—— but this must be the number one priority for the incoming Government.
A number of steps could be taken to remove this poverty trap. It works against both the recipient and the State and the more such traps that mean people will remain in receipt of social welfare are in place, the more it costs the State to provide such welfare support. Moreover, the individual recipient obviously is caught in a trap and while the vast majority of such people would like to be in a position to go to work, it simply is not worth their while financially to so do. In addition, there is much leakage in respect of tax compliance. A total of €420 million in rent supplement is being paid to private landlords at present but there is no system in place to ensure that those landlords who are recipients of rent supplement are tax compliant. This has been very loose down through the years and although the Committee of Public Accounts recently has drawn attention to this issue a number of times, we still are a considerable distance from this. The Minister now is talking about collecting PPS numbers but it is known that this has not been successful in the past. In addition, it is known that there is a time lag whereby approximately 18 months elapse before any kind of follow up or checking is carried out on the PPS numbers that have been provided. This system simply does not work.
The Labour Party proposes that rent supplement would not be paid to any landlord unless that landlord could produce a tax clearance certificate. As I noted on Committee Stage, this is a basic requirement. If anyone is doing any kind of work for a council, Department or State agency, he or she is required to produce a tax clearance certificate. As Deputies, Members are obliged to provide such a certificate after election. Similarly, in respect of grants that are paid to small builders to carry out bathroom conversions and similar work, they always are required to produce a tax clearance certificate. It makes eminent sense that landlords, who are in receipt of such vast amounts of public money, should be required to produce a tax clearance certificate because it is known that the level of tax avoidance among landlords is considerable . As Minister for Social Protection, the Minister is responsible for the transfer of such large amounts of money from the public purse into the pockets of private landlords that he really should be absolutely vigilant about ensuring that those people are tax compliant and that the State gets back what is due to it in respect of taxes.
The other amendment under discussion proposes that not only would landlords be required to have a tax clearance certificate but that the payment of rent supplement would be made directly to landlords and there are many reasons this would be a good idea. First, bodies such as Threshold and others that work in the area have been seeking this change for several years. There are significant savings to be made, were the State to negotiate directly with landlords, including switching to a retained deposits system. At present, approximately €7 million is lost to the Exchequer every year through expenditure on deposits. This could be saved on an annual basis, were the Minister to move towards a direct payments scheme and a deposit retention scheme. In addition, this measure would work better from the tenants' perspective because at present, difficulties exist in this regard. In some cases, irresponsible tenants do not pass on the rent or the deposit. Similarly, some irresponsible landlords fail to return the deposit and some landlords insist that tenants make a top-up payment. Many highly vulnerable tenants are caught in a situation in which they are fairly powerless. Their options are limited as they are at the lower end of the scale, very often in substandard accommodation, and often are caught by unscrupulous landlords.
For all kinds of reasons, it makes absolute sense to have radical reform of the rent supplement system. It should have been done long ago and money is being lost to the State by the failure to do it. Most important, however, not only are tax receipts lost to the State but tenants would be much better off were this rent paid directly to the landlord and were they to go on a differential rent, thereby removing the existing poverty trap. It is regrettable that the Minister has not done this but if the Labour Party is in government after the next election, this will be its number one priority when dealing with the disincentives that exist within the welfare system.
