Dáil Éireann debate -
Wednesday, 25 Apr 2012

Vol. 763 No. 1

Social Welfare and Pensions Bill 2012: Committee Stage

SECTION 1

Deputy Aengus Ó Snodaigh

I move amendment No. 1:

In page 3, subsection (1), line 11, after "Welfare" to insert "(Miscellaneous Provisions)".

This amendment should be accepted given the change reflected in the motion on this Bill yesterday. The motion indicates that the Minister introduced a range of other provisions into what was originally a social welfare and pensions (No. 2) Bill. It is not only the social welfare code and pensions that we are now dealing with and the Minister should accept this. We are dealing not only with changes to the one-parent family payment, but also, as the motion states, with changes to the "Social Insurance Fund, employed contributors and employment contributions, supplementary welfare allowance, offences, miscellaneous control provisions and proceedings, claims and payments, jobseeker's benefit, appointments and duties of social welfare inspectors, social welfare [in general], miscellaneous provisions on budgeting, and occupational pension schemes". The legislation also deals with the use of PPS numbers for purposes other than those intended. I am not quibbling in that regard.

My amendment is reasonable and short and reflects the practice regarding previous social welfare legislation that dealt with matters in addition to the social welfare code, which practice involved the use of the catch-all phrase "Miscellaneous Provisions" in the Title. A range of issues is covered in the Bill. We thrashed out last night that the legislation is being rushed. If we had had more time, the Minister would have captured the essence of this amendment.

Minister for Social Protection (Deputy Joan Burton)

I do not propose to accept this amendment. I am informed by the Office of the Parliamentary Counsel that the current Title of the Bill, that is, Social Welfare and Pensions Bill 2012, is sufficient in regard to the various amendments to the Social Welfare Consolidation Act 2005 and the Pensions Act 1990 that are to be included.

The various Committee Stage amendments that have been proposed by Deputy Ó Snodaigh are covered by the current Title of the Bill. In the circumstances, there is no need to include a reference to "Miscellaneous Provisions" in the Title. When I announced and introduced the Bill, I pointed out the various amendments which, because of the timing of the Finance Act, we would unfortunately have to introduce. I apologise to Deputies for having to introduce the changes by way of amendment but such was the difficult parliamentary timetable in the context of the Finance Act.

I ask Deputy Ó Snodaigh and Sinn Féin to understand that these amendments contain some of the most significant and important changes regarding the fight against the small number of people who are defrauding the social welfare system in the most serious way. The Office of the Attorney General and my officials have worked really hard over the past year to bring forward these amendments, which, as I outlined to the House last night, achieve two objectives in particular, the first of which is to give power to social welfare inspectors at ports and airports to ask questions of people coming through who may be claiming social welfare but who are not resident in the country. I would expect to have the support of Sinn Féin and the other parties for that amendment.

Deputy Ó Snodaigh was very kind last night in praising the work of the officials. While I accept that compliment, I must state we have been discussing this issue at committee meetings and in this House since I became Minister. Considerable work has been done by the officials and the Office of the Attorney General to perfect an amendment that would give powers in this area. I apologise for not having been able to introduce the changes in the initial Bill. However, in all my speeches and announcements, I stated what I desired would be achieved by way of amendment. I ask for the understanding of the Deputies in that regard.

The second objective is also of significance in the fight against the small number who scam the system. It is important that we address this; otherwise, confidence in the system among ordinary contributors and claimants who only claim what they are entitled to will be eroded.

Powers are to be given to social welfare inspectors to ask landlords questions where there is a rent supplement to ensure that the property in question is being used by the individual who gets the supplement. We have had indications that this is an area of particular risk and exposure in the social welfare system. I do not propose to accept the amendment but hope the Deputy will understand that, in light of the timing of the finance legislation, it was quite difficult to settle on wording in regard to the two issues I have raised. I am very conscious of the fact that Deputies on both sides of the House made representations to me through parliamentary questions, discussions and committee meetings to the effect that these issues should be addressed. Although I am addressing them in a tight timeframe, I am happy to say we are addressing them none the less.

Deputy Sean Fleming

I understand the Minister's officials have worked hard on the amendments. As she is aware, we finished Second Stage last night. I, and I am sure the other spokespersons, got an e-mail at approximately 10.50 p.m. last night containing the list of amendments. The list came to 23 pages, which is as long as the Bill itself. We are debating them now, although, essentially, we only received the list when we arrived this morning. That is, to say the least, unfortunate. The fact previous social welfare Bills were guillotined is no excuse to continue what was a bad practice.

The Minister said the Attorney General and the officials in her Department have worked very hard for the past year on this Bill, so why did these amendments take until midnight last night? Why could they not have been published on 3 April when the Minister published the Bill? We would have had the past two or three weeks to digest and understand them and possibly come forward with more considered amendments than we have had the opportunity to do. Essentially, we will not have the opportunity to table amendments to most of the Bill because it will be guillotined tomorrow. We do not even know at this point whether it will be possible to table Report Stage amendments. There was no reference to Report Stage on the Order of Business today. It just states Committee and Remaining Stages to be taken today and to be completed tomorrow. That has to result in bad legislation.

Clearly, the Minister is dealing with people who have a lot of financial resources in terms of some of the issues mentioned in the Bill and she wants to eliminate fraud. However, by rushing legislation through the House and by publishing amendments at midnight last night to be passed by the Dáil and to be sent to the Seanad on Friday, there is a high probability that there will be loopholes in the legislation because we did not have the extra few weeks. Will the Minister explain to me in simple English the reason the bulk of these amendments could not have been included in the legislation published a fortnight ago? It would have given us the extra fortnight and we might not have needed some of these debates.

Deputy Aengus Ó Snodaigh

The Minister has tabled amendments and I have said I am not opposed to some of them. We will deal with them when, hopefully, we get to them. My point, which is not a major one, is that we should include the words "miscellaneous provisions" in the Title because I tabled amendments which go slightly beyond the social welfare code and deal with child care and the proposal that this Bill be tied to the delivery of after school child care facilities. That falls slightly outside the Minister's remit and she said that on Second Stage.

I refer to another amendment which is not on the list because we were still working to try to ensure this Bill captured some of those amendments to the social welfare system and the use of the PPS number. I resubmitted an amendment I tabled previously on PPS numbers being used for the electoral register. The Minister said at the time that the next social welfare Bill would address that. I accept there is a timeframe and that it is a struggle to capture everything in one Bill and I made that point yesterday. That is the reason the Title should include the words "miscellaneous provisions".

The Bill covers a long list of issues. If one uses the words "miscellaneous provisions", people understand it does not just cover one issue or two issues. The pensions issue is captured but major changes to the social welfare code are being introduced, some of which are welcome. As I said last night, some of them clarify current practice and ensure current practice continues or reflect changes which have happened and which need to be clarified. Technical changes happen on an ongoing basis. However, there are other changes in the Bill which are substantial and that is the reason I suggest it is a social welfare and pensions (miscellaneous provisions) Bill. I will not press the amendment because we have limited time. I thought it was a reasonable suggestion.

Deputy Michael Healy-Rae

I, too, voice my objection to what has happened. When we received the list of amendments this morning, it was actually warm off the printing press. It is unfair to put Members at such a disadvantage.

An Ceann Comhairle

Sorry, Deputy, we are speaking to an amendment.

Deputy Michael Healy-Rae

Yes, I am tying it into that.

An Ceann Comhairle

You are wasting time but that is your business.

Deputy Michael Healy-Rae

I want to raise the time issue with the Minister. The way the Government is handling this is unfair. It is not allowing proper debate among all of the Members who wish to contribute. We very much welcome measures in the Bill to help eliminate fraud, as would every right thinking person. I stand fully behind that. I also compliment the officials in the Department who did a lot of work but the time element is the issue. To come into the House with 23 pages of amendments is unfair and wrong.

Amendment, by leave, withdrawn.

Deputy Joan Burton

I move amendment No. 2:

In page 3, subsection (4), line 18, to delete "Section 3” and substitute “Sections 9, 12, 14, 15, 16, 17 and 19”.

The purpose of this amendment is to provide that a number of the provisions I propose by way of Committee Stage amendments come into operation by way of commencement order. In addition, arising from the Committee Stage amendment which I propose to introduce, section 3 which provides for the phased introduction over the period from April 2013 to April 2015 of the increase in the number of contributions required to become a voluntary contributor, there is no longer a need for a commencement order for section 3.

The new sections I propose to include in this Bill by way of Committee Stage amendments that are to come into operation by way of commencement order are section 9, which relates to the operation of the Revenue's relevant tax and share options system; section 12, which relates to the entitlement of the mortgage interest supplement; section 14, which relates to the powers of social welfare inspectors to make inquiries of landlords in regard to the investigations of rent supplement claims; and section 15, which relates to the strengthening of the provisions relating to authenticating a person's identity for the purposes of making social welfare claims and for the purposes of using personal public service numbers, PPSNs, and public service cards. Deputies will be aware that the Department is in the process of beginning the rollout of a public service card to every citizen in the country which will have an encrypted photograph so that when people go to social welfare offices, their identity can be properly established as well as their signature on the card. That is another important element in making our systems more secure and robust against fraud.

I also propose to include section 16, which relates to a change in the payment week for jobseeker's benefit purposes from a six-day week to a five-day week, and section 17, which relates to the further strengthening of the powers of social welfare inspectors to make inquiries at ports and airports. As I said, we have discussed that particular provision with many Members over a long period of time and it is very important that social welfare inspectors have the power to question people coming through ports and airports who are not resident in this country but who could be coming here to claim a social welfare benefit and then leaving the country shortly thereafter. It could be Irish people who have left the country but who come back.

Equally, they could be non-Irish persons who took up residence in Ireland and subsequently left but, for some reason, continue to claim social welfare wrongly. This is an important reform.

Section 19 relates to an extension of the household budgeting facility to cover other energy companies regulated by the Commission for Energy Regulation. The purpose of these commencement orders is to give sufficient time following the Bill's enactment for the necessary administrative procedures to be put in place before these provisions are commenced. I recommend the amendment be made.

Deputy Sean Fleming

I understand the need for commencement dates, but will the Minister indicate which provisions she expects to commence in this calendar year? I do not need to know the day, week or month. Which will be commenced next year or the year after?

The Minister has twice mentioned the issue of people from outside the State entering the country through ports and airports to claim social welfare to which they do not have a legal entitlement. Are many such people resident in Northern Ireland or is the Minister referring to people arriving on boats? Most people who enter Ireland can easily travel down from Belfast, a route on which there are no checks. Anyone who finds his or her way to England or Scotland can travel to Northern Ireland and get the train down and up again. It is possible that not all of the people involved in the activity concerned are travelling to Ireland by aeroplane or ferry.

Deputy Joan Burton

Ports as well.

Deputy Sean Fleming

The Minister might explain where the bulk of her concern lies. Obviously, she has a feel for the issue. Do these amendments relate to the major access points into the country used by people who abuse the system?

Deputy Joan Burton

These provisions will be ready to go almost immediately, whereas other changes will take a number of months to implement. For example, the provision moving the social welfare week from a six-day week to a five-day week akin to the working week will be enacted in July.

Regarding inspectors at ports and airports and inspectors questioning landlords, the critical aspect that I am trying to develop in the Department is a special investigations unit. My predecessors started this work some time ago, but we are trying to expand and strengthen it to focus on specific risk areas. Recently, we identified up to 1,400 people travelling through ports and airports who, for one reason or another, were not entitled to claim.

There is another element. Gardaí, immigration officers and customs and Revenue officials work at ports and airports. It is key that social welfare officers be fully empowered to take part fully in inter-agency teams. Sharing information through such teams allows the most effective work to be done. This provision will enhance the powers to social welfare officers in that context.

While discussing this matter during our debate on last year's Bill, a question arose about whether senior departmental officials, senior inspectors and I required additional powers where there was a serious case of suspected fraud. This was the advice I received and I promised to introduce such a provision in the House. Following the lengthy and detailed discussions with the Attorney General's office regarding this Bill's strengthening measures in the battle against fraud, the Attorney General advised that, given that a working protocol had been worked out between the Irish Banking Federation, IBF, and departmental officials at the most senior level, namely, Assistant Secretary, principal officer and the head of the special investigations unit, the legislation enacted in 2009 by one of my predecessors was sufficient. I do not need to proceed with new legislation because the Attorney General has given a ruling. We are ready to commence this suite of measures almost immediately. They will allow for a considerable strengthening.

The PPS and social services cards comprise a longer term project. We started to roll it out last September on a trial basis in four offices around the country. Its roll-out will commence in full this year when we hope to issue several hundred thousand cards. Each card will contain a biometric-style photograph, be encrypted and carry a signature. The cards will be helpful to us. If new recipients of, for example, unemployment assistance and benefits want to sign on, they must visit their post offices or social welfare offices regularly. People will now be able to sign on electronically, which should considerably accelerate the administration, of which there is a great deal. The post offices are playing a critical role in this regard. After the cards have been rolled out, a recipient will be able to insert his or her card in a machine and an encrypted photograph of the person, for example, me, although that probably would not be very nice, would appear on screen. An official in the post office or the Department of Social Protection would be able to identify that the card's user was me and not my friend or someone else who was collecting the payment on my behalf because I had left the country and was far away. This is a critical measure and is being provided for in the Bill, but rolling it out will take a couple of years. The Bill's various provisions have different timelines.

Deputy Aengus Ó Snodaigh

This looks to be a technical amendment. Certain sections will enter into operation at some future point, in that the Minister "may appoint by order or orders either generally or with reference to any particular purpose or provision, and different days may be so appointed for different purposes or different provisions", but the full list of what is being facilitated by the amendment includes the changes to jobseeker's benefit and mortgage interest supplement in particular. I noted that the Minister concentrated on the changes that were, in many ways, logical. In the case of jobseeker's benefit and mortgage interest supplement, however, there has been little engagement with the sectors that help those who are in mortgage distress and must avail of mortgage interest supplement.

I do not know whether many Deputies managed to receive the submission from the Free Legal Advice Centres, FLAC, and the Northside Community Law Centre regarding this Bill. In those submissions, they highlighted what the Minister's changes to the mortgage interest supplement would entail. By denying access to the supplement for 12 months from the date on which the arrears arise, many borrowers in trouble will inevitably leave the 12-month period in greater difficulty or arrears than they would had they been allowed to engage at an earlier stage when the full consequences of their distress occurred. The Minister is adding to the problem and their distress.

Although financial institutions follow a code of conduct in terms of mortgage arrears, it is not compulsory for lenders to offer an alternative arrangement. The arrangement might not be in place in some cases, however. I will deal with this issue in more detail when we come to the mortgage interest supplement but certain lenders do not even allow the mortgage holder to speak face-to-face to somebody. These proposals will put the onus on the mortgagee to engage but if the lender is making it difficult to engage this becomes an onerous responsibility. This amendment will allow the Minister to delay the implementation of section 1. Before she even considers triggering the operational date for the reformed rules, I urge her to give more consideration to the additional burdens placed on people who are already in distress by denying them access to mortgage interest supplement for 12 months.

The Minister had promised to make changes to the 30 hours per week rule for mortgage interest supplement in order to allow individuals to take up additional hours on a casual basis. At present they lose payments under the supplement if they take up work.

I hope we will have sufficient time to debate these provisions because it is vital that we have an opportunity to ask the technical questions which usually arise on Committee Stage in order to get information from the Minister or her officials, who have a greater understanding of the specific workings of these measures. This would not only allow us to allay some of our fears but the Minister might also learn more about the day-to-day impact of her proposals on vulnerable people. I urge her to consider my proposals on the mortgage interest supplement.

The amendment also deals with the proposed change to assessment basis of jobseeker's benefit from six days to five days. As I pointed out last night, this will result in substantial cuts for those who receive jobseeker's benefit. Once again the Government is putting its hands into the pockets of those who are in distress or have been reduced to two or three days of work per week. They will be penalised further for being underemployed.

I ask that the Minister delay the implementation of these measures until certain criteria have been met. I may attempt to cobble together a further amendment before Report Stage. Our time is so restricted that we cannot even pause to consider the Minister's response to the amendments tabled on Committee Stage in order to prepare further amendments for tomorrow's debate on Report Stage.

Deputy Michael Healy-Rae

The Minister wisely concentrated on the issue of fraud in her discussion of the changes she proposes to make. Nobody would argue with those changes but I wish to draw attention to the number of personnel that will be required in this area. Disabled and unemployed people are at home today waiting for a response to their applications to her Department. I ask for an assurance that these people's applications will be processed swiftly. That is not the case at present. I understand the Department is swamped with applications but ultimately there are people with young families who are dealing with social welfare officers and calling to their local offices because they need money to put food on the table, send the children to school and buy clothes and shoes. These people want the Department to act swiftly.

If the Minister is redirecting staff to work on cost saving measures, such as stamping out fraud, we welcome that because people should not get payments to which they are not entitled. However, we want people to receive the payments to which they are entitled in a timely manner. I urge her to balance the allocation of resources to reduce waiting times. She will be aware from her constituency work of the difficulties people face while awaiting payments. We are lobbied on a daily basis by people with genuine difficulties in putting food on the table or paying electricity bills. They are facing serious hardships.

Deputy Sean Fleming

The Minister spoke about the extensive powers of social welfare officers. We have heard reports of inter-agency operations and are familiar with checkpoints involving gardaí and Customs and Excise agents alongside social welfare inspectors who are there to determine whether individuals are claiming social welfare payments. Given that such inter-agency groups are operating successfully, why do they have insufficient powers to work at airports?

Deputy Joan Burton

Social welfare inspectors do not have the necessary powers. This Bill gives them those powers.

Deputy Sean Fleming

They can work as part of inter-agency groups to investigate drivers on the side of a main road.

Deputy Joan Burton

Those powers may not be sufficient.

Deputy Sean Fleming

Are these powers included in this Bill or are they separate?

Deputy Joan Burton

They are included.

Deputy Sean Fleming

The Minister focused her comments on ports and airports. Will this measure increase the power of the social inspector on the street or road when a vehicle is being stopped?

Deputy Joan Burton

The list includes ports, airports, landlords of rent supplement tenants and identity cards.

Deputy Sean Fleming

I ask for an explanation of the provisions on encrypted photographs and electronic signing on. How will these provisions work, where can people sign on and will they require a camera in their houses so that they can be seen through the computer at the other end? Are we in danger of creating a technologically disadvantaged group of people? There is a direct parallel with the payment system for the household charge. People who have access to computers were able to pay the household charge on-line on a quarterly basis but those without access were financially disadvantaged in that they had to pay the lump sum up-front. With electronic signing on, there will be a fast-tracked easy system for people who are technologically-----

Deputy Joan Burton

In the office.

Deputy Sean Fleming

So the person still needs to go into the office physically. I was concerned that they could do it remotely.

Deputy Catherine Murphy

Deputy Ó Snodaigh spoke about the criteria. Clearly the mortgage interest supplement is a very restrictive supplement given that a person must be working for less than 30 hours a week, and I know there are proposals to go slightly further than that. For people working up to 30 hours a week for 11 months, those in most trouble will be those whose mortgagers have a big interest element - mainly those who have taken out mortgages in recent years. Have the banks agreed to buy into this? If they have not, the criteria will be really important. A person, who goes back into full-time employment after 11 months and with whom the bank has not engaged, may end up in more extreme difficulty than would have been the case if he or she had got the kind of support we are discussing. We can all think of such cases. If this provision is put in the Bill, will checks and balances be put in place before the Bill is signed into law or is it something that will come into effect immediately?

Deputy Richard Boyd Barrett

These two amendments, relating to jobseeker's benefit and mortgage interest supplement, deal with two groups of people who have been hammered by the current recession - low-paid workers and people with mortgage difficulties. I am concerned that amendments are introduced at the last minute and we have not had enough time to consider the possible ramifications. We do not have sufficient time to table amendments and debate the matters properly. These provisions could have an adverse effect on two sections of society that have already been hammered and do not need to be hammered further.

The change to jobseeker's benefit just looks like a cut to the low paid. What is the rationale for introducing such an amendment at such a late stage? Can the Minister give us a guarantee that people, who will now lose entitlement to mortgage interest supplement as a result of this amendment, will not find themselves in greater difficulty if the banks are unwilling to facilitate them with some sort of moratorium on their interest payments?

Deputy Joan Collins

People only apply for mortgage interest supplement if they are in a dire situation and have lost their jobs. They are dealing with the ramifications for their families of reduction in income, including having to approach the bank and go through the MARPS process. We have nothing in place to assist people in dealing with these big institutions although there is talk of an insolvency Bill. We are now told that people will not be able to access mortgage interest supplement, which they will need on the first day they lose their jobs. It is not acceptable for a Labour Minister to consider doing this. I understand that 17,000 households accessed it in 2010. Originally it was a very small amount. Obviously it was introduced a number of years ago during the so-called Celtic tiger years as a protection for people. Now that that protection is needed it is being taken from them for the first 12 months they are unemployed. It is one of the most vicious and nastiest cuts we have seen in the Bill.

The change to jobseeker's allowance affects the most vulnerable. Many people are working three days a week and avail of the extra money they get in jobseeker's allowance. This has greatly helped them in being able to adjust to their changed circumstances. For such a small amount, why is this cut being made? This is a Bill of 100 little cuts across the board that are impacting people in their pockets at a time when they most need it. I ask the Minister to explain her need to do this or else remove it as otherwise we will oppose this section of the Bill.

Deputy Joan Burton

A number of Deputies asked about the mortgage interest supplement on which I will give some background. The purpose of mortgage interest supplement is to provide short-term support to eligible people who are unable to meet their mortgage interest repayments in respect of their sole place of residence usually because they have lost their job. The supplement assists with the interest portion of the mortgage repayments only and the capital repayment is not taken into account in calculating the amount of the supplement. Approximately 18,000 people are in receipt of mortgage interest supplement, an increase of 340% since 2007. This year we will spend more than €50 million on the mortgage interest supplement.

The Department reviewed the administrative, policy and legal aspects of the mortgage interest supplement scheme and this review was published in July 2010 in conjunction with the interim report of the mortgage arrears and personal debt review group - the Cooney report. The final report of that group was published in November 2010 and its recommendations were considered by the interdepartmental mortgage arrears working group under the chairmanship of Mr. Declan Keane whose report was published in October 2011. The Department supports the key finding of that group, which recommended these changes in the mortgage interest supplement.

When budget 2012 was introduced I announced this change and gave considerable detail. The amendment provides that a person shall not be entitled to the supplement unless, at the time of making an application, a designated person - usually somebody from MABS - is satisfied that the person making the application has engaged with his or her mortgage lender in order to meet his or her mortgage repayment obligations. In any debt settlement process the debtor and lender need to engage with each other. It is not possible to reach resolution or help the person who has fallen into debt and fallen behind in mortgage repayments unless the lender - the bank or mortgage agency - will engage. That is why both reports strongly recommended this approach which provides a mechanism for getting the financial institutions to engage with people who because they have lost their job or for some other reason are unable to meet their mortgage commitments. The purpose of the Department's scheme is to help them with the payment of interest.

The person is required to have engaged with the bank and entered into and to be complying with an alternative repayment arrangement in respect of his or her mortgage repayment obligations. The applicant must have completed repayments for a cumulative period of not less than 12 months. The underlying principle is to ensure the mortgage arrears resolution process, MARPS, functions alongside State supports. Many Deputies will have had dealings with the Money Advice and Budgeting Service, MABS. MABS is empowered to work towards the resolution of banking debts for individual families, which is what Deputies are concerned about. It is authorised to ask the borrower and the lender to engage in the mortgage arrears resolution process, which is something this Government, and indeed my predecessor, was trying to work towards. The arrangements are now there, in this legislation, to achieve this. I have had opportunities to visit quite a number of MABS offices around the State, including in Dublin, Sligo and Tralee, and I have talked to those who are at the coalface, helping people who are in arrears to negotiate restructuring plans with the bank. As Deputies know, the Government is currently preparing detailed, technical insolvency legislation to help people to keep their family homes and structure their way out of arrears.

Deputy Ó Snodaigh referred to the Free Legal Advice Centres, FLAC. I attended the conference it ran last week - I do not know if the Deputy was there - and I have had detailed discussions with FLAC and, I am happy to say, with the Northside Community Law Centre and other public interest law centres as well as with MABS, because their insight into dealing with debt is important. I have also spoken to people involved in the chartered accountants' voluntary assistance scheme and barristers who are involved in voluntary assistance schemes, because I share the concern of the Deputies that this must be dealt with. Unless we can ensure that lenders, that is, banks and financial institutions, seriously enter into negotiations and dealings with their customers, we will not be in a position to help those customers. Mortgage and debt resolution is a complicated issue, but at the basic level one must have two parties who are willing to engage so they can come to an arrangement that protects the family home while helping the individual who is suffering the weight of indebtedness. In most cases this indebtedness arises from the fact that people took out mortgages to buy properties at very high prices at the height of the boom, because they thought they were doing the right thing, and then found they had lost their jobs or another source of income and were no longer able to service their mortgages.

We have to work at persuading the lending institutions, in particular, to engage. This is what both groups dealing with mortgage arrears suggested, and the Department examined it in detail. The previous Government accepted the recommendation, as has this Government. It is critical to helping people who are in mortgage difficulties. This is what the amendment is about. I hope it will be of significant assistance because, in order to obtain the mortgage interest supplement, the lender will have to engage in the mortgage arrears process. Most Deputies will be aware that when people go to MABS with difficulties, the MABS officials help them work through the source of the difficulties, their income and what they have the capacity to pay. Simply to have an automatic commitment to giving mortgage interest supplement to the lender, even if the lender does not engage with the borrower, is not necessarily best practice. This provision is supposed to help people by ensuring they go into the mortgage resolution process. If Deputies have had opportunities for contact with MABS they will know that a feature of the recession is that people have complex debt. They do not have only mortgage debt but also car loan debt, credit card debt, credit union debt and, in some cases in which people were self-employed in the construction industry, business debt. In the latter case, they may have complicated arrangements about using their family homes as collateral for this debt.

Deputy Richard Boyd Barrett

What about jobseeker's benefit?

Deputy Joan Burton

Deputy Healy Rae spoke about the large volume of applications for social welfare supports, and a number of Deputies mentioned the issuing of the personal services card. The systems of the Department in a number of areas are currently being updated, as I mentioned in the House before in reply to parliamentary questions. I appreciate there has been a major increase in the volume of applications across all areas of social welfare. We started the roll-out of the personal services card on a trial basis last September, and we expect a large volume of cards to be issued this year - a couple of hundred thousand. My predecessor instituted the practice of requiring people to sign on in person at offices more frequently than was the case before the downturn, because of the large volume of new applications. In addition, payments are made via post offices because, particularly in local areas, the post office probably has a reasonable chance of knowing the people collecting the payments. Electronic signing will take place at offices; it will not be done remotely. We do not have that technology, but in any event I do not think it would be advisable. Signing on will be done electronically rather than on a piece of paper which then needs to be filed. This should improve the speed at which local social welfare offices can operate and result in better record keeping. We expect several hundred thousand of these cards to be issued this year, and the roll-out will be completed over a couple of years.

Anybody involved in the social welfare area knows this card has been talked about for at least ten years. Like Deputy Fleming, I was a member of the Committee of Public Accounts, and I remember departmental officials coming in many years ago to show us the card. When I became Minister, I wanted to know where this famous card was. Happily, last September we began the process of issuing cards, and it will be completed over a couple of years. Ultimately, everybody in the country will have one of these cards, because everybody gets a PPS number when he or she is born or enters the country to become a resident.

Deputy Sean Fleming

The Minister might clarify one point with regard to mortgage interest supplement. This provision will come into force on the commencement date chosen by the Minister. I understand that at the moment, a person with a certain level of income is eligible for mortgage interest supplement, through the Department, as a support. Are we now essentially giving the banks a veto, that is, the power to say whether a person can receive this supplement? That is how I read this. The Minister is assuming the banks will operate in absolute good faith. Up to now, a person with low income, say in the €20,000 bracket, whose repayments constitute a certain proportion of his or her income, became eligible for mortgage interest supplement based on his or her financial situation. Sometimes that supplement prevents people from going into arrears. It is important. Now the Minister is saying, if I understand correctly, that people will need to be in a forbearance arrangement, which implies they are already in arrears, before they can receive this supplement, and lenders will have to engage with borrowers. Up to now, this arrangement was based on a person's financial situation and was a matter for the applicant and the Department; now, the bank must be happy with the arrangement if the person is to receive the supplement. By definition, it has a veto. Some banks may be fully helpful. Today the Taoiseach mentioned that one bank will have 300 staff working in this specific area. The Minister mentioned the Cooney and Keane reports. The Minister for Finance announced there would be 100 designated people who would be intermediaries between the borrower and the bank because the two parties are not on an equal footing, financially, legally or when it comes to negotiations. That has not yet been implemented. Is the Minister now stating she is introducing a new arrangement? In my view, she does not believe Irish banks always operate in absolute good faith for the sole benefit of the poor distressed mortgage holder. If that was the case we would not be here today. I might still be over on the other side and the Minister might still be on this one.

I know of nobody in Ireland who trusts the Irish banks which have made a hames of their own operation, as many continue to do. They were given €5 billion by the Irish taxpayer as part of their funding. This was to trickle down to distressed mortgage holders but none of it is doing so. The banks got the €5 billion and want to bank it. Now they want the Minister to finance any arrangements they must make to help distressed mortgage holders. She is turning around and making an arrangement whereby the banks will be given a veto on people in the most difficult situations who may be trying to stay out of arrears and any forbearance arrangement. Is my way of looking at this not a valid way to put it? The Minister should not give me the benign view from the banks' side.

Acting Chairman (Deputy Peter Mathews)

Before the Minister responds to that, I point out that Deputies Ó Snodaigh, Murphy, Collins and Boyd Barrett wish to come in with supplementaries. Would she prefer to deal with Deputy Fleming's point or wait for further contributions?

Deputy Joan Burton

If it is helpful to the Deputies I will outline the process, briefly. They may be aware there is a code of conduct on mortgage arrears. Those of the Deputies who may have attended the very good free legal aid centres, FLAC, conference on this issue recently, or people who have worked in debt settlement, will know one must get the lenders to engage. At present, we are paying more than €50 million a year in interest to the banks. If the Department of Social Protection, which is very hard-pressed for money, is giving the banks more than €50 million a year, we are entitled to ask - and so am I, as Minister - that for this we should get engagement. That is how one does business with banks.

Deputy Sean Fleming

The borrower is the meat in the sandwich.

Deputy Joan Burton

It has been agreed that the code of conduct on mortgage arrears applies to the mortgage arrears lending activities of all regulated entities except for credit unions. By and large, the credit unions have agreed to this but equally, by and large, they do not offer full mortgages. In fairness to them, however, they have been putting mechanisms in place. People tend to have loans with credit unions which may be to furnish houses but the institutions are not mortgage providers. All regulated entities operating in the State have signed up to the code of conduct on mortgage arrears. The definition of these is a financial services provider, authorised, registered or licensed by the Central Bank of Ireland, or a financial services provider, authorised, registered or licensed in another EU country or EEA member state which has provided or is providing mortgage lending activities in the State.

To be clear to Deputies, the code applies to all financial providers which provide mortgage lending activities. Under the mortgage arrears resolution process, each branch, or office of a lender in the case of a lender who does not operate a network, must have at least one person with specific responsibility for dealing with arrears and pre-arrears cases and for liaising with the lenders' arrears support unit in respect of these cases.

Deputy Richard Boyd Barrett

From where is the Minister reading this?

Deputy Joan Burton

We have a structure which has been developed. However, one knows from talking to people that there is still a belief there is not enough engagement by the lenders. The mortgage arrears resolution process is to help lenders. I refer in particular to the work done by people in the MABS offices. Obviously, the mortgage, the roof over people's heads, is the most important element and the Government is seeking to ensure that remains the case. Why should the Department of Social Protection pay out large volumes of interest to lenders unless the lenders are engaging in the process? Engaging in a process is really helpful to people who are in debt. The authorised people in MABS are doing that and very detailed arrangements are being developed, particularly by my colleague, the Minister for Justice and Equality, Deputy Shatter. This should significantly improve and strengthen the process of helping people who, unfortunately, are in difficulty with their mortgage and whose lender must engage, for all the reasons different Deputies have mentioned. The lender has to engage with the process.

Deputy Aengus Ó Snodaigh

In her contributions, the Minister suggests there should be an engagement and that the entitlement would be gained after engagement. I do not know anybody in mortgage distress, on reduced working hours or unemployed, who would not willingly engage with his or her lender. The problem, as the briefing note suggests, is that for somebody to qualify for mortgage interest supplement there must be more than an engagement. That is the key point. One can engage all one likes with a bank but if the bank is not willing to enter into an arrangement, currently there is no requirement or obligation on the institutions to enter into one, or even to offer an alternative arrangement. If they refuse, they can write a little note and somebody will look at it and say, "You are bad boys," and so be it.

The Minister has presented this onus as a good thing. Here are the Minister and the Department forcing the banks, the lenders, to engage. Nobody denies the right of the Minister and the Department to force banks - given that we own most of them at this stage - to deliver for the people whose present distress, in many cases, they have caused. If there was an amendment in front of us stating that banks had to enter into, or were obliged to come up with an arrangement, then there would be something we could properly consider.

Another point is that arrears will continue to develop for 12 months before there must be engagement and compliance with a repayment arrangement. The latter comes afterwards. If one goes to the bank in the morning, the manager will not say, "There you are, you're all sorted, there's the arrangement". Anybody I know has had a number of months engagement with the bank prior to successfully coming up with an arrangement. The time in question does not involve only the 12 months but the period before, when the arrears are mounting. In some cases, people are 18 months in distress before they can get access to a mortgage interest supplement. This is restrictive and that is where the problem lies. If one could get mortgage interest supplement at an earlier stage it might deal with the problem. The Government has promised to deal with mortgages. This system is similar to the way the rent allowance scheme originally was, namely, a short-term solution to try to help to alleviate a problem until such time as a person found work or some other arrangement. That does not happen. That deals with the mortgage interest supplement.

Regarding the section dealing with jobseeker's benefit, if we have a proper debate on Second, Committee and Report Stage, with gaps between the Stages, I would have tabled parliamentary questions to find out the number of people affected and whether the people who will lose out are able to claim the family income supplement. The 30 hour rule means they qualify for the family income supplement because they are still working.

The Bill deals with commencement orders and my argument is that we should delay commencement of any of these sections without full knowledge. We have not looked at them properly. The Minister referred to the FLAC conference. People attended on my behalf because I was not able to attend. FLAC does laudable work and it has made presentations to my party on this Bill at short notice. The Minister acknowledged the insight of FLAC into people dealing with debt as invaluable but she is not listening to their recommendations, one of which is: "That no proposals to further limit Mortgage Interest Supplement be enacted, at least until an overall package of supports is available to ensure the protection of borrowers who have the capacity to remain in their homes with appropriate targeted support." FLAC is saying not to proceed with this because the Minister's proposal is limiting it. FLAC also suggests: "Recommendations to remove inappropriate restrictions on Mortgage Interest Supplement should be implemented immediately." and "Mortgage Interest Supplement should be targeted at people with sustainable mortgages who can potentially meet their mortgage interest payments with some assistance." The Minister should not proceed because the overall package of support is not available.

Deputy Catherine Murphy

No Member disagrees with the principle of the banks engaging but the manner in which it is occurring is the cause of concern. One of the major criticisms during the debate on the Keane report came from FLAC, New Beginnings and others who had recommendations to make but were not part of the report. Most of us pay attention to what they say because they are at the coalface. They reflect the issues raised with us at an individual level but with a broader view. Borrowers are already in a distressed situation because they are unemployed or underemployed. The need for mortgage interest supplement is growing because people are unemployed or underemployed and we have not managed to get more people back to work. This is leading to an increase in the requirement for social welfare payments. The borrower is asked to deliver proof. How can one prove the bank is engaging with the customer? Will there be sufficient people to-----

Acting Chairman (Deputy Peter Mathews)

There is a message prompt sound from someone's phone and it should be turned off.

Deputy Catherine Murphy

It is my phone, I am sorry.

Acting Chairman (Deputy Peter Mathews)

It is for Deputy Murphy's comfort.

Deputy Catherine Murphy

I imagine a situation where someone will lose a job after the Bill is enacted. Instead of having some level of support for the mortgage, the person must go to the bank and it depends on whether the bank engages with the person. Interest on the mortgage will increase every month while people are awaiting a decision. Is there a possibility of the decision being backdated? Will it start from 12 months on or from the time there is buy-in from the banks? None of that is clear. The briefing note is contradictory and other speakers will make the same point. The concern is that the individual is isolated. The person must go to the bank and must be considered on a one-to-one basis and much depends on how banks treat people. They may add the person to a queue or may deal with it in a reasonable time. People will become further distressed.

If the mortgage is restructured, does it have an impact on the amount paid in interest? The fact that it is a restructured mortgage has an impact on how much interest is paid because some interest will be deferred. That point is not clear.

Deputy Joan Collins

I am trying to tease out this point. The only time I came across mortgage interest supplement was when people had had an accident at work and were sick in the long term. They needed the short-term mortgage interest supplement to get over the hump. Now, it has become a long-term issue because of people losing jobs left, right and centre. They need mortgage interest supplement in order to keep going. My understanding is that the bank does not consider a customer to be in distress if the customer is paying the mortgage. The bank will not contemplate having a discussion about putting off two repayments in order to get over a hump. The banks will not engage unless the mortgage is three months in arrears. The original measure provided that the person had access to the mortgage interest supplement scheme for the first 12 months while the person is involved in the mortgage arrears resolution process and this has changed to a requirement on the person to be engaged with the bank or moneylender before the mortgage interest supplement is paid. A better way of putting that is that as soon as the person applies for the mortgage interest supplement, the banks must engage. As soon as the person has made the application, the person is in difficulty and interest must be paid. The Minister gave the banks the mortgage interest supplement and should oblige the banks to engage with the person or family. If I go to the bank tomorrow saying that I have a debt problem I am trying to get over, the bank will not engage with me if I am paying the mortgage every month. Most people are paying their mortgages until they are unemployed. Everything looks okay, even if they have some debt problems, until they find themselves unemployed. The person may be able to pay two or three months but then drifts into problems. Then, the person can look for mortgage interest supplement.

That is the way it should have been approached. That clarification should have been made. I presume anybody out sick for a short term will still be able to access the MIS as a natural process, although I know it is difficult to get it. The approach should have been that once a person applies for a mortgage interest supplement, on the basis of a job loss or whatever, the bank must engage with that person, because the person could still be paying the mortgage.

Deputy Richard Boyd Barrett

The more one looks at this, the more one realises how unacceptable it is that this debate is being limited in the way it has been and that these amendments have come forward so late leaving us with so little time to consider them and put forward further proposals. We are dealing with a serious issue that affects a growing and vulnerable group of people who find themselves with mortgage difficulties.

I agree with the Minister and others that anything we can do to put pressure on the banks to engage with borrowers and people in difficulty is the right and necessary thing to do. However, when we look at this, the onus is almost entirely on the borrower rather than the banks. Correct me if I am wrong, but under this provision, even if borrowers make an arrangement with the bank and comply with that arrangement, they lose a year's mortgage interest supplement because it is not paid until a year after entering an arrangement. Is that correct? Unless it is backdated, it is lost. The Minister should return to this and explain it, because it is certainly not clear here. Also, there are no corresponding measures in the legislation that will compel the lender to engage, but that is where we should put the pressure.

Deputy Collins put it best suggesting that would be the way to go. As soon as somebody finds himself in need of mortgage interest supplement and is granted such a supplement, the pressure should then be on the Government to force the banks to engage with the borrower, or perhaps it should give authority to groups like MABS to do that. We must think carefully about how to do this. We must in some way force the banks to engage. Currently, there is no obligation on the banks to engage or to engage in a reasonable way. Given that the borrower will not get mortgage interest supplement unless he has entered into such an arrangement and has been in such an arrangement for 12 months, the banks have the whip hand to compel borrowers to sign up to an arrangement that might not even suit them well. The conditions may be too difficult, too onerous or unsustainable for them. The banks will want as much as they can get and will want to pressurise the borrowers into agreeing to giving the bank the most it can get from them. The banks have the whip hand in that regard because the borrowers may feel under pressure to sign up to an unsustainable arrangement on the basis that only by doing so they will be entitled to mortgage interest supplement.

There are many problems in this regard and we have only had a short time to thrash them out and consider the full implications. While there is a reasonable aspiration on the part of the Minister to ensure that if we are paying money to the banks, some pressure is applied to the banks. However, it is highly questionable whether this amendment succeeds in that objective. It may have unintended and adverse consequences for borrowers in mortgage difficulties.

Deputy Joan Burton

I reiterate that the code of conduct on mortgage arrears has been agreed with all lenders and with everyone licensed to lend, whether in this country or in other countries in the European Union. However, the contract is between the mortgage holder or borrower and the financial institution. The relationship of the Department of Social Protection is not with the banks but with the individual in distress. These people in distress are being supported by my Department through the Money Advice and Budgeting Service to sort out their financial difficulties. This takes a lengthy period of time.

The development of the code of conduct on mortgage interest arrears, which was supported by all the parties in this House has been a very positive development and all of the lenders have signed up to it. Looking at the situation from a social point of view, the Department of Social Protection is paying more than €50 million this year to banks. Therefore, the Department is entitled to ensure that the banks engage. That is what this is about.

Deputy Richard Boyd Barrett

We agree with that.

Deputy Joan Burton

The best way to do that is to have the mortgage arrears resolution process managed by MABS. As the Deputy probably knows, most banks now have dedicated desks and sections to deal with customers in debt difficulties.

Some people seem to suggest that people should be able to walk into a social welfare office and get an arrangement, where the Department of Social Protection would simply pay over money to the banks without engagement in a resolution process. From my experience of business, I would not recommend that approach at all. I have worked in this area and I know that if someone is deeply in debt, the situation is often very complex. We must try to help people with their whole portfolio of debt so that they can stabilise the situation and get back on their feet and, most importantly, keep their family home. This is what the code of conduct on mortgage arrears does. While I am not the greatest fan of our two largest banks, in fairness to them they have worked hard at doing this and have built up dedicated staff to deal with the issues.

There will always be difficulty with regard to debt settlement arrangements, between getting a fair resolution that recognises the needs of the borrowers and their need to be kept in their homes and a recognition of the requirements of the lender. In many cases, to get that balance requires the wisdom of Solomon, particularly where people have lost their jobs. That is the reason for the work being done currently by my colleagues, the Minister for Finance and the Minister for Justice and Equality, on the creation of a new insolvency series of structures here to replace our old-fashioned bankruptcy laws. Previously, bankruptcy almost followed a person for life. Technically, bankruptcy is a 12 or 13 year process, but it follows a person for life. Other jurisdictions have a much shorter process. We have specific constitutional provisions with regard to property rights and lenders have property rights relating to mortgages. Therefore, it is a difficult issue to address in the context of the Constitution.

I am determined that the MABS Service and the €50 million plus that my Department spends are used in a way that ensure maximum engagement by lenders. At the same time, we must remember that the relationship of the Department is not directly with the lenders but with the individuals who have lost their jobs and suffered a loss of income. These people are entitled in law to receive support from the Department and the Department assists them. We want to do this in a way to ensure the banks will engage and in my view, this is a reasonable approach.

Deputy Richard Boyd Barrett

Will it be backdated?

Deputy Sean Fleming

I have a difficulty with the approach being taken by the Minister in this regard. The lender and the borrower are involved in a transaction and the taxpayers are also involved. The Minister must protect the taxpayers' money in this scheme. However, I note that people are getting into more financial difficulties because they may be unemployed. I note from the briefing note on this amendment that the Department supports the curtailment of the mortgage interest supplement scheme. I agree this scheme helps the banks but it is designed to help the individual who is in difficulties with mortgage repayments. The Department is supporting the curtailment of this scheme by way of this specific legislative provision.

The Government has made legal provision to suspend the mortgage interest tax relief at source for people in mortgage arrears. We are dealing with an 18-month period so the two sets of figures are not co-ordinated. The Minister may argue this is a matter for the Department of Finance. As soon as a person's mortgage interest relief is suspended or the mortgage interest supplement is stopped, the tax relief will also be suspended and this has to be taken into account in the overall mix.

As regards the code of conduct on mortgage arrears, both elements of the State support are designed to help the individual and legal provisions are in place to penalise the borrower in distress. The Minister has referred to codes of conduct regarding mortgage arrears and these are voluntary, non-legal and non-binding arrangements. The only reference the Minister made to the banks was with regard to the constitutional rights of the lenders. This House could have passed legislation any time since last November to ensure the banks would implement the Keane report recommendations rather than by means of voluntary codes of conduct. I do not accept the situation where the penalties imposed on the borrower are decided by legislation, for instance, the reduction of mortgage interest supplement and the abolition of mortgage interest relief but on the other side with regard to the banks, there is a voluntary code of conduct in place. It is as if the Government would not wish to upset the banks by imposing a legally binding code of conduct.

The legal force of law is being applied to mortgage interest supplement and it should also be equally applied to the lender so there is no more of these voluntary arrangements and codes of conduct which the banks like to operate. They will threaten the Minister by saying that a legally binding code would upset their balance sheets and that it might not find favour with the international bond markets. I want to see the Minister apply the same legal rules to the banks to make them come to the table rather than allowing them have a voluntary code of conduct.

Deputy Joan Burton

It is regrettable that Deputy Fleming did not make those representations to the previous Government because I do not think it engaged at all. I refer to the Cooney report and various other reports and I do not recall very much happening at that time. Perhaps the Deputy was not engaged in this subject at the time and he has become more engaged since he changed over to being in opposition.

A total of €50 million from the Department of Social Protection is being paid to the banks and we insist that the banks need to engage with and be part of the mortgage arrears resolution process. The voluntary code of conduct on mortgage arrears to which the Deputy refers, which has been signed by all the lending institutions, was arranged by his Government. All the banks are included. He did not open his mouth then. However, it is always difficult to find a resolution between a lender and a borrower which is fair to both. Under the Constitution one must be fair to both sides. My colleagues, the Minister for Finance and the Minister for Justice and Equality, are working very hard to change our insolvency laws because the biggest problem in our system is that in extreme situations it does not provide easy access to an insolvency arrangement. The Deputy probably shares my view that we want to ensure that people who are in mortgage difficulties are able to remain in their homes. This can only be achieved if the lender will engage with the process. The lenders are getting funding of €50 million from my Department and the price of that funding is that those lenders must engage in the mortgage arrears resolution process and they must agree to the code of conduct. In fairness to the lenders, they are doing this; it may not be to the degree we would all prefer but they have signed up. All the banks have specialised sections dealing with these issues. It is a very traumatic issue for individuals who have difficulties and I am confident that this amendment will assist in the process. It is a considerable sum of money, €50 million a year going in interest payments, interest supplements, to the banks. Some of the banks have requested the interest supplement to be paid directly to them once the resolution is agreed. This has been examined because some institutions have complained that in some cases the supplement has not been passed on to the lender by those who received it. This is a relatively small number of cases but that point has been made.

The Money Advice and Budgetary Service, MABS, is expert in this area. Deputy Fleming is a business person and he will understand that in a lending situation, both the lender and the borrower must engage with each other. We all wish to ensure that people keep possession of their family home and keep the roof over their head. I am confident this amendment will assist the process.

Deputy Catherine Murphy

On a point of clarification, what constitutes engagement in this regard? Can it be back dated? What amount will be paid in interest in the case of a restructured mortgage? The Minister referred to the banks asking that the supplement be paid directly to them. When people engage with the banks, the practice is that the banks will examine their personal and daily expenditure in detail and will make suggestions for changes. The banks will consider whether a person has cable television, for instance.

In many cases, people may have a very finite amount of money and even a small shock to an income can account for the reason people may not have paid the supplement to the bank in question. The key points I raise are when the arrangement kicks in and whether the level of interest will be reduced because of the restructuring. The Minister has a point of view but my point of view is that of the person with a mortgage difficulty who has become unemployed and who contacts me. I am looking at it from the point of view of the borrower. There are three different viewpoints in this and it is a question of coming to a satisfactory arrangement for all three. The least satisfactory arrangement, however, seems to concern people in mortgage distress.

Deputy Richard Boyd Barrett

The more one listens to this debate, the more one realises that it would not be a three-way problem if we just nationalised the banks we have recapitalised. We could then square the circle properly and force the banks, as they should be forced, to engage reasonably and fairly with people who are in mortgage difficulties primarily because of the banks' activities. However, the previous Government did not do so and neither will the current one.

The politicking between Fianna Fáil and the Fine Gael-Labour Government is beside the point and trivialises the matter, if the Minister does not mind me saying so. Regardless of what the last Government did, and I might agree with the Minister on those points, the key question applies to people in mortgage difficulties now and who might require mortgage interest supplement. They should not find themselves in more difficulties as a result of this legislation being passed.

We agree that the banks should be put under pressure to engage and the sum of €50 million is a significant amount, but does the Minister envisage a saving as a result of this? Is that budgeted into this matter? If so, it might colour whether we understand this to be a cut masquerading as something else. Is the Minister envisaging a saving? She is shaking her head, so maybe she could confirm in her reply that she does not anticipate any saving as a result of this measure.

Can she clarify one point concerning someone who loses their job who would otherwise have applied for and received the mortgage interest supplement, but now cannot access it and must engage with the bank to come to some arrangement? Is it correct that such persons will not receive mortgage interest supplements unless they have entered into an engagement and have complied with it for 12 months? Is that not what this amendment says?

Deputy Joan Burton

Yes.

Deputy Richard Boyd Barrett

Right. Therefore, in order to receive the supplement one must engage with the bank and be in an arrangement for 12 months before accessing the mortgage interest supplement. Will the interest that has built up in that 12-month period be paid and backdated? The borrower will lose out unless there is some obligation on the bank, as a result of this legislative change, to write off interest arrears that might have built up in the 12 months when that person was not entitled to mortgage interest supplement. Can the Minister clarify that issue?

I do not see why the Minister cannot accept that point. In order to be fair to the borrower, a loud and clear message should go out from the Minister to everybody who might lose their job and find themselves in mortgage difficulties, to engage with their bank. If, however, the bank will not engage reasonably and fairly, the borrowers should not worry because they have done their best by trying to engage in the process. They should be told not to worry about mortgage interest arrears arising because the Government will put pressure on the banks. If people are not reassured they will continue to worry if banks are not engaging fairly, reasonably or at all. The best way to do this is by putting pressure on the banks.

The Minister says her Department relates to the borrower, not the bank, but she also says the bank is the target of this legislation. As Deputy Catherine Murphy said, there is no way to see this other than that the borrower is being used as a pawn between the Department and the banks. Is that fair? Is it the right approach to use the borrower as a pawn if, as the Minister says, the target is the banks? Why not go directly to the banks instead of using the distressed borrower as a pawn?

Deputy Mattie McGrath

I am concerned about this pussyfooting around the banks. During the last Government's term, the Minister and I were members of the committee dealing with social protection. She was then a strong advocate for people in mortgage arrears and in receipt of social welfare generally. She was also very much opposed to the bank guarantee, so she is in a better position than most to know that the banks are not playing fair with anybody in this country. They lied to the last Government and have lied to the current Government. It is not fair to expect this from people in mortgage arrears because they are under enough pressure to keep themselves sane, and I do not say that lightly. They are trying to keep themselves together as a family unit with some degree of dignity. It is wrong to expect them to be used as pawns.

A code of conduct for the banks is like the rain outside today - it will be gone in an hour or two, and that is all the banks care about. They have no respect for the law, not to mind codes of conduct. This legislation is really pussyfooting around the banks and the Minister knows that better than anybody. She is in a position to know that the banks do not have respect for borrowers, the Government or anybody else. All they want to do is get back in business and cut their losses.

The Government brought in legislation to stop banks menacing people more than once a week, but there are ways around it because banks operate clandestinely. The public do not deal with the same person more than once since managers are moved on, so customers are on their own. The Bill before us should be as protective as possible of those in mortgage arrears who are most needy. If big businesses owe banks a lot of money, the banks will deal with them because they have no choice. While the sums involved are big to individual mortgage holders, they are only pawns in a game, as Deputy Boyd Barrett has said. It is not fair.

Codes of conduct are absolutely useless in dealing with the banking system. The public and the business sector are patently aware that codes of conduct, directions or ministerial speeches mean nothing, unless there is legislation to tie this down and oblige banks to act. The public cannot understand why no banker has yet been arraigned. We have had soundings from various Labour Ministers who are disappointed with the delays but what is going on is unthinkable. Ordinary mortgage holders and their families are suffering. In addition, they are bewildered by what the Minister said in opposition about the last Government and what is happening now. They feel they have no hope.

Deputy Joan Burton

I thank Deputies for their contributions. I wish to reiterate that this year the Department will spend more than €50 million, which in one sense will be for distressed mortgage holders, in mortgage interest. In fact, however, it is €50 million that goes to the banks. We could all have a debate about the wisdom of that, but basically an individual comes to the Department or MABS and gets into a mortgage arrears resolution process. To answer Deputy Mattie McGrath's point, we want lenders to go into the mortgage arrears resolution process because it means there will be a stop on the interest while one reaches an agreement with the banks about how to deal with the level of debt.

I have personally met at length with the Vincentian Partnership which has done quite a lot of work on fair living arrangements. I hope the banks would not suggest that people should live on less than the social welfare rate. As regards the case the Deputy is referring to, the issue is about people who have more means and how much they can afford to contribute. The rule on debtors was stressed by FLAC recently and I agree. If an arrangement is made that is too onerous on the debtor, and Deputy McGrath referred in particular to people in business, one is looking for blood from a stone as the debtor cannot pay that much. Most such agreements fail within a period of time because they are unrealistic. The mortgage arrears resolution process and the process about which we heard at the FLAC conference relating to other countries is about arriving at a reasonable amount. The Vincentian Partnership has done a great deal of work on suggesting guidelines on this which I believe it will put on the Internet. Deputy McGrath might be interested to know this work is based on what a family in a rural area might require because of transport requirements versus what a family in an urban area might require where there might be more access to public transport.

The object is for the Department to help people in mortgage arrears but also to force lenders to engage in the mortgage arrears process. Otherwise we will just be handing out money without any requirement for engagement and this does not make sense. I understand that Deputy Boyd Barrett is very sympathetic to giving out the maximum amount of money but money is very tight in this country. The €50 million we will distribute will come from people at work and we want to ensure we get value from the lenders in the mortgage arrears process. We do not have free amounts of €50 million to distribute nor do we have the money to distribute larger and larger amounts to banks. We need to give it in a way that helps people and keeps them in their family home.

Progress reported; Committee to sit again.