I welcome the Minister for Social and Family Affairs, Deputy Éamon Ó Cuív, and his officials. As it is the Minister's first time before the committee I wish him well in his new post and hope the Joint and Select Committees on Social and Family Affairs will work with him in the true spirit of mutual co-operation. The social and family affairs portfolio will be responsible for aspects of Government policy which affect many individuals and families in society in a profound way. I am sure we can work together productively and efficiently to address the issues of importance and thereby help to improve the quality of life for many people. I invite the Minister to commence his briefing on proposals for a national pensions framework and measures to combat social welfare fraud. Members may then ask questions. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
Measures to Combat Social Welfare Fraud: Discussion with Minister for Social and Family Affairs
Tá fíor-áthas orm a bheith anseo agus deis a bheith agam labhairt ar na ceisteanna tábhachtach seo. I am delighted to attend the meeting today to have an opportunity to respond to the report which was produced by the committee and to discuss the pensions issue.
The national pensions framework, which I will talk about later on, is the Government's plan for future pension reform, encompassing all aspects of pensions from social welfare to private occupational pensions and public sector pension reform. The prevention of fraud and abuse of the social welfare system and the avoidance of error is an integral part of the day-to-day work of the Department. It has a broad-ranging and comprehensive control strategy which aims to keep fraud and abuse to a minimum. I will begin by outlining the work that has been carried out recently in this regard.
During 2009 the Department carried out 750,000 reviews of social welfare payment entitlements. At the end of 2009 it recorded fraud and error control savings of approximately €484 million. The 2010 budget provides for an increase in the target for control and fraud savings for this year to €533 million across all the Department's schemes. There are more than 620 staff working in areas related to the control of fraud and abuse of the welfare system. Measures to control fraud and abuse include desk reviews of claim papers, home visits, the issue of mail-shots to selected customers, database checking and medical reviews in the case of illness payments.
Controls are exercised at the initial claim stage and at subsequent stages during the claim life cycle. Claims are reviewed regularly and on a targeted basis. Means-tested payments are reviewed at certain intervals or when there are indications that changes in circumstances have not been reported to the Department. Those in receipt of illness payments are called for a medical examination by the Department's medical assessors. Customers in receipt of unemployment payments are checked on an ongoing basis to verify continued compliance with such requirements as being available for and genuinely seeking work. The Department also has a programme of employer inspections to ensure accurate records of employees are kept; the correct class of PRSI is being deducted and remitted; employees are not concurrently working and claiming social welfare payments; and that employers are aware of their responsibilities with regard to social welfare and tax legislation and incentives available to employers.
Criminal prosecutions are taken against persons who defraud the social welfare payments system and employers who fail to carry out their statutory obligations. In 2009, 347 criminal cases involving social welfare recipients were finalised in court, an increase of 38 on the previous year. A total of 301 criminal cases were referred to the Chief State Solicitor's office for the initiation of prosecution proceedings. The control strategy is further strengthened through co-ordination and co-operation with other agencies, including Revenue, the Garda National Immigration Bureau and a range of Departments and agencies. These arrangements include data matching exercises and local joint investigation operations. The increase in the numbers claiming social welfare payments has put pressure on staffing resources and, in particular, on social welfare inspectors who are responsible for carrying out means tests on initial applicants and conducting reviews and inspections.
In response to this, new initiatives were introduced to target controls more effectively in the schemes. Control activity is focused on the prevention of fraud and error at the claim application stage. While this is the most cost-effective control mechanism, savings achieved in this way are not included in the published figures for control savings.
In addition, significant advances have been made to reduce the risk of overpayment through systems "talking" to one another. With the introduction of the new service delivery modernisation, a greater number of the Department's claims and payments are sharing a single technical platform. Technologies introduced as part of the SDM programme have allowed the Department to run specially designed programmes which interrogate other internal stand-alone systems and report on cases where there may be duplicate payments. Certificates issue to targeted customer groups by age, payment method, location or country for completion. Certificates that fail to be returned or are completed incorrectly may result in suspension and-or termination.
As a fraud prevention measure, the option to receive payments by electronic fund transfer was removed for new claimants for jobseeker payments. Border regions put an increased emphasis on control of claims from applicants with a previous address in Northern Ireland. One-parent family payment recipients with earnings are the subject of ongoing review. The Department is moving to a risk-based system of claim review, which it is hoped will achieve better value for money by focusing scarce resources on the most appropriate cases. This involves assigning and recording a risk rating at the award and review stage.
From 7 January 2010, members of the public can report suspected social welfare fraud anonymously to the Department by completing a new on-line form on the Department's website at www.welfare.ie. They can access the form by going to the “contact us” area of the website. The number of anonymous reports from members of the public has increased dramatically in the past year, with over 6,400 reports made at the end of 2009 to the control section in Carrick-on-Shannon, compared to approximately 1,000 reports made in 2008. Each report is followed up. Reports made in 2010 to the end of March totalled 2,729. The total for the same period in 2009 was 1,099, so it is up 248%.
In 2010, the Department will begin the phased introduction of a public services card, with key security features, including a photograph and signature, which will be used to authenticate individuals. One of the anticipated advantages of the PSC is that it will help to reduce fraud and error which result from the incorrect identification of benefit claimants.
It must be emphasised that the level of fraud on most schemes is very low. As reported by the Comptroller and Auditor General, the percentage of expenditure resulting from fraud identified in the Department's fraud and error surveys was 0% for pensioners, 0.1% for illness benefit, 0.8% for the family income supplement, 1.8% for child benefit and 2.3% for the disability allowance. Nonetheless, target control measures have been put in place for high risk schemes and for the customer segments in schemes where any form of high risk has been identified.
I assure the committee that the Department is conscious of the importance of having the appropriate controls in place. Welfare fraud is a serious crime and the Department is doing everything it can to crack down on people who abuse the system.
We will take questions on social welfare fraud first. The Minister will respond and we can then move on to the national pensions framework.
The increase in the target for the control of fraud this year is based only on the failure to achieve the targets set in the previous year. The target last year was higher, at around €600 million, so that increase is because the Department failed to make the target as opposed to a genuine increase.
There are 620 part-time staff who work in areas related to control of fraud. Is there a dedicated unit that tackles fraud alone? How many people work full-time in that unit? When the Minister says there are 620 people working in the fraud and abuse area, are all staff aware of the issues involved in fraud and keeping an eye out for it? What is different about those 620 people?
I feel many of the checks, while worthwhile and necessary, are not getting to the heart of the problem. People are being checked for illness payments by the Department's medical assessors. What checks are carried out to ensure they are not working anyway? That is where the difficulty lies. If a person gets through the medical assessment, he or she might have some sort of illness. There are those who get the payment who are also working. I am not suggesting such checks would be simple; it is not possible to walk into a supermarket and check if someone is on social welfare. The real difficulty is those who are not listed as employees because they are not paying tax and who receive social welfare. I have had builders coming to me who are fully registered but who cannot get work because they are competing against those on social welfare who are not paying tax. One person in particular has brought this up with me again and again. I put it to the Minister for Finance that there should be an amendment to address this issue. When someone applies for a mortgage, there are requirements for the builder to have certain documents. Is there no mechanism whereby a builder must prove he is registered for and paying tax? If that mechanism was put in place, it would be of assistance. The building industry is not what it was but one-off housing is still being built. Likewise, for electricians, plumbers and other tradesmen, we want to be sure that those doing the work are paying tax and are not in receipt of social welfare.
A crackdown in the Border areas was initiated by the Revenue Commissioners and the Garda. What level of improvement has there been? Anecdotally, we are still hearing stories where the numbers claiming are a lot higher than the population. The changes in payment levels to those under 25 may have made it less attractive but are checks still being carried out? Is there a mechanism to ensure checks are carried out in conjunction with the Department of Social and Family Affairs to ensure people are claiming where they should be claiming?
The former Minister made the point that the percentage of fraud reports that were correct was quite small. Has that changed? It would be interesting to see how many of the reports made following the 248% increase in reporting turn out to be true.
I ask the Minister not to fall into the same trap as his predecessors by reading out expenditure percentages. There is no point saying 0.8% or 1% when we are talking about an overall spend of €21 billion. We cannot afford to waste that amount of money.
I welcome the measures that have been put in place so far but the proposals in the report must be acted upon to achieve greater savings and to ensure those who are working and paying tax are treated fairly and those who are genuinely in need of social welfare get it.
I thank the Minister for his presentation. The committee should recognise the enormous pressures that have been placed on staff in the Department in recent years, given the difficulties involved in managing the deluge of new claims.
There has been concern in the past that some staff who were dealing with fraud had been diverted to processing claims. We are all shouting about the need for claims to be processed as quickly as possible, but the Department has a responsibility to pursue the issue of fraud vigorously to make savings. As the Government is making cuts to social welfare payments, there is an onus on the Department to do everything it can to tackle fraud and make savings in that area before cutting benefit rates. It is a false economy to divert staff from tackling fraud to processing claims.
The Comptroller and Auditor General's assessment of the Department's performance in recent years has shown that it is not good at managing fraud or managing the risks involved in paying out vast sums of public money. The Comptroller and Auditor General strongly recommended that the Department needs to establish baseline figures for the level of fraud in each of the schemes to measure its own performance. Targets have been set, but it is not clear where those figures come from. As Deputy Enright said, those targets have, extraordinarily, been revised downwards at a time when the Department is paying out a lot more money. Realistically, if the Department is performing well, the targets should have been increased year on year.
A much more calculated approach to tackling fraud is needed rather than simply plucking figures from the sky on an ad hoc basis. The Department needs to develop baseline figures for each of the schemes and measure its performance against those benchmarks year by year. That has, regrettably, not been done to any great extent since the Comptroller and Auditor General’s report was published.
On page 2 of the Minister's paper in response to the committee's report on fraud, there is a table that gives a breakdown of the surveys that have been carried out. However, there is no detail on the surveys that the Department carried out in 2009. Will the Minister fill members in on that?
There are no figures for the last two rounds of surveys. The numbers for fraud cases and "exp" — I am not sure what that stands for — are listed as zero. Will the Minister bring the committee up to date on the Department's performance in tackling fraud and its measuring of its own performance during recent years in light of the Comptroller and Auditor General's recommendations?
As the committee identified in its report, there is real difficulty with the manner in which the Department measures fraud and its performance in relation to what it recoups from fraud cases. If the Department detects that someone has been defrauding the system to receive jobseeker's payment, for example, it calculates its performance by projecting that that person may have continued to make that fraudulent claim for up to 15 months. It would be more realistic for the Department to identify people who were defrauding the system and measure the extent to which they have already defrauded it. That is a real figure and it is already available. Does the Minister intend to move towards that type of system?
The Comptroller and Auditor General's report identified that the Department's figures are not realistic. They are potential figures for the amount of fraud if the payment is projected forward. It would be better if the committee knew the level of fraud the Department had detected year by year. The Department could then provide members with further information on how much of that money it managed to recoup.
It is difficult to reach a conclusion on the Department's performance, given the way the figures are presented. The Department needs to move away from using projected figures. As Deputy Enright mentioned, the Department presents the figures in absolute terms. The figures are rising year on year, but they may not be rising as a percentage of the Department's overall expenditure. It would make much more sense for the Department to present those figures as such a percentage because that would give a much more realistic view of its performance in detecting fraud.
Given the Department's huge budget, even a small percentage of savings amounts to millions, and in some cases, hundreds of millions, of euro. It is important to concentrate on fraud and to divert resources to tackle it because the potential savings are enormous.
If we are to believe the findings in the committee's report and the recent media attention, the "Prime Time" programme in particular, there is potential for significant savings. It is always important to ensure fraud does not take place, but it is especially important in the current climate in which the Department is considering cutting people's benefits. Priority should be given to tackling fraud and making the maximum savings in that area.
The Minister mentioned that the Department has a staff of 620 devoted to tackling fraud. Those 620 people may in one way or another have some responsibility in relation to fraud, but it is misleading to say there are 620 people dealing with fraud all day, every day. Perhaps the Minister can give the committee a breakdown of that figure. My understanding is that the number of people in the Department's specific anti-fraud unit is much smaller than that. It is clear those processing claims have a responsibility to do so thoroughly to reduce the level of fraud. How many people are devoted exclusively to doing the follow-up work such as carrying out the fraud and error surveys that have been recommended?
The report identified the issue of one-parent family payments. How does the Minister intend to proceed on that? Three definite recommendations were made. First, it was recommended that the Department move towards a system that its predecessor, or the predecessor to that, recommended. A parental payment rather than a one-parent family payment would be made to poor families irrespective of whether there were one or two parents and whether they were in work or on welfare. That type of targeted payment helps children living in poverty, irrespective of their parents' circumstances. Does the Minister intend to proceed with that?
Second, how will the Minister improve the maintenance recovery rate in the Department which is already very low? Third, does the Minister intend to accept the committee's recommendation that there should be compulsory registration of the father's name on the birth certificate? What is the Minister doing to improve the matching of personal public service numbers of landlords in receipt of rent supplement? The Department pays out approximately €450 million of public money to landlords, but its performance in identifying those landlords and producing accurate details and PPS numbers so they can be followed up for tax compliance purposes has not been good. Is priority being given to that area in light of the significant amounts of public money involved?
I, too, wish to be associated with the comments about the Minister's presentation. Social welfare fraud must be controlled and addressed. The Minister mentioned criminal prosecutions. He said there are 347 cases of social welfare fraud and that 301 were referred to the Chief State Solicitor. How many cases go to court in a given year because it is only when that happens that the media will get an opportunity to highlight the serious action being taken? I am aware much work is being done behind the scenes but there are exceptions that must be highlighted to bring home to people that fraud is a serious issue and that it will be dealt with in a serious way.
Deputy Enright mentioned the position regarding the Border. There is a myth that people in the Border area act illegally at all times. I recall when the smuggling of cattle was at its height that the main people involved in taking cattle across the Border were from Cork and Tipperary. I apologise to anybody present who may be from those counties. It was not the local people who were involved in that activity.
A story about Ballyconnell got massive publicity. I appreciate the work of the Garda, the Revenue and everybody concerned but the fact is that the social welfare office in Belturbet had been closed and the area to be catered for had increased dramatically. It was not just the small town of Ballyconnell that the Ballyconnell social welfare office was catering for. It was a much larger area, yet the publicity gave the impression that people across the Border were abusing the system. The numbers caught proved that the problem was not as serious as had been thought.
There are other areas requiring much more scrutiny such as the one-parent family allowance already mentioned and the small builder who can buck the system. When somebody demands to be paid in cash rather than by cheque, one automatically knows that something is wrong.
There are two other aspects that may appear to go against the issue of dealing with fraud. I sometimes become concerned about the checks on recipients of illness benefit or some other benefits. Some of the people who come to my clinics are clearly quite ill, yet their applications for benefit have been turned down by medical inspectors who never met them. That issue must be dealt with in a compassionate way. I accept we must deal with social welfare fraud but we should not go over the top in that respect. I have a few cases about which I am extremely angry.
The Minister referred to the public services card. I came across a very sad case this week where a lady attempted to use her public services card to get €40, to which she was entitled, for her child who is in college but a note appeared stating that the number could not be traced. She had been getting her money in this way without any problem since the child went to college. She is now wondering if she will get her own social welfare payment on Friday using the same card. She called to the local office but it was unable to help her. In the current situation I am not allowed to contact anybody and, therefore, she found herself in a very difficult position. Somebody at local level must be able to deal with that type of problem. From time to time we find that our credit cards do not work in a particular machine. This is a similar case and we must have a fall-back option in that regard.
The difference is that if someone experiences a problem with a credit card, it may be because he or she has no money. In this case we do have the money.
There are other reasons as well.
In general I support the Department's efforts to control fraud. I have come across some dreadful cases of people who came to me for help. We must realise that if there is a great deal of money involved, it will take some time for the people concerned to pay it back. I appreciate the way the Department deals with genuine cases and gives them time to repay. There is no excuse for people lifting moneys to which they are not entitled while others who are entitled to it do not get their payments because of a technicality. The Minister will hear about that from other people.
I, too, wish to be associated with the warm welcome extended to the Minister and his staff. This is the first time the Minister has appeared before the Joint Committee on Social and Family Affairs and he will see that we are all very busy. We are delighted to have him present. We recognise the challenge he faces and wish him well in that regard.
I want to return to a topic mentioned by Deputy Crawford. Yesterday in the Dáil I had the pleasure of being in the Chair for the Minister's first Question Time, which I was happy to do. I was impressed by all the questions but one that struck a chord was from Deputy Enright when she asked the Minister the position with regard to staff in his Department, particularly in regard to the current public sector response. I have no problem with the staff in the Department of Social and Family Affairs. I have always said it was the one Department that dealt with queries promptly but, as Deputy Enright said yesterday and Deputy Crawford mentioned earlier, when we contact the Department it is not to annoy anybody. We are responding to cries for help from people who need answers and who cannot get through to the Department. I am not challenging the position of the staff except to say that it is causing a good deal of grief for people. I hope the Minister and his senior officials are examining ways, and I note he made that point in the reply in the Dáil yesterday, of solving the problem in conjunction with his colleagues in the Department of Finance. Deputies could take the attitude that we do not care but none of us wants to do that. We all want to represent the people who come to us with serious issues. I am glad Deputy Crawford and others made that point, and it was made well in the Dáil yesterday. It is a problem for all of us and we want something done about it because people are suffering.
Regarding the business before us, we appreciate the Minister's response. The committee spent a good deal of time examining all these issues. Our colleague, Deputy Shortall, was complimented by all of us on the manner in which this report was put together. We feel strongly about all the recommendations contained in the report. I hope the Minister will examine all the recommendations and, as far as possible, implement them in respect of the all-party approach we took.
The Minister and his Department must continue to tackle all types of fraud in an effective way. We must examine all the systems and create a position where people — and nobody should be offended by the phrase I am about to use — are not forced to cheat. It is important that the systems and programmes respond to the needs of people. There has always been an unemployment problem but in recent times people who were never previously unemployed have become unemployed and they find themselves facing challenges which were never a problem in the past. I hope the Department will continue to examine these issues and respond to them in a particular way.
The Minister spoke about the steps to employment programmes and referred to two pilot programmes that were held in Finglas and Tallaght. They are certainly two communities where the unemployment figures have increased. I live in Tallaght and unemployment there has increased hugely in the past year. Many of the unemployed are the new poor, people who have to respond to new situations. I hope the Minister will examine all the programmes in a radical and innovative way. People have approached all Members of the Houses about the programmes, for example, the back to education programme and how restrictive it is and the difficulties they have accessing the back to employment programme. I believe those programmes must take account of our new situation. It is a very unusual situation, as Jack O'Connor and others have reminded us. The Department has always been a caring one so I hope it will examine all these issues and respond in a positive way.
I refer to the recommendations and comments in regard to the issue of lone parents and how it is dealt with. If the late Seamus Brennan were here, he would want us to mention this because he took a particularly innovative approach in the Department. Unfortunately, not a large amount of progress has been made in that regard. The Minister already showed at the other meeting that he is prepared to examine everything and respond to requests from the committee and others. I hope he will examine the matter of lone parents and consider what can be done.
I know very little about the Border area. However, I am a member of the British-Irish Parliamentary Assembly with Deputy Crawford and others. I am happy to be a member of the body because it offers us an opportunity to share ideas and network with colleagues from across the Border and from what the Minister's grandfather used to call "the mainland". It is a good experience. Does the Minister envisage any potential for sharing information and dealing with issues with his colleagues in Northern Ireland? What plans does he have in that regard?
The Minister has been given a tough assignment at a difficult time for the economy. Social welfare is very important but, ultimately, the vast majority of people who are obliged to claim benefits from the State want to be re-educated, retrained and to get a job. I hope the Minister will continue to examine how they can achieve that. We will have other opportunities to discuss FÁS with the Minister, which will require a separate meeting. I also support the often-expressed view about the importance of MABS in the context of the subject we are discussing today, and I look forward to the Minister examining that. Incidentally, if he wishes to visit a good MABS office, I will be happy to bring him to the one on High Street, Tallaght, as I did with his predecessors. I am sure colleagues will invite the Minister to visit their communities as well. I hope the Minister will visit communities and see the situation for himself. I wish him well in his office.
I welcome the Minister's presentation. It shows there has been much progress in this area. However, there are two areas of concern. With regard to new claims for jobseeker's benefit and allowance, the Minister said that the prevention of fraud and error at claim application stage is very important and cost effective. The reality is that many people going to the hatches in local offices do not have a clue what their entitlements are or what is required of them. Those on the far side of the counter also do not know what are their entitlements. Sometimes, sheer frustration can lead to tension at the start of processing a claim. Having had experience on the operational side of the counter, I am aware that when the pressure is on, it is sometimes not always possible to be, as Deputy Crawford said, compassionate about it. There should be some type of mechanism to ensure that if somebody is dealing with a particular individual with whom they have a problem, there is a means of consulting a different individual. If it goes to appeal stage, the person obviously will be talking to somebody different but the initial stage of making the claim is where problems can arise.
The second issue relates to people on disability allowance who are allowed for reasons of rehabilitation to work for a certain amount of time. There are many disallowances now in that area. A standard letter is issued which states that the medical officer has made a medical decision, but further down the letter points out that this is an administrative decision and that there is no further appeal. There is a contradiction there. I understand that there must be constant vigilance with regard to people taking advantage of such a scheme but there is a contradiction in that area. It is very frustrating for people, particularly now when we are trying to keep as many people as possible in full-time or part-time employment. I am concerned about these two matters.
I congratulate the Minister on his appointment and wish him well with his new brief. It is a very important Department. I support the Department's work on fraud. People are horrified by the widespread fraud in the social welfare system so I welcome the Minister's initiatives and his presentation today. Much progress has been made. Like many people in this country, I was shocked by the "Prime Time Investigates" television programme some months ago. Did the Minister see it? If not, he should watch it. The programme concluded with a conservative estimate that 10% of all claims were fraudulent. Given that the entire social welfare budget is €22 billion, "Prime Time Investigates" claims that €2.2 billion of that is fraudulent payments. What are the Minister's views on that claim? If that money was returned to the coffers, it would not be necessary to take money from people who clearly need it.
The Minister in his speech said that most of the schemes have very low fraud rates. Could it be broken down into percentages for fraud and for error? I would also welcome a breakdown as between males and females, the breakdown countrywide and a breakdown according to age group, particularly with the disability allowance. That should be given in the report.
I will start with Deputy Catherine Byrne's question. I can get her the information on error versus fraud but we do not have the other information. We will give the Deputy whatever information we have but apparently we do not have it according to all the criteria she just mentioned.
The Minister does have information on fraud versus error.
Yes, but not necessarily on men and women and according to the other categories.
Does the Minister have the breakdown for disability allowance throughout the country and information on whether there are areas with higher numbers?
I do not believe so but I will give the Deputy whatever information I have.
The Minister said he has a breakdown between fraud and error.
Yes.
Those figures have not been produced. Does the Minister have them with him now?
We do not have them here but we can get the figures for the Deputies. I decided yesterday that we would give the committee a comprehensive briefing in the hope that it will be helpful. Rather than read it all out at this meeting, we want to give members a chance to look at the responses from the Department. The debate has been very useful. Since I started working backwards, we might as well continue working backwards. I thank Deputy Joe Carey for the support concerning fraud. I did not actually see the programme. I do not see much television because I am normally on the road. I do not accept, however, that the figures were accurate. I will refer back to the Ballyconnell matter again. We all know from our own personal experience that there is a certain amount of fraud. However it is wrong to say that it runs to 10% when one discovers that there is virtually no fraud with pensioners, who account for the biggest single social welfare payment. It is straightforward both for contributory and non-contributory pensions, and there are not too many ways one could cheat the system, even if one wanted to do so. It is important to detect and eliminate all fraud, if possible, although one will never have zero fraud. In fact, if one had that situation it would also make the schemes unworkable for the ordinary, honest, decent person. Therefore, we try to eliminate it to the best of our ability. We must try to detect all the fraud that can be eliminated and still have workable schemes for ordinary people. We have to strike that balance.
In my previous Department, I saw that where people tried to eliminate everything it made it impossible for those who are genuinely in trouble and need help to get services.
I was interested in what Deputy Cyprian Brady said about people not knowing their entitlements. Things have improved greatly with Internet access and information offices, but people often do not know their entitlements. A particular problem is that the weakest people often do not know what they are entitled to.
The Deputy also raised a very human issue of which we are all aware as practising politicians. A person who is easily upset may attend a politician's clinic, but one has to say, "Will you calm down? You'll get twice as much out of the system if you take it calmly, interact and listen to what you are told, even if at times you don't want to hear what you're being told". The appointment system has improved this dramatically by arranging a fixed time and avoiding big queues, thus providing more time to interact.
People can be difficult for all sorts of reasons, including being upset and not understanding the idea of a second official trying to calm them down to help them. Many Deputies have experience of the challenge of getting people to give the relevant information. In the past, I have made representations to the Department of Social and Family Affairs on behalf of certain people. Helpful officials have come back seeking additional information. A person may be entitled to a social welfare benefit, but I cannot persuade him or her to give me his or her bank balance or other information required before the payment can be approved. I always found that where people played fair, and there was no reason to suspect any wrongdoing, social welfare inspectors and officers are helpful and co-operative. I am sure they will continue to work on that basis.
I have seen letters concerning the issue of rehabilitative work, particularly when Johnny or Mary is told that the time is up. The scheme was that people got the work for a period, which was meant to rehabilitate them into full employment. When that time is up, the theory of the scheme is either to move into full employment or if the rehabilitation was not working then there was no point in such rehabilitative work. The theory is fine, although members of this committee are saying that certain people can do some work, but cannot get full-time employment in a very competitive economy. They cannot live without some kind of social welfare payment, so they need the scheme on a longer term basis. At present, the scheme does not provide for that. As I said in the Dáil yesterday, the partial disability payment is being examined. I do not want to jump out of the frying pan into the fire on this matter, so we must ensure that it would not be an advantage to be disabled compared to being unemployed. I want to examine that slight worry I have. If people could get a partial disability payment and also be employed, compared to being able-bodied and getting no payment, they would be at a disadvantage. They might find that the number of claims for disability or illness benefit might start going through the ceiling. I am to be presented with a scheme, so I will come back to this committee to use members' knowledge and tease out the issue in order to achieve the right balance. The current position is unsatisfactory but we want to improve the scheme rather than make it worse.
Deputy O'Connor referred to the Department continuing its services and the industrial dispute. I hope we can work with the social partners to get agreement. Obviously, it is up to individual union members to vote on the Croke Park agreement which has been drafted. I want to put on record the fact that there has been a de-escalation of the action since the Croke Park agreement was signed, and some problems that were there have been resolved. As I said yesterday, when front desks were not being manned, people were working in the back-rooms. Therefore, while we were losing on the swings we gained on the roundabouts. Generally speaking, we all want to work with our staff whose valuable work we recognise.
Deputy O'Connor raised an interesting point about not being forced to cheat. Having worked with unemployed people for a long time, this point is worthy of serious consideration. I am sure Deputy Crawford will empathise with me on this matter because he probably remembers, like me, the time when one had a small farm they took a euro for every euro earned on the farm. They then took a euro for the eggs, milk and turf one used in the house. A person might spend the year working on a farm, but social welfare took 100% of the takings. Effectively that was a 100% tax on small farmers, although the richest person in this country does not pay that. I spent years legitimately giving work to people and therefore they were not means tested. It became a life's mission to get people work, even if I could only get them enough work in the year to get them onto benefit, so they were not means tested. I was getting people out of what I considered to be the craziest situation. Of course, all that has improved over the years. Pharmacists came in at 70% and it was 50% for the REPS payment. We must be cognisant of the fact that if a system is totally penal, it puts people in an impossible situation. The rate of cheating will go up, people will feel more justified in doing so, and there will be less public outrage. In all my years of dealing with the social welfare system a lot has been done to improve things, but we must always examine new situations and how we can change schemes to make them fairer. Up to a point, there is no objective measure of fairness because what one person considers fair, another does not. Nonetheless, we must make schemes objectively as fair as possible, as well as being an incentive to work. If 100% of earnings are taken away, there is no incentive to work. Therefore we must incentivise self-help and activity, as everybody here would agree. That brings me to the question of the "new poor" — people who have gone from two incomes to one. Their lives were predicated on two incomes and they are not entitled to social welfare. That is becoming a major issue that we must examine and try to do something about.
I have a fixed budget and one of the ways of doing better for those in genuine difficulty is to reduce fraud in the system. I have very strong views on that. If I can make savings by tackling abuses in the system, and use those to provide places on schemes or jobs, it is a fair way to proceed. One gets a double win there in that one helps those who genuinely need more help and penalises those who are abusing the system.
I note that Deputy Enright raised this point on the issue of the small self-employed builder. That is probably one place we are totally vulnerable, if we all are honest here. It is difficult to cheat on the contributory old age pension but if one gets a social welfare payment on the basis of being an out of work plumber, carpenter, lorry driver, machine-hire operator or whatever, it is difficult to monitor whether that person is working.
The point there is the person is not——
The Minister without interruption.
I want to clarify a point with the Minister, that is all. It will make it more effective.
I noted the point Deputy Enright made.
The Minister is in full flight and I want to allow him continue.
I will come back to the specific issue Deputy Enright raised about contractors and small contractors. I am also saying that the other obvious way we are vulnerable is where somebody has a means of self-employment that fluctuates and if he or she got a great deal more work, the Department would not know. If one does catch him or her working, one does not know whether that was the part means tested. One of my thought processes in a general sense, which goes back to my view of farm assist, etc., is that to a certain extent perhaps the way we should deal with unemployment of persons who want to retain their right to be self-employed and still do not have enough income at present is to say we will give them a payment for time, in other words "you give me work, I will give you a payment and you can go off to do what you want in the evening when it is your own good luck". In that way we get services and legitimise people helping themselves. On the other hand, the total fraudsters who were always working 40 or 60 hours a week will not be available to give me the time because they will be working so hard it will not be worth their time, and they will disappear out of the system.
We must think laterally, and I am certainly doing much of that. I have been doing it for years but I have been doing it intensively the past few weeks now that I have an opportunity to change things. I would be very interested in the views of the committee.
I think that where people refuse to take up offers of work or placement on a scheme, there should at least be intensive scrutiny of why they are not available for work or placement on a scheme if they are saying they are available for work.
On a point of order, we have a long session coming up on the pensions framework and with all due respect to the Minister, he has many outstanding questions to answer on fraud. Maybe we could move ahead quickly with those.
Sure. On being asked where is the greatest possibility for fraud in this area of working and drawing, I tried to share my views as to where we might go.
On the Border, there is a memorandum of understanding with the authorities in Northern Ireland and in Britain. I understand there are quarterly meetings and joint operations. I certainly will take up Deputy O'Connor's invitation to visit Tallaght where I hope to meet people who interact with the system on a day to day basis.
Deputy Crawford asked how many cases go to court in a year. On social welfare fraud, there were 347 court cases. That was an increase of 38 on the previous year. I did not see the "Prime Time" programme, but I understand it stated there were more claiming than live in Ballyconnell. What it did not say was that the Ballyconnell area has a population of 14,000 and extends far beyond Ballyconnell, which is one of the reasons the programme might have made a total over-estimation of the fraud. Deputy Crawford knows the position as well as I do.
It was the former Minister, Deputy Hanafin, who made the point that there are more people claiming in Ballyconnell than live in Ballyconnell.
The explanation of the point is that there are not really when one adds up the total area.
On illness benefit cases, a problem with illness benefit is the all or nothing approach. Another problem with illness benefit is establishing the illness, but two people, depending on the type of job they do, might find that in one case the person could work with the disability and in the other case the person could not. The second problem always with illness benefit is to determine whether the person, based on education, work experience, etc., can continue to get work or not.
One of our problems is the issue to which I alluded earlier, it is an all or nothing approach. There are difficulties in that regard. There are many appeals being submitted on this matter at present and that is an issue.
On the public service card issue, if the Deputy gives me the details we will check it up.
On the issue of the diversion of staff into processing in claims, there is always an issue of managing staff. It would be wrong for us not to try to give people quick decisions. Obviously, we must use staff resources where there is greatest pressure at any one time. I also believe that the front line staff and every member of staff have a role to play in fraud and error detection.
The Comptroller and Auditor General has agreed to work on a committee to establish the baselines to which Deputy Shortall referred, and that will be going ahead. She spoke about a more targeted approach. There is a targeted approach but as I stated previously, we must look not only at eliminating the fraud but also at the schemes to see whether one can do much to eliminate fraud by amending them.
As stated in the briefing documents, there was no survey done in 2008 and 2009.
On the question about the calculations, the calculation forward and the calculation back, I accept that this is not an exact science. There are standard procedures used. One cannot say in any one case when they would have been found out, whether they would have continued on indefinitely, etc. One knows how much they got in the past, which is definitely a fact, but it is also a fact that it is as likely that they would have continued to claim whatever they were getting fraudulently if they were not caught at it. In one's savings one must put in some calculation as to the likely saving by virtue of the fact that they cannot continue to do what they are doing.
The Minister does not provide the figures for the amount of fraud to date that has been detected. That is the problem. If he could provide those figures, he could provide realistic figures on the recovery rate.
I do not know whether we can get Deputy Shortall those figures. If there are any figures, we will get her whatever we can get.
It is not a matter of the Minister getting us whatever figures he can. Why does the Department not measure fraud in that way?
In just the fraud saving to date and no calculation forward?
I refer to the savings to date, in other words, what the individual who is defrauding the system owes the State.
The basis of fraud detection is that you presume that if you did not detect it, they would have continued fraudulently. It is a legitimate exercise. I understand it is standard procedure, not only here but in other countries, that one makes some calculation as to what would have likely happened if one did not catch them.
When the Department takes a case to court to recover the moneys that have been claimed fraudulently, presumably it does so on the basis of what the person received, not on the basis of what he or she might get in the future.
Yes.
Then can the Minister present the figures in a way that shows what has been fraudulently received to date?
Yes. No doubt those figures are available. It would be incorrect to state that such is the limit of the savings on fraud because one must presume that if one had not detected the person, he or she would have continued claiming.
For how long does the Department calculate it then? Is it for the rest of that person's life?
Between 32 weeks and 136 weeks.
Why use that specific period?
There are standard procedures that are fairly generally recognised in different countries. We are following a fairly standard procedure of how this is done.
One of the problems with this is that it is like when the Garda states the detection rate of crime but one does not know the total number of crimes because people do not report crimes. One of the difficulties is that this is only a "guesstimate". Anyone who believes it is possible to supply accurate figures in respect of what would have happened if these people had not been caught is barking up the wrong tree. It is not mathematically possible to calculate such figures, it is a statistical exercise. There are standards laid down to which we adhere. I do not see how it would be possible, in mathematical terms, to be absolutely sure how long the person would have continued to defraud the system. We must, therefore, work on averages. In general, averages and statistics work quite well if the figures are sufficiently large.
Does the Minister accept that there is a problem with the figures that are available? It is standard practice that any organisation should have good indicators in place to measure its performance. This was a key issue that was identified by the Comptroller and Auditor General in respect of the Department's handling of fraud. We are aware that the figures presented by the Department, which are in the public domain, do not distinguish between fraud and error. The Comptroller and Auditor General has already identified that there is significant error in the processing and payment of claims within the Department. Therefore, the Department does not make the distinction to which I refer. Equally, it does not make a distinction in respect of likely future fraud and actual fraud that has already been committed. Does the Minister accept that there is a need to take an entirely new approach to measuring how the Department deals with fraud?
That is agreed. The Comptroller and Auditor General's office is involved in work to establish the baselines. Measurement is important.
The recommendation to the effect that the Department needs to carry out much more extensive fraud and error surveys in order to obtain a benchmark was made in 2006. However, the Minister has just indicated that no such surveys were carried out in 2008 or 2009.
It was only in 2009 that those surveys were not carried out.
At a time when the Department is paying out unprecedented levels of public money, the Minister states that no fraud and error surveys were carried out.
That was because the resources were deployed in paying those who were genuinely——
Is it not a false economy to divert staff away from fraud detection? Everyone recognises that there was a need for additional staff to be brought into the Department.
The Deputy should not misrepresent what I said. I stated that we did not carry out a survey. I did not state that we ceased trying to detect fraud. There are two issues that arise. The first is the actual elimination of fraud and the second is the counting methods used. We should be careful to separate these two issues. My primary concern is to eliminate fraud.
That could be done if performance indicators were in place.
The Deputy appears to be preoccupied with figures rather than with eliminating fraud and saving money.
The figures are needed in order that we might establish the scale of the fraud and evaluate the Department's performance. We cannot just adopt a scattergun approach. Performance indicators are required.
We have to focus on the elimination of fraud. Our multifaceted approach in this regard includes examining the various schemes to identify which are most liable to fraud.
We do not know which are most liable to fraud.
When I take strong action and state that people who refuse to partake in schemes or go to work will not receive their full payments, I hope the Labour Party will——
That is a meaningless statement.
——support me. This is the most effective way to proceed. One of the obvious areas where people will——
What the Minister has outlined does not relate to fraud, it would involve changing the system entirely. The purpose of this meeting is to discuss fraud. When the Minister brings forward the proposals to which he refers, we will consider them.
The most obvious way in which people defraud the system is by working and claiming.
Yes.
When systems to deal with that problem — which involve the taking of tough decisions — are devised, it will be interesting to see if the Opposition will support them. This is one of the clear ways in which one can eliminate fraud without being obliged to carry out any survey. Anyone who lives in the real world knows, as Deputy Enright stated, that it is in the area to which I refer that the system is open to fraud. This is not rocket science. Identifying fraud and measuring the levels that obtain is important. However, eliminating it is much more important.
We will be more than happy to discuss that matter when the Minister introduces the new system. The sooner he proceeds to introduce it the better.
I welcome the Deputy's support on that matter.
However, we want to discuss the subject matter of this meeting, namely, fraud. I will support the new system when it is introduced, but the Minister has to bring forward proposals in the first instance. In the interim, it would be good to discuss the report that is before us.
Exactly. That is what I am doing.
Will the Chairman indicate if there is a time limit regarding our use of this room?
No. However, I ask members to be reasonable because there is a great deal of business with which we must deal. Contributions should be as brief as possible. I afforded members a great deal of latitude in respect of their initial contributions.
In fairness, members kept their earlier contributions quite brief.
The Minister should be allowed to continue.
Members of the previous incarnation of this committee used to prefer comprehensive answers and would have complained bitterly if a Minister failed to deal with the issues. However, if the current members do not wish me to deal with the issues, that is fine.
As members are aware, there are proposals in place in respect of lone parents. These do not go as far as introducing a parental payment. However, the issue of imposing a single payment in respect of all people of working age is an interesting concept to which I will be giving consideration in the long term.
On improving the maintenance recovery rate, I would love to believe that there is a heap of money which could be recouped but I am not sure that is the case. However, we will continue to pursue any money that is available to be recouped. It is fine to state that there should be compulsory registration of fathers. However, it would first be necessary to identify fathers. The Deputy may have some suggestions to make in respect of how we might proceed in this regard.
I understand that 21% of landlords supply PPS numbers. I also understand that the names and addresses of all landlords on the rent supplement scheme are supplied to the Revenue Commissioners. Consideration must be given to this issue. There are interesting new possibilities looming in this regard in the context of NAMA——
No, there was a commitment——
Two years ago, the Committee of Public Accounts examined this issue and identified the fact that there is major leakage from the tax system as a result of the failure of the Department of Social and Family Affairs to procure PPS numbers from landlords in order to ensure they are tax compliant. Some €400 million in public money is going into the pockets of these individuals. The Minister is now stating that only 21% of landlords who are in receipt of rent supplement are actually providing PPS numbers.
The figure I was given in this regard is 21% but my officials inform me that it is actually 31%. I will check which figure is correct. I have only been in the Department for four weeks but I am of the view that the figure should be 100%. However, we would not want huge numbers of people to be forced out of their accommodation because their landlords were not prepared to supply PPS numbers. This problem was also faced by my predecessor.
Due to the existence of NAMA, I believe there is an historic opportunity to tackle this issue. We must work as quickly as possible but we do not want to cause major problems for tenants by insisting that their landlords should not obtain rent allowance without first providing PPS numbers.
Why should they not be obliged to provide PPS numbers?
Our relationship——
Why would the Minister not make it a requirement for landlords to provide PPS numbers?
There were under 50,000 rent supplement claims for 2009. If I stated that the — for argument's sake — 70% of landlords who have not supplied PPS numbers must do so by the end of May or have their payments revoked and if 20% or 30% of them refused to comply with my demands, then a corresponding percentage of tenants would be thrown out into the street. In such circumstances, the Deputy would be the first to state that this uncaring Government had been responsible for this eventuality and would be severely critical of me. I want 100% of landlords to supply their PPS numbers but I want to ensure that this is done in a way that tenants will not lose out and that the State will gain. Landlords must be compliant but we can only ensure that this happens over a period of time.
Very good.
It would be very good. However, the Minister's predecessor made a commitment to us on several occasions to the effect that by the end of last year the Department and the Revenue Commissioners would have put the relevant systems in place in order to ensure that it would no longer be the case that only 21% or 31% of landlords would have supplied their PPS numbers. The former Minister indicated that all landlords would have provided the relevant information by the end of December.
The names and addresses of landlords are passed on to the Revenue Commissioners who can engage in a process of data matching in order to pursue people.
On the last occasion that was attempted, the levels of matching achieved were abysmal. There is a low level of matching. There is a huge oversupply of rented accommodation and this is the time to move on it.
Absolutely.
We will watch the Minister closely over the coming months.
The Deputy will find no more willing person in the Dáil to pursue this issue relentlessly but I will not do it in a way that means the tenant loses. I will not hit vulnerable people and, therefore, I will——
This was identified as an important issue in the context of the loss of money to the Exchequer umpteen years ago and little progress was made in recent years.
I will make progress but I will not do it in a way that, which I keep repeating, means the tenant would be the loser. There is an historic opportunity now through NAMA to deal with this issue for once and for all and I will pursue how that might best be done with my colleague, the Minister for Finance.
A total of 300 people work full-time on fraud in the special investigations unit. They engage in data matching and so on and they are seeking new ways all the time to detect fraud and there are sophisticated ways to do that. Then there is the inspector of claim processing and so on.
Does the Minister expect to conduct fraud surveys in 2010?
There will be three, with one to be completed by the end of the second quarter.
Which schemes will be surveyed?
Jobseeker's allowance, lone parent's allowance and disability allowance. This comes back to changing structures to eliminate fraud. It is bang on where we are going. It is where the high risk is. There is major risk on some schemes while there is low risk on others. We have to change the structures where there is high risk as well as chasing people. The easiest way to eliminate fraud is to eliminate the opportunity. The same applies to the identification card.
Deputy Enright raised the issue of primary contractors, subcontractors and so on. C2s and so on are an issue and I will discuss this scene with the Minister for Finance. It is a little more complicated. Primary contractors might have paid all their taxes and so on but they were paying a subcontractor through a C2 who was paying through another subcontractor and so on. Collection of taxation is an issue, as is working while claiming social welfare payments. We must tidy this up.
The other issue is sole contractors who do house extensions or repairs and who have one or two lads with them and they get cash payments. That must also be cleaned up. One of the ways to challenge this is anybody who is claiming and who is self-employed should outline his or her hours and this would limit the opportunity. Some of them are highly skilled and they would give more than their value in work. One would get work out of them and they work the rest of the hours on a scheme, it would be legitimate and fair because they would be working for someone. If they get busy, the money they would make through self-employment would exceed any payment per hour on a scheme and they would naturally migrate off the schemes. If one's income started to pick up, there would be the temptation to continue drawing one's social welfare payment. Even if one is busy, one might not ring the social welfare office to sign off. If one had to list hours, there would be much more of a drive once one got busy again to pack up the welfare payment. We can go back. There is an entire scene here which must be examined.
The Deputy asked how many people are using the fraud telephone line. A total of 20% of the calls are legitimate reports, which means 80% of the calls do not have a basis to them.
Is this effective? If departmental officials are investigating every call and only one fifth turn out to be legitimate reports, would another method be more effective rather than having them on wild goose chases? I do not know the solution but the Minister might think about this.
I understand that in many cases a cursory check will establish whether there is truth in the report. This goes back to the issue of time versus return where fraud is concerned. The Deputy referred to €500 million and if I could get it would be 10% but I do not believe that to be correct. There will always be fraud. One tries to eliminate and reduce it and one also examines the schemes to make them non-fraud friendly. No Minister will ever stand up and say he or she has eliminated 100% of fraud because, unfortunately, people who engage in this are ingenious at finding new ways to perpetrate fraud. However, we must eliminate it cost effectively.