Whatever epitaph will be written about me as Minister, I am happy to remind the House that in the short time that I and the Government have been in office, we have delivered the largest increases in social welfare payments, particularly to old age pensioners. I have dealt with an issue raised continuously in both Houses, namely the over 56 years old self-employed pensioners. Senator Ridge referred to the difficulty people have on the death of a family member. I increased the death grant by 500 per cent in one fell swoop. There was a 40 per cent increase in the carers' package this year on that delivered last year – it is £63 million this year compared to £45 million in 1998.
In the three years I have been in office I have allocated resources far in excess of any of my predecessors, including, for example, the allocation of security alarms to the elderly. I introduced the farm assist scheme, and the president of the IFA said in the Irish Farmer's Journal that it answered all the requests farmers had made after 40,000 of them protested on the streets of Dublin. Indeed, I have overseen the largest drop in the live register in the history of the State. My record and that of the Government speaks for itself.
I particularly welcome the opportunity to discuss the report of the Ombudsman on the issue of late claims for contributory pensions because there has been a great deal of ill-informed comment about this issue, particularly in regard to the Government's reaction. I hazard a guess that many people who commented on this have not fully read the report. People should do so before they make any further comment.
I agree fully with the Ombudsman that the old position in relation to backdating claims was overly restrictive. When I took office in June 1997, shortly after the publication of the Ombudsman's first report on this issue in March 1997, I found that my predecessor, Deputy De Rossa, had already taken the first step to try to resolve this issue. I went further and introduced regulations in February 1998 which provided that full arrears could be paid in certain circumstances – I will outline them later – and, in line with the Ombudsman's recommendations, all late claimants receive a portion of the arrears to which they would have been entitled had they claimed in time.
The previous Government had only addressed the position of post-1997 claims leaving claims made before then, which had given rise to the Ombudsman's investigation in the first place, largely unaffected. I do not say that to score a political point, but because it is important. The Government and I felt strongly that it would be inequitable not to address this situation. Accordingly, I made a strong recommendation and the Government agreed to put in place a special payment of arrears to persons who had made claims before 1997 at an estimated cost of £10 million. I am glad that the Ombudsman acknowledged that as a result of the developments in 1997 and 1998 the issue is now "an historical problem".
To deal with the substantive issue, I emphasise that the report is not the opening chapter of a new problem, but the culmination of a process that has spanned a number of years. The recent report, as he said, represents an overall account of his engagement in this issue since 1985. It deals with the various improvements which have been made and represents an analysis of the manner in which my Department has responded to the Ombudsman's recommendations.
It is important to emphasise that the report does not include recommendations for further changes in the provisions affecting contributory pension applications. The Ombudsman stated that the issue dealt with in the report represents an historical problem which, in light of developments since 1997, "has now been significantly ameliorated". He also accepted that because of the improvements made since 1997, when this Government came into office, the pension arrears issue is "unlikely to continue to be of major concern" to his office and that he "intends this report to mark the end of his Office's involvement with the general issue of lost arrears of contributory pensions". The background to the Ombudsman's investigations and his special report lies in the requirement on people with pension entitlements to make their claims within a specified period and the fact that loss of arrears of pension arose from failure to make claims in time. This principle is not unique to Ireland and applies in most, if not all, social welfare systems. Our nearest neighbour recently tightened its rules in relation to late claims which are now considerably more restrictive than those applying in this country.
In recent years these provisions came in for criticism and generated a volume of complaints to the Ombudsman from pensioners who were adversely affected by them. These complaints culminated in a formal investigation by the Ombudsman under the Ombudsman Act. The Ombudsman's previous report of his investigation into these cases and of the general issues arising therefrom was published on 14 March 1997. In this report, the Ombudsman made a number of recommendations, all of which were accepted.
The report contained a number of recommendations of a general nature. These included changes or improvements which have been put in place and, in the case where the development of computer systems is required, provision is included in my Department's development plans for the computer systems supporting pension payments to accommodate the relevant recommendation. The general recommendations also concerned the use of the delegated authority to make extra-statutory payments in certain cases. For the information of the House, I will give some background to the provision of these extra-statutory payments which, by definition, are outside the terms of the law.
As I indicated earlier, the limitation on backdating late claims has been a feature of the system in question for lengthy periods. The application of these provisions prevented payment of pension arrears in some circumstances which were seen as very harsh and unjustifiable to the Minister and the officials of the time. To overcome these difficulties and to enable payment to be made in circumstances where they considered it just to do so, proposals were put to the Department of Finance and agreed by that Department over 40 years ago to deal with these cases on an exceptional basis by making extra-statutory payments.
It must be stressed that these arrangements were intended for use on an exceptional basis because they involved the making of payments outside legal provisions. Furthermore, the annual accounts carried details of the extent to which these arrangements were used. In the case of contributory pensions, this information was contained in the accounts of the social insurance fund which are laid before each House under the relevant Act. There was no secret about these arrangements. They were put in place as a result of an initiative which deserves to be commended and were used down the years in the way their authors intended to deal with cases where pensioners complained about loss of arrears and where the reasons volunteered came within the categories covered by the arrangements. It was never intended that the arrangements would have widespread use.
The staff of my Department who decide claims have been very unfairly attacked because they tried to use these arrangements responsibly. These officials have been accused by one commentator of being "uncivil and self-serving" and of being more concerned about the public purse than the pensioners' entitlements. Within the social welfare code, entitlements are determined by and in accordance with the legislation. It is a fundamental feature of our system that entitlements are based on legislative rights. Moreover, officials charged with administering schemes to which entitlement is enshrined in legislation cannot, and did not, behave in a cavalier manner in the application of the law. They have acted at all times with integrity and I totally reject unwarranted attacks of this nature which distort the truth and do a huge disservice to public administration.
My Department is acknowledged as a leader in the Civil Service in fostering a strong customer service culture over the past number of years. Staff have been to the forefront in this process and are providing a quality service that is fair, courteous, efficient and personal. The commitment by staff of my Department to high quality service is widely acknowledged in the Oireachtas and by our wide range of customers. As recently as the conclusion of this year's Social Welfare Bill, I was pleased to convey to my officials the glowing comments of Senators on all sides on the way in which my staff deal with them and their constituents. The excellent level of satisfaction with our service expressed in customer surveys and through customer panel groups is indicative of this commitment. The feedback from our customers specifically acknowledges the high levels of courtesy, politeness and knowledge displayed by staff with whom they have dealt.
The extra-statutory arrangements, involving as they do payments outside the law, were never an appropriate vehicle for a widespread response to the issue of late claims. The proper way to respond to demands for a more lenient regime is through amending legislation and the extra financial provision to meet the increased expenditure arising. This is how the Ombudsman's recommendations have been accommodated.
The recommendations of the 1997 report asked the Department to provide all late applicants, who are not receiving full arrears, with information on the circumstances in which pension arrears may be paid on an extra-statutory basis and also indicated that in the case of delayed contributory pension claims, the Department should, in the absence of an appropriate amendment to the regulations, exercise its current extra-statutory discretion to pay arrears of pension up to the level of full arrears where the delay arises due to an error for which the Department has some culpability; failure to pay the arrears would result in hardship for the claimant, and the delay arises due to some mental or physical incapacity on the part of the claimant, or as a result of events or circumstances, including situations of force majeure, outside the claimant's control and where to withhold arrears would be inequitable.
The report further recommended that the Department should, as a matter of urgency and no later than six months from the date of the report, give further and serious consideration to cases not falling within these categories with a view to mitigating the adverse effects on late claimants so that any penalty suffered would be more in proportion with the failure, whether through ignorance or bad advice, to claim on time. As I said, all the recommendations in the report were accepted. Claims outside the period covered by the new legislation in this area are being determined on the basis of these recommendations. Discussions are ongoing with the Ombudsman's Office on a number of cases in which there are outstanding complaints.
The Social Welfare Act, 1997, which was introduced by my predecessor, incorporated the provisions on late claims which had been in the regulations into primary legislation. The maximum period for which arrears of contributory pensions could be paid was extended to 12 months – it was previously six months – in respect of claims made after 1 January 1997. Regulations made by me in 1998 under powers in the 1997 Act provide for the payment of arrears beyond 12 months on a proportional basis. These regulations also provide for the possibility of full arrears in certain circumstances where cases are delayed due to force majeure, proven incapacity on the part of the applicant or departmental error and also to alleviate current financial hardship.
These provisions were designed to strike a balance between the need for effective management of the system and for appropriate recognition to be given to cases of genuine hardship or difficulty. The extra-statutory arrangements for late contributory pension claims were withdrawn in the light of the legal entitlement provided for under these regulations.
While these provisions represented an improvement on the previous position, I and my Government colleagues were concerned to ameliorate the position of the significant number of pensioners who had applied for pension prior to 1 January 1997. As I said, any changes made by the previous Government related only to post-January 1997. An estimated provision of £10 million was made for the payment of proportionate arrears of pension in the case of late claims made prior to 1 January 1997 in respect of retirement, old age contributory, widow's and widower's contributory pensions and orphan's contributory pension. Payments of proportionate arrears of pension due under these new arrangements is continuing. My Department is identifying the pensioners affected by this latest development and arrears are being issued automatically to those concerned.
I wish to comment on a number of specific issues raised in the Ombudsman's report. The first concerns the fact that time limits affecting late claimants were in secondary rather than primary legislation. The second issue is the related one that "There is no effective monitoring and supervision of secondary legislation by the Dáil and Seanad". As I stated, the relevant provisions have now been incorporated into primary legislation in section 32 of the Social Welfare Act, 1997. The report also mentions that while section 32 links the disqualification for late claiming to the prescribed time for claiming, it is the Minister and not the Oireachtas who defines the prescribed time.
The prescribed time for claiming is three months after the date of entitlement in the case of pensions covered by the Ombudsman's report. If claims are made outside this period, full arrears are payable for up to 12 months so no disqualification arises on contributory pension claims made within 12 months of entitlement. Where claims are delayed for more than 12 months, proportionate arrears are payable in all cases.
Regarding the related issue of adequate supervision of secondary legislation by the Dáil and Seanad to ensure that what is being done under its authority conforms with its intentions, the passing of the 1997 Act should put this question beyond doubt in relation to the issue of late claims. Under the authority given by the Oireachtas, regulations made by the Minister in this instance must be laid before each House of the Oireachtas and either House has the power to annul the regulations by passing a resolution to that effect within 21 sitting days. The initiative lies with each House under the provisions of the particular legislation.
I will be happy to facilitate the Oireachtas in any way possible in order to achieve meaningful supervision of social welfare regulations by it. The Joint Committee on Family, Community and Social Affairs has played and could continue to play a valuable role in this regard. Last year it had a useful discussion on the regulations on availability and searching for work. I will discuss this matter with the committee in the near future.
The third issue concerns the publication of discretionary powers. In accordance with the Freedom of Information Act, all guidelines used by staff in processing claims for social welfare benefits are available and published on the Department's website. All affected claimants are now being advised of the circumstances in which further arrears may be payable.
The fourth issue considered was the question of policy and whether time limits for late claims were compatible with the concept of social insurance. Elsewhere in his report the Ombudsman accepts that time limits should apply in certain circumstances. I understand his comments to relate to the old time limits, which are now significantly relaxed.
The fifth issue raised was in the form of a question – why was action not taken on this issue much earlier than 1997? For my part I made regulations shortly after coming to office to address the Ombudsman's complaint of lack of proportionality, by providing for proportionate arrears on a sliding scale for post-1997 claims. I also obtained Government approval for proportionate arrears in the December 1998 budget for pre-1997 claimants. To be fair to my predecessors, improvements cost money and must be considered in the context of competing demands and priorities at the time, both social and economic.
Finally, I note the Ombudsman's comments on the last budget's response to the overall problem. As Senators will be aware, the issue of late claims was only part of the pension issues facing me when I came into office. I am delighted to say that, in addition to the response on the late claims issue, I also received Government approval for additional expenditure of £18 million per year on a new pension for those self-employed persons excluded from entitlement to pension because they were over 56 years when social insurance was extended to the self-employed in 1988. In addition, as I have said on many occasions, I have asked my Department to examine the issue of pre-1953 contributions, which has also been raised with me by Oireachtas Members. I feel strongly about this issue. My officials and I are determined to ensure to the best of our ability that all genuine issues raised by widowed and eld erly people, including those issues brought to our attention by the Ombudsman, should receive the highest priority.
It is my understanding that the long-held objective of the Ombudsman on the issue of late claims was to ensure that the loss to pensioners would not be disproportionate to their failure to claim in time. I thus provided for proportionality in regulations made on the basis of the power in the 1997 Act. This power concerned claims made on or after 1 January 1997 and was designed to effect change on a current basis.
As I stated, I was concerned that earlier claimants were excluded altogether and I put to Government proposals, which I considered to be a reasonable response in the circumstances, to ameliorate the position. These improvements provide for proportionate arrears at a level approximately half that applicable to post-1997 claims. The arrangements have been widely welcomed by those benefiting from them. To date, arrears have been paid to 706 pensioners or personal representatives where they had been in correspondence with the Department or where the Department has identified that arrears are due. A total of £1.3 million has been paid to date. The Department's pensions computer system is currently being searched to identify additional pensioners who will qualify for proportionate arrears payments under these arrangements. I assure the House this is not an easy task.
It is a long-standing requirement of our legislation that claims should be made within a certain time and payment of arrears may be affected by failure in that regard. Similar provisions are a feature of legislation in other countries, as I said earlier. These restrictions are justified by the need to exercise supervision and control of claims, sound financial management and to control public expenditure. In his most recent report, the Ombudsman acknowledges that these concerns are genuine.
In an ideal world there would be no late claims. The expansion of the social insurance system and my Department's excellent information service mean that more people are aware of their entitlements. The next generation of information technology will allow us to go further and enable us increasingly to identify people who may have an entitlement to a contributory pension and to prompt them to make a claim. These developments will have a marked influence on the number of late claims received.
In the meantime, the provisions which have been put in place mean that all people with late claims now receive either full arrears, in the circumstances I set out, or a significant proportion of the arrears over the whole period of their claims. It is estimated that, as a result of the measures introduced in 1997 and 1998, about £3 million per year is being paid in respect of late claims. I am pleased to have been able to ensure that the recommendations made by the Ombudsman have been fully accepted. Work is well in hand to effect payment of arrears due under the initiatives I have outlined.
I thank the House for the opportunity to respond to this issue, on which there has been some ill-judged public comment. As long as I am Minister for Social, Community and Family Affairs I will do my level best to ensure that anomalies, particularly for pensioners, are ironed out. I have made a commitment to look at an issue which is dear to many inside and outside the House, that of contributions made before 1953. We are examining how we can handle that bone of contention.
