2017 Social Insurance Fund

Mr. John McKeon (Secretary General, Department of Employment Affairs and Social Protection) called and examined.

We have an extensive agenda. We will examine the 2017 annual report of the Comptroller Auditor General and appropriation accounts: Vote 37 - Department of Employment Affairs and Social Protection; chapter 11 - regularity of social welfare payments; chapter 12 - JobPath employment activation service; chapter 13 - actuarial review of the Social Insurance Fund; chapter 14 - overpayments of age-related jobseeker's allowance; and chapter 20 - PRSI contributions by the self-employed. In the afternoon we will examine the 2017 Social Insurance Fund. To provide a structure for the meeting, we will take all matters related to rent supplement and the housing assistance payment and the chapter on PRSI contributions by the self-employed in the afternoon when we will also be joined by representatives from the Department of Housing, Planning and Local Government and the Revenue Commissioners.

This morning we are joined from the Department of Employment Affairs and Social Protection by Mr. John McKeon, Secretary General; Mr. John Conlon, Ms Anne Vaughan, Ms Kathleen Stack, Ms Deirdre Shanley, Ms Patricia Murphy and Mr Jim McDonnell. Given the extent of the agenda, I acknowledge and thank the Department for its efforts at relatively short notice to provide briefing material in advance of the meeting. We are also joined by Ms Gráinne McGuckin from the Department of Public Expenditure and Reform.

I remind members, witnesses and those in the Visitors Gallery that all mobile phones must be switched off completely or left in airplane mode. Leaving them in silent mode is not sufficient as they will still interfere with the recording and broadcasting systems.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the provisions within Standing Order 186 that the committee shall refrain from enquiring 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 policy or policies.

While we expect witnesses to answer all questions asked by the committee clearly, witnesses can and should expect to be treated fairly and with respect and consideration at all times, in accordance with the witness protocol. We will start with the opening statement from the Comptroller and Auditor General.

Mr. Seamus McCarthy

As members are aware, the Department of Employment Affairs and Social Protection operates a wide range of income support, welfare and labour activation schemes. Expenditure on the schemes is spread across two accounts: the appropriation account for Vote 37, and the account of the Social Insurance Fund. The Department's overall expenditure on scheme payments in 2017 totalled €19.3 billion. Expenditure on administration of the schemes amounted to a further €618 million. An annex to the appropriation account provides a useful summary of the combined programme expenditure and sets out the expenditure on a scheme-by-scheme basis.

The Vote account is funded mainly through direct Exchequer issues. In contrast, the Social Insurance Fund is financed mainly from pay-related social insurance contributions, which are collected by the Revenue Commissioners, acting as the Department’s collection agent. Receipts into the fund have recovered in recent years as employment and earnings levels have increased. Total receipts in 2017 were €10.2 billion, up 6.6% year on year. The receipts included some €422 million in levies payable to the National Training Fund operated by the Department of Education and Skills. The surplus for the year was €731 million, leaving the fund with accumulated reserves of €1.2 billion at the end of the year.

I gave a clear audit opinion on the accounts of both the Vote and the Social Insurance Fund for 2017.

Welfare recipients may be paid amounts to which they are not entitled or which exceed their entitlements. Such irregular payments can arise as a result of innocent claimant errors, deliberate fraud by claimants or the manner in which claims are administered by departmental staff. Control surveys of welfare schemes carried out by the Department are intended to identify the types of cases where such excess payments arise. The surveys also provide a basis for estimating the level of irregular payments affecting the schemes examined. The results of successive control surveys suggest that there was a material level of payments in excess of entitlements on both the Vote and social insurance schemes in 2017. As has been the case for a number of years, I have drawn attention to this concern in both audit certificates. The matter is explained in further detail in chapter 11.

Chapter 14 presents an example of the type of circumstances that give rise to welfare payments in excess of entitlement. As part of the audit of the 2017 appropriation account, a review was undertaken of jobseeker's allowance. One of the matters examined was the correct application of age-related rate reductions, which have been implemented since 2009. Reduced payment rates apply to most jobseekers aged 25 or younger but there are a number of circumstances where an exemption applies and the payment rate is not reduced. At the beginning of November 2017, there were just over 30,000 claimants in the age cohort, of whom 5,225, or 17%, were not on a reduced rate. The audit identified, based on the information held by the Department, that 486 of those claimants, or 1.6% of the cohort of claimants as a whole, did not meet the qualifying conditions for payment of the maximum personal rate. As a result, they were being paid an amount in excess of their entitlement. We estimated the cost to the Department of such excess payments at just under €1.2 million in 2017. This is attributable to departmental or official error rather than to claimant error or deliberate fraud.

Chapter 12 reports on an examination of the Department's JobPath employment activation service for people unemployed for one year or more. The JobPath service has been delivered since mid-2015 across the State by two companies contracted by the Department. The key objectives of the JobPath service are to move people from the live register into employment, to reduce the number moving back onto the live register, and to reduce the duration of unemployment when it arises. The service has been delivered against the backdrop of a substantial upswing in employment levels in recent years.

Jobseekers selected by the Department for participation in JobPath are provided with information on the services available and a personal adviser is assigned to each jobseeker. Together, the personal adviser and the jobseeker develop a personal progression plan, or PPP, which includes a series of actions designed to assist the jobseeker in securing employment. The service provider then supports the jobseeker in implementing the plan. Up to March 2018, the Department had referred 192,000 jobseekers to JobPath. Almost 160,000 of those referred had commenced engagement with the service providers. Approximately 16,000 had dropped out and a further 16,000 were still in the process of developing a personal progression plan. Approximately 69,000 were working with the service providers in implementing agreed plans.

The engagement with a service provider can extend to around two years. Consequently, in order to assess the outcome of the service, we looked at the outcomes for almost 63,000 jobseekers referred in the period up to the end of 2016. Of these, approximately 25% had subsequently commenced employment, which was significantly higher than the target minimum rate of job commencement set by the Department. However, the proportion who stayed in employment fell away over time, so that by the end of 12 months, only 7% of those who engaged with the service providers were still in a job. As indicated in the diagram which is now on screen, this was just marginally above the reference job sustainment rate, which the Department based on its own previous performance. Broadly speaking, the outcome pattern achieved was similar for the various categories of unemployed persons.

With regard to the cost, fees of some €109 million had been paid to the two companies up to March 2018. The payments were based on verification of the delivery of the service to individual jobseekers, and of continued employment for those who took up a job. Fee discounts built into the contract were availed of in 2017 when employment in the economy generally exceeded pre-specified levels.

Rates of contribution to the Social Insurance Fund are based on earned income, but vary for different contribution classes. The types of benefits available to contributors also vary considerably by class, reflecting the insurance nature of the system. Chapter 20 reviews the procedures adopted by the Department to gain assurance that PRSI classifications declared by employers in relation to their employees and on a self-assessment basis by self-employed individuals are appropriate. The report also considers the adequacy of the arrangements in place between the Department and Revenue in relation to the collection and reconciliation of PRSI receipts.

In 2016, 96% of persons classified for PRSI purposes were in one of three classes: A, M or S. Class M, approximately 10% of the total, applies mainly to those under 16 or over 66 who are in employment and those in receipt of an occupational pension where no social insurance liability arises and very minimal benefits are available. Class A, which is approximately 76% of the total, applies to the earnings of most categories of employees, while class S, approximately 10%, applies mainly to earnings from self-employment. An individual may have more than one contribution classification, depending on the source of earnings. The rate of personal contribution by persons is the same for class A and class S, at 4% of earnings, but in the case of class A, employers are liable for an additional contribution equivalent to 10.85% of their employees’ earnings. Consequently, there may be a considerable potential economic incentive, at least in the short term, to categorise workers in certain circumstances as self-employed. However, we noted that despite apparent changes in employment relationships over recent years, there has not been a significant increase in the proportion of earners in PRSI class S over the past ten years.

The Department’s scope section may make a formal determination of the appropriate PRSI classification if requested. However, the number of such determinations is small, less than 1,000 a year.

The Department undertakes some testing of compliance with PRSI classification rules, including through joint investigations carried out with Revenue. Targeted joint investigations in recent years have detected a significant incidence of misclassification in the construction sector. Members will also recall the review of the circumstances of persons in RTÉ classified as self-employed, which identified a significant number of cases that required further review as to whether individuals were employed by RTÉ or were truly self-employed. That potentially has implications for their PRSI classification.

The Department also recently undertook a pilot review of the social insurance class of company directors and concluded that such a review did not need to be repeated. The examination found that the pilot review used a very narrow sampling frame, resulting in assessment of the cases of just 13 individuals. That limits the conclusions which can be drawn from the exercise. The examination concluded that there is scope for the Department to increase the level of compliance activity it undertakes in relation to contribution classification and recommends a programme of random reviews of PRSI classification.

Chapter 13 reports on the long-term prospects for the operation of the Social Insurance Fund, SIF. That is based on the results of an actuarial review of the financial condition of the fund that the Minister for Employment Affairs and Social Protection is required by law to commission at least every five years. Based on the position at the end of 2015, the review projections indicate that, in the absence of further action to tackle the shortfall, the fund will move into a deficit position and the Exchequer subvention required each year to meet ongoing expenditure requirements will be substantial and will increase rapidly. The review projects that the subvention, in constant 2017 prices, will be €1.7 billion in 2025, €5.6 billion in 2035 and €11.4 billion in 2045. However, these projections are heavily assumption-driven. Changes in assumptions about real earnings growth and life expectancy have the most significant impact on the projected SIF shortfall. The conclusion is that the periodic review is a valuable exercise that enables informed public discussion about the expected long-term implications of current decision-making.

I thank Mr. McCarthy and invite Mr. McKeon to make his opening statement.

Mr. John McKeon

I thank the committee for inviting me here today to discuss the appropriation account for Vote 37, chapters 11, 12, 13, 14 and 20 of the report of the Comptroller and Auditor General, and also the account for the Social Insurance Fund, all for the year ending 2017.

I am joined today by Ms Anne Vaughan, deputy secretary of the Department, together with Ms Kathleen Stack, assistant secretary general with responsibility for control policy, Ms Deirdre Shanley, assistant secretary general with responsibility for finance, and Ms Patricia Murphy, assistant secretary general with responsibility for employment affairs and PRSI policy. I am also joined by Mr. Jim McDonnell, the Department's chief accountant and Ms Gráinne McGuckin, from the Department of Public Expenditure and Reform. With the Chair's permission, I may rely on assistance from my colleagues in addressing some of the questions members may ask.

I arranged for an advance copy of this statement together with briefing material on each of the chapters under review, the annual report of the Department and the annual statistics report and other relevant information to be provided to the committee secretariat last week. I hope members found that material to be of use. In my opening statement last year, I referred to the changes in the nature and role of social welfare over the period dating back to the establishment of the Department some 70 years earlier. I spoke about the role of welfare in compensating for and mitigating the impact of failures in the market economy. I spoke of how the more than 70 different payments and services provided by the Department contributed significantly, not just to cushioning the impact of the great recession but to helping the economy recover faster than it might otherwise have done. I spoke about how our staff are acutely aware, through their everyday work, of the impact of welfare and employment services at the micro level - the level of individual citizens and families - and that while they are mindful of the need to control the distribution of scarce State funds, they are equally mindful of the vulnerability of the people who rely on our services. I spoke about how we work to treat every person with dignity and respect and to make our offices bright and welcoming. I also spoke of how independent research indicates that customers rate our staff and services highly, including those provided under contract by third parties.

I mention this again because the work of the Department is essentially the work of balance, not just the external balancing of market dynamics and social goals but also internal balances. In our work we have to strike a balance between ensuring, on the one hand, that people have access to a payment and, on the other, providing them with, and requiring them to avail of, a service that can help to reduce dependence on that payment. There is also a balance to be struck in, on the one hand, designing and managing large-scale service processes that are reliable, efficient and effective for the overwhelming majority of customers and, on the other, imposing controls and checks intended to reduce fraud and error. As I said last year, we cannot pursue the elimination of error or fraud at the cost of denying entitlement to service or frustrating access to that entitlement. There are also balances to be struck on the revenue side of our operations relating both to intergenerational and inter-temporal equity and to horizontal equity in terms of treatment of social insurance charges on different types of employment. These are the balances at the heart of the five chapters selected for discussion today, and it is on these chapters that I will focus my opening remarks.

The first chapter, chapter 11, summarises the Department's approach to what, following feedback at the Committee of Public Accounts last year, we now call control surveys. It outlines the results of 14 surveys conducted by the Department over the past six years, covering approximately 80% of the Department's expenditure. These surveys are conducted to help identify the risk factors that give rise to incorrect payments on individual schemes and to inform changes to operations processes and control measures to help reduce the level of incorrect payments into the future. The surveys also provide an indicative estimate of the level of control loss, or leakage, in the system at a point in time. In general, for most schemes surveyed, this ranges between 0.5% and 5%, with farm assist being a notable outlier at 10.4%. Across all 14 schemes, the net level of excess payments averaged about 2.2%. As Accounting Officer, I agree, given the scale of the Department's expenditure, with the Comptroller and Auditor General's assessment that this level of control loss or leakage is material. However, as I did last year, I also draw attention to the fact that this rate stands comparison with equivalent rates in social welfare administrations in other states, for example, in the UK it is 1.9%, in Israel it is 5% and in Canada it is 3.5%, and indeed to rates of bad debt, which typically range between 2% and 5%, and shrinkage, which is typically 2% in commercial industry.

The second chapter, chapter 12, reports on a review of the JobPath service by the Comptroller and Auditor General. By way of background, JobPath is an employment advisory and case management service provided to long-term unemployed jobseekers. The service is provided on behalf of the Department by two contractors who are remunerated based on their engagement with jobseekers and the employment outcomes achieved. The service sits alongside and augments the case management and advisory service provided by the Department's own Intreo staff and the contracted service provided by local employment services.

In the past, at this committee and elsewhere, a number of queries have been raised in respect of JobPath. The first is whether it is appropriate to provide and to require jobseekers to engage with a case management or employment advisory service. The evidence on this is, I believe, very clear. Of all of the types of labour market intervention provided by public employment services around the world, the form of intervention which is shown to have the most impact is case management and employment advice. For this reason, it is important to provide an employment advisory and case management service and JobPath is simply a method of doing this.

The second question raised is whether such a service should be provided under a contracted model or should be provided directly by the staff employed by the State. Different people will have different views on the matter. What I can say as Accounting Officer is that most countries use a mixed model, contracted resourcing being used to ensure that resource capacity can be flexibly added as required to core in-house capacity. This was the rationale for the procurement of JobPath services at a time when the Department's in-house resources could not respond, as required, to the large increase in unemployment.

The third question raised is whether the JobPath model provides value for money. I have provided under separate cover some additional briefing material which sets out the costs of the JobPath service and the outcomes achieved. These data indicate that the service is delivering on targets set and that the costs of the service compare favourably with other case management services contracted by the Department. Committee members may be interested to know that preliminary results of an econometric study currently being finalised indicate that people who received the JobPath service have higher rates of progression into employment and higher earnings in employment than people with a similar profile who have not received the service.

The fourth question raised is whether the Department has sufficient controls in place to ensure that payments to contractors are validly made and supported by real evidence of sustained employment. This issue was considered by the Comptroller and Auditor General in his examination of JobPath. Overall, the Comptroller and Auditor General's report notes that the number of people moving into employment from JobPath exceeds the target levels and that the number of people sustaining employment is broadly in line with the reference levels, both of which were set at 62% of the counterfactual or base case level, by which I mean 62% higher than the counterfactual or base case level.

The report also notes that the Department has a reasonable basis for the key performance measures used to evaluate contractor performance and that payments made to contractors were validly supported by evidence of the performance achieved.

Other questions raised in respect of JobPath, including about its interaction with programmes such as community employment, were addressed in a presentation to the Oireachtas Joint Committee on Employment Affairs and Social Protection earlier this year. I have provided the committee with a copy of a statement on the JobPath service which was submitted at the time. I hope it will address questions members may have, although I will be pleased to address further issues of interest.

Chapter 13 summarises the results of the actuarial review of the Social Insurance Fund and notes that it is a valuable exercise to inform discussion on short-term decisions and their impact on long-term outcomes. The actuarial review is a periodic study conducted every five years in accordance with statute to project forward the likely evolution of the funding position of the Social Insurance Fund based on a defined set of assumptions. It is important to note that the Social Insurance Fund, unlike, for example, private pension funds, does not operate on a pre-funded basis, whereby contributions made by a contributor today are invested to fund future disbursements. Rather, it operates on a pay-as-you-go basis, with current year expenditure funded by current year revenues. Deficits in any year are funded by means of an Exchequer subvention paid from the Central Fund. Surpluses in any year are invested by the Department of Finance for the benefit of the fund and used to supplement income in subsequent years, but they are not netted off against deficits incurred in prior years. Therefore, although the fund is projected to be in surplus to the value of €2.3 billion at the end of 2018, that is a somewhat simplistic presentation of the actual position. It has run deficits in six of the past ten years and during the recession the total value of the deficits amounted to €11 billion. These data indicate that the value of benefits paid by the fund greatly exceeds the value of contributions made to the fund. That position is confirmed by the actuarial review which indicates that the value of the State pension alone is more than the value of the contributions made. For that reason, given the projected increases in the numbers of older people and increasing life expectancy, the actuarial review projects significant annual deficits into the future. It is important to note that decisions on the funding of the Social Insurance Fund, in particular on the setting of social insurance rates and the investment of any fund surplus, are vested in the Minister for Finance.

The fourth chapter for discussion is chapter 14 which sets out the results of an examination by the Comptroller and Auditor General of age-related jobseeker's allowance payments. The report finds that approximately 1.6% of jobseeker's allowance payments to people aged 18 to 25 years were made at a higher rate than provided for in legislation, at a cost of some €1.2 million in 2017. It, therefore, recommends that the rules used to calculate payments be coded in the Department’s computer systems and that, pending this change, a greater level of quality control be applied and additional staff training undertaken to ensure all staff are aware of the rules. As Accounting Officer, I agree with the recommendations and have taken steps to put them into effect. These steps are set out in the conclusions and recommendations section of chapter 14.

The final chapter earmarked for discussion is chapter 20 which deals with the collection of PRSI contributions by self-employed persons. As this topic cuts across the operations of this Department and those of the Revenue Commissioners, I will be joined by Mr. Keith Walsh and Mr. Kevin Cashell from the Revenue Commissioners who will endeavour to address questions related to its work. As noted in the chapter, self-employed persons pay the standard rate of employee’s PRSI, or 4%, but they do not pay the employer-related contribution of 10.05%. The difference in contributions may provide a financial incentive for an individual to be declared as self-employed. However, the chapter also notes that despite this apparent incentive, there has been no increase in the proportion of earners classified as self-employed in the past ten years. The issue of disguised employment was the subject of an interdepartmental review group study in 2017 which is referenced in chapter 20. A copy has been provided for committee members under separate cover, together with a recent presentation on the subject to the Oireachtas Joint Committee on Employment Affairs and Social Protection.

Classification of employment for social insurance purposes is based on self-declaration, typically by the employer, with the scope section of the Department determining the appropriate class in cases where the correct classification is unclear or in dispute. The section utilises the agreed code of practice for determining the employment and self-employment status of individuals in making such determinations. The Revenue Commissioners act as agents of the Department in the collection of PRSI. Both the Revenue Commissioners and the Department, working separately and together, conduct investigations of compliance, with correct classifications as part of our standard investigations regime. As part of his review, the Comptroller and Auditor General examined a random sample of 35 determinations made by the scope section during 2017 and found that the evidence supported the basis on which the section made its determinations. No example of a misclassification was reported.

The examination also considered a pilot review undertaken by the Department of the social insurance class applied to company directors in order to assess the merits of a regular annual review and noted that the Department had concluded that such an annual review process was not merited. In addition, the examination considered a number of cases where the Revenue Commissioners or the Department’s inspectors had conducted investigations into social insurance classifications and did not find any issue of concern in them. However, it did note that the investigations had detected what the Comptroller and Auditor General considered to be a significant incidence of misclassification, particularly in the construction industry.

The Comptroller and Auditor General concludes with three recommendations. The first is that the Department introduce a random programme of reviews of PRSI classifications, both to provide assurance as to the accuracy of classifications and to act as a deterrent to deliberate misclassification. In the main, I agree with this recommendation. However, my preference is that it should be achieved by increasing the number of employer PRSI inspections, rather than reviews per se, and that the inspections should include targeted, as well as random, elements. As members may be aware, earlier this year the Department conducted a media campaign on the issue of false self-employment. Following the campaign, we undertook an intensive programme of employer inspections in the Dublin area and a targeted campaign in the construction sector in the Galway area. Based on these exercises, the results of which are being reviewed, we intend to intensify our employer inspection activity, as part of which we will again conduct a media campaign in 2019. The purpose of the campaign will be to increase employer and employee awareness of rights and obligations and encourage reporting of suspected cases of misclassification. The intelligence garnered in response to the campaign will inform the targeting of specific business and industry sectors for inspection purposes.

The second recommendation is related to the compilation of sectoral data for self-employed contributors. The data provided by the Revenue Commissioners does not include sectoral data for the source of PRSI receipts. I agree that receipt of this information would be useful in targeting inspection activity and we are following the matter up with Revenue. In the meantime, the Department has analysed the sectoral data for self-employment available from the Central Statistics Office. I have forwarded a trend analysis of the data in the past 20 years. In summary, it indicates that the share of employment comprising self-employment is in gradual but steady long-term decline. This suggests that, at a macro level at least, the issue of disguised or false self-employment is not as prevalent as it is sometimes presented to be. Within these data, there are some interesting trends worthy of note. For example, the share of self-employment accounted for by the services sector has grown, whereas that accounted for by agriculture has diminished. The share accounted for by other sectors is largely unchanged. However, these changes are largely driven by changes in the composition of employment in the economy, in particular the growth of the services sector. As a result, the share of employment in the services sector comprising self-employment has remained relatively unchanged, at approximately 11%, over the entire period. Again, this suggests there is no systemic reclassification of employment in the sector.

When the data are analysed by type of self-employment, a somewhat different picture emerges. Two types of self-employment are captured for the purposes of statistical reporting. The first is people who are self-employed and employ staff in their business. It is very unlikely that such persons are misclassified as self-employed. The second type of self-employment is people who are employed on their own account - people who do not have staff engaged in their business. This type of self-employment could include some people who should properly be classified as employees. At an overall level, the share of own-account self-employment is in steady decline. This trend is common to all of the major sectors, with the exception of construction. As shown in the charts forwarded to the committee, the share of construction employment classified as own-account self-employment was constant, at approximately 15%, in the period up to the start of the recession. During the recession it doubled to approximately 30%. This can mainly be explained by the fall in construction employment during the period. It is notable that the share of own-account self-employment is falling again as construction employment has recovered in recent years. However, it will be important to monitor the trend to ensure the downward trajectory is continuing. Accordingly, the Department will continue to place a particular focus on PRSI compliance inspections in the construction sector in the next year.

The third recommendation is related to the process undertaken with the Revenue Commissioners to reconcile monthly variances in PRSI receipts versus estimates.

I agree that a more structured process would be useful and would expect more timely data that should become available as part of the PAYE modernisation programme will support such a process. I am therefore arranging to have this recommendation followed up with the Revenue Commissioners.

I understand that members would like to discuss the issue of housing supports today. This Department previously played a significant role in providing monetary supports to help people in receipt of welfare payments to cover some or all of their household rent. The role of the Department has diminished since 2014 when the housing assistance payment, HAP, funded by the Department of Housing, Planning and Local Government and administered by the local authorities, was introduced. Payments by local authorities, which are not contingent on a person being in receipt of a welfare payment, and so avoid a welfare trap problem, now account for the majority, more than 70%, of housing support payments funded by the State. In order to address any issues that the committee members may wish to raise I will therefore be joined by my colleagues Ms Mary Hurley and Ms Marguerite Ryan from the Department of Housing, Planning and Local Government later this afternoon.

In conclusion I would like to say that the scale and scope of the operations of the Department of Employment Affairs and Social Protection are greater than perhaps any other Department or public body. The managers and particularly the staff of the Department work hard to deliver services to the communities from which we come and in which we live, conscious that it is our families, friends and neighbours who not only depend on these services, but who, through their social insurance contributions and taxes, pay for these services. We are proud of the work we do but we know we are not perfect and we do not always get things right. That is why we welcome the oversight of the Comptroller and Auditor General and of this committee. This process plays an important role in reminding us of our purpose, helping us to identify areas for improvement and helping us to learn from our mistakes. It is through such a process that we would hope to improve.

I and my colleagues will be pleased to take any questions members may have.

I thank Mr. McKeon for his opening statement. It was a long and comprehensive statement, but there were a lot of chapters in the Comptroller and Auditor General's report, so covering all that ground explains why it was exceptionally long. The first speaker is Deputy Cullinane, followed by Deputies Burke, MacSharry and Catherine Murphy. The first speaker has 20 minutes, the second speaker has 15 minutes and the remaining speakers have ten minutes each.

I welcome Mr. McKeon and his colleagues. I accept that the Secretary General and Accounting Officer is dealing with four chapters from the Comptroller and Auditor General's report and the appropriation accounts but the reason we seek supporting documentation in advance of an Accounting Officer coming in is to avoid lengthy opening statements. We have a voting block at 12.50 p.m. I do not suggest it is the case here but there is sometimes a perception that Accounting Officers give lengthy statements to talk down the clock. It does not work because we can stay here for as long as we need to. I do not suggest that was the case this time. We will not even get to one of the issues because there is a large amount.

Am I right in saying that the PRSI contributions by the self-employed and rent supplement are best dealt with in the afternoon-----

Yes, in the afternoon.

-----when we will have the staff from Revenue and the Department of Housing, Planning and Local Government here? That is fine.

I gave prior notice that I would raise this with Mr. McKeon. He talked about his staff working hard, and no doubt they do, and I pass on my appreciation for the work his staff does. This morning, under our correspondence, we received a breakdown, at our request, of Civil Service sick leave statistics for 2017 and statistics that show lost time rates in percentage terms. Mr. McKeon's Department has one of the highest recorded average working days lost, a full-time equivalent of 13 days, which is two and a half weeks per year. The average across the Civil Service is 10.1 days. In percentage terms of lost time, his Department is at 5.7%, as opposed to the Civil Service average of 4.4%. Can he account for why it is so high, at 13 days per full-time equivalent?

Mr. John McKeon

It is an issue of concern to us. If the Deputy was to delve into the figures in more detail, and I know he has not had the opportunity and some of the information that I have would not be available to committee members, but if one looks at the age profile of our Department, compared with the Civil Service generally, if one looks at the gender mix and the grade mix, it is different than the Civil Service generally. To give an idea, we have about 150 staff under the age of 30 and close to 3,000 staff over 55. That would not be the typical age profile. Those issues play into that. If we adjusted for those issues-----

If I could just come back on that, we have caveats here from the Department of Public Expenditure and Reform. They set out a number of caveats that might explain why the figures are higher in some areas. That explanation is not one of them. This breakdown colour co-ordinates each Department in terms of the numbers of staff. Mr. McKeon's is one of the bigger Departments, of 5,000 staff or more. It says there may be fluctuations in smaller organisations because of their nature. The bigger the organisation means there would be the full flavour of staff, in age, demographics, gender and so on. It should not be the case that those statistics are higher, if that is the case. This is according to the Department of Public Expenditure and Reform.

It also says there might be an issue in the Department of Rural and Community Development because it was only established in 2017.

My point is that it is unacceptable for Mr. McKeon to say it is a result of how it is classified and that if it was done differently it would show a different outcome because it would show a different outcome for everyone. That caveat is not given to us here. I appreciate we have not been given an opportunity to delve into the figure, but I think we need to understand why the average amount of working days lost is 13. In the Irish Prison Service, the figure is 15.7. We can accept it might be higher in that area, given the nature of the job and that people get assaulted in the course of their work who would then be out. We can see obvious reasons for it to be higher in that area. Mr. McKeon's Department is the next highest, at 13 days. He said it was a concern but the explanation he gave does not really satisfy me. I am trying to figure out why there is a difficulty in his Department that does not seem to apply in other Departments. For example, in the Department of the Taoiseach, the figure is 3.5%. Some other big Departments are well under 10%, yet the Department of Employment Affairs and Social Protection is 13 days.

Mr. John McKeon

Yes, 13 days. It is 5.6% or 5.7%. I understand what the Deputy is saying. I am just seeing these data on screen now. I was aware of them before but I would be pretty confident that, if we were to adjust those figures for age, gender and grade, that would be-----

Is it because staff are old or because they are young?

Mr. John McKeon

Our Department has one of the older age profiles. For example, 12 people died in service last year. That would be far more than any other Department. It is a reflection of the age profile.

How many people over 60 years of age does the Department have?

Mr. John McKeon

We have about 630 people over 60 years of age; which is about 10%.

Is that above the norm in the public service?

Mr. John McKeon

Our median age is 53. I think the average age around the Civil Service is-----

Let me clear this up as it would be useful for us. Can we go back to the Department and get a gender breakdown and an age profile for each Department? That might give us the full picture of what Mr. McKeon is saying. I am not saying that staff do not have an entitlement to apply for sick leave, of course they do. For example, we are very sympathetic to the type of job the staff of the Irish Prison Service have. My concern is that if there is a problem in a Department where people are out sick for whatever reason, we would want to know to improve the situation for the staff. It is not an attack on the staff at all; quite the opposite. It is a concern when the figures are so high. Maybe Mr. McKeon is right, if we delve deeper into the figures, but we will come back to it once we get that breakdown.

Deputy Cullinane is looking for a breakdown from the Department of Public Expenditure and Reform across the board.

We just have a breakdown of the Department and the number of days lost. There is no caveat given here to the effect that there could be variations because of gender where, for example, there is maternity leave and I accept that. There is no caveat for a higher age profile. That might have an impact. I am saying we did not get that information, so I think it is fair enough for the Accounting Officer to point that out. Can we go back and get that information from each Department? Then we can see whether or not there is still a problem. Can we do that?

We will ask the Department of Public Expenditure and Reform, but we will also ask Mr. McKeon to send us his own comprehensive note of his Department-----

Mr. John McKeon

We can do that.

-----and the analysis he has internally.

Mr. John McKeon

I want to reassure the committee that we are very conscious of managing sick leave and absences in the Department and we have a rigorous regime. I do not want to give the wrong impression with the word "rigorous". As the Deputy said, people are entitled to their sick leave and we are sympathetic, but we do interview people when they come back from sick leave to find out about their absences.

We had a number of people on very long-term sick leave at one point and we took measures to address the issues.

I will deal with JobPath in the context of the Comptroller and Auditor General's special report and the Appropriation Accounts. I will put the same questions to Mr. McKeon as I put to him at our previous meeting because we wish to assess whether we are getting value for money. The Comptroller and Auditor General looked at the process, rather than whether the project represented value for money in overall terms. The total cost of JobPath from July 2015 to March 2018 was €109 million, is that correct?

Mr. John McKeon

That is the figure the Comptroller and Auditor General had. I can provide the up-to-date figure if the Deputy wants.

What is the up-to-date figure?

Mr. John McKeon

It is €149 million.

There were two companies who rolled out JobPath, namely, Seetec and Turas Nua. Can Mr. McKeon provide a breakdown of how much of the €109 million listed in the report of the Comptroller and Auditor General went to each of the two organisations?

Mr. John McKeon

I have the breakdown of the updated figure, the €149 million.

Mr. John McKeon

I should say that we had to get permission from the contractors to provide this information because it is commercially confidential under public procurement. They agreed because the committee indicated that it is an issue of concern.

We thank the companies for the information because it is helpful to us.

Mr. John McKeon

Turas Nua received €75.7 million and Seetec received €73.3 million. Last year, I said the split was 50-50 or as close to it as made no difference.

They were paid per individual. There was an initial registration payment when an individual signed up to the personal progression plan.

Mr. John McKeon

That is right.

How much was that payment?

Mr. John McKeon

The average across all clients and both providers, which I provided to the committee last week, was €311.

There were sustainment fees once a person had a 13-week period of sustained employment. What is the average for those?

Mr. John McKeon

There are four different sustainment fees. For 13 weeks it is €613, for 26 weeks it is €737, for 39 weeks it is €892 and for 52 weeks it is €1,165.

I thank the Accounting Officer for that information. It was information we sought previously and we appreciated that there could have been issues of commercial sensitivity. However, it allows us to evaluate whether we are getting value for money so it is helpful. On page 139 of the report of the Comptroller and Auditor General, it is stated that the service was intended to assist unemployed persons to find and sustain permanent employment or self employment. What is the definition of permanent employment?

Mr. John McKeon

We talk about sustained employment.

I read sustained permanent employment. Am I wrong about that?

Mr. John McKeon

The term we use is "sustained". As far as the Central Statistics Office is concerned, the term "permanent", in the general context of the labour market, means a job, or a tenure in business, which a person has for a period of 12 months or more.

What is the Department's definition of sustained employment?

Mr. John McKeon

We define employment as a job of more than 30 hours per week, lasting for at least 13 weeks and, ideally, up to 12 months. That is why the sustainment fees are at 13-week increments.

How many people have gone through JobPath?

Mr. John McKeon

There have been 190,000.

How many of them have gone on to have some form of sustained employment?

Mr. John McKeon

Approximately 28% have gone on to employment.

What is the figure?

Mr. John McKeon

It is 28%.

Do you have the number?

Mr. John McKeon

I can do the maths for the Deputy. It is roughly one third of 190,000. I can get the figures for the Deputy.

I would like a full breakdown. The Department works on the basis of four payments made to the companies based on 13, 26, 39 and 52 weeks. Do we have a breakdown of what proportion of the 28% were employed for 13, 26, 39 and 52 weeks, respectively?

Mr. John McKeon

We sent this information to the secretariat in advance. The cohort sustaining 13 weeks' employment was 17%, for 26 weeks it was 14%, for 39 weeks it was 12% and for 52 weeks it was 9%. Those figures are increasing because there are people who have not yet had the opportunity to get to 39 weeks, 52 weeks, or even to 13 weeks.

Is 9% a good figure for people who got employment for 52 weeks?

Mr. John McKeon

For long-term unemployed people, it is an excellent figure.

The unemployment figures have dropped. In July 2016 it was 8.6% but it is now 5.1%. At a time when more jobs are being created and unemployment is decreasing, Mr. McKeon considers 9% a good figure.

Mr. John McKeon

It is a good figure compared to the people who do not go through JobPath. We set a target for JobPath by taking the figures for 2012 and 2013 and adding 62% to them. The target figures were 62% above the base case and all the figures exceed their base cases. We will have the full data when the econometric review is published in January but the preliminary data show that it is significantly in excess of the figures for people who do not have the JobPath service.

On page 143 of the report of the Comptroller and Auditor General, it is stated that, of the 62,631 jobseekers engaged with JobPath, 15,731 commenced a job of some duration but only 1.75%, equal to 1,096, sustained employment for one year.

Mr. Seamus McCarthy

I think the last figure was the Deputy's own calculation. I would have to do the sums. The amount who sustained employment for one year was 7% of the 62,631, which is approximately 4,000.

Does Mr. McKeon think that is a good figure?

Mr. John McKeon

It is. In our report to the committee, we also gave information on our own performance statistics, such as on sustainment. At that time, we had only had 26-week job sustainments. The information showed that we were outperforming people who were not on JobPath by approximately 22% or 23%.

JobPath is delivering significantly higher job outcomes than is the case for people not referred to the scheme. Those who engage with JobPath are sustaining their employment. As I said, the preliminary outputs from the econometric review, which is independent and is carried out by the OECD and Deloitte, indicate that earnings, employment, job progression and job sustainment are significantly higher among people referred to JobPath compared with identical or close to identical people who are not referred to it. I am quite satisfied that these figures will compare more than favourably with our Intreo service and local employment services.

I wish to return to the term "sustained employment". Is that an appropriate benchmark? The Central Statistics Office, for example, would not use sustained employment but rather part-time or permanent employment. It would not use sustained employment as a benchmark. The period of 13 weeks is a low threshold in the context of measuring success. There are four stages up to a year but a period of 13 weeks would not be a success. From where did that period come? Why did Mr. McKeon refer to sustained employment as opposed to permanent employment?

Mr. John McKeon

It is important to say it is sustained full-time employment. The other issue concerns the payment model. We pay the local employment services on an inputs basis. We pay them €20 million a year and they deal with 20,000 clients, which is approximately €1,000 per client that they look for from us. There is no visibility or accountability, however, regarding whether they get somebody into a job or whether that job is sustained. We did not want to do that under this model. We wanted to base payments on outcomes, but the question was how to define an outcome. We defined it as a person getting a job for at least 30 hours per week and it must be retained for at least 13 weeks.

That is my point. The outcome can be defined based on a low bar, which the period of 13 weeks seems to be.

Mr. John McKeon

I disagree because if one considers the pricing information which I provided, one will see that the 13-week sustainment fee is significantly lower than the sustainment fee for a 52-week outcome. There is a strong incentive, therefore, for the providers to try to sustain some of the employment for a full year. Part of the service they must provide is working with employers and the jobseeker while he or she is in employment to help him or her.

Did the two companies have an input in respect of the timeframe of 13 weeks?

Mr. John McKeon

No, they had no input. We set the input in our tender document. The contract was designed after a long and detailed consultation process. There was input from the National and Economic Social Council, the Economic and Social Research Institute, the Centre for Economic and Social Inclusion and labour market experts from Maynooth University. We did much study and research on similar models in other countries, and the conclusion was that if somebody is to be contracted to do something and be paid by outcomes, he or she must be paid something along the way or he or she will have no cashflow. That "something along the way" is paying him or her based on a 13-week job sustainment.

That is fine. Of the 190,000 who came through JobPath, how many came through twice?

Mr. John McKeon

The most recent figure is approximately 15,000.

Is that a measure of success? That means these companies were paid twice for the same individuals, but the whole purpose of going through JobPath is to get a job or some level of employment. What was the cost of putting 15,000 people through twice?

Mr. John McKeon

The companies will have received the registration fee for each individual twice, which is approximately €311 each time. The issue is that the service we want to provide to people is a case management employment advisory service. It is a service that we should provide to all jobseekers on a continuous basis. Should people who have been on JobPath but have not obtained jobs just be left alone and ignored? While they have finished JobPath, they have not gone on after six months to community employment, training or the local employment services, but they are on the live register.

I understand that, but 15,000 of 190,000 going back to JobPath seems to be a high number. While the companies receive only the initial registration fee, they receive it twice. I am trying to tease this out from the point of view of the companies and what incentives there are for them to make money, because that is their aim. The period of 13 weeks is too low a threshold for the first tranche of money. If 15,000 people have gone through twice and these companies have been paid twice, I see that as a problem. Mr. McKeon might not, and he has given the reasons he does not, but there is an issue from a value-for-money perspective.

A discount rate of 8% is mentioned on page 148 of the Comptroller and Auditor General's report. Will Mr. McKeon clarify the discount rate? Why were two rates introduced?

Mr. John McKeon

There are a number of possible discount rates, namely, 4%, 8% and 16%. We introduced the discounts in the contract design because when we carried out our research in other countries, we learned that their pricing models do not include any consideration of the fact that the economy might recover and, therefore, it would be easier to get people into employment. In the request for tender we issued to providers, we told them in advance that based on employment growth in the economy we would reduce prices, subject to an analysis of their financial accounts and so on.

Mr. John McKeon

That is why we introduced the discount rate.

That goes back to my exact point earlier when I talked about the 9% success rate. We have a recovering economy with greater than expected numbers of people in employment. It is a little easier to get a job than it was three, five or seven years ago, which means it is less difficult for these two companies to operate and get people into employment. The Department built in discount rates because of that, yet there is still only a 9% success rate at the end.

Mr. John McKeon

We are paying less, however.

I am not talking about paying. The Department is paying less, but my point is related to the figure of 9%, which Mr. McKeon quoted moments ago. Notwithstanding that there is a recovering economy and it is easier to get a job, we are dealing with the long-term unemployed. It should not be seen in the same way, but the Department does see it that way and it builds in the discount.

Mr. John McKeon

Yes.

When it suits, the argument can be made that the economy is recovering and it is an easier and better environment. That suits when one is talking about the discount rate, which suits the Department. In measuring whether the project actually works in overall terms, however, we cannot use that argument because it is different due to the long-term unemployed.

Mr. John McKeon

The Deputy is conflating two matters. On the first, one of the challenges we had in designing the contract was doing it in a way that would protect the value for money for the State in order that we would not pay money to people in a recovering economy that we would have paid in a more depressed one. We built that in and that is what we apply.

The second issue is-----

Where did the percentages come from? How were the figures arrived at?

Mr. John McKeon

We arrived at the figures in consultation with the Department of Public Expenditure and Reform based on input and advice we received from the Centre for Economic and Social Inclusion and Professor Dan Finn from the University of Southampton, who has advised the European Commission and others on the design of this type of contract models.

On the second point the Deputy raised, which was related to the figure of 9%, the issue is how it compares with other long-term unemployed people at this time. My point is that it compares favourably.

That is fine. I thank the Accounting Officer for the considerable amount of information he gave us before the meeting. It made it much easier for us to prepare. We do not always receive such information but when we do, we should acknowledge it.

I thank all the witnesses for their attendance and for all the detailed information furnished to us in advance of the meeting. It is helpful to go through all the various documents concerning different aspects of the Department.

My first question is related to the lead-times for certain payments, which has raised concern. What is the average time taken to process an application for carer's allowance?

Mr. John McKeon

It is 17 weeks.

What is the Department's target? What would it like the average time to be?

Mr. John McKeon

We would like it to be 12 weeks. We process applications for domiciliary care allowance, which is a slightly simpler scheme because there is no means test and so on, in approximately nine weeks, while we process those for disability allowance in approximately 12 weeks, and we would like to bring the time for carer's allowance down to that level.

It is a complicated scheme. We do not just look at the disability of the recipient of care. We look at the circumstances of the carer as well, including their means and their habitual residence. They are decisions that unfortunately take a long time and require a lot of information from the applicant.

Has the Department looked at the lead times for carer's allowance in other jurisdictions?

Mr. John McKeon

I do not have that information. I am not sure that many jurisdictions have announced-----

The UK, our nearest neighbour, is one example.

Mr. John McKeon

I do not have that information with me. I can get it. I am not sure the UK has an exactly analogous scheme. There is a different way of doing things there which is not as generous as the carer's allowance in Ireland. I am not sure it is analogous.

Obviously a substantial amount of responsibility for assessment for a carer's allowance is placed upon the GP. There is also the means test. I am concerned about both the carer's allowance and the disability allowance. I am dealing with a few cases at the moment. In one example, an individual who applied in October was told that it would be well into January before the application would be processed and a decision made on it. Carer's allowance affects people who are very vulnerable. Illness can come upon someone quite quickly and can be progressive. The delay in assessing claims can be very frustrating, especially when we are told that we are now at record levels of employment. A total of 2.3 million people are employed in this country. One would imagine that more resources would be available to the Department to reduce the lead times on such schemes, particularly when so many labour activation schemes have been outsourced. It frustrates me that we are not seeing more progress on these payments.

Mr. John McKeon

This reflects what I said in my introductory statement about striking a balance between protecting the interests of the taxpayer and controlling the scheme on the one hand and trying not to frustrate people's access to entitlements on the other. Everyone in the Department would like to see us deliver those services more quickly. They tend to be more difficult. In some ways the average paints a picture which is worse the reality. That figure would include situations where somebody has had an application for disability allowance turned down and then gets a review, which takes time. Then there might be an appeal. The average includes all of those situations. It is not just the clean cases, for want of a better term.

Even a target level of 12 weeks for carer's allowance is quite significant, is it not? That means it takes three months to process an application.

Mr. John McKeon

It is. It does take time, and we are-----

Can the Department not improve on that? Does Mr. McKeon not think that to allow a period of three months is very generous to the Department?

Mr. John McKeon

Again, we are talking about the average, including claims that are rejected in the first instance, go through a review process and then go through an appeal process. For clean claims-----

This is also about processes and reports. To be clear, leaving aside reviews, what is the Department's ideal timeframe for an application for carer's allowance to be processed and for a decision to be made in the first instance?

Mr. John McKeon

For carer's allowance we should be looking at something around eight weeks. That would be reasonable given where we are on domiciliary care allowance, which is simpler. It is a good indicator of what can be achieved.

The Department significantly overshoots an eight-week period at the moment.

Mr. John McKeon

We are significantly off it on average for-----

Am I correct in thinking that with the outsourcing of some labour activation schemes and with more people employed, we should be seeing greater improvement in this sector?

Mr. John McKeon

Actually, we are seeing significant increases in the number of people claiming carer's allowance. Again, it is to do with the ageing of the population.

There are also increases in disability allowance claims.

Mr. John McKeon

That is correct. The four schemes that are growing most significantly are carer's allowance, disability allowance, domiciliary care allowance and pensions. Carer's allowance has increased by 5% year on year. Jobseeker's allowance has fallen by about 15%. Domiciliary care allowance has grown by about 11%. Disability allowance has grown by about 5%. Those increases are putting pressure on our processing capability.

There are two types of people involved in the processing. Actually there are three, but there are two main types. One group is our deciding officers, who for these schemes are based in Longford and Buncrana. They review the claim, carry out the means assessment, check conditionality and so on. Then there are medical assessors. We are looking to add more resources to both of those areas. It is difficult at this point to get medical assessor resources, but we are working on it. We are interviewing-----

The means test component of a carers' allowance application should be fairly black and white, be it the old self-assessment forms, P60s or bank statements. The requirements for the individual should be the same as those for a jobseeker’s' allowance application.

Mr. John McKeon

No. I must say two things about the carer's allowance means test. First, it is more generous than the jobseeker's allowance test, so-----

I am talking about the adjudication and the documents that are required to make the decision.

Mr. John McKeon

There are other factors. For example, the person providing the care is meant to be providing full-time care and attention, ideally in the home of the recipient of care. We provide flexibility for the claimant to work up to 15 hours and to live away from the recipient of care, provided they can get there within a certain time. All of these things have to be assessed, because many people claiming carer's allowance are not living with the recipient of care. As such, we have to assess whether they are in fact providing full-time care and attention.

Does the Department have a target for when the time will be down to eight weeks?

Mr. John McKeon

It will depend. We are working towards that target. We are trying to recruit additional medical assessors at the moment.

Does Mr. McKeon have a date? Can he be ambitious and say the Department wants to achieve its excellence by-----

Mr. John McKeon

It is hoped that this time next year I will be able to say that. At that time the figure for the year will not be at eight weeks because we are starting out where we are starting out. However, I would hope that this time next year we will be in a position to say that a clean application will take eight weeks. We have started making progress. We produced-----

Lead times are long, even for disability allowance, yet potentially one claimant in five is getting excess payments. That is also concerning. If the Department takes time to adjudicate yet has a high incidence of awarding incorrect payments at the end of this lengthy process, that is a concern.

Mr. John McKeon

I would need to check the fraud and error survey for the carer's allowance. I do not think it is one in five.

I am referring to disability allowance.

Mr. John McKeon

I think that is the gross rather than the net figure for disability allowance.

The gross figure is 18.4%.

Mr. Seamus McCarthy

Some 15% of which is medical disallowance.

Mr. McKeon referred to the time taken to process a claim, including the initial decision, the review and an appeal.

Mr. John McKeon

Yes.

Is he including an appeal to the independent social welfare appeals office?

Mr. John McKeon

Yes. That is all included. I am referring to the time it takes to award a claim.

Surely that is outside Mr. McKeon's Department. What is the processing time for the Department to make a determination? We need to know what happens. We all know how long that takes. If that body ever made a decision in 18 weeks, it would be brilliant.

Mr. John McKeon

I am sorry. I misled the committee-----

Mr. McKeon has referred to appeals twice.

Mr. John McKeon

I have misled the committee. The Chair is right. The 17 weeks actually excludes the appeal. It includes the review but excludes the appeal.

That 17 weeks refers to the internal process in the Department before someone even goes to the independent appeals office.

Mr. John McKeon

Yes.

I thought so.

Mr. John McKeon

It includes the review, but it does not include the appeal.

Mr. John McKeon

That 17 week period has decreased to 16 weeks as of this week. We have reduced the number of pending decisions on carer's allowance by 1,000 in the past month because we allocated extra staff to it. Our main challenge is to get additional medical assessors. We are recruiting medical assessors at the moment. They are being interviewed this week. It is not only a question of getting them but also of holding on to them. We all know that in the medical community-----

What is the salary rate for these people?

Mr. John McKeon

They are principal officers. The salary is about €90,000. They are qualified occupational doctors. It is hard to keep them at that level.

Why is the salary set at the principal officer level when the Department is competing against the HSE?

Mr. John McKeon

It is a historical thing. In other jurisdictions, not every medical condition needs a qualified occupational doctor to determine that a carer's allowance or disability allowance should be paid. In other jurisdictions, nurses are used. We are looking at that to see if it would be an option.

Very well.

It is to be hoped that next year we will see a significant improvement.

Mr. John McKeon

I will not be able to say that the average for the year is eight weeks, but I hope that by that time we will have reached an eight-week processing time.

Excellent. Part 2.8 in the accounts includes the Department's major capital projects. One is the public services card. The lifetime cost is expected to be €32 million. How does Mr. McKeon feel the card is operating? Is the Department reducing instances of overpayment by it?

Mr. John McKeon

It is difficult to calculate how much we have saved because of the public services card.

Does Mr. McKeon think it represents value for money?

Mr. John McKeon

Yes, and I will explain why. We have always had an identity card in the Department. Previously, it was the social services card. Most of the cost of the public services card, PSC, is incurred in its production, and would have been incurred anyway because we would have been paying for the social services card to be produced.

So far, we have identified approximately 220 cases of identity fraud using the PSC.

Did Mr. McKeon say "220"?

Mr. John McKeon

Yes. A number of those have gone forward for prosecution and a number have-----

What was their value?

Mr. John McKeon

The average value in control savings from those cases is approximately €4.2 million.

Exclusively from the PSC cases.

Mr. John McKeon

Yes.

Mr. McKeon corresponded with his counterpart in the Department of Transport, Tourism and Sport following the decision to drop the card for driver theory tests, which would have been a key use of the card. Was Mr. McKeon disappointed with that decision?

Mr. John McKeon

It is a matter for each Department to make its own judgment as to how it wants to-----

But Mr. McKeon corresponded with him.

Mr. John McKeon

Yes. Speaking as the Accounting Officer for this Department, we use the PSC for our own purposes. Whether another Department wants to use it-----

It was supposed to be a major tool for saving costs across various Departments.

Mr. John McKeon

It is.

That was one of the arguments that was made from its inception.

Mr. John McKeon

This is more about what we call the safe registration process than the card itself. The card is just a token showing that someone's identity has been authenticated. My view on it is that-----

It is more than a token when it can be used to access key benefits. In theory, it was designed to be used by the National Driver Licence Service, NDLS, for theory test registrations, for cross-departmental entitlements and so on.

Mr. John McKeon

I will make two points. The physical card is simply that, a token, except for where the approximately 1 million people use it for the free travel scheme. They use it to tap on and tap off buses, get through train gates and so on. That valuable benefit to customers is not captured in the control savings figure.

Was it a regressive step by the Department of Transport, Tourism and Sport to drop it?

Mr. John McKeon

That Department has to reach its own conclusions. I would argue that, where we have authenticated a person's identity to a high standard using the safe registration process, it should not be necessary for another State body to ask that person for the same information again. Our identity verification process, which serves a good public service purpose, could be used again instead of requesting similar information from the same customer. My understanding is that the Department of Transport, Tourism and Sport was concerned about whether it would have to make changes to its legislative framework to use our service. I hope, and I believe the intention is, that it will return to using it. From a customer service perspective, the user-----

Will Mr. McKeon encourage the Department to do that?

Mr. John McKeon

I would. As a user, I would prefer to be able to say that I have registered my identity already, show my PSC and ask the organisation to use it.

It was important to understand the idea behind its introduction.

A number of contracts were in breach of procurement law. Will Mr. McKeon give us a flavour of those and the reasoning behind them?

Mr. John McKeon

I cannot give the committee a list of them, but most of them related to situations where we were waiting for a framework contract to be put in place by the Office of Government Procurement. Our own contracts had run out and the new framework contract was not in place yet, so we had to renew the contracts. Regarding the contract for our mobile phone service, for example, we could not leave inspectors and other staff of the Department without mobile phones while we were waiting for a Government procurement contract.

Was that not just a case of failing to plan the tender for renewal early? What was the reason?

Mr. John McKeon

We had anticipated that the Government procurement frameworks would be in place by the time our contracts came to a conclusion, but they were not. That left us having to roll the contracts over.

Another case involved the procurement of translation services, which are important. Most people believe that this only means trí Ghaeilge, but many of our clients are from Poland, Russia and so on and we had to procure translation services.

It was reported that the Department embarked on a tender process for the monitoring of social media.

Mr. John McKeon

That is right.

Was that tender process completed?

Mr. John McKeon

No, we have not proceeded with that element of the tender. We included it as an option. Previously, they would have been called press cutting services. Like most other large organisations within and without the public service, we get files everyday of references in the press to the Department. Given the role that social media now play, we thought it might be useful to get cuttings of such references on social media. It was not what it was presented as in some places, namely, that we would be monitoring individuals' use of social media.

It was just for references to the Department.

Mr. John McKeon

It was to monitor whether the Department was mentioned in a post and whether there was something trending that we should have been aware of.

Why did the Department withdraw that element?

Mr. John McKeon

Given the concerns raised, we decided to pause it for the time being and explain to people what we were doing before proceeding.

Does the Department intend to proceed with it at a later date?

Mr. John McKeon

Not in the next year or two. When the current contract is concluded, we will consider the matter then.

Regarding the rebate for making employees redundant that the employer is due to pay, what is the outstanding debt in recouping that?

Mr. John McKeon

The current debt is approximately €460 million, relating to 13,400 employers, the vast majority of whom went insolvent or into liquidation in the period 2008 to 2013.

What happens to a company's debt to the Department when the company goes into liquidation?

Mr. John McKeon

We retain that debt on our books. Along with the Revenue Commissioners, we are a preferred creditor in a liquidation environment. Generally, we pursue recovery of the debt via the officially appointed liquidator. In practice, though, we would be doing well to get more than 10% of it back.

When the liquidation process is completed-----

Mr. John McKeon

The debt will be in a write-off situation. The process can take up to seven or eight years.

The figure of €460 million relates to active liquidations or employers that are still live.

Mr. John McKeon

Most of it - 75%, or approximately €345 million - relates to employers that we definitively know have been liquidated and have ceased trading. The prospect of getting any money back there are very slim, but we are pursuing it. Approximately €41 million is in respect of sole traders who do not have to go through a liquidation process but who do not appear to be trading either. We reckon that approximately 16% of the debt, or €72 million, is in respect of employers, at least some of which we know are trading. They are listed by the Companies Registration Office as trading. We work with those companies and try to agree repayment plans with them to get the money back.

There was a failure to reconcile the amounts on 31 December 2017. Given the Department's debt and receipts accounting system, DRAS, why was that the case?

Mr. John McKeon

The DRAS is the transaction system that records the processing of debts and sends a file to our general ledger via an update from an interim reporting system. The DRAS overstates the amount by approximately 0.5%. One would normally expect some difference between the transaction system and the general ledger. We are working it down. In the past year, we undertook a forensic analysis of that debt by PPS number, which involved examining 1.8 million separate transactions, to try to reconcile the amounts. There will always be-----

It is a significant debt.

Mr. John McKeon

Does the Deputy mean the €460 million?

Mr. John McKeon

It is, but it is separate from the debt on the DRAS, which is in respect of individual claimants and so on and amounts to approximately €475 million. I worked in the private sector for a long time. Were I back there now, I would be writing the employer debt off. There would be no question about that, but the Government accounting rules mean that we do not write it off until the liquidation is completed. That is not to say that we are not working hard to recover the €72 million of employer debt that we know is in respect of companies that still have some activity. We took in approximately €7 million of that last year. So far this year, we have recovered approximately €9 million.

We set up a new process with Revenue, at the suggestion of the chair of the committee last year, in which we exchange details on the 100 highest debts in both organisations of employers-----

Some of the amounts are trivial.

Mr. John McKeon

Some of the amounts are trivial. That is why we will focus on the 100 highest.

The big amounts.

Mr. John McKeon

Revenue has 100 and we will have 100. We will look at the intersection and work together.

Did I see in the accounts somewhere that the Department expects to collect approximately 10% or €50 million of the €550 million?

Mr. John McKeon

Ten per cent is what we would-----

Mr. McKeon said that 70 are live but the Department will not get 100% of that.

Mr. John McKeon

We will not get 100% of that.

So it will be €50 million.

Mr. John McKeon

There or thereabouts is what we would expect to get. On average, we recover approximately €10 million a year. We have six people working full-time on debt recovery on employers. Many of the employers still trading are still in financial difficulty so if we pursue recovery of the debt too robustly, we are in danger of tripping them over and maybe incurring an even higher debt because of the workers they then have to let go. We always try to get that balance. I looked at a number of cases myself just be sure and there are a number of small businesses that are struggling, particularly outside Dublin. We could go after them but that would not serve anybody's best interest.

I thank Mr. McKeon for his time.

I was going to ask a question or two on that point when I came back in but I will clear them up now. Deputy Burke has covered his points. Last year, collections for the full year were approximately €7 million based on the Department's accounts. Mr. McKeon is saying it is over €8 million so far.

Mr. John McKeon

It is €8.8 million, so we expect it will be about €9 million by the year end.

Yet there was payment out last year of almost €30 million, which is still quite a bit reduced.

Mr. John McKeon

It is a significant reduction. In 2011, we were looking at payments of €340 million a year.

The previous year it was €40 million, so the trend is going in the right direction.

On that topic, the Department now has a system in place with Revenue. Mr. McKeon mentioned it is dealing with the Companies Office but Revenue are the best people to tell it whether they are active. The Department has made some contacts with Revenue. It has some system in place now.

Mr. John McKeon

That is right. We have just set up, under our memorandum of understanding with Revenue, an employer debt recovery group and we have agreed to take 100 cases from both organisations, look at the intersection or the overlap, and then work together on that overlap. They would be the 100 highest cases from each organisation. If that is successful, we will extend it.

To conclude my questions on this debt issue, following which I will call Deputy Catherine Murphy, where the Department lists in the Social Insurance Fund the benefit over payment recovery, how does it handle that? Are they people making repayments of debt to the Department or people in receipt of a payment who are agreeing to pay €30 a week? How does the Department handle the two different types of-----

Mr. John McKeon

It is both. I might rely on my colleague to talk about that. Most of our recoveries are from people who are still in payment because we have a direct contact with them. That is the truth.

Any Deputy in Ireland will tell Mr. McKeon that.

Mr. John McKeon

We also recover what we call off-book debt from people who are off-book. We now have the ability to apply attachment orders to earnings, and we have started to apply that attachment order.

We have met them too as local Deputies.

Mr. John McKeon

We are looking to do that. If the Chairman is agreeable, Ms Kathleen Stack might comment on those recoveries because she is the lady responsible for making it happen.

Absolutely.

Ms Kathleen Stack

In terms of our outstanding debt, and we are talking about individuals rather than employers, at the end of October we have a little more than 156,000 debts and €475 million in value. As the Secretary General mentioned, we divide them between on-book - people who are still getting a payment from us each week - and a number of off-book people as well. In terms of value, we have approximately 60% who are off-book and 40% who are on-book. If the €475 million is broken down, approximately €191 million is on-book and €284 million is off-book.

How is that recorded in the accounts? For example, benefit overpayment recoveries are recorded in the receipts. Is that a combination of the people who are not in payment and giving the Department a cheque plus the amount that-----

Mr. John McKeon

Both.

Effectively, the Department is not paying it out and it is taking it in as a receipt. Is that right.

Ms Kathleen Stack

Yes.

Mr. John McKeon

That is right.

That figure includes amounts deducted at source-----

Mr. John McKeon

Absolutely.

-----with the agreement or otherwise of the person involved.

Mr. John McKeon

Yes.

Ms Kathleen Stack

The €48 million is cash. Last year, we got back €82 million, so €48 million is cash and €34 million is direct deductions.

Direct deductions. That is what I was looking for. I thank Ms Stack.

I will begin by picking up on that. The control piece for us is the people who walk through our door with the letter stating that there has been an overpayment or whatever, and there are questions that jump out from that. If somebody was overpaid or made a fraudulent claim, the Department has to deal with that and the way people negotiate with the Department is sometimes the reason they contact us. I am aware of a number of people on family income supplement who, say, work in a school but who did not work the right number of weeks because of the storm, school holidays and so on. They should have signed off and gone onto a jobseeker's payment, which might have been a smaller payment. How do the witnesses manage that in terms of the way they reflect that type of case? Is that a contra item or do they look in retrospect with somebody like that?

Mr. John McKeon

Generally, we review family income supplement, FIS, once a year so when somebody gets into a FIS payment, or a working family payment as it is called now, we review it on an annual basis. We ask them to notify us if there are any material changes in their circumstances. If they do not and they continue to get a family income supplement payment, if they have an entitlement to another benefit we would generally net it off. We would not-----

Ms Kathleen Stack

We offset it.

Mr. John McKeon

We offset it. It is likely that in that situation they are probably getting less from a working family payment than they would have been getting from a jobseeker payment so we would generally net it off and it would not be an issue.

It will not show up as something they will follow through on. They will deal with it.

Mr. John McKeon

Yes.

I am almost afraid to raise the issue of JobPath because if I do, I know a number of people who have engaged with the service will make contact with my colleagues. It depends on what is counted in terms of value for money. I have no problem with there being a case management system. It is welcome that people are helped to have a plan. I am not wild about the outsourcing of it but I have a bigger problem with what people are being told to expect from the service when they engage with it. Nearly everybody will say they are invited in once a week to sit at a computer and look up the jobs.ie website or a similar website. That is the extent of their engagement. I hear that over and over again. Have the witnesses done an analysis of the difference between the engagement with Intreo and JobPath in respect of the person's experience of their case being managed?

Mr. John McKeon

We specify the range of services that must be provided by the JobPath providers. Other countries use what is called a black box approach. They would say, "We are sending you a jobseeker. Your job is to try to help the jobseeker get a job. We don't care how you do it but if you do, we'll pay you a certain amount". We said we would not go that route and that we will specify a minimum range of services that must be provided such as assistance on curricula vitae and interview skills, the development of a personal progression plan, if a person is in employment, support for the first three months they are in employment, and a range of other services.

We do customer satisfaction research. We have done it four or five times now; I think I provided the most recent published version of the research and the information. We ask customers if they are satisfied that the service being delivered is a good one and so on and on a scale of zero to five, where five is brilliant and zero is lousy, they score it at 4.3 or 4.4.

It was across pretty much everything we measure, including the personal progression plan, post-employment support and whether they think the services are valuable and will help them get a job. At the macro level the feedback from customers is good. We have done approximately 180 inspections of JobPath providers, although I need to verify that number as it might be a little off. We have inspectors who check what is happening on the ground. We have not come across anything that causes any major concern. There are always issues but any that we have had have been sorted out. We have not come across any major issues. One of the questions-----

I have a very limited amount of time so if the witness does not mind, I will direct particular questions at him. The narrative has not changed in terms of people who make contact. It is the point I make. Customer satisfaction in people's minds might relate to something from a shop not fulfilling what is supposed to, for example. There is a different kind of mindset. There are particular Departments with which people do not like to have a serious engagement. We hear that people will fill out the form but they do not want to rock the boat with the Department of Employment Affairs and Social Protection because they seem themselves as being in a vulnerable position. What would the witness describe as full employment?

Mr. John McKeon

The Deputy can line up all the economists in the world and get a different answer from all of them. To be clichéd, there would never be a conclusion. Before the recession, we were at a rate of 4% unemployment.

It was constantly described as full employment at the time.

Mr. John McKeon

Generally speaking, economists will say the percentage relates to the overall number of people in the labour market. If there is a bigger labour market, the measure of full employment might to where the rate is 4%, 5% or 6%.

Does Mr. McKeon have a number?

Mr. John McKeon

No. It is really a matter for the Department of Business, Enterprise and Innovation.

If it comes to a point of renewing contracts, it is something that would be considered as the needs are different in a growing economy. Just because an economy is growing does not mean it will continue to grow. I presume it is factored in.

Mr. John McKeon

Absolutely. What we consider is not so much the percentage of unemployment but the number of people in our caseload. It is what people used to call the live register, although the Central Statistics Office has moved a little away from that. It still produces the figure but it now focuses on a monthly unemployment figure. Our live register has 188,000 people on it currently, with another approximately 70,000 on various programmes, leaving a total of approximately 250,000. We will see where we are. These contracts are due for renewal at the end of next year, if they are renewed. We will have a look over the next year. We will serve our client base with our own resources first, the local employment service second and then contract the capacity on top of that if required. We will consider that.

In that context, the introduction of the JobPath scheme had an impact on the likes of community employment schemes. If we counted community employment schemes only with respect to progression, a different measurement may arise, as some of the community employment schemes fulfil quite significant roles in communities. They include the likes of meals on wheels, the running of football clubs or whatever. Very often such processes help a community to function. The likes of JobPath have changed the dynamic as people are directed more towards JobPath than community employment schemes. The minute people leave a community employment scheme, they go straight to JobPath. That is counted but they may have had beneficial training that could help sustain employment afterwards. Is that fair to say?

Mr. John McKeon

Absolutely. We can all get very narrow-minded in specifying what gets people a job. Was it a stint on JobPath or in community employment or a training course with the local education and training board? It is important to remember it is probably the sum total that ultimately helps somebody who is very long-term unemployed get into employment.

For a while and until last year, mainly because we were trying to ration available places to everybody, people on community employment and Tús could not also be on JobPath and vice versa. Perhaps the Deputy is alluding to that. We have changed it and in the past couple of months, for example, approximately 1,200 are on community employment or Tús and JobPath at the same time. We have relaxed the stipulation because community employment is a requirement of 19 hours per week and JobPath does not take up the other 19 hours per week. It is a couple of hours per week. To an extent people thought they were in competition but they never were. It has been raised by people as such but I can honestly and absolutely say they were never in competition with one another. To the extent that people thought they were, it is certainly not an issue any more.

I have a question on the public services card. There is legislation for the use of the card by the Department of Employment Affairs and Social Protection. When there was discussion around other Departments using it, what was decision when it came to whether there was a legal competence or status to use the card?

Mr. John McKeon

That is certainly a matter for each individual Department.

There was not a collaborative approach between Departments.

Mr. John McKeon

No, it would be wrong to say that as well. There is a Government decision on this. Where citizens, clients, customers - people use different terms so I will use all of them - engage with the State to get a high-value public service, they should authenticate their identity with what we call the SAFE2 standard. It is a high level of assurance of somebody's identity. Whether it is done through our process or another body decides to set it up and have a parallel process, we strongly encourage that other body to use our process purely for purposes of savings and public convenience. If another public body decides to use another process, it is a matter for that body. It must get sanction from the Department of Public Expenditure and Reform for that expenditure, so it is a separate discussion it would require.

One of the concerns of some people was that with the range of different Departments using it for different processes, such as driver licences, it was almost turning into a national identity card by stealth. If we are to have one, we should have a debate and it should not happen by stealth. There were question marks over the legal status of Departments to use the card. I would have thought that when it was being set up, it would have been given a considerable degree of consideration. As Mr. McKeon says, if there is a cost it should not have to be repeated with multiple cards, for example. What kind of engagement occurred?

Mr. John McKeon

There were engagements on an official level between different Departments. There was a Government decision and a joint memo to the Government sponsored by our Department and the Department of Public Expenditure and Reform. It is up to the other Departments to make that real. I cannot write the legislation if it is required for another Department. I am confident that within the Social Welfare Consolidation Act 2005, particularly section 262, other bodies are given the legislative authority to use the card. It is something that may be tested in due course but I am confident the authority is already in place.

I will move to the Social Insurance Fund. We have an ageing population and there is a cost so Exchequer subventions will need to increase by €1.7 billion to 2025 and €5.6 billion to 2035. That reflects the ratio of employed people to pensioners, in the main. What are the figures for those ratios?

Mr. John McKeon

I do not know if I have the numbers with me but we can certainly get them.

The figures were provided for us by KPMG which conducted the actuarial review so there will be numbers in the detailed report and I can certainly get those to the Deputy. Perhaps one of my colleagues can lay their hands on it.

What relationship would that have with, for example, the national development plan and national planning framework? There is a cross-relationship with this where there is an expectation the population will grow. I presume the actuarial assessment or review looked at projected population growth. Is it possible to do that?

Mr. John McKeon

Yes, it is. There is what is called the AGS, albeit I cannot remember what the acronym stands for. The European Commission and all member states' relevant agencies, including our Central Statistics Office, produce a report which includes long-term population projections for every country. They used the population projections from last year in the development of this.

Not every country has the same profile as Ireland if one starts to look at the vehicle of emigration when there is a downturn and so on.

Mr. John McKeon

On that, the CSO is the authority in Ireland that inputs into the European Commission so the figures are adjusted for each country based on what the experts in the country provide on the population projections.

I go back to another aspect of disability payments. Deputy Burke spoke about the length of time it takes to process carer's allowance. One is looking at situations with carer's benefit, for example, where someone has to leave work due to a stroke and there can be a delay. That needs to happen quickly as a person can be at work and suddenly have to depend on social welfare. As the person may have some savings, community welfare officers do not really kick in. That is one category but there are others in the area of disability. I have come across people who were previously on an invalidity pension. I realise it is not necessarily a pension for life where someone recovers. One wants people to recover and go back to work. It is a useful payment from that point of view. However, I have seen people removed from payment in circumstances which make the mind boggle. It is where someone has an obvious long-term illness. If someone appeals that or a disability payment matter, there is a very high rate of reversals of departmental decisions in disability cases. It is, or it certainly was, in excess of 50%. That is not a very good use of administrative time. In fact, it adds a layer of concern and bureaucracy for people who get the payment when they succeed on appeal. Has the Department looked at that and has the number come down in recent times?

Mr. John McKeon

The Deputy raised two issues. One was the issue of someone who was on a payment having the case reviewed and being taken off the payment. It is very rare that happens. It is very unusual. If the Deputy has examples, I would be very happy to have a look at them. That is very rare as it is generally the case that to get onto the invalidity pension payment, a person will tend to have a very profound medical condition. It is very rare that happens, albeit it is not to say it never does.

With regard to appeals, the Deputy is right that approximately 60% of people who appeal a disability or invalidity related decision, which is approximately 1% of those who get a decision, which is the context in which this must be considered, get a favourable outcome. The appeals office then sends the file back to the Department for another look and it is at that stage when most of them get the favourable outcome. Generally, it is because people have provided additional information which was not available to the Department the first time. We have worked with disability activation groups and carers. We have developed a new form which is getting positive and negative feedback. On the one hand, we are accused that the form is too long. On the other hand, the Carers Association feels it is as long as it needs to be to ensure all the information required to make a first-instance decision rather than a second-instance one is captured. We are continuing to work to try to improve the quality of the information available. Our medical assessors are not like Attila the Hun, they are trying to look realistically and objectively at each case. It is frustrating for them when someone presents with a bare characterisation from a GP on a particular illness whereas subsequently a full consultant's report is provided which puts the whole thing into perspective.

I have had a good bit of experience of dealing with these and I certainly tell people to provide lots of evidence. The full range of information is needed to make a decision. However, I have seen cases reversed or where there is a more favourable treatment where there has not been much additional information. My question is whether it would be useful to look again at the process for value for money reasons and given the administrative hours required to deal with this when a large proportion succeed on appeal, albeit that is of a small proportion who apply.

Mr. John McKeon

We are looking at that. I have met the chief appeals officer who operates an independent office from the Department. I have asked her to meet with our chief medical officer. They do not like having to meet, not because they do not like each other, but because of the independent element. However, I have asked them to sit down and discuss this to find out what is going on underneath and to see if we can sort it out. We are doing that at the moment.

I call Deputies MacSharry and O'Brien. Both want to get in before the vote.

Unfortunately, I was not here for the presentations. If I cover ground which was already covered, I ask the Chairman to stop me and I will move on. I had to go to another meeting. On job activation measures, has an analysis been done on outcomes and the percentages in full employment, or who are more or less welfare dependent?

Mr. John McKeon

We have done a number of econometric reviews on different schemes at different points in time. We have done econometric reviews of the back to education allowance, for example, which is an activation measure. We are just finishing one on JobPath. We have an ongoing programme of reviews.

Are they published or are they just used internally?

Mr. John McKeon

They are published. We will publish the JobPath one in January. The back to education allowance review was published last year. We did a back to work allowance review.

What are the headlines? Is it 20%, 50% or 80%?

Mr. John McKeon

The headlines in Ireland are the same as they are all around the world. I do not have the figures to hand but in general terms case management advisory type interventions like Intreo and JobPath tend to have positive impacts. Specific training schemes-----

I am more interested in the percentages.

Mr. John McKeon

It is approximately 20%. Now, that is very broad.

Is that 20% success?

Mr. John McKeon

Over and above what would have happened in the absence. One is looking at an uplift.

Does it mean 80% were unsuccessful?

Mr. John McKeon

No. What I am saying is that without case management, 10% of people would have got into employment. With case management, 12% get in. As such, there is a 20% increase over what would have happened. It is that kind of figure.

It is a 20% increase over what would have happened. Mr. McKeon is saying that 12% would have gained employment and 20% over that brings it to 15% in total.

Mr. John McKeon

That is the way one measures these programmes.

Mr. John McKeon

Generally, one is speaking about people who have been unemployed over a very long term and who have significant barriers to employment.

What about the cost of the schemes versus the 20% increase or real increase of 2%?

Mr. John McKeon

One does not provide case management activation type services on the basis that they are going to break even.

It is not a case of breaking even or being profitable or anything like that.

Mr. John McKeon

One does it to provide the service.

Has the Comptroller and Auditor General done any analysis of them?

Mr. Seamus McCarthy

It is a difficult type of accounting.

Is it on the radar or is it because there are difficult metrics?

Mr. Seamus McCarthy

It is difficult. It is more a matter for an economics research unit to do that kind of work.

Do we have one of those?

Mr. Seamus McCarthy

I do not.

Does the Department?

Mr. John McKeon

Our Department carries out more econometric reviews of its work than any other in the State. We have published a number of reviews and I will get copies of all of them for the committee. Generally, the outcomes are positive. If one were to bring them back and ask whether the State had broken, that would not be about their purpose. The purpose is not for the State to break even, it is to provide a service to the jobseeker.

I agree with that, but if the cost was €30 million and the win was 20% more people, or 2% of the total, common sense would demand that we look at another way. Surely that is worthwhile.

Mr. John McKeon

It is and it depends on the cost and benefit-----

I am sorry to interrupt but I have no time and, no more than myself, Mr. McKeon likes to talk. Can Mr. McCarthy tell us what economic forum in the State we could ask to do something like this?

Mr. Seamus McCarthy

The obligation is on the Department to demonstrate that what it is doing represents value for money. I support the idea that the Department should carry out the research in the first instance, publish it and make the case-----

Could that be done? The default position is that it is not doing this to make money or to break even. I appreciate that there is a cost to the service but we need some way to measure the cost and benefit. A 2% win seems quite small.

Mr. John McKeon

It is 20%.

Mr. McKeon said 10% to 12% are going to gain employment.

Mr. John McKeon

That is just-----

We are all the way up to 15%. If that 3% boost costs €30 million or €40 million, it might be great value for money but perhaps it is not. Perhaps we should carry out an analysis of whether that €30 million would be better spent doing something else for these people.

Mr. John McKeon

We commissioned econometric research by the ESRI, the OECD and similar bodies.

Mr. John McKeon

It is published, peer reviewed and is available.

Does it give the answer I am seeking?

Mr. John McKeon

It gives indications, which I do not have with me, and it tackles value for money. I can give the Deputy a very rough number that might help. If he looks at the number of people who got employment subsequent to the JobPath service and divides the total cost by the number of people who are now in full-time employment it amounts to approximately €4,000 per job. Those people would generally be in receipt of €10,900 as jobseekers but when they go into employment they will pay approximately €5,000 in taxes. One could say, in a very simplistic way, that there is €15,000 for approximately €4,500. It is not as clean and simple as that. Then one must ask how many of the people on whom €4,500 was spent would have got a job in any event. That is where the complexity comes into the analysis. It is important to do that-----

How many left jobs and six months later were back with the Department?

Mr. John McKeon

It is a very specialised field of research. If the Deputy speaks to the ESRI, the OECD or other bodies he will find that the Department has a reputation for publishing this data. It is all in the public domain. I just do not have the exact detail the Deputy is seeking with me.

Will Mr. McKeon send it to us?

Mr. John McKeon

We can send all-----

Do not send us all of them. We do not need ten reports. Mr. McKeon knows what I am asking for so he could send us that.

Mr. John McKeon

We will send the ones we have done.

What report is Mr. McKeon going to send?

Mr. John McKeon

The ones that have been published recently have been on the back to education allowance and the back to work enterprise allowance.

The one on JobPath is due.

Mr. John McKeon

The one on JobPath will be in January.

Perhaps Mr. McKeon could send us all three in January.

Mr. John McKeon

There is a review of JobsPlus as well which will be published shortly. We will send the four of them.

I read in an article that 11,000 people used the JobPath service twice.

Mr. John McKeon

It is 15,000 now. We spoke about that earlier.

I do not wish to go over old ground. Did we deal with it adequately, Chairman?

Yes, Deputy Cullinane did.

If people are in prison do they receive social welfare?

Mr. John McKeon

No, up until yesterday. We will have to consider yesterday's Supreme Court decision. It was particularly in the context of pensions so we will have to consider the decision and see what it means.

Can Mr. McKeon briefly outline the decision?

Mr. John McKeon

It was a case taken by a prisoner who claimed, effectively, that his social insurance entitlement was a property right and that he had paid his contributions so, therefore, he was entitled to a payment regardless of whether he was in prison.

It was a benefit, not an allowance.

Mr. John McKeon

Yes. However, we have to be clear about it and I have not had a chance to read the judgment. The judgment was only handed down yesterday and I need to read it in full. We also have to get the Attorney General's office to look at it.

Would that not be linked to contributions?

Mr. John McKeon

It would be linked to contributions.

One cannot get jobseeker's allowance in prison.

Mr. John McKeon

One cannot get jobseeker's benefit in prison either as one must be genuinely available for and seeking work, which is a difficult condition to meet if one is in prison.

What about invalidity pension or disability allowance?

Mr. John McKeon

Invalidity pension is a possibility but disability allowance is probably not because it is means tested. As I said, I am loath to go too far into it because we have to read the judgment-----

I appreciate that there are implications.

Mr. John McKeon

-----and the Attorney General will have to advise. The case was lost in the High Court. The Attorney General's office worked on our behalf. Even though we knew the Supreme Court was likely to reach the decision it did, it had to decide what type of order it would make. We had argued there was a type of order it was possible to make to resolve the constitutional issue which would not result in people in prisons being entitled to benefits. We now must consider with the Attorney General whether that is an issue that might be the subject of a further appeal. That is as much as I can say.

Is there a protocol for who holds somebody's social welfare card when the person is in prison? If I am a prisoner, do I surrender my social welfare card to the governor of the prison or, theoretically, is it floating around outside?

Mr. John McKeon

It is a personal card so the person keeps it. One can give it to somebody else but the advantage of the public service card is that the person will not be able to use it fraudulently because of the identity checks. It is not like the old social services card that did not have a photograph.

Are there protocols whereby the Department routinely gets the list of people who are in prison or custody?

Mr. John McKeon

We do.

The Department can then cross-check that against payments.

Mr. John McKeon

Yes.

Good. Was Turas Nua dealt with in detail earlier?

Mr. John McKeon

It was.

Okay, I will not annoy Mr. McKeon about it. Does the Department ever employ private investigators?

Mr. John McKeon

No.

Does the special investigations unit do all that work?

Mr. John McKeon

Yes.

It is stated on page 12 that 130 cases were given to the Garda for further investigation or referral to the Director of Public Prosecutions. Not to refer to individual cases but what type of cases get to that stage?

Mr. John McKeon

I will ask Ms Stack to answer that question.

Ms Kathleen Stack

They are high-end fraud cases whereby there might be somebody trying to impersonate another person or, perhaps, a serial offender who has been working and claiming for a number of years. They are the cases we would refer for prosecution under the Criminal Justice Act.

It would be somebody who is pretending to me and seeking to get my benefits.

Ms Kathleen Stack

Yes. It could be somebody who has two PPS numbers and is claiming social welfare under one and working under another.

How does one get two numbers?

Ms Kathleen Stack

One should not, but on occasion-----

Who issues them?

Ms Kathleen Stack

The Department.

Does the Department have different processes and procedures now to prevent people getting two or how is that checked?

Mr. John McKeon

It is the public service card and the SAFE process. Many of these would have predated the introduction of the SAFE process. The quality of the SAFE process is that we have the photograph and we can check with our facial image matching software if the person has presented previously. The deterrent effect-----

What if one grows a beard?

Mr. John McKeon

No, it works on mathematical models.

I have a quick question. There are more PPS numbers than there are people so are there duplicates all over the place?

Mr. John McKeon

Not necessarily. For example, there are people who might be seeking a benefit from abroad, so they need a PPS number to transact business with the State.

Could Mr. McKeon send us information on that? People have emigrated, people have died and people are no longer working or are on long-term benefit. The Department must have information on the breakdown.

Mr. John McKeon

We can break that down.

I understand that there are 7 million PPS numbers.

Mr. John McKeon

We have provided that information a number of times in responses to parliamentary questions so we will put it together.

Yes, it will be easy to put that together for us. I thank Mr. McKeon.

What percentage of reports of Joe Bloggs claiming twice and the like come from the general public?

Mr. John McKeon

They all come from the general public.

How does the Department differentiate between a vexatious report and a genuine one? Does the Department investigate them all?

Mr. John McKeon

No. We carry out a desk review of each case. Often it is easy to determine that they think John McKeon is working and claiming when, in fact, he is a casual part-time worker or he is on the working family payment, so that is not pursued. Approximately 70% of cases go on to an investigator.

Approximately 30% are deemed to be vexatious, for want of a better word.

Ms Kathleen Stack

Or the person has an entitlement and there is no issue involved.

Mr. John McKeon

It is without merit rather than vexatious.

Would there be cases where, for example, a person does not like John McKeon so the person contacts the Department and says he is working and claiming?

Mr. John McKeon

We do not try to figure out why people report whoever they might report. Our issue is whether there is validity in the report.

The Department takes every report on face value, carries out a desktop review and from that it determines whether it will go forward.

Mr. John McKeon

Yes.

Has the Department been wrong in many cases that it pursued?

Mr. John McKeon

I do not know what the outcomes would be.

Ms Deirdre Shanley

The reports are just a trigger for an investigation. The Department would look into the facts and evidence. No action is taken on foot of the report. The Department would conduct a thorough investigation.

Has it pursued any to the nth degree that turned out to be false or vexatious?

Ms Deirdre Shanley

No, because the Department would have to establish facts and evidence to support anything that is in the original report. So the report-----

Did the Department lose many cases when it got to that stage?

Mr. John McKeon

Is that when we get to the court stage?

Mr. John McKeon

In general, we do not lose cases in court.

Is it 10%, 1% or less?

Mr. John McKeon

None, I would say.

None. Okay, good.

Mr. John McKeon

Less than 1%.

I want to let Deputy Jonathan O'Brien in.

How many people call the Department to report suspected fraud?

Ms Kathleen Stack

Last year, we got a little over 21,000 and. Up to October of this year, there have been 13,500.

Is there a vote in the Dáil imminent?

There is a vote, but I want to let Deputy Jonathan O'Brien in because he cannot come back after lunch.

I will be dealing with the abortion legislation after lunch.

If Deputy MacSharry is here after lunch, he will have a second opportunity.

I will be in the House for the abortion legislation, I am afraid. I did have a few more questions, but I will put them to our guests on another occasion.

I will fly through my issues and Deputy MacSharry might even be able to get back in.

I wish to go back to the referrals and the job commencement figures. We are working off two sets of figures, the current figures and those from the Comptroller and Auditor General's report. I am happy to work on the basis of the figures from the Comptroller and Auditor General report, which states that 15,731 of the 62,631 actually commenced a job of some duration. It refers to 15% sustained employment for at least 13 weeks, which comes to approximately 9,395. Does this mean that 6,336 did not make it to 13 weeks?

Mr. Seamus McCarthy

That would be my interpretation of it. They started a job but did not persist in it.

They did not reach 13 weeks. Approximately 40% of people do not make it to 13 weeks. The next category is those still in employment at 26 weeks. The number is about 7,515. I estimate that there drop-off of 1,880 - in the region of 20% - between 13 weeks and 26 weeks . At the next stage, it is 5,637, a further drop-off of 1,878, or approximately 25%. After one year, we end up with 4,384 people, which is a further drop-off of 1,253, about 22%. Are those rough calculations correct?

Mr. Seamus McCarthy

Yes.

Mr. John McKeon

Based on those data, yes. We have more up-to-date data. As I explained earlier on, the figures improve because people have not got the opportunity.

People do not have the time.

Mr. Seamus McCarthy

The reference period, if the Deputy looks at diagram on screen-----

It goes up to December 2016, so some of them would not have-----

Mr. Seamus McCarthy

The target that was set by the Department for that performance was based on a projection as to the number that might start a job and then they said, "We would expect 80%-----

Mr. Seamus McCarthy

----- for each quarter as you go on." So that is the sort of progression rate. Apart from the first 13 weeks, the progression works out at 75% or 80%.

It is pretty close.

Mr. Seamus McCarthy

It is the pattern that was previously seen, apart from the fact that more people were starting jobs and more people were falling out in the first 13 weeks. The Deputy can see it in the diagram there. There is a faster fall-off.

I reckon approximately 40% drop out before they hit 13 weeks.

Mr. Seamus McCarthy

It is a very fast fall-off.

Do we know why there is such a significant drop-off before the 13 weeks?

Mr. John McKeon

It is difficult to say. Around the world the evidence is that the first four weeks, in particular, of somebody starting in a job, particularly if they have been very long-term unemployed, is critical. Most of the people we have referred to JobPath have been three years or more unemployed on the day they start. It is very difficult for someone who has that long period of unemployment. It is simple things like getting up in the morning, being there at 9 o'clock and taking instructions from somebody when one has not been used to doing that for a long time. In making that adjustment evidence all around the world has shown the first four weeks are critical.

I appreciate that. I am working from the Comptroller and Auditor General's figures. I know there are more up-to-date figures, but I did my calculations on this. Those 15,731 represent the five different groups - people unemployed for up to 12 months, between one year and two years, etc. There are five categories. That would encompass all five of those categories. I do not need to get details now; they can be passed on to the secretariat because we are up against time. Do we have a further breakdown of the 15,731 across the five categories? Does the Department follow through on each of the various stages? In other words, do we have a breakdown of those 4,384 people who have reached one year in continuous employment by each group?

Mr. John McKeon

Annex 12A of the Comptroller and Auditor General report-----

Mr. Seamus McCarthy

In fact it is figure 12.6. One has the same kind of diagram for each of the five groups, taking in the two service providers. In the annex we have given it by each of the service providers.

Mr. Seamus McCarthy

One sees that same very fast fall-off in the first quarter, but if the Deputy looks at those diagrams, he will see that they are all on the same scale. He can see group 4 there which is long-term unemployed more than three years and the lines are low on the graph. Whereas if he looks at the long-term unemployed group 1, those who have just reached the 12-----

It is slightly higher.

Mr. Seamus McCarthy

It is actually a much higher commencement rate, but again one sees a falling off.

The purpose of JobPath is to prepare people who are out of work to go back into the workforce. This mainly applies to groups 1 to 4, maybe not so much group 5. I am trying to get an understanding of what JobPath actually does then. Irrespective of whether it is real, there is a perception and we have seen evidence that they help a person with a CV and how to prepare for an interview. However, do they do what Mr. McKeon said about trying to get people back into that work routine and teaching them life skills?

Mr. John McKeon

They do. They provide workshops on what to expect in work. One of the things we ask them to do - the feedback, our own inspections and the customer satisfaction research indicate they are doing it - is to stay in contact with the person during the first three months. They make regular contact with them to try to help them through. We know that if one can get over the first three months, as the Deputy can see, the tail-off flattens off quite considerably. Getting to the first three months is actually the critical thing. We do ask them to provide those services. Our feedback from our own contacts with the people involved and our own research indicate that they do. The incentive, in terms of the financial payment, is also there to encourage them to do it because obviously they get a relatively small payment, all things considered, for getting somebody to three months, but they get a much bigger payment for getting somebody to 12 months.

They get €1,165 for getting to 12 months and they get €613 for getting to 13 weeks. Mr. McKeon said we do not really have any detailed data on why there is such a drop-off; before 13 weeks, it is approximately 40%. Is it possible to get that? Is that something the Department should be getting?

Mr. John McKeon

We have not done it. Research that has been carried out indicates that the reasons are really associated with what I said earlier. It is the change in work habits; it is getting used to getting up in the morning. To put it bluntly, it is getting used to taking instruction from somebody where maybe one did not have to take instruction before. The other issue is a confidence issue. If one has been three years unemployed one generally goes into a job with quite low confidence. Those are the factors that play into the decline there.

If we know the factors, are the companies involved tailoring their training programmes?

Mr. John McKeon

They do that, yes.

Have they updated them? Do they consult the Department on that?

Mr. John McKeon

They work and they work together even. We have job clubs, ourselves, which we contract out for our own Intreo service, that do similar work. They do workshops with people, they provide counselling to them and they provide support in employment.

This is a very difficult cohort to get to. As I said, while the fall-off on the charts is high, it is still considerably better than if they had not been on the JobPath programme.

Mr. John McKeon

The low green line represents the reference rate. It should be borne in mind that we set the reference rate at 62% above the actual rate; therefore, we had set a stretching target which is being exceeded. The evidence is available and we will see the outcome of the econometric review when we publish the findings in January. As I have only seen very preliminary data, I do not have that level of detail, but the preliminary data suggest people are finding jobs and staying in them. They are earning more in them than those who did not go through JobPath. There will be more detail. The OECD is still finalising the review.

I will just talk about the fees charged. The fee for a commencement or referral is €311. Is that correct?

Mr. John McKeon

Yes; that is the average figure.

Therefore, there is a higher and a lower figure.

Mr. John McKeon

There is. There are different fees for each of the client groups and each year. I cannot give the Deputy the fees per provider, but they do not vary that much.

Do the contracts include performance requirements to have sustained employment?

Mr. John McKeon

Yes. The controls in the contract include a minimum performance level that the providers have to meet. It is 30% higher than the counterfactual rate, which is set at a lower level than the reference rate. We set the reference rate as a target in order that we can make price comparisons between bidders. The providers have to do 30% better than the counterfactual rate. If they do less than 30% more than what was the case beforehand, we can terminate the contract. If they do not hit their own submitted targets which are different from the reference rate, although the are often quite close to it, we can take 14% of their payment, but we have not had to do that yet.

We have never had to do it.

Mr. John McKeon

No.

They have always hit their targets.

Mr. John McKeon

They have hit their targets pretty much, yes. We built in controls in order that if they did not perform, it would affect the retention payments. Under the contract, we offer providers the opportunity to earn the retention payments back over a period of time by getting back up to the required level, but we can withhold 14%.

The next set of questions are related to social welfare payments. They relate to job sustainment claims which were found to be invalid. This is to be found in Table 12.10 on page 148 of the report of the Comptroller and Auditor General. When providers apply for their fees, there are some controls in validating the data. The report reads, "During the validation process for some 50,000 claims for job sustainment fees submitted in the period July 2015 to March 2018, the Department found a total of 10,000 claims (20%) to be invalid". Table 12.10 gives a breakdown of the reasons the claims were found to be invalid. The report goes on to state that after the initial verification, there is an opportunity for the companies to submit for reverification.

A vote has been called in the Dáil.

I will finish on this point. Do we have figures which show how many of the 10,000 have been submitted for reverification?

Mr. John McKeon

I do not have the figures with me, but we could generate them. We have not generated them up to this point, but we should be able to do so if they are of interest to the Deputy. We built in those controls specifically to avoid concerns about cases of contractors committing fraud in other countries. We only pay when people receive a commencement of employment notice from Revenue and sign off on it, which means that we know that they are no longer claiming a payment and are in employment. If we cannot verify it in our systems, we do not pay. It is a good control to have in place.

It is. My final question is for the Comptroller and Auditor General. Is he happy with the controls in place?

Mr. Seamus McCarthy

Yes. I am satisfied that they are working.

I will try to come back after lunch.

We will be back at 2 p.m. When is the Deputy due to speak in the Chamber?

Probably at 2.30 p.m. I will come back.

I thank the Deputy. We will suspend the sitting owing to the vote in the Dáil Chamber. We will then break for lunch and resume at 2 p.m. We had originally said 2.30 p.m., but we will try to restart at 2 p.m., for the information of anybody who was scheduled to come at 2.30 p.m.

Sitting suspended at 1.05 p.m. and resumed at 2.10 p.m.

We are joined by officials from the Department of Employment Affairs and Social Protection and Ms Mahin Fitzpatrick from the Office of the Comptroller and Auditor General. We are also joined by officials from the Department of Housing, Planning and Local Government who will assist in answering queries about the housing assistance payment, HAP, scheme which has taken over from the rent supplement scheme. We are joined by Ms Mary Hurley and Ms Marguerite Ryan. From the Office of the Revenue Commissioners we are joined by Mr. Keith Walsh and Mr. Kevin Cashell who may advise on the chapter dealing with PRSI contributions from the self-employed.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. While we expect witnesses to answer questions put by the committee clearly and with candour, they can and should expect to be treated fairly and with respect and consideration at all times in accordance with the witness protocol.

There are two issues I want to deal with. Reference was made to the PRSI contribution made by the self-employed. I have questions about the housing assistance payment and rent supplement schemes. Who is present from the Department?

Ms Mary Hurley

I am from the Department of Housing, Planning and Local Government.

If I am right, there are four elements to State support for social housing applicants or people in need of social housing in the private rented sector. They include the housing assistance payment, HAP, for rental accommodation and the social housing current expenditure programme which includes long-term leasing and rent supplement, as the scheme is known. The HAP for rental accommodation and long-term leasing come under the Department of Housing, Planning and Local Government, while rent supplement comes under the Department of Employment Affairs and Social Protection. I think I am right on that much. What is the current spend? What was the spend in 2017 for each of the four categories? How many tenants or families come within each of the four categories? Is that information available?

Ms Mary Hurley

I can give details of the three leasing arrangements in place in the Department of Housing, Planning and Local Government. I wish to point out that the HAP scheme and RAS are separate leasing schemes from the social housing current expenditure programme which is a long-term leasing arrangement. We might deal with them separately.

Were the HAP scheme and RAS seen as short term in nature?

Ms Mary Hurley

No; they are long-term arrangements. We have long-term contracts in place for the social housing current expenditure programme. The budget for the HAP scheme in 2018 is €301 million.

How much? I asked for the spend in 2017.

Ms Mary Hurley

The budget was €152 million of Exchequer funding in 2017.

That was the amount spent under the HAP scheme. Is that correct?

Ms Mary Hurley

Yes. There is also a figure for the number of tenancies supported up to 2017. There were 17,000 additional tenancies.

What was the overall number for 2017 under the HAP scheme?

Ms Mary Hurley

There were 31,000 households supported under the HAP scheme in 2017.

What was the figure for the rental accommodation scheme?

Ms Mary Hurley

Expenditure under the RAS in 2017 was €142 million. It supported 20,000 households.

What are the figures for the long-term leasing scheme and the social housing current expenditure programme?

Ms Mary Hurley

We have spent €84 million. The number of households supported to the end of the year is 14,792.

Does the Department have the figures for the rent supplement scheme?

Mr. John McKeon

Last year expenditure under the rent supplement scheme was €230 million or thereabouts. This year the projected figure will be €180 million. Currently, the scheme provides for approximately 25,740 tenancies. That is the last figure I have for the number of tenancies supported.

The figure was €230 million for 2017. Is that correct?

Mr. John McKeon

In 2017 the figure was 34,378 tenancies.

What was the level of expenditure?

Mr. John McKeon

It was €230,566,000.

Under Rebuilding Ireland, targets are set for each of these areas. What is the target in 2021 for each of the four schemes? What is the targeted level of expenditure?

Ms Mary Hurley

There are figures for new tenancies under the HAP scheme to 2021. An additional 87,000 households will be supported.

What is the projected level of expenditure?

Ms Mary Hurley

There is projected expenditure of €442 million to the end of 2019. On an annual basis-----

I want to get to the end of the plan. When will Rebuilding Ireland finish?

Ms Mary Hurley

It will conclude in 2021.

For every year up to 2021 there is planned expenditure on each of the schemes, as well as figures for the numbers of families or households who will be accommodated. I have the figures for 2017, including expenditure and the numbers involved. I am looking for the corresponding figures for 2021.

Ms Mary Hurley

I will outline how it works. We work it on an annual basis in the context of the budgetary process. The figures I have are for-----

No; I know things can change, but there are estimates built into Rebuilding Ireland.

Ms Mary Hurley

We have not agreed any estimate with the Department of Public Expenditure and Reform.

Ms Hurley does not know how much it will cost. Is that accurate?

Ms Mary Hurley

It is very difficult to do it because there are several factors. There is geography in terms of tenancies and rent limits. The market at the time is another factor. There is also eligibility-----

I understand all of that, but Ms Hurley gave me a figure of €422 million. What was that figure for?

Ms Mary Hurley

The sum of €422 million is the funding in the Vote for next year to support HAP scheme households.

Let us deal with next year for which the Department has figures. Let us leave them aside for a moment. I will outline numbers. The Department does not have estimates for 2021, but it certainly has targets, on which I am focused. There will be increases. In 2017 the figure was 37,000 for the HAP scheme. What is the target for 2021?

Ms Mary Hurley

The target for 2021 is 10,000.

Does that refer to additional payments?

Ms Mary Hurley

Yes; that is the figure for new tenancies. The total is 83,000.

What is the estimated total? Will it be 47,000?

Ms Mary Hurley

The figure is 83,000.

The figure will increase from 37,000 to 83,000. Is that correct?

Ms Mary Hurley

Yes.

What is the figure for RAS? In 2017 it was 20,000. What is the estimated figure for 2021?

Ms Mary Hurley

For RAS, the new target is 3,800, but what we do have is-----

Is that on a yearly basis?

Ms Mary Hurley

No; that is to the end of Rebuilding Ireland.

I am looking for a figure. I have a figure of 20,000 for 2017. In 2021 how many households it total will be under RAS?

Ms Mary Hurley

The figures must take account of exits and the numbers of households that will transition to social housing homes.

I assume all of that has been done and that the Department has built in the adjustments. I am simply looking for the figure. Rebuilding Ireland includes targets for every year. It is not a trick question. I want the figures for 2021 for the numbers of families or units that the Department expects to be in these categories. I have the figure for RAS. It is 83,000. I am looking for the figures for the HAP scheme, the RAS, long-term leasing arrangements and the rent supplement scheme.

Ms Mary Hurley

There are 20,000 tenancies under the RAS. In the coming years we will be adding a further 3,000. However, there will also be exits from it. There will be an additional additional tenancies under the RAS.

As the figure may not be 23,000, Ms Hurley does not know for sure. Is that correct?

Ms Mary Hurley

It may not be 23,000 because we are seeing exits from the RAS.

What is the figure for long-term leasing arrangements?

Ms Mary Hurley

The figure for long-term leasing arrangements under Rebuilding Ireland is one third of the target. A total of 10,000 homes will be leased to 2021. That is the additional number.

Does that mean that the figure is 24,000?

Ms Mary Hurley

Yes.

Will Mr. McKeon give me the corresponding figure for the rent supplement scheme?

Mr. John McKeon

I will ask Mr. Conlon to comment on that.

I do not want a comment; I want a figure.

Mr. John McKeon

I will give the Deputy the figure. We are expecting to reduce our numbers.

Mr. John Conlon

Rent supplement is a short-term income support so the numbers are reducing year on year and we expect them to reduce further in the period to 2020.

Does the Department have a projection for 2020? That is what I am asking.

Mr. John Conlon

We expect somewhere in the region of between 10,000 and 11,000. That is subject to labour market conditions remaining the way they are and the economy remaining the way it is. Many factors can impact that figure.

When rent supplement was first established, it was established as a short-term strategy and when RAS first came on-stream, it was talked about as a long-term solution. I have listened to the Department and the Minister recently talk about RAS and HAP not as long-term solutions but as more short-term to medium-term solutions. I am trying to understand whether that is the case. Am I reading it wrong? I spoke to my colleague, Deputy Ó Broin, who is very active on this issue. His sense of it is that the Department now sees HAP and RAS as more short to medium term and not long term. That is the language the Department uses. Am I right in that?

Ms Mary Hurley

No. That is not correct. We see the long-term needs of households being met by HAP. People are able to work with HAP. We see very few exits from HAP.

That is all I needed to know. The Department sees it as long term.

Ms Mary Hurley

It is.

Yet some of Ms Hurley's superiors, when they appeared at committees, spoke about it more as short term to medium term. I say that because in terms of the Rebuilding Ireland, they argue that after 2021 there will be a strategy to house some of the people who are in housing assist programmes and RAS into traditionally social housing. I am trying to figure out what the policy and targets are. It is very important for us to measure whether or not strategies are working and that there are benchmarks and targets. Perhaps I am wrong about their interpretation and perhaps my colleague is wrong. I do not know but I doubt it very much. If Ms Hurley is saying from her perspective it is long term, is she then saying the plan up to 2021 is to have almost double the number of people in HAP accommodation, from 37,000 in 2017 and whatever it is now - it is probably over 40,000 - and up to 83,000 by the end of 2021, which is double? I imagine it would also double the cost. We could be talking about €400 million just for HAP alone. That is them sorted. From the Department's perspective, their long-term housing needs are being met through HAP. Is that what Ms Hurley is saying?

Ms Mary Hurley

The long-term housing needs are being met through HAP but it is important to note we have already seen 1,700 tenants move from HAP to a social housing home. While one is in HAP, one is in a secure tenancy and can work but one can also remain on a transfer list. In terms of exits, we have already seen over 1,700-----

I understand that. It is a separate point to some degree. I understand that. I am talking about it in simple terms. If the Department sees HAP as long term, that is fine and I can work out the rest of my questions from that. The Department sees it as long term.

Ms Mary Hurley

Yes.

It meets their long-term housing needs. The Department does not have a plan to any great degree to move those 83,000 households who will be in HAP in 2021 into social housing beyond 2021?

Ms Mary Hurley

There will always be people moving out of HAP into social housing because the transfer list will always work. What needs to be taken account of is there are 71,000 households on waiting lists. That has reduced from 92,000 in 2016. Of those 71,000 families on housing lists, Rebuilding Ireland has a plan to deliver 50,000 built, acquired and leased homes and separately 87,000 housing supports through HAP. What the Government and officials are saying at committee is we will see housing support numbers drop annually from next year. The target is 16,600 as opposed to 17,000 this year. We will see supply by way of building. From 2021 we will see the State deliver build acquisition and leasing homes to the order of 12,000 on an annual basis.

That is useful because the Department has a target of 12,000 but how many of those 83,000 people the Department envisages will be in HAP will be transferred into those units?

Ms Mary Hurley

Already, 1,700 have been transferred. If we work that through-----

Does the Department have a plan or a target for those 83,000?

Ms Mary Hurley

We do not have a target for that.

The Department does not have a target. That is fine.

Ms Mary Hurley

The transfer list is a matter for the local authority.

That was my next question. Ms Hurley gave me the 2017 figure. How many people are in HAP accommodation now?

Ms Mary Hurley

There are just over 42,000.

How many are on transfer lists?

Ms Mary Hurley

We do not know how many are on the transfer list because the transfer list is a matter for the local authority. What we do know what the movement off the transfer list is.

How could the Department not know? Surely it gets that information from the local authorities? We are asking the representatives of the CEOs to come before the Committee of Public Accounts to help us and so far we have not been successful in getting it. How many local authorities are there?

Ms Mary Hurley

So-----

How many local authorities are there?

Ms Mary Hurley

There are 31.

There are 31. Ms Hurley is telling me the Department is not in a position to contact 31 local authorities and find out how many of their HAP tenants are on the transfer list. Is it that the Department has not do it or that there is a problem getting the information from the local authorities?

Ms Mary Hurley

What I am saying to the Deputy is that legally the operation of lists is a matter for the local authority. What I am also saying with regard to the 71,000-----

I am not asking how they legally deal with applications. This is data. Is Ms Hurley telling me that local authorities cannot give the Department the number of HAP tenants on the transfer list? I find that flabbergasting.

We do not want names. We are talking about the numbers.

Ms Mary Hurley

What I am saying-----

Ms Hurley mentioned the word "legal". Is she telling me that legally the local authorities cannot give the Department that information?

Ms Mary Hurley

I am not saying that.

No. It can. Why have they not given it and why has the Department not sought it?

Ms Mary Hurley

My focus is on the 71,000 people on the housing waiting list who need solutions. In terms of the transfers and HAP, the movement from the transfer list into social housing homes or other-----

How many people have been transferred? I am getting to the policy here.

Ms Mary Hurley

The figure is 1,700.

I can tell Ms Hurley that a much greater number - almost all, I think - who are in HAP accommodation are on the transfer list.

Most are.

It is the default position.

That is my point. Ms Hurley knows that. She did not even have to get the figure from local authorities. She could have said it at the start. That is my point. Only a small number are transferred. We are getting into the question of whether we are dealing with the need that is out there.

Ms Mary Hurley

The Department is very clear to local authorities. A ministerial direction issued with regard to the equitable operation of the transfer list. The lists are a matter locally for the local authority. The desire is that as many people move off the transfer list, we will see increased numbers as increased delivery happens over the coming years? In 2014, there were more than 400 houses built. We know that this year ten times that number will be built. We will see much more supply. Many more transfers will happen. The Deputy can take it that-----

Did Ms Hurley read the independent report commissioned by the Department of Public Expenditure and Reform-----

Ms Mary Hurley

Yes.

-----on the four schemes?

Ms Mary Hurley

Yes.

I took from that report that there was a clear sense that capital investment is much better than current expenditure investment. That was one of the take-out points of that report, yet we seem to be increasing our expenditure. We are going to double it yet the Department of Public Expenditure and Reform report, which is independent, is saying there will always be a need for some level of supports for people in the private rented sector because of the nature of housing. The more fundamental question in terms of value for money, which we have to look at, is we have a target to double the investment in HAP, yet we are not using that money to invest in capital investment to build homes that people need. The State would then own those homes. We are adding to a problem. All of this is having a consequence on the private rented sector. We are funding almost everybody, including social housing tenants, into the private rented sector. What has happened? Rents have gone up. The average rent in Dublin is now €1,900. The average rent across the State is €1,400 a month. Part of that is a result of the policy solutions that are put in place.

Everybody is being pushed into the private sector. We are not building enough houses, yet it seems that the Department has not learned from it because the target is to double the spend and to double the number of people in HAP by 2021. Do the witnesses think that will reduce rents across the State or will it continue to play its part in increasing rent?

Ms Mary Hurley

One of the things that we are conscious of is monitoring the rental market. The rent limits for HAP and the rent supplement were reviewed in 2016 to ensure that they were fair and equitable and were not driving up rents. From looking at the discretion that is being used, we found that in Dublin the average HAP payment is well below the average Dublin rental payment. We are not seeing the effect Deputy Cullinane is talking about but we will continue to monitor the situation because it is very important that we do so.

I say this to Mr. McKeon as well, there is no doubt that all of the evidence points to the fact that since the State stopped building social and affordable houses more and more people with a social housing need are having their need met through the private rental sector. That, in itself, creates fierce competition in the private rental sector, which has played a very significant part in increasing rents in Dublin and elsewhere. Nobody could argue that is not the case because it is the reality. Could Mr. McKeon respond to my questions as well? Has he read the Department of Public Expenditure and Reform report I am talking about?

Mr. John McKeon

Housing policy is a matter for a different Department. Our interest in terms of rent supplement is to provide an income support in the form of rent supplement to people who are on a welfare payment because when people on welfare are in rented accommodation they may not be able to sustain the rent.

I understand that but the question I asked was if Mr. McKeon had read the report.

Mr. John McKeon

I have not. No. It is not part of my policy or operational brief.

Rent supplement will be reduced because many of its recipients are going into HAP anyway. There is a policy to get as many people as possible off rent supplement on to HAP, or they fall off it naturally. How many of those who are in receipt of rent supplement are on the transfer list?

Mr. John McKeon

We would not know. We pay people who present to us on a welfare payment with a difficulty paying their rent and we provide them with a support to help them pay their rent. That is the purpose of rent supplement. That is why it is called a short-term scheme, because hopefully people are in a transitory situation when they are on a welfare payment. For those who have a longer-term need responsibility for their housing needs moves to another Department. That is where HAP and social housing or whatever else comes into the equation.

I think this was useful for the session we will have in the new year with the Department. The approach is very haphazard. We have four different schemes and sometimes the left hand does not know what the right hand is doing. I will write to the clerk and request information for the next meeting. Is it the case that we will have a further discussion with the Department specifically on HAP?

It is on housing, including HAP.

But it is related to current expenditure.

We will come back to some of those issues. I will move on then to PRSI contributions by the self-employed. For clarification, note A on page 254 of the Comptroller and Auditor General's report states the Department does not analyse PRSI receipts by class. Could we get that up on the screen to ensure I am accurate? Why is that the case?

Mr. John McKeon

It is something we could do, but in our statistical report we produce we report the actual number of people in each class. As the Comptroller and Auditor General says, the vast majority of PRSI receipts are accounted for by classes S, A and M.

Mr. Seamus McCarthy

I think the note says the Department produces statistics on receipts by employee, employer and self-employed. Self-employed PRSI receipts are presumed to be class S receipts. A difficulty here is that the statistics are gathered by Revenue and there are different definitions in use in Revenue and in the Department of Employment Affairs and Social Protection. One has different schedules used and the information that is captured in Revenue is captured on a revenue basis and some of the statistics captured by the Department are using those definitions and some of them are using their own class definitions. There are different schedules in Revenue and different classes in the Department. They are very close but they are not exactly the same thing. I would like all receipts and all individuals to be classified on both bases so that we could get behind the statistics.

Is that something that could be done?

Mr. John McKeon

We are working with Revenue on those matters and we are hopeful, for example, that the more up-to-date information that will be available from the PAYE modernisation project will help in that regard. To be clear, we produce in our statistical report every year the number of contributors by class in some detail. We report the income by employee and self-employed. We could seek to break that income down by class as well but we would need to do a bit more work with Revenue first.

Could we move to recommendation No. 20.1 in chapter 20 of the Comptroller and Auditor General's report? I want to get the Accounting Officer's response to it. It relates to bogus or false self-employment. Mr. McKeon said that following the awareness campaign on false self-employment, which commenced in May 2018, the Department is intensifying its activity in employer inspections by its social welfare inspectors and special investigation unit, SIU, staff. He said it is anticipated that a significantly larger number of employer inspections with a particular emphasis on insurability for PRSI purposes will be carried out in the latter half of 2018 and 2019. What type of records are kept of those inspections?

Mr. John McKeon

I might ask Ms Murphy to respond further on this question. The records are kept in paper format. The inspections are made on site and they are recorded by our inspectors on a system-----

I want to know how those inspections are recorded.

Mr. John McKeon

We record them on an electronic system, having incorporated the information from the paper records generated by the inspectors who operate in the field. They conduct their inspections in the field and bring the information back.

Ms Murphy might be able to enlighten me.

Ms Patricia Murphy

As the Secretary General said, the inspectors call to an employer and the information on inspections is collated by the Department's divisions in terms of where people are located. The results of the inspections are collated to an extent in terms of what was found. We specifically look for where records are not being maintained by employers or PRSI is not being returned by employers or where issues arise with PRSI by employers. We collate that activity.

I read reports suggesting that no proper records are kept. Could Ms Murphy furnish the information to the committee?

Ms Patricia Murphy

We do not keep specific records on bogus self-employment.

Yes, that is what I am talking about.

Ms Patricia Murphy

It is not a category we capture. In the context of employer inspections where there are difficulties with PRSI we will deal with that.

If I can, I will stop Ms Murphy there. What I am talking about is false or bogus self-employment. Inspections are being carried out but my understanding is that they are not recorded. Is that right?

Ms Patricia Murphy

It is not a particular category that we record.

I know that; so they are not recorded.

Mr. John McKeon

What we record is the misclassification.

The question has been answered. They are not recorded. Am I correct in saying they are not recorded?

Mr. John McKeon

I am sorry but that is not quite right. We record a misclassification of social insurance class. Whether that misclassification was down to it being bogus or something that was deliberate or there was a genuine reason for it, we record it as a misclassification.

Why is that not classified? Bogus self-employment is an issue that is in the public domain now more and more. If it is the case that the work is being done but it is not being classified in that way or is not being recorded properly, then when we table parliamentary questions as part of our job in order to understand the level of the problem, if the Department is not properly recording it, that is a difficulty for us.

I am trying to understand the reason for not doing it. If it is a problem that the Department did not do it in the past, why not start doing it now?

Ms Patricia Murphy

As an issue, we are, I suppose, ramping up our approaches in this area. As well as the employer inspections - we are increasing the number of employer inspections, as we said, at the end of this year and for next year - the other avenue on this is individuals coming and querying their insurability of employment. We will also initiate an inspection on the basis of that. They come back into scope and then we will re-categorise the PRSI category that should have been paid at the time. The term focus, I suppose, is really the thing for us.

Maybe I can make a request then. If the Accounting Officer is saying it is done, maybe he can furnish this committee with a report of the number of inspections which have been carried out, the level of records which are kept, how many - if any - were classified as bogus self-employment, where it was determined that it was a case of bogus self-employment and the level of information that was recorded in general terms. Could that be forwarded to the committee or is it something the Department does not have?

Mr. John McKeon

We can certainly do the number-----

I am asking Ms Murphy first, sorry, because she was answering.

Ms Patricia Murphy

Maybe we have inspections. There were 5,400 inspections carried out in 2017.

In how many of those inspections was it determined that there was a case of bogus self-employment?

Ms Patricia Murphy

Arising from those inspections, I do not have that precise number.

Ms Patricia Murphy

Because, as I said, we would categorise them.

Because it is not categorised, which is my point.

Ms Patricia Murphy

It would not always be apparent. There may be no records maintained by the employer. We may have no PRSI returns.

I am not asking what the employer records. I am asking what the Department records, if it has people going out to inspect. What number did Ms Murphy cite?

Ms Patricia Murphy

There were 5,400 inspections.

There were 5,400 inspections and the Department is not able to tell me how many cases of bogus self-employment there were.

Mr. John McKeon

We do not record bogus self-employment, as I explained.

Mr. John McKeon

We record the re-classification.

It took 15 minutes to get there. The Department does not record bogus self-employment. That was my point. Why not?

Mr. John McKeon

There is an issue which was discussed here, for example, last year, in the context of whether we should call issues where we suspect fraud as fraudulent cases with regard to people claiming benefit or whether we should delay the labelling of fraud until the person is found guilty in court. Defining whether something is bogus or not is a matter of judgment. We record strictly what are mis-classifications of employment. If it is subsequently found in court that a person was fraudulently presented as being self-employed and he or she was not, then one can label it bogus. Until then, to use the terminology we us, it is only suspected bogus, and we were asked not to use that term. We have to be consistent.

There is a fundamental problem with Mr. McKeon's response. Classifying somebody as bogus self-employed is not illegal and it will never be brought up in court.

Mr. John McKeon

It is illegal.

It happens all the time. In many cases, it is done insidiously.

Mr. John McKeon

But it is illegal. Let us be absolutely clear, falsely presenting somebody as being self-employed when he or she is not is an offence under the Social Welfare (Consolidation) Act 2005 and it is offence which is-----

How many cases were there? How many people were brought before the courts?

Mr. John McKeon

We have taken 22 cases against employers-----

Twenty-two cases.

Mr. John McKeon

-----in the past three or four years. There has been none in the past year.

What I would say is when we look at bogus self-employment and trends in self-employment - I provided the information in my opening statement and in the supplementary information - it is not that it does not exist but it does not exist to the extent that is commonly perceived. I refer to all of the data. The ESRI has studied this and has separately produced a report. The report on zero-hours contracts was similar. When one goes looking for evidence of precarious employment, the levels of bogus self-employment in Ireland that one can detect are much lower than in other European countries. That does not mean that there is not a problem and that every case is not an issue to be dealt with, but just to make the general point, it is not as prevalent as people think.

For example, we conducted 2,000 employer inspections as our response to the media campaign that we ran, both in Dublin and in Galway. In Galway, they concentrated on the construction industry. We interviewed more than 170 staff and there was only one case that was suspicious. When we finalised the investigation of that case, it was found to be correctly classified as self-employed. In Dublin, when we did more than 1,000 inspections, there were three cases that we found to be suspicious, all of them, by the way, in the private security sector which is not something we were expecting to find. Those three cases are being followed up. If they lead to prosecutions in due course, we will follow them up. I have no interest in presenting something that is not the case. It is just that what we learned from our own data and our own experience is not what is sometimes presented to us.

I will finish my contribution on this because I am aware Deputy Catherine Murphy wants to get in.

There are different views on how prevalent bogus self-employment is. Mr. McKeon states that it is not as prevalent as some people think, whoever the some people are. It is possible it is exaggerated by some. My point is that we should have more accurate recording and more accurate data on how prevalent or not it is.

Because of its nature, it is difficult to determine when there is a case of bogus self-employment. For example, we had staff members of RTÉ before the committee who stated that they felt they were victims of bogus self-employment. An employer, not in this case, will say that he or she sees it differently. It is a difficult area. That is the point I was making earlier.

If we are not capturing the data correctly and if employment is not being properly recorded, we cannot be as definitive as Mr. McKeon is in saying that it is not as prevalent. Mr. McKeon may be correct. I would need the data to prove to me it is correct and I do not have it.

Mr. John McKeon

I absolutely agree with nearly everything Deputy Cullinane said. It is difficult and it is something that we find frustrating in the Department. It is difficult for someone who is being paid to stand up and say: "The person who is paying me is not paying me the way I would like to be paid" or "The person is paying me on a contract for services instead of a contract of service." We appreciate that is difficult.

That is why we did the media campaign. We encouraged people to contact the Department, on an anonymous and secure basis. We spent more on that media campaign than we did, for example, on the famous "welfare cheats" campaign last year. We spend more on the campaign asking people to please tell us about whether they thought they were in a situation of being falsely self-employed, and received 50 calls.

Ms Murphy might provide us with the note I asked for earlier.

Mr. John McKeon

The other point on the data is I would genuinely refer the Deputy to the good study the ESRI did. The ESRI has clean hands on this. I believe we have clean hands. We are still concerned about it. The Deputy should not get me wrong. I am just saying it is not as prevalent.

We will be increasing employer inspections. We will be focusing on the construction sector. Perhaps, based on what have got from the Dublin experience, the private security sector is an area to look at. There are some other sectors. The Deputy mentioned RTÉ. We will have a look at that in due course. There is an investigation going on there at present.

Will Deputy Cullinane clarify precisely what he was looking for?

Ms Murphy had it earlier. The number of inspections that were carried out was 5,400. How were they classified or recorded? It is not recorded in terms of bogus self-employment, but the reasons why.

I have just a few questions. To pick up on that last point, are the inspections the Department conducts always notified inspections?

Mr. John McKeon

No. In many inspections, we turn up on site without notice. With the Revenue Commissioners in the joint investigation unit, we will stop people in roadblocks. They are not notified at all.

If it is a roadside check with Revenue, it is a different matter entirely from, say, visiting a business premises.

Mr. John McKeon

The vast majority - I will defer to Ms Murphy and Mr. Conlon, perhaps - of our inspections are unnotified. I am not aware that we do any employer inspections on a notified basis.

How many would be scheduled to be completed, for example, this year?

Mr. John McKeon

This year, we will not do as many as we did last year which is why we stated in the response that the intention is to considerably ramp it up in the latter part of this year, and into next year. This year, we will probably do in the order of 3,000, which is 2,000 fewer than last year, but we will be significantly increasing that next year.

Mr. John McKeon

Why would that have happened this year?

Mr. John McKeon

It is down to the availability of our inspector resources and their focus. We need to focus more staff on employer inspections. We did not do enough of it this year. We need to return to a focus on employer inspections.

We saw many mis-categorised as self-employed in the construction sector some years ago.

We then saw it in a different context when the crash happened and people did not qualify for payments. They had presumed that they would continue to be self-employed. Is such a person categorised under a class S stamp?

Mr. John McKeon

That is right.

To sign on for credits, the qualifying criterion is the person's previous contributions.

Mr. John McKeon

Yes.

There would be entitlements, but they would be reduced.

Mr. John McKeon

They would be reduced. The Government has extended the benefits available to self-employed people to include treatment benefit, invalidity pension and so on. The main benefits that they cannot access are illness benefit and jobseeker's benefit, but the Government has just announced that it will introduce a jobseeker's benefit for formerly self-employed people. The percentage of entitlements that self-employed people will not be able to access will be small.

I am sure that a sizable number of people fell into that category. When some applied for benefits, means would have been found to decide against them and they would have been paid allowances instead of benefits. Given the large fallout at the time, was there any analysis of the cost of not fully capturing people in a system that had a floor below which they could not fall?

Mr. John McKeon

The tax and social welfare review group, chaired by Ms Ita Mangan, examined the issue. I cannot recall the details, but a review was undertaken. The committee should be aware that the nearly 90% of people who presented as self-employed and did not qualify for jobseeker's benefit ultimately qualified for the jobseeker's allowance, which is the means-tested scheme. That was a high proportion, which reflects the fact that many people who are self-employed - trades people, crafts people and so on - do not necessarily have the large reservoirs of personal wealth that would disqualify them from a means-tested allowance.

Yes. None of us foresaw the extent of the crisis, but the contributions being made by those categories to a system that was self-funded on an annual basis would not have covered the cost, given that they had to be paid allowances rather than benefits.

Mr. John McKeon

That is right. If it happens again, the only comfort will be that the self-employed now have access to a wider range than they did at the time of the crash. That is probably what informed the Government's policy response to the exact problem that the Deputy described.

Obviously, the Department has examined Brexit's potential impact on the Social Insurance Fund, SIF. It is no surprise that a crash-out would be catastrophic for us. Has the Department examined other elements, for example, the current reciprocal arrangements for pensions? Are there assurances in that regard?

Mr. John McKeon

We have been working closely with our colleagues in the United Kingdom. The common travel area, which preceded our joint entry into the European Union, still provides the basis for the retention of the existing arrangements. We hope to formalise an agreement on that very shortly. Under the common travel area, we have a bilateral agreement with the UK that predates our entry into the EU.

I thank Mr. McKeon.

I will put a few questions on a variety of issues that have not been picked up on by other members so far. In the domiciliary care allowance application process, an applicant now sets out his or her case. It is not the old type of form where an applicant would tick a box beside "Domiciliary Care Allowance" and everyone got it. This was done to improve it, make it more user friendly and whatever. Did I correctly hear Mr. McKeon state that the Department was moving towards the same method for the carer's allowance application form?

Mr. John McKeon

Yes.

Where does that process stand? I take it that it will be for new applicants. The Department will have to give people an explanation as to how to work the new form. Those who have been used to ticking a box will now find themselves having to state their cases and write essays, as it were. They will need help. It is a good system and I have helped many people with their domiciliary care allowance applications, documenting what they do from the moment they wake up right through the day. It is the same for elderly people, who must set out their living circumstances. I imagine that the assessment process will take more time, given the volume of information about the persons being cared for, where they live, how many hours of care are provided and so on that will have to be read. Why has the Department come to this decision and will it be a good thing?

Ms Anne Vaughan

It is a good thing for the reasons the Chairman outlined. The change to the domiciliary care allowance application process, which he is familiar with, was done in co-operation with the stakeholders and people involved, for example, the parents. As the Chairman is probably aware, the rate of approval at first instance is much higher because we get a great deal more information now, which leads to fewer appeals. The application process is done more quickly. As Mr. McKeon stated, our response rates and processing times in that regard are quite good.

What is the processing time for a domiciliary care allowance application?

Ms Anne Vaughan

It is approximately eight weeks.

A few years ago, it was a disaster.

Ms Anne Vaughan

It was much higher. The reduction is due in part to getting far better information. For example, families keep diaries and so on. The Chairman will be aware of that from his own work. We will use that model in the carers area and in due course will use it in the disability allowance area.

The medical schemes are the most difficult and take the longest for the reasons outlined. We have used the same model for the carer's allowance. As a means of learning, there have been considerable discussions with the advocacy groups and people who are in receipt of the entitlements. We need to hold discussions with the Irish Medical Organisation, IMO, which represents general practitioners, GPs. We have a new form. While it is far more detailed, we hope that, as with the domiciliary care allowance, the level of approvals at first instance will be higher and we will have all of the medical and non-medical information that we need at the first point.

When will that start?

Ms Anne Vaughan

We have the new form and are using it. Some GPs are using it. We just need to talk to the IMO further to get full usage.

Must GPs be paid for their part of the form?

Ms Anne Vaughan

It is part of the overall discussions, which we have almost finalised.

Is it two months' away?

Ms Anne Vaughan

No. I would say it will be a lot sooner than that, but still next year.

Will there be a separate section in the form for the GP to fill in that the applicant will not see? Does Ms Vaughan know what I am getting at? Sometimes, applicants under the current system do not know what their GPs write down, and the minute they see that part after their applications have been rejected they realise that they could not possibly have passed. The GP might still have written a strongly sympathetic letter.

Ms Anne Vaughan

In future, it will contain as much information as we should be getting from everyone, including the applicant. In the carer's allowance situation, we need the details of the person providing the care, as well as the person who needs the care.

And the doctor. Three people's information is required.

Ms Anne Vaughan

Yes. This is about making the process as easy as possible for our medical assessors to see what is involved in each applicant's situation.

I have noticed something about application forms across the board. In the medical section, there may be 12 separate queries where an applicant must tick "Mild", "Moderate", "Severe" or "Profound". Eleven of the 12 relate to physical difficulties, for example, whether someone can walk, climb a stairs and so on, and many people who have mental illnesses feel that the forms are weighted in favour of physical illnesses.

There is very little space for people with severe depression or who are suicidal. The form does not adequately capture the reality for a lot of applicants. They might be able to run up and down the stairs but the doctor ticks just one section for mental health.

Ms Anne Vaughan

We are very conscious of that. The new form pays more attention to both mental and physical health. Our chief medical officer, Dr. Singh, is very conscious of this too.

I am not just talking about carer's allowance.

Ms Anne Vaughan

Absolutely.

Of the payments the Department makes, what percentage goes through the banks and what percentage goes through An Post?

Mr. John McKeon

At the moment the ratio is approximately 70:30. It was 60:40 at one point.

Which is 70% and which is 30%?

Mr. John McKeon

At the end of September, 40% of payments were made via An Post and 60% by the bank. It is not changing as fast as I thought.

I assume the ratios are different for the applications for this year and last year, as compared with earlier years. What are the figures for 2017?

Mr. John McKeon

For 2017, 42% were done via the post office and 57% via the bank, with a small percentage made by cheque.

What payment arrangements does the Department have with the banks and the post office for processing the payments? How does it work?

Mr. John McKeon

We have a payment services contract with An Post, which expires at the end of 2019, when it will have to go to tender. We have a rate of payment for each payment it makes. It is tiered and over a certain amount, the payment rate drops. There is a fixed fee per transaction. With the bank there is a standard electronic funds transfer, EFT, fee.

What does the Department pay the banks and what does it pay to An Post?

Mr. John McKeon

The banks are significantly cheaper. If everything went through the banks we would probably bring the cost of our payments down by over €40 million per year.

This applies to 40% of payments.

Mr. John McKeon

It means that 40% of payments cost most of the money.

This is a historical issue.

Mr. John McKeon

Yes. If it was purely a matter of finance and accounting we would all say we should go to EFT tomorrow. However, our customers value being able to go to the post office. They choose to go there and we want a payment facility whereby people can go to collect it. When we go to tender we will ask to keep that facility. An in-person payment will obviously cost more money. Once one decides to provide the service, one has to accept the costs.

Does the Department go through the credit unions?

Mr. John McKeon

People can mandate their payments to their credit union account. It is captured under the EFT heading.

Perhaps the Department can send us a more specific note on that to flesh out the information.

Mr. John McKeon

We can do that.

The arrangement with An Post seems to finish every two years.

Mr. John McKeon

The contract with An Post has been in existence for over six years and we have been renewing it but we have run out of rope to do that under procurement rules and we now have to tender.

It should be designed appropriately to get the right result.

Mr. John McKeon

We will design it to get the best result.

What kind of a contract does the Department have with the banks? What could the Department do if the banks announced next month that they were putting up the cost of the EFT payment? How long does the price hold?

Mr. John McKeon

Our banking arrangements are moving to Danske Bank at the moment as the Government ran a procurement competition for Government banking services. Our charges are probably safe enough for the time being.

I had not heard that before. Did Mr. McKeon say Danske Bank was taking over the Department's payments or all Government payments?

Mr. John McKeon

Danske Bank is now going to be the Government banking provider.

Since when?

Mr. John McKeon

The contract was placed earlier this year.

We have been here a while but it is the first we have heard of it. People are going to be quite interested in this. The bank will be handling all Government payments, such as those of the Department of Agriculture, Food and the Marine. Will it be handling salaries for public servants?

Mr. John McKeon

The Government will pay all its money out via Danske Bank, though if the customer has a Bank of Ireland account, Danske Bank will pay the money into that account. It will take some time for us to make the move and there is a migration plan. We are the biggest player so we will probably be at the end of the line.

It might take a year or two.

Mr. John McKeon

I would say it will take about a year.

Did the Department have a role in the tendering process for this? Was it the Department of Public Expenditure and Reform?

Mr. John McKeon

We were involved.

Who was on the body dealing with the tender?

Mr. John McKeon

It was the Department of Finance which tendered but we were on the group that specified the tender. The aim was for Government to get the lowest-cost banking solution.

Mr. John McKeon

The Department of Finance is responsible.

We will write to the Department of Finance for a full briefing note on this. People will find it unfortunate that one of the domestic banks does not have the contract, though maybe they did not want it. Were there many tenders?

Mr. John McKeon

I am sure they all tendered but the job of the Department of Finance is to get the job done with the best value for the State.

Mr. McKeon said it was a good job his Department did not operate that way or all the payments would be going through the bank, rather than the post office. A bit of humanity has worked its way down to the Department of Employment Affairs and Social Protection.

Mr. John McKeon

We have to take account of customer requirements. We are comfortable that Danske Bank will be able to meet our requirements in terms of our customers.

I take it that the Comptroller and Auditor General is fully au fait with the situation.

Mr. Seamus McCarthy

We will be looking at it. In the meantime, we can ask the Department of Finance for a briefing.

We will write to the Department of Finance straight away for a full briefing and information on the whole tender process. It will be news to the public that Danske Bank will be taking over payments on behalf of all Government. With severe centralisation, there is a risk of something going wrong.

Mr. Seamus McCarthy

There are issues around cybersecurity.

We are dealing with that next week.

This will nail the presumption that some of the payments are being made through the banks for the benefit of the banks.

It is amazing. I wish to move on to aspects of the Vote. On page 24, it shows there was higher expenditure on direct provision allowance. Is that in the form of supplementary welfare payments through the community welfare office? I assume it is for asylum centres.

Mr. John McKeon

Yes. We pay the direct provision payment to people in the asylum centres. I cannot remember the exact amount but there was an increase in the amount paid last year and there will be another increase next year.

It states that the final outturn, of €4.8 million, was higher than the estimate by €1.1 million. There were higher average recipient numbers, at 2,620. I have checked this figure out and, at the end of last year, there were 5,096 people in direct provision. I know that it includes 801 families. Are they individuals or could a parent be claiming for a spouse?

Mr. John McKeon

They are, in effect, household payments.

Can Mr. McKeon send us a note on them? It should cover some 5,000 people. The figure went up because it included the higher rate of €36 per week, plus the Christmas bonus.

That is fine. I did not know it was the Department of Employment Affairs and Social Protection that paid that directly. I am just making that point. The matter I want to deal with is on page 25, which is the next page. The average payment on the rural employment scheme is €262 per week while the average payment on Tús is €241. A comparative figure is not given for the community services programme. What would that be?

Mr. John McKeon

On the community services programme, I might defer to my colleagues-----

The witness does not have-----

Mr. John McKeon

We pay the service provider-----

Is that the community employment, CE, schemes?

Mr. John McKeon

No, the community services programme is a different programme which is now run by the Department of Rural and Community Development. We pay a provider to pay services rather than pay individuals. I think that is correct.

What does heading A16, the community service programme, refer to?

Ms Kathleen Stack

It is the old social economy programme.

What is it?

Ms Kathleen Stack

The old social economy programme.

That is fine. When I saw it, I thought it was community employment.

Ms Kathleen Stack

It is now in the Department of the Minister for Rural and Community Development, Deputy Ring.

That is fine. It is the old social economy programme. I have the answer and that is fine. I want to ask about page 7 of the report of the Comptroller and Auditor General. There is a paragraph on the irregularity of expenditure.

Mr. Seamus McCarthy

Is this on the Vote?

Yes, this is on the Vote. It is the Comptroller and Auditor General's own note. The note reads:

Chapter 11 of my report on the accounts of the public services for 2017 relates to welfare payments in excess of entitlement included in the 2017 account for Vote 37. I consider the estimated level of irregular payment to be material.

Does the Comptroller and Auditor have that statement in his report every year?

Mr. Seamus McCarthy

Yes, we have had that note in it for the last seven or eight years. It is based on the evidence from the controlled surveys. I am not coming down on a specific amount that would be irregular but the percentages coming through, even on a net basis, seem to indicate that it is material.

Okay, that is fine. I have one question on chapter 13. It is about the actuarial review of the Social Insurance Fund. Who carried that out?

Mr. John McKeon

It was KPMG.

I would take everything in that chapter with a suitable grain of salt because assumptions have been made about GDP growth for the next 50 years, about the inflation rate for the next 50 years, about life expectancy for the next 50 years, about employment growth in the economy for the 50 years, about the projected increase of workers for every individual over the same period and about the unemployment rate. It is a lovely chapter but it has to be taken with a grain of salt. Am I being too severe? Based on the assumptions, the figures work out but the assumptions are far into the future. I am just making the point that it has to be taken with a severe dose of caution.

Mr. John McKeon

I agree. It is a forecast for 70 years and the one thing we know for certain is that it is wrong.

That is fine.

Mr. John McKeon

It is still a useful exercise. It gives us some advanced warning as to what might be coming down the road. We do it every five years. It is a statutory obligation, and now a European obligation, to produce an actuarial review. The assumptions used are those generally used-----

Where did the assumptions come from? Are they European? Who came up with them?

Mr. John McKeon

It was the actuarial arm of KPMG that did it and these are the type of assumptions used in valuing pension schemes generally. We had a team that worked with KPMG where the Department of Finance, the Central Statistics Office, the Department of Public Expenditure and Reform - the Government actuary works in the Department - and our own Department were involved. A group of people agreed these assumptions but they are very similar to those that would be used by any actuarial firm in valuing any long term investment scheme.

Mr. Seamus McCarthy

One of the things that gives me pause for thought about this is that the real earnings growth forecasts are very significant. It looks forward to real earnings growth, after inflation, of 2% in 2016, 1.4% in 2017 and 1% to 1.1% in the period 2018 to 2021. It continues in the same vein with real earnings growth into the future for 40 years. That seems very difficult to believe and it is one of the key drivers of the-----

What I am coming at is that this was designed, as has been said, to look at a scenario that showed a bigger problem than if there was negative income growth. That was the case in Ireland for a decade.

Mr. Seamus McCarthy

It is a useful mechanism. The first thing that has to be done though is to question the basis on which it can be maintained that these assumptions are likely to be the outcome.

That is really all I am asking.

Mr. Seamus McCarthy

It is better to have this model than to have no model at all.

I accept that.

Mr. John McKeon

There are two important points to be made on that. One is that we are taking the real earnings growth figure from the GDP growth figures. There is a relationship. We are assuming that the economy is growing and that some of that will translate into real earnings growth. I think that is reasonable. The second thing is-----

It depends on the distribution of the wealth.

Mr. John McKeon

It does. Another thing they did, to be fair, was a sensitivity analysis. High, low and base case earnings growth models were all done. I agree with the Comptroller and Auditor General. Many of these assumptions have to be examined. There was a projection that we would be heading back into deficit in 2019 but we are not. The surplus is actually growing. Even within three years, therefore, this has gone a little askew. We hope that is goes more askew in the same direction.

Mr. Seamus McCarthy

Inevitably, the kind of figures the actuarial review is forecasting cannot work out that way. It just will not be sustainable.

I know that.

Mr. Seamus McCarthy

That is not what is going to happen in 2030 or 2045.

Mr. John McKeon

It would not be sustainable for the Social Insurance Fund but, arguably, it is, potentially, sustainable for the State. The Irish pension share expenditure on public pensions as GNI* was about 4%. Many other countries that are already ahead of us have equivalent GDP spending of about 8%. That is, effectively, what is said will happen in Ireland. It is just a question of whether that 8% spending is funded through the Social Insurance Fund or whether it comes out of general taxation.

Ageing is implicit in the model and assumptions are also being made about birth rates and immigration.

I am moving on to chapter 14 and the issue of overpayments of age-related jobseeker's allowance. A person has to be 26 years old to get the full rate. There is a reduced rate for someone who is 25 years old and a more reduced rate again for people who are between 18 and 24 years old. The 4,700 people on the rate were examined and the Comptroller and Auditor General found that there were 486 people on the full payment who should not have been. How did those errors arise? I do not understand how the mistakes were made if a person's date of birth is known when he or she makes a claim and he or she also has a public services card. Will Mr. McKeon explain that?

Mr. John McKeon

I ask Ms Vaughan to comment on that.

Ms Anne Vaughan

These decisions are difficult for staff to make because the scheme is complicated and these reduced rates were brought in over a number of years. There are also exceptions to the rules. It is not that everybody under a certain age gets a payment.

I understand.

Ms Anne Vaughan

It is the working of the exceptions that is difficult. We worked through the first set of cases we got from the Comptroller and Auditor General and, between us, we decided what the final error cases were. It is complex and even within our various Intreo offices we had a debate about some of these cases and whether they should or they should not get the benefit of the exemption and be paid on the higher rate. It is not as straightforward as might be thought. For the future, firstly we have put in better training. We have also decided that only two deciding officers would work on these cases in Intreo offices-----

Rather than everybody?

Ms Anne Vaughan

That is correct and that should improve the situation. Those errors were, as the Comptroller and Auditor General said, very much our fault.

On applications that will come in this year for the underage rate, does Ms Vaughan think that the Department is on top of this issue?

Ms Anne Vaughan

Yes, we are. There will always be something but I would hope so.

There are fewer people making the decisions so they are more specific in relation to the role.

Ms Anne Vaughan

That is correct.

From reading the chapter, I did not understand why it happened so I just wanted to ask about it.

On chapter 20, concerning PRSI, I have asked the question I wish to ask here before. Generally one stops paying PRSI on one's 66th birthday. What is the position on self-employed people in this regard? The chapter is about them. If the self-employed make an annual return on income for the calendar year in which they turn 66, their income covers the full year and their payment to the tax office is for the full 52 weeks. I understand there is a mechanism whereby one can add the number of days up to one's 66th birthday to increase one's number of contributions but this is not taken into account in working out one's annual average. I believed the legislation stated that if one is self-employed, there is zero or 52 weeks' PRSI. Do the delegates understand the question I am asking? They must know the question.

Mr. John McKeon

It is a one-year contribution, in effect.

Does a self-employed person get the benefit of 52 contributions in the year of his or her 66th birthday if making a single payment?

Mr. John McKeon

I need to check. There is definitely the ability to pay for the period up to when one turns 66 because we can be paid directly rather than via the Revenue Commissioners. Whether those concerned can accumulate 52 contributions for half a year, I would need to check. I do not believe they can.

Common sense might ordain it should stop. I just do not know whether the legislation reflects that.

Ms Anne Vaughan

The Chairman has raised that before.

The witnesses know what I am asking.

Ms Anne Vaughan

Perhaps we can come back to the Chairman on this. I do not want to mislead him.

I ask the witnesses to do a bit of research and send us a written note on it.

One of the major issues concerning social protection in the past 12 months has concerned those individuals, mainly women, who left the workforce to do family duties and had a reduced annual contribution by comparison with others. There are thousands affected. Could I have the full rundown? Letters were being issued to people. What is the current position on that? When did the people get their increases? We will ask for a detailed breakdown. Perhaps the witnesses have already done so through parliamentary questions but I have not been taking account of it. How many people are getting increases? Will anybody get a shock and get a decrease? Understandably, more women than men might qualify. The witnesses must be up to speed on this.

Mr. John McKeon

All of the letters have been issued to people explaining the processes. There are 70,000 in Ireland and 7,000 outside Ireland. I believe there were 77,000 in total. We have taken on 74 staff on a temporary basis and will take on more in the new year. In January, we will start to do the exercise on recalibrating or recalculating everybody's pension entitlement. We will write to them at that time. Nobody will get a reduction. We will be writing to people telling them we have made a calculation and that it works out at a certain value. The correspondence will state they are getting an increase or that the value will remain the same. People will be able to ask for a review. It is a deciding officer's decision. If one believes a calculation has been made incorrectly, one will be able to request a review. We hope to start making the first payments of the new pension fairly early in the first quarter but it will probably take us from three to five months to get through all 70,000 odd, stating what each calculation is and getting those concerned to come onto the new system and so on. That is the current position. We will not know the numbers until we carry out the reviews.

The Department is not at that point yet.

Mr. John McKeon

We are not at that point yet.

It looks as if there are over 70,000 cases, and Mr. McKeon said 70 or 80 temporary staff are being taken on. That is an average of 1,000 cases per staff member. Is that correct?

Mr. John McKeon

There are more staff to be taken on. I believe we are taking on another 30 next year, so it will be close to 100.

How many months will it take to work through the cases?

Mr. John McKeon

We hope to have most of the reviews done in the first quarter but it might slip into the second quarter.

Fine. Will it be backdated to 1 January?

Mr. John McKeon

Backdated to March of this year.

I forgot that it is backdated to March 2018. Some people, if they get the extra €30 for each of 52 weeks-----

Mr. John McKeon

That is a nice surprise.

They might have a ballpark figure of €1,500 coming to them. Have the witnesses no sense of how it will work out?

Mr. John McKeon

Not until we carry out the reviews.

That has been a burning issue for many.

My next question is for the witnesses from the Department of Housing, Planning and Local Government. If they do not have the answer, they may send it on. Reference was made to the HAP. On the Joe Duffy show all week, landlords were ringing in saying they took on tenants on the HAP and had no problem doing so but then received a letter from the local authority or the central processing body in Limerick stating that because those tenants did not pay their rent contributions, amounting to 14% or 15%, the landlords' payments would be stopped. How many landlords had their HAP suspended during the course of the year to date? Could I have a breakdown of the reasons, especially where it was through no fault of the landlord and was because a tenant did not pay his or her proportion? The witnesses will have heard that controversy raging all week. Could they talk to us about it?

Ms Mary Hurley

There are 21,000 landlords in HAP at the moment.

For how many properties?

Ms Mary Hurley

For 42,000 properties.

How many landlords have more than one property, and how many have between two and five properties or between five and ten? Have the witnesses those figures?

Ms Mary Hurley

I do not have those data with me.

I ask Ms Hurley to send it.

Ms Mary Hurley

Yes. That is no problem.

Ms Hurley will understand why I am asking. If there are 21,000 landlords for 42,000 HAP agreements, and bearing in mind that many landlords will have multiple properties, what is the greatest number of properties for which a landlord is receiving the HAP? Is there anyone receiving a HAP in respect of over 30 properties?

Ms Mary Hurley

I can get the detail for the members. It would be unusual. There would be some landlords with one or two homes, and there would be some outliers with more. I can get the breakdown for the Chairman.

Ms Hurley will send us the analysis.

If she does not have the figures on suspension, she may send them to us. How many HAP payments have been suspended during the course of the year?

Ms Mary Hurley

I can give members some detail on that. With regard to payments to landlords, we have a very robust system in place in the HAP shared services centre in Limerick. Where tenants are beginning to get into trouble in terms of arrears, there is a system whereby a numbers of letters are triggered. The rate of collection of rent is 98%. Only 1% of cases would be of the kind referred to by the Chairman. To date, 575 tenancies ceased where a payment was not made.

Can it be reactivated promptly if things are righted? Is there a complete cessation?

Ms Mary Hurley

Payments would be suspended but in the case of every tenancy that ceases, the local authority tries as quickly as possible to address the matter.

Obviously, a tenancy is valuable so the local authority tries to work with the tenant and keep the landlord in the HAP scheme.

To whom does the tenant pay his or her contribution?

Ms Mary Hurley

The tenant pays the contribution to the HAP shared service.

Some landlords say they were paying the tenant's share so they would not lose the rest of their payment. I was listening to what Joe Duffy was reading out all week. The landlords knew that if the tenant's 15% did not go in, the entire payment would be stopped. Therefore, some landlords said they were paying the 15% to make sure they got the 85% because they had a mortgage on their property.

Ms Mary Hurley

That really should be a matter for the RTB. It should not happen.

It should not have to be.

Ms Mary Hurley

Absolutely. One of the objectives of the HAP shared services centre in Limerick is to streamline processes to make it easy for the landlord. Once the landlord is set up and the paperwork is done, it is very straightforward. On the last Wednesday of the month, the landlord is paid. The differential rent comes into the shared service and the landlord is paid. All the regulation and paperwork is done through the shared service so there is a centre of excellence, shall we say, for landlord and tenant. It works well.

When Ms Hurley is sending us the note, she might give us the detail on how many are working through agents. There were agents on the radio during the week. An agent was saying he was the collecting agent and was passing it on to the landlord. Out of the 21,000 or 42,000, how many are covered by agents? I am sure some agents could have 100 or more properties. They might not be the landlords but they are agents. I do not want a breakdown on landlords alone.

The HAP shared service officials will have details of that. Ms Hurley and her colleagues might send that on to us as soon as possible.

My two final questions for the officials from the Department of Employment Affairs and Social Protection relate to the briefing note they supplied. I refer to document 1745(2). We have been given a summary of the outturn for 2017 and for this year up to the end of October under all categories of payments. We have also been given the 2018 Estimate. My question relates to Appendix 2 to the document and the working age employment supports. I am surprised that the Tús Estimate for 2018 represents a considerable reduction on last year's outturn and that the Department's Estimates for the back-to-work enterprise and back-to-education allowances and back-to-work family dividend represent a considerable reduction on last year's figures. Will Mr. McKeon comment on why the Estimates for 2018 are significantly below the previous figures?

Mr. John McKeon

The Tús Estimate is broadly in line with what it was for 2017. In fact, the number of people on Tús this year is probably a little higher than it was last year. The outturn for 2018 might be closer to the outturn for 2017. Perhaps it will be a little higher. That is what will happen regarding Tús.

The back-to-education and back-to-work enterprise allowances and the back-to-work family dividend are led by the demand from people leaving the live register. As the number of people on the live register is falling a little more quickly than it had been, not as many people are leaving the live register to go into education or to set up their own businesses. It is purely a question of demand. We are not doing anything.

Okay. Mr. McKeon said the opposite earlier with regard to the back-to-work family dividend, which used to be known as FIS. It was mentioned earlier that people are leaving social welfare and going into work. This means there should be an increased demand for the back-to-work family dividend.

Mr. John McKeon

That is-----

If people on low incomes who have young families are leaving social welfare and going into work, I would have expected an increase in this regard.

Mr. John McKeon

A mathematical calculation is going on there. There are more people-----

Will the Department send us the details?

Mr. John McKeon

No, I can explain what is happening. Two years ago, there were more people going onto this scheme, which lasts for two years, than there are this year. There are more people coming off it now than there are going onto it. The back-to-work family-----

It lasts for just two years.

Mr. John McKeon

Yes, it lasts for just two years. One gets the full amount of the qualified child payment in the first year and 50% of that payment in the second year. One moves on at that stage. There are more people leaving it now. More people were going onto it two years ago because the number of people on the live register was higher then.

Does that replace FIS?

Mr. John McKeon

No, FIS is a separate payment. The Chairman is thinking of the working family payment.

We are talking about the back-to-work family dividend.

Mr. John McKeon

Yes. That dividend is a payment made to people who leave the live register. It allows people who have children to keep the qualified child portion of their payments. Under the working family payment, which is replacing the family income supplement, a differential is paid based on the gap between earnings and employment. Members of the committee will be familiar with that.

Where is the figure for that in the document?

Mr. John McKeon

The working family payment is normally-----

Mr. Seamus McCarthy

It is covered in section A31.

Right. The names of the back-to-work family dividend and the working family payment are similar. We are nearly done. The Department is still projecting that €180 million will be spent this year on rent supplement, which we have discussed. What is the Estimate for next year if everyone is moving to HAP?

Mr. John McKeon

I cannot remember the Estimate off the top of my head. It will be considerably less. We expect the numbers to fall from 25,000 to 15,000. I just do not have the Estimate with me, but if the Chairman is looking for a ballpark-----

The Department can send us on a note.

Mr. John McKeon

Yes, we can. It has been published in any event. We will send it on to the committee.

On the same page, last year's figure for fuel allowance was €148 million and the Estimate for this year is €138 million. I thought that an additional week of fuel allowance was being paid.

Mr. John McKeon

It is.

Why has there been a reduction in the Estimate?

Mr. John McKeon

The number of people entitled to this payment is falling. This can mainly be attributed to changes in the live register. We have put an extra week into the payment. I remind the committee that we paid an extra week this year. We paid a supplementary week because of bad weather. We had 27 weeks. The Government decided earlier this year that an extra week of fuel allowance should be paid.

How many fuel allowance payments are made to senior citizens rather than to people on the other-----

Mr. John McKeon

People on long-term payments, including those who have been on the live register for a long time-----

I ask Mr. McKeon to give us a breakdown of how many people are over rather than under. Given that we have an ageing population, I would have thought that more people would reach the age category where they would qualify for fuel allowance.

Mr. John McKeon

We can send the committee the details of that.

Mr. McKeon can end us a note. That is it.

Mr. John McKeon

Fuel allowance is a means-tested scheme as well.

Mr. John McKeon

The number of pensioners is increasing, but most of them are on the contributory pension. They would have to pass a means test to qualify.

The next document to which I would like to refer is the Department's annual report for 2017 and annual target statement for 2018, under its 2014-18 compliance and anti-fraud strategy. The document in question is on the screen. I refer to page 23. I have to compliment the Department in this regard. I do not have a question on it. There have been annual increases in the value of the overpayments being recovered by the Department. The overall figure increased from €50 million in 2012 to €81 million last year. The Department has stepped up its collection of overpayments. There has been a great deal of discussion about this. Total overpayments in 2017 came to €111 million whereas, last year, overpayments of €81 million have been collected. The Department is heading towards a position where it might recover more in overpayments than it overpays. The gap is closing.

Mr. John McKeon

We will see.

That would be dreamland.

Ms Kathleen Stack

We have a bit to go yet. We are moving in the right direction.

The officials understand my point. There was a gap of €56 million in 2013, when overpayments of €127 million were made and overpayments of €71 million were recovered. Last year, the Department overpaid €110 million and recovered €81 million. The gap has reduced considerably. Progress is being made. I am not here to knock it; progress is being made. Overpayments are not increasing and the recovery of previous overpayments is improving. That is to be recommended.

We referred in our latest periodic report to the writing off of small amounts of less than €100. According to a chart on page 25, some €501 million of outstanding debt - presumably from overpayments - was due to the Department at the end of last year. More than 30% of that is pre-2010 debt and is, therefore, more than eight years old, and another 36% of it is debt that was accumulated between 2010 and 2014. The majority of this debt is historic. What are the chances of the Department collecting that historic debt, especially the pre-2010 debt? Will these figures sit on the chart year after year? Is the Department making much progress on the old stuff?

Ms Kathleen Stack

Over the past year, we have done an extensive exercise on our legacy debt. s a result, we have written off a substantial level of old debt with the approval of the Department of Public Expenditure and Reform. In the past year, we have written off €41.5 million in old legacy debt associated with pre-2011 overpayments. In each of these cases, the value of the debt was less than €10,000 and no repayment had been collected since 2015. We wrote off €41.5 million in just over 33,000 cases.

I ask the Department to send me a summary.

Ms Kathleen Stack

The exact figure is 33,290.

I assume some of them involve people who received one overpayment and owed €500.

Ms Kathleen Stack

Some of them went back to the 1980s and 1990s. They were uneconomical. We were never going to-----

It was always going to be uneconomical to chase some of the old small ones.

Ms Kathleen Stack

Yes.

It was not going to achieve-----

Ms Kathleen Stack

The average debt written off was €1,247.

It was not collectable anyway. To be truthful, we were codding ourselves by thinking it was collectable.

Ms Kathleen Stack

We can send the committee some details if it wants.

I ask the officials to send us a detailed note that contains a breakdown of the debt that is still on the Department's books, which is what I am looking for.

Ms Kathleen Stack

Sure.

Perhaps the amounts could be broken down to set out how many cases involve debts of less than €100, between €100 and €1,000, between €1,000 and €5,000, and between €5,000 and €10,000. We want an idea of how many big debts are included in this group. We are looking for a breakdown of the numbers. The Department probably has such a breakdown. I am not asking for it this minute.

Mr. John McKeon

We might not-----

Do many cases involve more than €30,000? I have chosen that figure because it is large in a social welfare context.

Ms Kathleen Stack

I have the figures somewhere. If the Chairman bears with me for a second, I will find them.

I have a question in the same field if that is okay. It relates to the process whereby the Department enters into arrangements for the repayment of overpayments, perhaps caused by accidental payments or rollovers.

Surely the Department has some sort of legislative backing for deducting money from existing social welfare payments rather than trying to get it back. If it has, why is it not using it? If some debts go back to the 1980s and the debtors are in receipt of social welfare in any form, surely there is a means by which small sums, say €5 a week, can be deducted, at least making some inroad.

Ms Kathleen Stack

According to our on-book debts, which I discussed with the Chairman earlier, approximately 90% of the people who are getting a payment from us at the moment and who have received an overpayment are repaying us. That is since 2012. We are gradually going back through the years. The main issue with debt recovery is that the quicker it is done, the better the chance of success. If it is left for a longer time, it gets harder to make the recoveries. In recent years, we have been trying to concentrate on more recent debt, but we are working our way back. Among people who are receiving a payment from us at the moment, a high percentage are making repayments. We have a legislative basis for this. There is a basis under social welfare legislation for us to take up to 15% of the personal rate, and we do that in certain cases. We try to agree a repayment plan with people who have been overpaid, but there is a provision that allows us to take 15% of the personal rate if someone does not co-operate with us.

Perhaps when the officials provide the figures to the clerk to the committee, they can provide an indication of the number of arrangements in place at the moment. That would probably be helpful.

For the Deputy's benefit, last year there were 337 cases from which the Department recovered a total of €8.9 million from the estates of people who passed away. It does not even stop when one dies. The Department can get it back from the estate.

There is no such thing as free money.

Exactly.

Mr. Seamus McCarthy

Death and taxes.

Death and taxes, the only two certainties.

Mr. John McKeon

Several years ago, the Chairman raised the point that people can get a shock. We now write to people every year with a statement of the debt they owe, so there can be no shock.

I made the point that some people had been in the workplace, went to claim their State pension and suddenly found they owed money from eight years previously when they were on jobseeker's allowance and claimed an adult dependant. They might ask why they had not been told so they could pay it back rather than be hit with the debt when drawing a pension. As a Deputy, I have found that sometimes somebody advises a person to verify how a debt arose. A local office's paperwork on a claim from ten years previously is consulted about a claim the person says he or she did not make. The evidence is not always up to scratch on the old stuff. The Department probably has to take a pragmatic view on some of that stuff if the old records are not great.

We have covered great ground. We have discussed five chapters of the Comptroller and Auditor General's report, as well as the Department's annual accounts and the social insurance fund. I did not think we would get through it all today. I consistently have to compliment this Department. The officials have answered questions and provided all the information sought. In due course we will get anything they have not provided. That has added to the smooth running of the meeting. It allows them to get all the answers out and it allows us to get all our work done. I originally thought this would take two meetings over two days. A couple of organisations are very good when they appear before the committee, and it helps the smooth running of the committee. I thank everyone from this Department, the Department of Housing, Planning and Local Government, the Revenue Commissioners and the staff of the Comptroller and Auditor General.

Mr. John McKeon

I wish to acknowledge that Ms Anne Vaughan, our deputy Secretary General, is retiring in a week or two. She has been here every year for the past eight years. I wish to acknowledge that work.

We wish Ms Vaughan all the best and thank her for all her assistance. It might be no coincidence that the number of women representing the Department of Employment Affairs and Social Protection is consistently higher than for most other Departments. When dealing with other Departments, we often hear from six or seven males and no females. Perhaps that is why it is a well-run Department. I do not know. Perhaps we have something to learn from the witnesses on that.

Ms Kathleen Stack

I wish to give the Chaiman one figure. He asked me about the debtors owing more than €30,000 debt. There are 3,209 of them.

How much money?

Ms Kathleen Stack

They owe more than €30,000.

What does that-----

Ms Kathleen Stack

That is €179 million.

A total of €179 million is owed by how many people?

Ms Kathleen Stack

Some 3,209.

Each of those owes more than €30,000.

Ms Kathleen Stack

Yes. I can provide the breakdown.

Ms Stack will send that to us. I will do the sum for her now.

Ms Kathleen Stack

Perhaps I will be sorry I gave it to the Chairman.

The €179 million owed by the 3,209 individuals equates to €55,781 each. I call on the officials to get after it and collect it as soon as they can. I thank Ms Stack for that. I knew the figures were large. It is great that we can get such information as efficiently as that. I thank the witnesses. We will now adjourn until 6 December, when we will meet officials from the Department of Communications, Climate Action and Environment on the following matters: Vote 29 of the 2017 Appropriation Accounts; chapter 8 of the Comptroller and Auditor General's report, concerning measures relating to national cybersecurity; chapter 9 of same, concerning the energy efficiency national fund; and matters relating to the national broadband plan.

The witnesses withdrew.
The committee adjourned at 3.45 p.m until 9 a.m. on Thursday, 6 December 2018.