I approach this from different angles. The Department carries out fraud and error surveys in payments. At times it can be very hard to differentiate between fraud and error and whether a person culpably held back certain information. We all have had constituents in our offices telling us they did not understand the system. Sometimes one believes them; other times not.
Then there is the born loser who if they knew how to do it straight would have got as much as they did doing it illegally. Maybe I am a little softie in that I do not pass moral judgment on any of these people.
All Members have had the case of a person inheriting money that was not declared. Again, it was a case of people not understanding the rules or believing them a little penal, with which some of us would agree and others would not. Naturally, when an interest rate of 20% is being charged on capital, there will be two views on the matter.
We should try as far as possible to eliminate wrongful payments. There are two ways to do this, one of which is to police the system more. I have statistics for the checking of errors, fraud services and so on. The second way is to change the structure which may be facilitaing cheating. By changing it, one eliminates the opportunity to cheat. We need to identify the areas in which fraud is likely to occur. We are all aware that, despite having money in the bank, people will claim benefits. We will get the people concerned sooner or later, given that there is an effective system in place. While it would be better if we could recoup this money earlier, we get it back in the end because when probate is taken out, there is an obligation to make a declaration.
One of the main ways identified by which people engage in fraud is that they claim using two identities or child benefit payments at 15 post offices. Members will be aware of the game played in this regard. There is a simple answer, namely, the introduction of a high quality card providing for facial recognition, similar to a passport with a chip. This would be worth more than any number of inspectors running around trying to check up on people. Through the use of technology, we could tighten the system and close down the opportunities for abuse.
Another way identified by which people engage in fraud — I suppose this is understandable if one is tight for cash and under pressure, although it is not justifiable — is that they work and draw benefits at the same time. I cite as an example a self-employed carpenter who has hit hard times, is in receipt of benefit and takes on a job not expecting to have one the following week but who then gets another one the following week. The structure in place is wrong, as it is too tempting to do this. One would have to have an army of people policing everybody and every back kitchen being constructed. My general view is that self-employed persons would be much better off participating in activation schemes which would allow them to work at night, as long as they paid their taxes and PRSI. On the other hand, if one gives them approximately €204 a week and allows them to work for 19.5 hours, one receives a huge contribution for them and value for money; it is a win-win. In this way one structurally solves the problem of fraud in the system.
Another area in which it is obvious people are breaking the rules is that of cohabitation. It is advantageous because people receive two single payments and two rent allowances which is better than one full payment and a two thirds payment if one is cohabiting officially. I do not believe anyone can quantify the level to which this is happening. It was proposed that a single working age payment be introduced. The late Deputy Seamus Brennan introduced proposals that would have assisted in addressing the cohabiting rule, which is unenforceable. It is a difficult area to police. There are approximately 620 staff at local, regional and national level engaged on a full or part-time basis in the control of fraud or abuses of the social welfare system. This figure includes 392 inspectors. However, if the system easily lends itself to cheating, all of the policing activities in the world will not eliminate it. I am examining the areas wherein there is widespread fraud to determine why it is taking place and the motivations for it to see if we can change the system to make it easier for people to operate legally. Many years ago when tax rates were high, people cheated because the advantages of working in that way were so minimal.
I do not know what the level of fraud is, but I do not believe a saving of €2 billion can be made. If somebody could come up with a programme to save me €2 billion, I would take it on board like a shot because there is an awful lot I could do with such a sum. I will not go easy on those who cheat the system. I am examining the biggest structural areas which offer the greatest opportunity to engage in fraud. However, I do not believe there is that kind of money to be plucked from trees. We should try to keep things in proportion.
Tax cheating was mentioned. If one took it to the absolute letter of the law, it is fair to say the amount is mega . With no disrespect to anyone, there are many PAYE workers, not to mind self-employed persons, who are always the target in terms of tax cheating, who do the odd job, give grinds and so on who do not necessarily declare it on their tax forms. Technically, anybody who accepts a tip in a restaurant and so on and does not declare it for tax purposes is breaking the law. It is not only the big guys who are involved in tax fraud, to be puritan about this, although I am not making any judgments.
On social welfare fraud, one must keep a sense of balance and reality. We have all had to do this when confronted by a person who received an over-payment. The people concerned are not the biggest cheats in the world. In recent times I have received representations from Senators and Deputies about over-payments, asking if the Department can go easy on those concerned, as they cannot afford to pay and so on. While, on the one hand, I want to eliminate opportunities to engage in fraud and cheat, we must also keep a sense of proportion, as most of those in receipt of social welfare payments are not in the higher echelons when it come to cheating the State of major amounts of money. In this regard, it is interesting to note, when one looks at the number of convictions for social welfare fraud, that it normally involves small sums of money when compared, for example, to what we see in the newspapers for tax defaulters at the top end.