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.