Dáil Éireann debate -
Wednesday, 2 Oct 1996

Vol. 469 No. 3

Written Answers. - Social Welfare Fraud.

Séamus Hughes

Question:

186 Mr. Hughes asked the Minister for Social Welfare his views of the amount of abuse endemic in the social welfare system in view of the recent report by the Central Statistics Office; and if he will differentiate between his estimation of the level of abuse and the level of fraud. [17269/96]

Batt O'Keeffe

Question:

190 Mr. B. O'Keeffe asked the Minister for Social Welfare his views on the fact that the Secretary of his Department told the Committee of Public Accounts in October 1995 that fraud within his Department was at a very low level. [17371/96]

Minister for Social Welfare (Proinsias De Rossa)

I propose to take Questions Nos. 186 and 190 together.

Experience in Ireland and internationally shows that it is difficult at any time to estimate the level of abuse and/or fraud of the social welfare system. However, the levels of detected abuse, with their resultant overpayments of benefit or underpayments of PRSI, show that there is a continual level of abuse, perpetrated by a minority of claimants and employers. This abuse can range from minor short-term irregularities to serious deliberate fraud of the system.

The only study of the absolute level of fraud and abuse was undertaken in 1987 by the Department with the assistance of consultants. The study covered both disability benefit and unemployment payments. In relation to unemployment payments the findings indicated that in Dublin some 2 per cent of the number of unemployment payments were based on claims which contained some clear element of fraud. In monetary terms this figure represented some 1.6 per cent of unemployment payments.

In addition, the review showed that 7 per cent of the sample of cases gave rise to suspicion on the ground that the facts of the case did not check out at the initial interview. Later investigation of these cases showed that two thirds were found to be actually bona fide, a minimal number were clearly fraudulent and no definite conclusions could be drawn about the remainder. Based on this study it would appear a reasonable conclusion that at that time there was a baseline fraud level of around 5 per cent.

Control activity of the Department has been a continuing feature of its work and by its nature it is targeted at categories of claimants who are considered to be at higher risk of fraudulently claiming payments and of employments where there is greatest scope of working and claiming fraudulently or greater likelihood of non-compliance with statutory obligations. The total annual value of savings arising from the Department's control activities in 1995 is estimated at £125 million. Some £50 million or so of this relates to the unemployment payment schemes which represents some 5 per cent of total unemployment expenditure, or 1.25 per cent of total expenditure. Where there are some 50,000 to 60,000 movements on and off the live rigister each month, the overall level of abuse must be in excess of that figure.

The recent CSO survey was not undertaken directly to identify the level of fraud in the unemployment payments system. It was designed to elucidate the reasons for the divergence between the different measures of unemployment which currently exist. However a number of findings of the survey suggests the existence of a higher level of fraud in the unemployment payment system than the evidence available to date. In particular the indications that a substantial proportion of people signing on as unemployed appear to be in full-time employment is a matter of concern.

The remarks made by the secretary of my Department to the Committee of Public Accounts related to the level of overpayments of benefit and assistance which were identified as being due to fraud. This relates to payments which were actually made to people engaged in fraudulent claiming and which are recoverable. It cannot be taken as a measure of the overall level of fraud in the system.

In the light of the indications emerging from the CSO survey I am arranging for a further survey to be carried out to get more detailed information on the problem which will enable the Department to deal effectively with it. My Department is also currently carrying out an in-depth scrutiny of existing controls.

I am determined to stamp out fraud and abuse of the social welfare system and to apply the full rigour of the law to those employers and claimants who deliberately set out to defraud it. I am satisfied that the measures now being put in place will yield results over time.