Bernard Allen
Question:3 Mr. Allen asked the Minister for Social Welfare if he will give details of the social welfare amnesty; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Social Welfare Amnesty.
Liz O'Donnell
Question:5 Ms O'Donnell asked the Minister for Social Welfare the Government's intentions in relation to a proposed social welfare amnesty; the persons who will benefit from the proposed amnesty; the precise nature of the various payments, benefits and allowances to which the amnesty will apply; and the period for which the amnesty will apply.
Proinsias De Rossa
Question:7 Proinsias De Rossa asked the Minister for Social Welfare if he will give details of the proposed social welfare amnesty; if he will give the legislative basis of the amnesty; when it will commence; the way in which it will operate; the expected returns to the Exchequer; if, in regard to the similar amnesty announced by him in 1991, he will give the total returns to the Exchequer from that measure; if, in particular, he will give the total number of employers who availed of the amnesty in respect of PRSI arrears; and if he will make a statement on the matter.
I propose to take Questions Nos. 3, 5, and 7 together.
The social welfare amnesty which I announced recently is designed to add impetus to the ongoing successful drive by my Department against fraud and abuse of the system. It offers people who may be defrauding the social welfare system a final opportunity to come clean and pay up what is due to the taxpaying public.
This amnesty will apply to employers, people claiming social welfare payments and self-employed people. It will apply in cases where the person or organisation informs my Department of their failure to pay PRSI due. It will also apply to people who admit receiving social welfare payments to which they were not entitled, or that they received or are receiving payment at a rate higher than that to which they were or are entitled.
People who disclose this information and who make arrangements to regularise their position will not face criminal prosecution. No interest will be charged on PRSI arrears which employers report and for which they agree appropriate payment arrangements. Special arrangements will be made for claimants to repay by instalment any money dishonestly obtained. In cases of genuine hardship my Department will take a sympathetic approach to people.
Anyone who applies for this amnesty but subsequently defaults on agreed repayment arrangements will no longer qualify for the benefits of this amnesty and their liabilities will be pursued in the normal way. Similarly, employers who do not continue to operate the full PRSI system will be prosecuted for offences. Decisions in relation to prosecutions, recovery of payments claimed illegally and recovery from employers of sums received fraudulently by employees, are administrative. There is no need for additional legislation for these matters.
I took enabling powers by way of regulations in the 1988 Act to waive interest payments in respect of PRSI arrears. I will shortly be making the necessary regulations for the purpose of this amnesty. The current amnesty is already in operation and will continue until the end of the summer.
The 1991 amnesty to which Deputy De Rossa refers operated in the context of special control of abuse measures which were initiated by me during that year. It is not possible to provide details of returns to the Exchequer arising from the 1991 amnesty. The Deputy is aware that the collection of PRSI arrears is primarily a matter for the office of the Revenue Commissioners. Payments of PRSI arrears made directly to the Revenue Commissioners as a result of the amnesty provision cannot be identified separately from other PRSI receipts.
The major effect of the amnesty was a more compliant response by employers when the Department's investigators called. In 1991 the investigators visited five times the usual number of employers and they encountered much less resistance and evasion than had previously been the case.
Based on experience in previous years, the number of cases failing to co-operate would have been about 200 in 1991 if the amnesty had not been in operation. Preparing cases for prosecution is time-consuming. Accordingly a significant benefit of the amnesty is that the investigators were freed from having to gather evidence for criminal prosecutions in more than 200 cases. This allowed them carry out a higher level of visits. As a result employers generally became more aware of the need for compliance.
An important outcome of the 1991 operations is that employers who were not operating the complete system have been identified, warned of the consequences and are now being scheduled for revisits to ensure that the co-operation promised has continued. In addition some 522 people claiming social welfare payments regularised their position with my Department. The 1991 amnesty was part of a package of control measures introduced by me. As a result of these measures and the amnesty which I am now introducing some £200 million in social welfare savings will have accrued to the Exchequer by the end of this year.
The effectiveness of the measures which we have undertaken to improve compliance and ease the burden on the general taxpayer can best be seen in the increase in PRSI collected from the estimate of £991 million in 1988 to £1,486 million in 1992. The penalties for fraud have been progressively increased by me since 1990 and the procedures for taking legal action and prosecuting those who are caught have been successfully streamlined, codified and strengthened. Those caught face tough penalties of fines up to £10,000 and up to three years in jail. Employers not operating PRSI are also liable to repay benefit fraudulently received by their employees.
Since social welfare fraud is a criminal offence, how can the Minister take it upon himself to pardon criminals? Would the Minister agree that the proposed amnesty is a second amnesty for a number of people but is a kick in the teeth for the PAYE sector and self-employed who make their commitments to the State in a responsible way? Would he agree that the £200 million mentioned in his reply shows serious incompetence in his Department in collecting money due to the State? As the Minister has been in that Department for many years surely this is a matter on which he should resign. Would the Minister agree that the perception among responsible business people — I know of a 70-year-old woman who is being challenged this week by the sheriff to give up her personal belongings — is that the white collar criminal and brigand receives total absolution because they have the ear of people in high places——
I appeal for brevity at this time. We have dealt with only a small number of questions in 20 minutes.
Responsible people who pay their dues are being harassed and hounded——
I am calling the Minister.
As I made clear in my reply, the powers I exercise are given to me by the House as Minister for Social Welfare. I have power to introduce an amnesty and have done so as part of our procedures.
What are the Minister's powers?
Will the Minister specify what these powers are?
Deputy Allen has asked questions and he should be good enough to listen to the reply.
I resent and reject the allegation that the staff in my Department are incompetent. On the contrary, they are extremely efficient and effective and are so regarded internationally. I know that the Deputy does not regard them as such in this context, but they are highly regarded on an international basis and that is good enough for me.
I was talking about the Minister, not the staff.
Deputy Allen must desist from interrupting.
I will outline for the Deputy the change that has taken place since his party was last in Government. In 1987, the taxpayer had to contribute 31 per cent of the social insurance fund whereas this year the taxpayer has to pay only 11.6 per cent. That represents real efficiency, competence and management, and the Deputy should withdraw his allegation of incompetence against the staff of my Department.
I was talking about incompetence against the Minister.
I thank the Minister for issuing this fact sheet which provides most of the information I require. The proposed social welfare amnesty is politically and morally acceptable to the public because it is compassionate towards those who find themselves in difficulty in terms of the social welfare code and is an opportunity for them to regularise their affairs. Any effort to tackle fraud is to be welcomed and I welcome some aspects of this measure which is saved from political disaster by the fact that arrears have to be paid and people are not being let off scot-free. They are absolved from liability in terms of prosecution but not from liability to pay the moneys which were fraudulently or incorrectly drawn from the State. That is what makes this amnesty more acceptable——
Please, Deputy, the questions should be relevant.
Did the Minister consider going the way of the Minister for Finance in offering a total amnesty and introducing a set charge rather than insisting, as he is doing, that people pay arrears? Did the Minister consider that and, if not, why not?
We take a sympathetic view of hardship cases.
I wish to put a number of supplementaries and, as this is a priority question, I hope the Chair will hear me out.
Certainly, but let us also bear in mind the need to dispose of other priority questions.
Will the Minister agree that to portray a reduction in the expenditure by way of general taxation on social welfare from 30 per cent to 10 per cent as an efficiency flies in the face of reality which is that the support of the social welfare system from general taxation has declined to a point where the commitment from taxation is now a disgrace? Does the Minister agree that it would have been better to maintain the contribution from taxation and thereby increase the benefits that would be available to those who are unemployed or sick? Can the Minister tell us where he got the figure quoted in a newspaper on 7 June 1993 that this amnesty could bring in up to £200 million, particularly in view of the fact that the Comptroller and Auditor General in his last report in November pointed out that social welfare fraud could be estimated at no more than £6.8 million? I put it to the Minister also that the last amnesty brought in only 17 employers who admitted to defrauding PRSI. Will the Minister indicate to the House where he expects the £200 million to be clawed back from, particularly as he has also——
The Deputy's questioning is over long, particularly at this stage.
——indicated that he intends to be generous to hardship cases?
The £200 million is a real figure for the two years.
I put it to the Minister——
The Deputy should permit me to finish.
Please, Deputy De Rossa.
——that he is attempting, as usual, to mislead this House.
This is not good enough.
I will come back to the Deputy's comment about fraud in a moment. Will the Deputy just contain himself?
You are a fraud.
The Deputy is confused. I will try to help him.
I am tired of the Minister misleading the House.
If the Deputy wants to continue to be confused, he can. This year we will save an additional £100 million.
They are cuts. Does the Minister remember the dirty dozen?
They are not cuts.
The Minister should be allowed to speak without interruption.
(Interruptions.)
Deputy De Rossa should desist. The Chair is doing his best to preserve the precious time at this stage and I cannot tolerate interruptions.
The Deputy is confusing fraud, abuse and unwarranted claiming.
You are lumping them all together.
Of course. I am the Minister for Social Welfare and they all come to me. The money I talk about——
You are treating them all as fraud.
The Deputy should permit me to finish.
We cannot make progress if there is to be continual interruption.
I am not treating them all as fraud. I have been very careful to say that we are talking about fraud, abuse and unwarranted claiming. Fraud is something which is proved in court. If we were to bring every person who makes an unwarranted claim or abuses the system to court it would amount to huge numbers of people. We do not do that. We get the money back for the taxpayer. We collect money from employers, as do the Revenue Commissioners, for the taxpayer. That is the kind of money we are talking about. It is very expensive to take a case to court in the first instance and it is mainly done to demonstrate that if people do not comply they can be brought to court. Compliance and collection is what it is all about. Earlier I mentioned the increase in collection. There are a couple of specific elements in that but beyond that there is a very substantial increase in the total collection of PRSI.
How much?
That can only be accounted for by a greater contribution and by compliance. It is difficult to measure it exactly. I can discuss that at some other time with the Deputy if he wishes. I gave the Deputy the figure for the start and the end and I can give figures for what came in the meantime but that has nothing to do with reductions in any benefit.
I have explained that fraud is a specific item. The Comptroller and Auditor General talks about fraud and consequently everybody is confused because that is the description in his field of work. I am talking about something else. As Minister for Social Welfare I am in the management business managing money. I am not in legal business and I do not want to be. We would have perhaps 350 cases going to court. We have only 500 staff in the country. If they were tied up in court cases it could be of no great benefit to us in our general collection which would fall behind. That is why I emphasised in my reply that we are carrying out a substantial programme currently. I tried to make it as clear as possible. We are currently visiting 10,000 employers and we need the staff to do that. We are getting compliance and we are giving a boost to that compliance with the amnesty. Recently a person who received dole on a forged document was sentenced to two years. Many prison sentences have been handed down.
What about the other questions? This could go on all day.
We do not want to be caught up in that area entirely. We want to give people an opportunity to comply. We will catch many people through stepping up the operation generally.
The Minister referred to this being a final opportunity. Does he mean that, or is it until the next amnesty? That is an important point in terms of the behaviour adjustments of people.
As far as I am concerned it is a final opportunity. People know that. The net, which has closed considerably over the past two years, is closing further. The Department is more efficient now and there is an opportunity for people to come clean and bring themselves up to date.
A Cheann Comhairle——
It must be very brief. The Deputy will realise that time is fast running out.
Will it be sufficient if I am as brief as the Minister?
Time is fast running out and there are two other questions.
The Minister did not address the point I raised in regard to the reduction in the contribution from general taxation towards the social welfare system. I would appreciate if he would address that. What proportion of the increased income from PRSI is accounted for by the fact that since 1988 the self employed have come into the PRSI system? Will the Minister agree that a significant proportion of what he is claiming came in as a result of the tax amnesty came in as a result of the self employed being brought into the system?
That is why I said that I would like to explain this to the Deputy separately. That accounts for about £60 million or £65 million rising to £70 million now.
That reduces the Minister's £200 million considerably.
That is a very small difference. There is a £500 million difference. There is another element of about £50 million to £60 million. They are the two elements I was thinking of particularly.
What is the other one? The Minister should tell us.
What about the £400 million having regard to the amalgamation of funds which took place?
And the dirty dozen.
There is nearly £400 million extra, not accounted for by increases or anything else. I want the House to be clear about one thing: when we talk about the reduction from general taxation we are talking about a percentage. The numbers on social welfare increased very substantially in the meantime——
Because we have 300,000 unemployed.
The money expended now amounts to £3.7 billion, which has risen enormously. I take the Deputy's point about the numbers having increased, but we are spending the money. The percentage position has changed; that is, of course, as far as the fund is concerned. It consolidates the position of the fund, which is what we have done. It had been my objective to render the fund as solid as possible. However, as the Deputy knows, there are others with different views about that.