quarter of this year, at their request. We transferred the information for 2008 in January this year.

Deputy Deirdre Clune

Therefore, there have been big improvements.

Ms Bernadette Lacey

Yes.

Deputy Deirdre Clune

An employee in my constituency was made redundant last June and has not yet received any redundancy payments because the employer claims he cannot make them. The matter has been referred to the Employment Appeals Tribunal, yet we have seen locally that the employer in question has since set up another business and is employing people again. What can be done about such cases? Surely he has to register as an employer with the Department. I know of this specific case but had heard about such cases before.

Ms Anne Coleman-Dunne

Given the turmoil in the labour market and the downturn in the economy, many employers are finding themselves in a position where they have to wind up their busineses formally or become insolvent informally. It is an increasing difficulty. We are seeing the debt to the social insurance fund increasing because simply employers are not able to pay.

We have a due diligence process in the Department. We simply cannot have employees telling us that their employers made them redundant and that they have not been paid. We must look for documentation to back this up. In the event that we do not receive the documentation we need from the employer, we have no option but to send the employee to the Employment Appeals Tribunal to have his or her right to redundancy payments established. The tribunal has a quasi-judicial function and hears the side of both the employer and employee. If there is a positive determination, that will enable us to pay the individual concerned. We must engage in a due diligence process which, to an extent, is unfortunate because it means the employee is placed in one queue and must then join another.

Deputy Deirdre Clune

Waiting time on that queue is 48 weeks.

Ms Anne Coleman-Dunne

It is and our redundancy business is causing the queue to lengthen. The tribunal has taken measures to speed matters up a little and is looking for more improvements to be made.

The issue of companies becoming insolvent and starting up again the next day under a different name came up last year. There are protections under company law in that regard. Those working on the issue of redundancy in the Department liase with the Office of the Director of Corporate Enforcement. Since last year on a quarterly basis we have been issuing lists of sole traders and companies, in respect of which we have paid on the basis of a claim of inability to pay. The Office of the Director of Corporate Enforcement can look at these sole traders or companies to see if there was reckless trading or inappropriate behaviour on the part of the directors when setting up again. In the redundancy payments section of the Department we have a function to pay out, but the Office of the Director of Corporate Enforcement is in place to exercise protections under company law. We give it a list on a quaterly basis, but I do not know what resources it has available to follow up on it. It is up to it to oversee the matter.

Deputy Deirdre Clune

Does the person in question not have to reregister as an employer with the Department? Should he or she not be making returns and payments to his new employees?

Ms Anne Coleman-Dunne

An employer registers with the Revenue Commissioners and the number would never change. Obviously, the directors of a company——

Deputy Deirdre Clune

Should it not register in the IT system that the employer has previously claimed inability to pay, yet is allowed to operate under another guise?

Ms Anne Coleman-Dunne

We would see that in the event of another claim being placed before us. We establish whether there is an inability to pay and then pay out. We would only come into contact again if there was a further claim from the employer. We do not have a policing function, which is why we send our list of companies which default on redundancy payments to the Office of the Director for Corporate Enforcement. It is up to that office to check the lists to find out whether there are common directors involved.

Deputy Deirdre Clune

It is a resource issue, but we have been down this route before.

Vice Chairman

It is a problem across the country.

Before I call on Deputy Shortall, I have a question about unused tax credits. What is the position in the Department on processing such refunds? Who is in control?

Ms Anne Coleman-Dunne

It is a Revenue issue. The redundancy payments section of the Department liaises with the Revenue Commissioners where a company owes the State money because in a sense we are defaulting in that we have not provided for a rebate to Revenue. We have an offset arrangement with Revenue. The other issue is a Revenue issue.

Vice Chairman

That is fine. We will take that up separately. I call Deputy Shortall.

Deputy Róisín Shortall

I welcome the delegation. I have a number of questions. The first relates to the social insurance fund, for which the Dáil has just agreed subvention of €1.5 billion. In addition to what the State will subvent, there are questions in regard to what is owed to the social insurance fund, specifically the fact that €79 million is owed through the recoupment of redundancy payments. What action is the Department taking to bring in that substantial amount of money? What is the Department forecasting it will be able to collect this year from that sum? At the same time, Ms Lacey might tell us what is currently owed in regard to PRSI contributions and the percentage of this amount the Department realistically expects to be able to bring in this year.

Ms Bernadette Lacey

The issue of the recoupment of redundancy payments is a matter for the Department of Enterprise, Trade and Employment.

Vice Chairman

Will Ms Coleman-Dunne comment?

Ms Anne Coleman-Dunne

It is a very difficult situation. Given the nature of this debt, we can never forecast what we might get back.

The debt arises in exactly the type of situation outlined by Deputy Clune, where a company has simply closed up shop or gone to the wall, without formally winding up by way of liquidation – it has literally closed on Friday and there is nobody there on Monday morning. In that situation, we have to take it that these companies – or this is certainly the information we get from their company accountant or solicitor — do not have any money and are effectively bankrupt at that point. The only possibility, and it is a very small one, is that eventually the company might trade out of its difficulties. We have had situations where, years later, we would get moneys back from companies that managed to get up and running again, trade successfully and then pay back.

At the time we make the payments, we set out to the employer that we are looking for the 40% which would be recoverable to the social insurance fund, and we ask the employer when and by what method of payment he expects to give that back to us. Often, we will not get anything, although we have a systematic follow-up by way of reminders and so on. One has to view this from the perspective that the chance of recoverability of the debt is not good in the first instance.

What we have done since the end of 2008 and in 2009 is to proactively offer the companies the facility of an instalment payment to take small bite sizes off the amount owed, a facility which has always existed. This has proved quite popular. In 2009, we issued approximately 1,600 letters to companies and sole traders that owed us money. In 11% of cases — 70 companies — we got a positive bite back in terms of their engaging with us in an instalment payment plan, which is continuing. To date this year, we got about €138,000 back on the instalment payment.

It is not the big bang approach. It is the little steps that we can take to——

Deputy Róisín Shortall

In recent years, the Department has been running an approximately €25 million per year shortfall in terms of what it is collecting. This committee has done some work on the whole area of fiduciary taxes, lax company law and people walking away from debts that are owed to the State. Obviously, in addition to debts in regard to PRSI, VAT, contract taxes and so on, there is that figure of €25 million a year in un-recouped redundancy payments which also needs to be factored into that sum.

Ms Anne Coleman-Dunne

It would be in the debt owing to the social insurance fund generally. It is something that we follow up and pursue. However, the prospect for recovery is not good in the first place.

Deputy Róisín Shortall

The loss to the Exchequer is running at about €25 million a year, which is very considerable. I would also like to have details of the PRSI moneys owing.

Ms Bernadette Lacey

I do not have details of the PRSI moneys owing. PRSI is collected by Revenue as part of the taxation collection system. Some €15.8 million of PRSI was written off by Revenue in 2008. In the same year, we carried out 3,200 employer inspections and found that 14% were non-compliant and that——

Deputy Róisín Shortall

Some 14% is very high.

Ms Bernadette Lacey

It is higher than it had been. We had been up to more than 90% but in recent years, because of financial difficulties, people are holding back on paying their tax and PRSI. That amounted to €5.829 million. In 2009, the non-compliance rate was 20%. We had a more targeted approach that year and went after high cash businesses. That amounted to €4.235 million in PRSI outstanding. When we identify such cases, we report them to Revenue for follow-up and collection with other taxation that would be outstanding.

Deputy Róisín Shortall

The Department of Social and Family Affairs has no role in recovery.

Ms Bernadette Lacey

If there is PRSI outstanding, there would be taxation outstanding as well. Therefore, Revenue would pursue the lot in one go, rather than the Department. As the Deputy knows, we also work on joint investigations with Revenue, so we can target this area.

Deputy Róisín Shortall

In terms of managing that risk, and very substantial amounts of money are involved and due to the Exchequer, what kind of spot checks does the Department carry out to ensure employers are compliant?

Ms Bernadette Lacey

We carried out 3,200 employer checks in 2008.

Deputy Róisín Shortall

What was the outcome of those checks?

Ms Bernadette Lacey

That is where we had 14% non-compliance.

Deputy Róisín Shortall

What happened then? What did the Department do about that 14%?

Ms Bernadette Lacey

We notified Revenue of the employers that were non-compliant and the amounts of money we had identified as PRSI for pursuit.

Deputy Róisín Shortall

Does the Department of Social and Family Affairs not pursue employers through the courts in any way?

Ms Bernadette Lacey

We pursue a small number of employers through the courts but this would be for very specific reasons, such as not keeping records or for obstructing our investigators in their activities.

Deputy Róisín Shortall

How many has the Department pursued in recent years?

Ms Bernadette Lacey

In the past year, we had 17 cases with the Chief State Solicitor's office.

Deputy Róisín Shortall

These are cases that actually went to court.

Ms Bernadette Lacey

No, they are with the Chief State Solicitor's office and are probably waiting to get into court.

Deputy Róisín Shortall

What is the last year for which the Department has full figures?

Ms Bernadette Lacey

I will have to send them to the Deputy as I do not have them with me.

Deputy Róisín Shortall

We hear much about fraud, which cannot be defended in any area. However, while we hear much about the Department's performance in regard to fraud committed by individuals, we do not hear much in regard to employers and their failure to comply with PRSI. It is important that——

Ms Bernadette Lacey

Our general investigators review the activities of employers. Our special investigation unit is specifically focused on fraud and would undertake very detailed investigations of employers. We would pursue it.

Deputy Róisín Shortall

Whatever the figure is, and it is 14% for a recent year, I am keen to find out the outcome of those cases. In how many of those cases does the Department recover the moneys owed and are fines imposed? How does it manage that risk?

Ms Bernadette Lacey

The information is passed to Revenue for collection with its taxation approach. We do not have the information about each individual employer.

Deputy Róisín Shortall

Why, then, would the Department of Social and Family Affairs take certain of those cases to court? I am trying to figure out who is responsible for policing this. When does Revenue do it and when does the Department pursue cases?

Ms Bernadette Lacey

The reasons we prosecute employers are if they fail to pay PRSI arrears on demand following the issue of a demand, if they fail to furnish information to the inspector, if they fail to produce records as required, if they obstruct the inspector, if they make false statements, if they fail to have records on site to record details of earnings and payment of wages and if they fail to notify a commencement of employment.

Deputy Róisín Shortall

Does Ms Lacey have a breakdown of those different categories. While I am not asking for them now, are they available and can Ms Lacey provide them to the committee?

Ms Bernadette Lacey

I have details of cases finalised in court in 2009. There were two cases where there was failure to provide PRSI on foot of demand, one case where there was failure to provide employment details of an employee, two failures to produce records relating to wages for inspections and two cases of failure to maintain proper wage records.

Deputy Róisín Shortall

Those figures seem very small. What percentage of cases would the Department prosecute?

Ms Bernadette Lacey

We prosecute a very small number.

Deputy Róisín Shortall

Of those that fall to the Department of Social and Family Affairs to pursue, what percentage would it prosecute? If Ms Lacey does not have the figures she can provide them to the committee at another time.

Vice Chairman

We can get any outstanding information from the clerk to the committee.

Deputy Róisín Shortall

That is fine. On the Citizens Information Board, there is a real problem with the information which is available to jobseekers. There is an undoubted nixer culture in this country. Equally, it is not very easy for people to take up casual work. In view of the difficulties in signing off, signing on and having to wait for a long period, would the Department accept there is a need to provide better quality information to jobseekers about their options regarding working casual days? The lack of information leading to abuse of the system is an issue. Has the Department examined that and considered the possibility of the Department working with the Citizens Information Board to provide information? In the current climate, in particular, we should be encouraging people to take up any work they can on a casual basis but it is not made very easy for people.

Ms Bernadette Lacey

We work very closely with the Citizens Information Board on the provision of information. On the specific issue raised by the Deputy, namely, casual employment, we have improved our information overall. I am quite happy to examine the specific issue and see where we can raise it because quite a lot has been done in recent years to facilitate people to work on a casual basis without having to return to the process of employment.

Deputy Róisín Shortall

I get a lot of queries about it. There is also a latent problem whereby many people are working on particular days and are not declaring it because they do not know how the system works. I have not found any leaflet which explains the situation.

Ms Bernadette Lacey

It is something which I will take on board and I will consider producing the information.

Deputy Róisín Shortall

Okay. On the jobseeker's allowance, the national average waiting time for a claim to be processed is seven weeks. It seems to be going in the wrong direction. In January it was six weeks. What are the Department's targets for processing times for jobseekers?

Ms Bernadette Lacey

The latest figures which I have are for March, and 78% of claims for jobseeker's benefit were processed in less than three weeks and 67% of claims for jobseeker's allowance were processed in less that six weeks.

Deputy Róisín Shortall

I thought the national average figure was seven weeks.

Ms Bernadette Lacey

That was last year, when we had particular difficulties, but we have brought the averages down in March. The most recent figures I have are that 78% of claims are processed in less than three weeks.

Deputy Róisín Shortall

Is the current industrial action having an impact on that?

Ms Bernadette Lacey

The industrial action did have an impact as offices were closed for half days for unaccounted periods and so on. Since the Croke Park deal, that has not come into play at all in local offices. When the offices were closed or people were not answering phones, people were processing claims in the background. In fact, it helped us to eliminate a substantial number of the backlogs.

Deputy Róisín Shortall

Okay. The new PRSI exemption for employees was announced in the budget to encourage employers to take on new staff. I gather there is no statutory underpinning of that measure yet. What is the position? Are people allowed to avail of that exemption now or will they be entitled to claim back the PRSI contribution when the legislation is passed? How is it working?

Ms Bernadette Lacey

My understanding is that the legislation, which will be passed in the next couple of months, will apply and will be backdated to the beginning of the year.

Deputy Róisín Shortall

There will be a Bill.

Ms Bernadette Lacey

I will have to confirm it with the Deputy.

Deputy Róisín Shortall

Employers who have taken on people since January——

Ms Bernadette Lacey

We will have to examine the position of such employers and establish whether they have the exemption.

Deputy Róisín Shortall

They will be entitled to a rebate.

Ms Bernadette Lacey

I will revert to the Deputy to confirm that. I have not seen the latest version of the Bill.

Deputy Róisín Shortall

Given that new arrangements were introduced in January, are employers being informed of the new scheme?

Ms Bernadette Lacey

I am not aware of that.

Deputy Róisín Shortall

It was announced in the budget, but it is not being promoted.

Vice Chairman

Will the Department of Finance have any up-to-date information?

Mr. John Conlon

My understanding is that, as the Secretary General has outlined, there would be a retrospective entitlement, once an underlying entitlement was in place. The Bill which will give legislative underpinning to the measure will be passed by the Oireachtas this session. I cannot give any further information on it. The Department of Social and Family Affairs has legislative responsibility for it.

Vice Chairman

Okay. I thank Mr. Conlon.

Deputy Róisín Shortall

I would like to ask Ms Lacey about the comments of the Comptroller and Auditor General on MABS. It would be very helpful if MABS published its waiting times. It is very difficult to know what the situation is. The witnesses told us many of the queries are dealt with on the telephone. Waiting times are available for all other services. It would be helpful.

MABS was established at a time when the main problem in terms of debt was illegal or legal moneylenders. In light of the financial difficulties in which many of its clients now find themselves, such as mortgage debt and much more serious debt problems, is funding provided to upskill those working in MABS to deal with the more complex and specialised problems with which people are presenting?

Ms Bernadette Lacey

Funding is provided for training the MABS advisers and I understand that the programmes are being adopted. As I said earlier, the Citizens Information Board has now taken over that responsibility. We will discuss its strategic approach for the next number of years in this area with it, in terms of how to ensure the people who are employed are geared to deal with the very difficult levels of indebtedness people have. A committee has been established in the Department of Finance to deal with indebtedness and mortgage arrears, with which we are participating. One of the issues which will be examined is how one ensures people have the skills and capacities to deal with the current changed environment.

Deputy Róisín Shortall

The problems are very immediate.

Ms Bernadette Lacey

I understand that.

Deputy Róisín Shortall

I wonder if the Department is in a position to ensure that those services are geared up in time, given the deluge of problems we are currently seeing.

Ms Bernadette Lacey

I understand training and upskilling has been increased in recent years. As the Deputy will appreciate, like a lot of things which happened, it happened at such speed that ensuring that there was a whole range of services across the country is very difficult to do. The feedback we are getting from most of the customers who have used MABS is positive. However, there may be areas in which we need to improve.

Deputy Róisín Shortall

Does the Department expect to be in a position to publish the waiting times soon?

Ms Bernadette Lacey

I will investigate that. We are aware of the average waiting times and which offices have a waiting time of a week or longer. I will investigate the possibility of publishing that.

Deputy Róisín Shortall

Okay. On the question of rent supplement, an issue on which the committee has spent a lot of time, the performance of the Department in this regard is not clear. The Minister used a figure of 21% of landlords providing the PPS number at the meeting last week of the Joint Committee on Social and Family Affairs, which he then corrected to 31%. What is the current figure?

Ms Bernadette Lacey

The overall figure for 2008 was that 31% of PPS numbers were obtained. I explained that in November 2008 we installed a new system. For the rent supplements that were awarded in the period up to December 2008, that is, a period of six to eight weeks, there were 4,200 awards for which we have 79% of the PPS numbers. I expect we will achieve a similar figure for 2009 as well.

Deputy Róisín Shortall

Okay. But how does the legislation work? Is the Department required to obtain the PPS number before it awards a rent supplement?

Ms Bernadette Lacey

No. We are required to request the PPS number and if we do not get it within the specified period we are required to notify Revenue that these landlords have not provided the information.

Deputy Róisín Shortall

Therefore the Department still can go ahead and make the payment.

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

Very well. Under the law, does the Department have the option of refusing the payment in the absence of a PPS number?

Ms Bernadette Lacey

No. I refer to our legal advice. There is a difficulty in that it is a payment to the individual who is seeking the rent and that it is his or her entitlement and we are not entitled to stop that. However, we advise customers that if the information sought is not available after a period, we may ask them to seek alternative accommodation. However, that is a major imposition on people who are looking for accommodation in this situation.

Deputy Róisín Shortall

Okay.

Vice Chairman

To clarify, as this is an important point, the correspondence to the committee dated 27 April stated that section 123 of the Finance Act 2007 places an obligation on the Department and the HSE to request a PPS number, a tax reference number, from the landlord before payment of the supplement is made. It obliges the landlord to comply with the request in time for the HSE to have the information before the payment is made.

Ms Bernadette Lacey

Yes.

Chairman

How does that tally? The Secretary General is saying that the Department is making the——

Ms Bernadette Lacey

We are obliged to request it.

Vice Chairman

But not to receive it?

Ms Bernadette Lacey

No.

Vice Chairman

Okay.

Deputy Róisín Shortall

Yes, but the Department is empowered to refuse a rent supplement in the absence of a PPS number, is it not?

Ms Bernadette Lacey

We are not empowered to refuse a rent supplement in the absence of a PPS number.

Deputy Róisín Shortall

Presumably, the Department has discretion in respect of granting rent supplements.

Ms Bernadette Lacey

The discretion must pertain to the individual meeting the conditions of the scheme, rather than to the landlord meeting the condition that he or she would provide his or her PPS number.

Deputy Róisín Shortall

Why can the Department not tell the client that it will be unable to make this payment until he or she gets his or her prospective landlord's PPS number?

Ms Bernadette Lacey

For a number of reasons. First, the legislation does not oblige the client to get the PPS number; it obliges the Department to get it. What happens is that when we register and award the payment, an automatic letter issues to the landlord demanding this information within 21 days. As I stated, since we introduced this new process, 79% appear to be complying. While it is a very small sample, 79% of those have complied.

Deputy Róisín Shortall

Is it sampled?

Ms Bernadette Lacey

No, I mean the six to eight weeks between November and the end of 2008. I should say it is a very small number rather than a sample. However, 79% are compliant at this stage and I expect we would have that. Our obligation——

Deputy Róisín Shortall

And in respect of the 2009 figures?

Ms Bernadette Lacey

We have not finalised 2009 figures because they will not be finalised until the fourth quarter of this year.

Deputy Róisín Shortall

Sorry, but the Department knows how many rent supplements it has paid out.

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

Does the Department's information system not allow it to report within a matter of weeks at the end of the year?

Ms Bernadette Lacey

No. Revenue has asked us not to report until the fourth quarter of the year.

Deputy Róisín Shortall

My understanding was that the Department was not required to report.

Ms Bernadette Lacey

No, Revenue has asked us to report in the fourth quarter of the year. That is when they require it.

Deputy Róisín Shortall

Okay, but that does not stop the Department from measuring its own performance in this regard, does it?

Ms Bernadette Lacey

The engagement with the landlords is continuing for 2009 to ensure that by the time we pass the file to Revenue, we would have an appropriate number of landlords who have confirmed their PPS number.

Deputy Róisín Shortall

It is hard to know how it is that by the end of April, the Department is unable to provide figures for the year to the end of December 2009.

Ms Bernadette Lacey

We had 150,000 rent supplements that were awarded to approximately 120,000 people and thus far, we have gathered 31,000 PPS numbers.

Deputy Róisín Shortall

That is 31,000 out of——

Ms Bernadette Lacey

A total of 150,000 rent supplements paid.

Deputy Róisín Shortall

For 2009?

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

Is that not a very low number?

Ms Bernadette Lacey

As I stated, we are continuing to engage with these landlords to——

Deputy Róisín Shortall

Sorry, but the Department asks for the PPS number when it awards the rent supplement.

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

Landlords then have 21 days in which to comply with that. Is this correct?

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

Therefore, given that we are four months into the new year, all these people should have complied by now.

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

However, Ms Lacey has stated that at this point, only 31,000 out of 150,000 have complied.

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

Is that not a very poor performance?

Vice Chairman

I seek clarification. I believe Ms Lacey mentioned earlier that if, 21 days after the letter was issued, there has been no response, the Department will refer this fact to Revenue. Is that correct?

Ms Bernadette Lacey

Yes.

Vice Chairman

Therefore, that process happens. I understand that as the Department's main aim is to ensure the customer also is looked after, I suppose there is a balancing act in this regard. But I understand what the Deputy is saying.

Deputy Róisín Shortall

I accept there is a balancing act. However, these figures indicate that only 20% of landlords have complied.

Ms Bernadette Lacey

By the time we transfer the file to Revenue at the end of the year, I hope that figure will have risen to approximately 80%. Moreover, that is the stage at which the Revenue Commissioners require the information.

Deputy Róisín Shortall

With all due respect, it is not on for this committee to wait until the end of the year or until early next year to find out what happened in 2009. The Department is required to obtain the PPS number.

Ms Bernadette Lacey

No, we are required to request it.

Deputy Róisín Shortall

Very well. Is it accurate to state that at this point, the Department has only had a success rate of 20% in obtaining the PPS numbers last year?

Ms Bernadette Lacey

Yes.

Deputy Róisín Shortall

What was the other figure Ms Lacey used earlier when she made reference to 79%?

Ms Bernadette Lacey

I said that in respect of the eight weeks at the end of 2008, when we first put in the process, the response to the 4,200 rent supplements that were awarded in that period was that 79% of the landlord PPS numbers were achieved.

Deputy Róisín Shortall

Okay. However, in April of a particular year, is it not reasonable to look back at what happened in the previous year and state that it was a very poor performance?

Ms Bernadette Lacey

That is the figure. As I stated, we have requested the PPS number in each case.

Deputy Róisín Shortall

Okay. Given the interest this committee has had in this issue and the special report it drew up, this is extremely disappointing. Is it the case that the legislation still is not tight enough if the Department is only achieving a success rate of 20%?

Ms Bernadette Lacey

The legislation is trying to address two issues. The first is the entitlement of the individual to the rent supplement. The second is the obligation on a landlord to provide a PPS number. There are two conflicting things and within the legislation as it is laid down, I have gone as far as I can with the process.

Deputy Róisín Shortall

Okay, so——

Ms Bernadette Lacey

I can neither force the landlord to give me the number nor can I stop the payment of the rent supplement on that basis.

Vice Chairman

That part is understood. I apologise for cutting across Deputy Shortall but the Department has a requirement and it will report to Revenue in the fourth quarter of this year, which is fine. From the sample it carried out during the six-week period, there was a compliance rate of 79% and we hope that this continues. I noticed it was a small sample. Within the Department's systems, how readily available is it? I grant that the Department must report to Revenue in the fourth quarter but are there further substantial details that Ms Lacey could supply to this committee within an agreed timeframe before then?

Ms Bernadette Lacey

I have given what I have at this stage.

Vice Chairman

Has Ms Lacey nothing more at this stage?

Ms Bernadette Lacey

No. I stated that we issued 150,000 last year and that we have PPS numbers for 31,000 of them so far.

Vice Chairman

Okay.

Ms Bernadette Lacey

However, I stated we are continuing to engage with the landlord and that I expect——

Vice Chairman

From the sample, Ms Lacey stated she would be hopeful that when the Department reported in the fourth quarter of this year, it would have a compliance rate of up to 80%.

Ms Bernadette Lacey

Yes.

Vice Chairman

Is this simply based on that very small sample?

Ms Bernadette Lacey

I should not have used the word "sample". It actually was the number of awards within that period and it showed that 79% of the landlords complied. I hope this will continue. While it is a low number at this stage, we have some months in which to continue.

Vice Chairman

That pertains to new claims as well. Okay.

Deputy Róisín Shortall

Sorry, although Ms Lacey states she has a number of months, she does not. The Department is required to give the landlord three weeks——

Ms Bernadette Lacey

And if they do not notify us, we are to inform Revenue. The Revenue Commissioners have asked that we would inform them in the fourth quarter of the year.

Vice Chairman

As for the Act, to be fair the letter we received stipulated that the Act requires the Department to ask but not actually to receive. This appears to be something that we need to do.

Deputy Róisín Shortall

The point I am making is that it is not working.

Vice Chairman

Yes.

Deputy Róisín Shortall

It is clear the new legislation is not working if there is only a 20% success rate. I appreciate, however, that the Department is not required to pursue it more vigorously under the legislation.

Ms Bernadette Lacey

If I could do it in an easy way, I would be more than happy to do so because we have been around this many times.

Vice Chairman

We will not labour the point further, as it has been well made. The committee is not happy. I also understand the Department must look after the client, but we want to see a tightening of the system and that would require legislative change. I am pleased that the Secretary General is advising Revenue; it is good that that is happening. Perhaps the gap between when we find out and when we report to Revenue is too great.

Deputy Róisín Shortall

I want to ask about the roll-out of the public service card scheme. When will it start and be completed?

Ms Bernadette Lacey

We had hoped to roll it out by the end of this year, but because of industrial relations issues, the date has been pushed back to early next year. It will take approximately three years to roll out the scheme across the country.

Deputy Róisín Shortall

On the general comments made by the Comptroller and Auditor General about the approach to tackling fraud, does the Department have any intention to change the way it measures this to distinguish between fraud and error and to look back rather than estimate the cost to the Exchequer of fraud and error?

Ms Bernadette Lacey

As well as these measurements, we have carried out fraud and error surveys which have given us a baseline. We have also had discussions with the Office of the Comptroller and Auditor General and agreed to develop new benchmarks to meet the issues raised by the Deputy.

Vice Chairman

I have a final question on the accessibility of the service, a matter referred to in the opening statement made by the Department which referred to some offices as not being suitable to meet demand, particularly in signing on. One of the more prominent examples is the office in Balbriggan. I will not be too parochial, but I will take the opportunity to ask a question. People may have to travel 22 or 23 miles to sign on. This may be happening in other parts of the country also. What is the position on the new facility? More broadly, what is the Department doing in instances where there are problems with facilities in order that people will not have to sign on on such a regular basis? It has tried to be helpful on this point.

Ms Bernadette Lacey

I have good news about the office in Balbriggan. We hope to have the new office open in ten weeks' time. It has taken a long time, but we must work alongside the Office of Public Works in acquiring suitable accommodation. In that regard, we have identified a series of offices. Regarding the pressure placed on offices by the growth in numbers, we took some of the work off them by setting up local office support units, of which there are six around the country to address the processing and awarding of claims. In the next year we will work on various programmes aimed at mobile phone certification and using electronic mechanisms for keeping in touch with an individual. Where there are serious problems, we vary the rate at which a person must attend the office.

Vice Chairman

Is it being monitored?

Ms Bernadette Lacey

We monitor it on an ongoing basis.

Mr. John Buckley

Regarding ICT projects, Deputy Michael McGrath said we should document the lessons learned from the REACH project. The general point at issue is that we tend to treat many projects in the same way. In some cases what is being procured is capable of being specified in detail, while in others measures are innovative. They involve proof of concept and one is moving into the unknown. It is crucial that one learns to distinguish between the two. One cannot use the same tools for both projects. One cannot undertake a cost-benefit analysis of something that has not been clarified or where is not capable of having a specification. We should also consider how we should handle innovative projects from a procurement point of view. Some of the material supplied in the reply from the Department of Finance is very useful. I refer to having small projects in order to test and prove a concept before proceeding, rather than having a large, open-ended project.

I refer to the restructuring of the MABS. One chapter concerns the movement of elements of the health sector to the Department of Social and Family Affairs and the difficulties and delays involved. In the case of the MABS moving to the CIB, as well as other movements, one must have a plan worked out in advance, involving detailed consideration of the personnel and financial implications, and a business concept that will apply in the new, restructured organisation to ensure there will be efficiencies and synergy and that the operating modes of the pieces being welded together will be consistent.

I refer to branch office authorisation of claims. As an auditor, I see risks. It is good from the point of view of service, but branch offices are remunerated based on the number of claims processed. They are service providers for the Department. The better way to attack this issue — if it could be achieved in the long term — is to move the community welfare service to the Department since its authorisation of interim payments means it will be part of it while definitive means testing is being carried out. This could be done as part of a more controlled system. I hope that process will push ahead and recourse to using branch offices for the purposes of authorising claims on the public purse will be a short-term measure.

Deputy Jim O’Keeffe

Is it possible for the branch officer to clear a claim for payment and then have it be passed to the deciding officer for an immediate fast-tracked decision?

Mr. John Buckley

It is a matter for the Department to work out how it will implement it. It must go to the Department at some stage, but the question is whether there is an interim stage when the payment will be made until the central control office catches up with the process. That is the problem we are trying to solve. The Department can probably revert to the committee on how it will work. Perhaps it can provide a note on the issue and the control aspects involved.

I refer to the MABS. We quoted figures which suggested there was a considerable amount of spare capacity in the system. Some two claims per week are being handled by staff. We did not have statistics for the ongoing claim load maintained, nor did the MABS. The Secretary General said it was 30,000. If we consider a factor of one third and add the 16,600 new claims, the figure is still rather low. The point of all this is that somebody managing the system, whether it be in MABS, the Citizens Information Board or the Department, needs to get on top of the statistics and know what is the throughput, the amount of cases being handled by each individual, the efficiency and future spare capacity as the service will be under pressure. To be frank, I find it surprising that we are quoting delays and waiting times as my provisional figures came up with potential spare capacity within the system.

Vice Chairman

Is it agreed that the committee notes Vote 38, Social and Family Affairs, social insurance fund 2008 annual report and accounts and disposes of chapter 9, Terminations of Major ICT Projects, chapter 29, Expenditure on Social Welfare, chapter 33, Review of Jobseekers Payments, chapter 34, Transfer of Welfare Functions and chapter 35, Money Advice and Budgeting Service? Agreed.

I thank all the witnesses for being present. We know the past 18 months to two years have been particularly busy and pressurised and I ask Ms Lacey to pass on our thanks to the staff of the Department of Social and Family Affairs. The Department of Enterprise, Trade and Employment is also doing very important work at present in pressurised circumstances and we thank its staff also.

I believe this is Ms Lacey's last meeting as Accounting Officer.

Ms Bernadette Lacey

Yes.

Vice Chairman

Every time she has come before the committee she has been very frank and open. I wish her the best in whatever she decides to do. I thank her very much.

The agenda for next Thursday, 6 April 2010 is the 2008 Annual Report of the Comptroller and Auditor General and Appropriation Accounts, on the Department of Finance.

The witnesses withdrew.

The committee adjourned at 12.22 p.m until 10 a.m. on Thursday, 6 May 2010.