COMMITTEE OF PUBLIC ACCOUNTS díospóireacht -
Thursday, 18 Jan 2024

Chapter 17 - Actuarial Review of the Social Insurance Fund

Mr. John McKeon (Secretary General of the Department of Social Protection) called and examined.

An Cathaoirleach

Apologies have been received from Deputy Imelda Munster. The witnesses are very welcome. I remind all those in attendance to ensure their mobile phones are switched off or are on silent mode.

Before we start, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards reference witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. This means that witnesses have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Cathaoirleach to ensure it is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with any such direction.

Witnesses are reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against any person or entity by name or in such a way as to make him or her identifiable or otherwise engage in speech that might be regarded as damaging to the good name of a person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with any such direction.

Members are reminded of the provisions of Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

The Comptroller and Auditor General, Mr. Seamus McCarthy, is a permanent witness to the committee. He is accompanied this morning by Mr. Ronan McCabe, audit manager at the Office of the Comptroller and Auditor General.

This morning we are engaging with officials from the Department of Social Protection to examine the following matters: the appropriation accounts for 2022, specifically Vote 37 - Social Protection; the Social Insurance Fund for 2022; and from the Report on the Accounts of the Public Services 2022: chapter 13, regularity of social welfare payments; chapter 14, ex gratia payments of €1.4 million to social welfare branch managers; chapter 15, raising social welfare overpayments; chapter 16, recovery of welfare overpayments, and chapter 17, actuarial review of the Social Insurance Fund. It is quite a big agenda. The committee has flagged the classification of employment for contribution purposes and the financial implications of misclassification of workers as specific areas of interest.

We are joined this morning by officials from the Department of Social Protection: Mr. John McKeon, Secretary General; Ms Teresa Leonard, deputy secretary general; Mr. Niall Egan, assistant secretary, corporate; Mr. Liam Daly, acting assistant secretary, control; and Ms Philomena McShane, chief accountant. We are also joined by the following officials from the Department of Public Expenditure, National Development Plan Delivery and Reform: Mr. Robert Scott, principal officer, and Ms Ivana McGarr, assistant principal. You are all very welcome.

I call the Comptroller and Auditor General, Mr. Seamas McCarthy, to make his opening statement.

Mr. Seamus McCarthy

Go raibh maith agat, a Chathaoirligh. It is a broad agenda this morning. As members are aware the Department of Social Protection operates a wide range of income support, welfare and labour activation schemes. Expenditure on the schemes is divided between two accounts: the appropriation account for Vote 37 and the account of the Social Insurance Fund. The Vote account is funded mainly through direct Exchequer issues. In contrast, the Social Insurance Fund is financed mainly from pay-related social insurance contributions.

The Department's overall expenditure on scheme payments in 2022 totalled nearly €23.9 billion. This was down from the €29.6 billion expended on schemes in 2021 reflecting mainly the tailing off of Covid-19 supports for workers. The reduction in that area was offset by significantly increased spending on State pensions, which was up 5.7%; on illness, disability and carers, which was up 10.6%; and on supports for children, which was up 10.6%. Fuel allowance payments in 2022 amounted to €576 million, which was up 82% from 2021. The Department's expenditure on administration totalled €696 million in 2022. This included staff salary costs of €329 million, payments for agency services totalling €195 million, and payments for medical certification totalling €44.6 million.

The audits concluded that the accounts of both the Vote and the Social Insurance Fund properly present the transactions for 2022, resulting in clear audit opinions in both cases. However, I drew attention in my report on both accounts to the likelihood of a material level of irregular payment on welfare schemes. This is a concern that arises each year and the basis of that concern is explained in chapter 13.

An excess payment arises where a claimant receives a social welfare payment to which he or she is not entitled or the level of payment exceeds his or her entitlement. Depending on the circumstances, when the Department identifies an excess payment, it may seek to recover some or all of the amount overpaid. The total value of overpayments raised in recent years has been relatively stable, in the range of €100 million to €125 million per annum.

Chapter 15 reviewed the Department’s processes in place when raising scheme overpayments. The examination found that there is considerable variation between schemes in the proportion of overpayments being raised and that, in some cases, there is insufficient documentation of the rationale for the deciding officer’s decision as to whether to raise overpayments. The report also recommended that the Department seek further opportunities to engage with claimants to make them aware of their responsibilities to inform the Department of any changes in their circumstances that could affect their payment entitlements.

Chapter 16 focused on the Department’s debt recovery process. At the end of December 2022, the Department had total outstanding overpayment debt of €495 million. The examination found that the key factors that determine the success of the Department in recovering welfare overpayments are the age of the debt, whether the claimant is in recent of a welfare payment, and the value of the debt. I recommended that the Department carry out a formal review of the reasons debt may not be recoverable in an effort to reduce the requirement for debt write-offs in future periods.

The report also recommended that the Department expedite the raising of overpayment debt arising from excess payments issued under the pandemic unemployment payment, PUP, scheme. The Department has estimated that there are a further 20,000 overpayment cases to be raised with a potential recovery in the region of €70 million. These cases relate to claimants receiving PUP during a period that overlaps with a period of employment.

Social welfare branch offices are privately managed by branch managers who operate under what is called a contract for services with the Department and who meet their costs from payments received from the Department. The remuneration terms of branch managers’ contracts were revised in 2018 and were sanctioned by the Department of Public Expenditure, National Development Programme Delivery and Reform to continue only until 2020. The Department continued with the same remuneration terms in 2021 and 2022. It explained that it assumed the sanction automatically continued to apply due to the circumstances imposed by the Covid-19 pandemic.

In addition, the Department made ex gratia payments totalling €1.425 million to 56 branch managers in 2022. These payments were over and above the contract terms with the branch managers and, under public financial procedures, required the specific approval of the Department of Public Expenditure, National Development Programme Delivery and Reform. However, that approval was not sought.

Turning to chapter 17, the latest statutory five-yearly actuarial review of the Social Insurance Fund projects that there will be an increasing annual shortfall in the fund from 2034 to the end of the projected period, which is 2076, and that on a current policy basis, substantial Exchequer subventions will be required in the long term to meet ongoing scheme expenditure shortfalls. The review projects a shortfall of €10 billion a year by 2050 rising to €16 billion a year by 2060 and €20 billion a year in 2070. It is interesting to note that when the projections of prior statutory reviews are compared with outturns, the fund appears to have performed better in the past decade than was previously projected, notwithstanding the unanticipated impacts of the 2008 financial crisis and of the Covid-19 pandemic.

Finally, I drew attention in my report on the Vote account to a material level of non-compliance with procurement rules as disclosed by the Department in the statement on internal financial control.

An Cathaoirleach

As Mr. McKeon has quite a long opening statement, could he summarise it?

Mr. John McKeon

I thank the committee for inviting me here today. We have eight matters to discuss, as signalled in the letter. I am joined by a number of officials from the Department. I set out their details in the letter I sent to the committee. With the Cathaoirleach’s permission, I may rely on assistance from my colleagues in addressing some of the questions that members may raise.We also sent the committee advance information we hope has been useful.

Before turning to the matters tabled for discussion, I will give the committee a short statement of the Department's operations in 2023. In prior years I spoke about how the Department has responded to the successive crises of Covid-19, the war in Ukraine and the sharp increase in inflation. While these pressures, particularly Covid-19, have abated significantly during the year, the Department continued during 2023 to devote significant energy, time and resources in response to the Ukrainian crisis and inflationary pressures. For example, staff from the Department continued with their colleagues in the other Departments to provide integrated reception services to people fleeing the war in Ukraine. To date, we have issued about 103,000 PPSNs, 75% of which are to women and children. We estimate that about 80,000 of these people remain in the country. We also processed about 60,000 claims for income supports and developed and implemented a new scheme entitled the accommodation recognition payment, which is now being availed of by more than 8,000 families hosting about 17,000 Ukrainian refugees. We have also offered employment supports and services to Ukrainian adults, of whom about 35,000 attended nearly 70,000 one-to-one engagements with our case officers. A total of 8,500 Ukrainian refugees are also being supported by our employment service partners, with a further 8,000 referred to programmes such as community employment, back to education, and Tús. Revenue records indicate that about 17,000 Ukrainian refugees are now in employment. Total expenditure to date on welfare supports and services to Ukrainian refugees to the end of 2023 is provisionally estimated at about €650 million. The Department and its staff take pride in this level of response and believe that it acts as testimony to Ireland’s willingness, even in the face of the constraints on our own services, to step up and offer a helping hand to others in need.

As I stated last year, the war in Ukraine exacerbated an underlying trend in price increases that had their roots in the monetary expansion implemented in response to Covid-19 and in supply chain disruption coming out of the pandemic. From a social welfare perspective, the Government’s response entailed a combination of base rate increases and one-off measures, the combined impact of which has been shown by the ESRI to substantially cushion people on low incomes from the effects of inflation. In the period since 2022, the Department has made 18 separate one-off payments with a total value of about €2.4 billion involving just under five million individual payment transactions. While there are differing views on the appropriate balance between base rate increases and one-off payments, the approach taken to date has increased incomes of people reliant on welfare by more than an inflation-adjusted amount, with a significant proportion of the increase timed to coincide with the winter-spring period when cost pressures are highest.

In addition to the exceptional demands relating to Ukraine and inflation, the underlying core work programme of the Department has also been extremely busy. During the year the Department continued the development of the auto-enrolment pension system and implemented a significant package of reforms to the State pension system. The Department also consulted on and secured Government approval in respect of a new pay-related benefit for jobseekers and a staged increase in social insurance rates, with enabling legislation referred for pre-legislative scrutiny. Legislation has also been prepared and published to exempt child maintenance payments from means tests and, very recently, to change the welfare arrangements in respect of Ukrainian refugees.

With regard to income and employment supports for people with disabilities, the Department published a report to improve the take-up of the reasonable accommodation fund services. It has also published a Green Paper on reforms to long-term disability payments, which is currently out to consultation, and has started a procurement process to regularise and expand the delivery of employability services for people with disabilities.

The Department undertook and published a mid-term review of the roadmap for social inclusion and will shortly do likewise for the Pathways to Work programme. The level of demand for our core services has also increased. Applications in 2023 across all of our main schemes are up on average by more than 32% compared with pre-Covid levels. Notwithstanding this level of increase, we have maintained the level of service at pre-Covid levels. This is due in no small part to the dedication of our staff and their willingness to adapt to new ways of working, including remote working and online service delivery. The Department has processed in excess of 7.5 million transactions via our online platforms in 2023, up 25% year on year.

The Comptroller and Auditor General has spoken about the accounts. I will leave that part of my statement for the members to read.

Turning to control of expenditure, chapters 13, 15 and 16 all relate to overpayments. In other words, cases where beneficiaries received a payment to which they were not entitled or in excess of the amount to which they were entitled. As in previous years, chapter 13 sets out the results of the control surveys conducted by the Department to identify the risk factors leading to such payments. The chapter makes no recommendations but does note that, on the basis of the survey results, the level of overpayments is material.

The Department accepts this conclusion but, as before, we note that the overall level of overpayments across all schemes, estimated at 2.9% to 3.8%, is in line with, or slightly better than, the overall level of overpayments reported by equivalent organisations in other states. For example, the comparable figure for the Department for Work and Pensions in the UK is between 3.6% and 4%. This is not to say that we can be complacent. We always have to be mindful to strike a balance between, on the one hand, designing and managing large-scale service processes that are reliable and effective for the overwhelming majority of people and, on the other, implementing controls and checks to assure payment and service integrity. We are mindful in doing this that our primary purpose is to support people who need support and that we cannot pursue the elimination of error or fraud at the cost of unreasonably denying entitlement to service or frustrating access to that entitlement.

Chapter 15 deals with the issue-----

An Cathaoirleach

I advise Mr. McKeon that he is over time. I ask that he summarise the remainder of his statement.

Mr. John McKeon

There are eight different issues to discuss, as I set out in the letter I sent, which is why it is taking a while. We have accepted the recommendations by the Comptroller and Auditor General in the various chapters. We are very conscious in accepting them, particularly in respect of overpayments, that we must have regard to fairness and equity. The Ombudsman published a special report on overpayment recovery in 2019 that emphasised the need not just to take an empathetic approach but to trust in the judgment of our individual officers when they make an overpayment decision and a decision about how it should be costed. We always must keep this in mind. We cannot just focus entirely on minimising the rate of error or maximising the rate of collection. We have to do so mindful that the people we are dealing with are people on welfare or who have very recently been on welfare.

With regard to the actuarial review, the figures are very stark. They point to the issues that will arise for future generations if action is not taken fairly soon. The Government has decided to take the approach of increasing PRSI rates as the means of addressing forthcoming deficits. That will start in 2024 with an increase of 0.1% in all rates of PRSI, which is the equivalent of about 90 cent a week for the typical individual.

Branch managers, on whom there is a chapter, have been in place since 1909, before the foundation of the State. They deliver a very important service for us. The exceptional payment we made to them in 2022 was entirely justified in light of the inflationary pressures at that time, the influx of Ukrainian refugees and the fact branch managers, who run small, mainly family-run, businesses, did not have access to the business supports from the Department of Enterprise, Trade and Employment. I am entirely satisfied that the payment was in order.

With regard to classification for PRSI purposes, I repeat what I said before, which is that the issue of misclassification is not as significant as people perhaps think it is. The data does not show that it is. That does not mean we do not take it seriously. We received a number of recommendations from this committee previously, all of which we have implemented. We have increased the number of resources in the Department dedicated to getting to grips with employers who are misclassifying workers. We are making progress. We must bear in mind in all this discussion that workers' main interest is in their employment rights, not their social insurance. That is our experience. Their social insurance benefits are pretty much the same nowadays whether they are employed or self-employed. In fact, reclassification from class S to class A can, in some cases, reduce people's entitlement. Workers' main interest is in their employment rights, which is a matter for the Workplace Relations Commission. The Supreme Court indicated in the recent Karshan judgment that the determination of employment status for social welfare or tax purposes does not necessarily translate to employment right purposes. The committee needs to be aware of that.

If I may, I will conclude with three points. The first is to acknowledge and pay tribute to the staff of the Department. Their response to the Covid, Ukraine and cost-of-living crises has been phenomenal. I am proud to serve and be associated with them. They demonstrate the best in public service values.

The second, and perhaps most important, point I make, and I try to say it every year, is that, as a Department, we are conscious that we must protect the welfare of pensioners, carers, lone parents, people with disabilities and others who are reliant on welfare payments. That is both in their interests and in the interest of wider society. A key determinant of economic and societal progress in developed economies is how income is distributed. It is important for people to have the wherewithal not just to subsist but to engage and actively participate in society. We strongly believe in and will continue to argue the case for seeing expenditure on social protection as an investment in social cohesion and human capital. It is an investment that is vital to the welfare and development of all people in our society, particularly, but not just, those in receipt of our payments.

Third, it is important to acknowledge that we are not a perfect Department. We do our best but we make mistakes. Given that we make 90 million payments a year, even a small percentage of error has a big impact. We are very conscious of that. We are always open to challenge and critique. We welcome this examination by committee members because it helps us to improve our services year on year. I thank the Chairman and members.

An Cathaoirleach

I thank Mr. McKeon. The first member I call is Deputy Burke. He has 15 minutes.

Deputy Colm Burke

I welcome our guests and thank them for their presentations. Mr. McKeon gave a figure of 103,000 for Ukrainian arrivals but said that number is now done to 80,000. What is the evidence for a reduction of 20,000-plus? Are there particular reasons he has come to that conclusion?

Mr. John McKeon

It is an estimate. Obviously, we do not track people's movements but we do know how many people we have issued personal public service, PPS, numbers to and we know how many of them are making employment returns to Revenue and how many are in receipt of welfare payments from the Department. When we add up all the people making payments to Revenue and all the people in receipt of payments from the Department, compared with the number of PPS numbers issued, there is a gap. We estimate that approximately 20,000 have left. The CSO has also produced an estimate using its own figures and it is the same figure of about 20,000.

Deputy Colm Burke

How do we know people who are drawing payments are still in Ireland?

Mr. John McKeon

Most of our payments to Ukrainians are made at post offices. They have to physically collect their payment. They have all been registered with the standard authentication framework environment, SAFE, system and have a public service card, which they must produce when collecting their payment. If they have left the country, they cannot physically present for payment.

Deputy Colm Burke

Mr. McKeon referred to "most" payments. Is he saying that some people are getting payments without having to physically present?

Mr. John McKeon

I do not have the figure in front of me but a relatively small number do not have to do so. Some Ukrainian refugees have been moved around quite a lot, which means their local post office changes often. The other thing we do is bring everybody into our offices to sign once a quarter. There is a physical signing procedure. Even if they are not getting their payment at the post office, they have to turn up to sign at our offices at least once a quarter.

Deputy Colm Burke

Mr. McKeon said that 17,000 Ukrainian arrivals are working at this stage. Will he clarify that?

Mr. John McKeon

That figure comes from Revenue. In total, 24,000 started employment, including part-time employment. The number of full-time employments is 17,000.

Deputy Colm Burke

Are a number of Ukrainian arrivals involved in community employment programmes?

Mr. John McKeon

Yes. We have referred about 8,000 to community employment and other programmes, including the back to education scheme and so on. Not all of those places have been taken up as yet. Currently, there are approximately 500 people active in community employment and Tús schemes. We have referred some 2,000 people to those programmes, of whom 500 are currently active. There is a time lap. The community employment and Tús people need to interview, accept and take the applicants on board.

Deputy Colm Burke

I have heard that in some areas around the country, because of the benefits people are getting, they are not inclined to take up employment, number one, and are not enthusiastic about taking up community employment if it is offered to them.

Mr. John McKeon

That is not our experience. Bear in mind that three quarters of the Ukrainian refugees are women and children. There are three to a room – a woman and two children – living in hotels in the west. She has childcare responsibilities and so on. The employment rate is approximately 30%, which is extraordinarily high for people in that situation.

Deputy Colm Burke

Have we a figure for the number of children physically in education?

Mr. John McKeon

I do not have that figure, but I would expect that they were all in education. We are paying child benefit in respect of approximately 21,000 children.

Deputy Colm Burke

Regarding people who are getting benefits while jobs are available and they have the necessary skills to take on those jobs, how does Mr. McKeon see this issue going over the next six to 12 months?

Mr. John McKeon

I will make a couple of points. We are doing a great deal of work in delivering employment services to Ukrainians. Nearly 35,000 Ukrainians are attending regular sessions with our Intreo case officers. Another 8,000 are attending weekly sessions with contracted employment services. We have also referred 8,000 to various programmes. For example, there are 110 Ukrainians in the work placement experience programme. We are engaging intensively with adult Ukrainians to try to support them into work. Some 1,000 are working in construction, more than 2,000 are working in manufacturing, approximately 5,500 are working in hospitality, just under 3,000 are working in retail and just over 1,500 are working in administrative and support sectors. Our Department took on approximately 140, 36 of whom have moved on to permanent jobs elsewhere in the Civil Service. We have just under 100 still working with us and we are delighted to have them. I suspect that the construction firms with the 1,000 Ukrainians are delighted to have the construction staff, as are the employers of the 5,000 in the hospitality sector. If anything, our case officers say Ukrainians are more eager to engage than some of the other people we deal with.

Deputy Colm Burke

Mr. McKeon stated that 8,000 families were getting the accommodation recognition payment in respect of accommodating 17,000 people. I presume that is the €800 per month.

Mr. John McKeon

Yes.

Deputy Colm Burke

The landlord who gets the €800 per month does not have to make a tax return in respect of it. I have heard criticisms that people paying €1,200 suddenly find their tenancies terminated in order for their landlords to take up the new accommodation recognition payment.

Mr. John McKeon

I have not come across that.

Deputy Colm Burke

I have heard of it happening down the country.

Mr. John McKeon

The Deputy might give us the details. If someone is doing that for tax purposes, it would be a matter for Revenue, not us. We are not aware of anyone being displaced from rental accommodation in order for a landlord to take on someone and receive the accommodation recognition payment. It is payable to the host. We operate this scheme as the payment agency on behalf of the Department of Children, Equality, Disability, Integration and Youth, but we are not aware of-----

Deputy Colm Burke

Might the scheme be reviewed at this stage in view of the fact that-----

Mr. John McKeon

I can bring that suggestion to my colleague in the Department of Children, Equality, Disability, Integration and Youth.

Deputy Colm Burke

I will move on to the issue of the pandemic unemployment benefit. There is an estimated overpayment of €50 million. Will Mr. McKeon outline how that stands?

Mr. John McKeon

We have spent a great deal of time on this over the past year. We have made some progress since the Comptroller and Auditor General’s report. We have invested a lot of time in analysing and cross-checking all recipients of the pandemic unemployment payment week by week. We made 30 million payments, all of which we have cross-checked with weekly employment records. The number where there is an overlap with employment has increased significantly as a consequence of this detailed analysis. We are looking at between 50,000 and 60,000 cases where there was an overlap between receipt of the pandemic unemployment payment and employment. In some cases, the overlap was legitimate. For example, the pandemic unemployment payment was paid on a full-week basis, so if someone went back to work on a Monday, the legislation meant that he or she still got the payment for that week. There is some filtering still to be done, but our cautious estimate is that, if every overpayment was due to a legitimate overlap, it would account for approximately €200 million. It will not work out at that amount, but we are we setting up a unit in our offices in Sligo that will spend the next year contacting all the people involved and checking the situation with them.

Deputy Colm Burke

Is Mr. McKeon satisfied that the Department will be able to make progress?

Mr. John McKeon

We will. We have recovered a fair bit of money already, although the number has slipped my mind.

Deputy Colm Burke

I will move on to two other issues, the first of which is the judgment of the Supreme Court in the Domino’s Pizza case on class S PRSI. Are we reviewing where people are treated as self-employed when they are technically employees? I have raised the issue of home school tutors, who are paid by the Department of Education and regarded as class S workers but are working full-time for the Department. Has this issue been reviewed?

Mr. John McKeon

The home school tutors’ situation is unique. Home school tutors are-----

Deputy Colm Burke

Mr. McKeon accepts that they are paid by the Department, technically employed by it-----

Mr. John McKeon

No. They-----

Deputy Colm Burke

-----and the Department deducts the tax.

Mr. John McKeon

That is not actually the case, Deputy. Revenue does not consider them to be employed by the Department of Education. Home school tutors are paid via a grant that is applied for by the parent. For the purposes of convenience, the Department makes the payment directly to the tutor, but it is effectively doing so on behalf of the parent.

Deputy Colm Burke

There are many similarities with the Supreme Court case. The people employed by the company were delivering a product.

Mr. John McKeon

I am not sure that is the case, Deputy. The issue-----

Deputy Colm Burke

Look at the judgment. I have read it.

Mr. John McKeon

As have I.

Deputy Colm Burke

There are many similarities. Here we have a Department treating people as self-employed. The way they are employed poses them significant disadvantages. On the one hand, we are going after the private sector and, one the other, we have a Department operating in a way that goes against the judgment.

Mr. John McKeon

I can only speak for the social insurance classification part. The workers’ rights part and the employment contract law part are for the Department of Enterprise, Trade and Employment and the Workplace Relations Commission. The taxation part is for Revenue. The contract that exists is between the individual household and the tutor. The household is engaging the tutor. The Department of Education pays a grant in respect of engaging a tutor. It used to be paid directly to the household, with the household having to pay it to the tutor. The household would then have to work with Revenue regarding taxation, social insurance and so forth. My understanding is that, for reasons of convenience, the Department of Education agreed to take them on and pay them. The fact that the Department is paying them for reasons of convenience does not change the nature of the relationship. The nature of that relationship is still a self-employed one for social insurance purposes.

Deputy Colm Burke

In light of the judgment, I presume that the Department of Social Protection is reviewing other contracts under which people are categorised as class S when they should in fact be treated as employees.

Mr. John McKeon

We are reviewing the implications of the judgment with our colleagues in Revenue. There is a high-level group examining the matter. There are five tests for self-employed status: mutuality of obligation; substitution; enterprise; integration; and control.

The Karshan judgment particularly focused on the mutuality of obligation test and in effect, changed the understanding of the law around that. Prior to that, there was the Barry case which was actually to do with agricultural inspectors, where the High Court found that there had to be an ongoing relationship where there was an obligation to offer and to take work, and that if that underlying ongoing relationship did not exist, there was no mutuality of obligation. The Karshan judgment, in effect, has said that this is not the case and that each individual engagement is separate. For example, if a worker comes in and works one week and then six weeks later works for another week, each of those are separate instances of employment and have to be looked at individually. That is what the Karshan judgment in effect determined. We are having a look at that with Revenue. Arising from the work of this committee, we undertook some time ago in 2018-19 to set up an employment status investigation unit. Normally, we respond to workers or employers coming to us looking for classification. We set up this unit to examine cases proactively. We have grown it and there are now 18 full-time inspectors on it. We are going sector by sector through the sectors where this is most prone. We are involved in a number of big investigations at the moment into individual sectors and individual employees. That is the approach we will continue to take.

Deputy Colm Burke

Can I raise one further question?

An Cathaoirleach

Yes, but we are nearly over time.

Deputy Colm Burke

My question relates to self-employed people who become seriously ill and apply for social welfare. I had a case recently where someone was diagnosed with cancer and given six months to live. It took three months to process this person's application for disability. The person has died since. The six-month prediction was correct. I refer to the process this person had to go through to try to get any support, at a time when he or she had no income. Where it has been clearly identified to the Department - especially for someone who is self-employed - that there is serious evidence showing the person is seriously ill, I ask that there would be a system in place to process applications faster.

Mr. John McKeon

I might ask Ms Leonard to take that question. What I would say, on the point I made in my opening statement about on the one hand balancing the need to have controls to make sure fraud and error do not enter the system, and on the other hand being empathetic and taking a commonsense approach-----

Deputy Colm Burke

In this case, after three months the person was allocated €140. They had borrowed money to survive which was treated as income. Therefore, they only got €140 after three months of fighting on the issue.

Mr. John McKeon

I take the Deputy's point. As he knows-----

Deputy Colm Burke

It particularly affects people who are self-employed and run into difficult circumstances but because they are self-employed there seems to be a far more robust system in place in dealing with applications.

Mr. John McKeon

The issue there is that the particular scheme they applied for is a means-tested scheme and it is also subject to medical tests. Of their nature, it takes time for people to produce the necessary documentation, for it to be reviewed, for the earnings to be checked against Revenue records and so on. That is of its nature and is an appropriate approach to take to try to reduce the level of fraud and error. As the Deputy says, as a Department, we need to have those controls but we also need to be empathetic in certain situations. I would certainly encourage Deputies who have examples of constituents in such situations to not hesitate to contact us. We can turn around those applications very quickly but we need to know about them. For disability allowance, we get between 35,000 and 40,000 applications a year. I am not saying it is a needle in a haystack but the staff who are dealing with those are dealing with a large volume of applications. We have got to get through them. Therefore, the exceptions need to be brought to our attention. Generally speaking, when they are brought to our attention, they are dealt with very quickly.

Deputy Cormac Devlin

I welcome Mr. McKeon and his team and indeed all the witnesses. At the outset, Mr. McKeon paid tribute to his own staff particularly during the pandemic and the way in which they adapted very quickly and payments were made. I concur with that. I have said it before and I will say again that the public service turned services into payment on the head of a pin. It assisted the public in a very short period of time, and we cannot forget that. I agree with Mr. McKeon on that. Regarding the overall staffing level for his Department, how many members of staff does he have within the Department currently?

Mr. John McKeon

We currently have, in full-time equivalents, about 6,300 staff. Over the past two years, we received sanction from the Department of public expenditure and reform for an additional 400 staff members - there or thereabouts. Regarding staff actually working, given that some staff members work shorter working years and part-time and so on, the number is just under 7,000.

Deputy Cormac Devlin

Have those 400 positions been filled?

Mr. John McKeon

Yes, we are filling them but it is challenging to get staff with the process and the churn. We have quite a lot of staff as will be seen in the report. Our accounts show quite a lot of staff earning acting-up allowances because of the time it takes. It is taking 12 to 18 weeks to fill a vacancy at the moment because of the labour market situation and that is one of the reasons we were delighted to get 140 Ukrainians, to be honest.

Deputy Cormac Devlin

Mr. McKeon made reference to the ex gratia payment to the social welfare branch managers. Are those 56 offices that are effectively on contract the public offices around the country?

Mr. John McKeon

They are. We have 61 of our own offices and 56 branch offices which are equivalent in many ways to subpostmaster arrangements. They would be generally outside of Dublin. Places like Rathdowney, Portlaoise, Maynooth, Ardee and locations like that have a branch office, as does Wicklow.

Deputy Cormac Devlin

However, the Department has 61 branches.

Mr. John McKeon

We have 61 of our own offices.

Deputy Cormac Devlin

Okay, so that is the differentiation. That is fine.

Mr. John McKeon

The branch offices were originally set up as dole offices - I do not like that term - to hand out the cash. They now provide an information service, a claim reception service-----

Deputy Cormac Devlin

They were relieving officers back in 1909 but they have kind of changed their form, I presume.

Mr. John McKeon

Actually, relieving officers were different. Relieving officers were based in 900 locations in 1909 and they were what is now the community welfare service. However, these offices were labour exchanges or dole offices as they are colloquially known.

Deputy Cormac Devlin

I thank Mr. McKeon for that.

Mr. John McKeon

Most of them are family-run businesses. They are intergenerational. As long as the family wants to keep the contract, the law is that they have it.

Deputy Cormac Devlin

Regarding the status of the new contract, because obviously it expired during the pandemic, has that been resolved? Are all the contracts now in place again?

Mr. John McKeon

Most of the contracts are ongoing and are open-ended. What we had to do was change the payment rate. What has happened over the years is that the footfall into the offices in some respects to get cash, for example, has gone to the post offices. Many people are now making their claims online but we still want those offices physically in place because they are a location for employment services and information. Therefore, we had to change the payment model. Previously we were paying them to hand out cash or to take a claim. We still want them so we had to change the payment model and that was the change in 2018.

Deputy Cormac Devlin

During the pandemic, obviously a number of staff were seconded from other Departments to come in to assist Mr. McKeon's own Department, particularly around PUP and other payments that were made. At its peak, how many additional staff members came into the Department?

Mr. John McKeon

From memory, I think the number of other staff members was about 400. They were mainly from the Passport Office, Bord Fáilte and places that had physically closed. All our offices were kept open and the branch offices in particular stayed open for ten hours a day, five days a week. Our own offices, for example, worked half days. The branch offices really stood up to the plate in that period.

Deputy Cormac Devlin

Regarding the return to normal, and as Mr. McKeon said in his opening statement, some people working from home and some working physically in the offices, what is the current make-up of the ratio of staff working remotely or indeed doing part-time blended hours in the Department's own 61 offices?

Mr. John McKeon

Just under 60% are working blended hours and 40% are working physically in the office. That varies, obviously. Each year we run an application process for people to apply for the blended hours. It is currently 58%; last year it was 60%. It might go back up to 60% this year or next year or it might go back down to 56%. We will see. It is relatively new. However, it has gone from about 60% to 58%.

Deputy Cormac Devlin

The reason I asked that is that there are some services for which the public need to physically come into the offices. I am thinking specifically around the public services card. I hear of different approaches by different offices on how one can apply for such a service, bearing in mind that some of these people may be pregnant, elderly, or infirm.

It is not a standard approach across the Department's own branches and that is causing a difficulty. In my own area of Dún Laoghaire, people queue from 8 o'clock in the morning. On a morning like this morning, that is not really appropriate or acceptable and should not be the case. I have raised it before. As Secretary General, what can Mr. McKeon say? How can we get over this to try to make it more simple to apply? These cards are essential for certain payments. People need them so they need to get them. If there is a lottery system in certain branches, that is not acceptable for the public. How do we deal with that?

Mr. John McKeon

I absolutely agree that it is not acceptable that people should be queuing from the morning. That was a particular situation in Dún Laoghaire and a couple of other offices.

Deputy Cormac Devlin

Yes, that is right.

Mr. John McKeon

To give a bit of background to this, before Covid all appointments for public service cards were scheduled. After Covid we had a big backlog to get through because we had to reduce things. Quite often we found that approximately one third of people were not turning up to their appointments so we moved to a walk-in service to try to maximise the throughput. Someone turned up and he or she was dealt with when they walked in. We are now reviewing that situation because what tends to happen is that everybody turns up at the same time in the morning. That is when we get the queues. If we were to spread appointments throughout the day, we would be able to manage it better. When everybody turns up at the same time, that is what happens. We want to reintroduce the appointments system. We have expanded the number of public service card stations in Dún Laoghaire so that should address the problem there. We are reviewing it. We will need to go back to an appointments process. The time is now because it is not-----

Deputy Cormac Devlin

Is that across the board? That is obviously not just in the areas where there the lottery system. Is it across all 61 branches?

Mr. John McKeon

We have already gone back to an appointment process in a lot of our offices outside of Dublin. We now need to do it in Dublin because the capacity is there. It is in people's nature to arrive early - we see the same thing in hospitals - when they are going to an appointment and are told to get there in the morning. Certainly in my case, I make sure I get there at 7 a.m. or 8 a.m., only to find that everybody is queuing. We are seeing the same kind of thing. We prefer to go back to an appointment process and give people a specific time and then we can manage it.

Deputy Cormac Devlin

Is there a timeline for the review? I welcome the fact that it is being reviewed. When will it be-----

Mr. John McKeon

It is under way. I expect the change to be imminent. We need to look at the capacity in each individual office. We have some work to do. We want to make some changes to the appointment system we had previously, which was online. That might take a few weeks because we found previously that people were making appointments in multiple Intreo centres. That was one of the reasons for the delays. We want to refine the system so that a person can make an appointment for one slot only, and not take up five slots.

Deputy Cormac Devlin

With regard to recruitment, is it still the case that it is difficult to full vacancies in offices in certain parts of the country, particularly in Dublin?

Mr. John McKeon

That is absolutely the case. I mentioned previously that it takes 12 to 18 weeks to get a new staff member. In some cases, it takes longer than that. To be honest, like a lot of employers we are finding it difficult to fill vacancies. We use our own services and the Public Appointments Service but there are vacancies. Where vacancies exist, we try to make sure they are not on the front line. We can move people into those offices and put in temporary staff. We have 400 to 500 temporary clerical officers at any point in time.

Deputy Cormac Devlin

I understand some of those posts are difficult to fill in the same offices where the Department finds it difficult to fill vacancies with full-time staff.

Mr. John McKeon

I will explain what we tend to find. In the Ukraine example, we took on 140 people and approximately 40 ended getting permanent clerical officer jobs in other Departments.

Deputy Cormac Devlin

That is the nature of it.

Mr. John McKeon

That is the nature of the piece.

Deputy Cormac Devlin

Mr. McKeon mentioned the booking system. There are a lot of services in the Department. Great progress has been made in terms of ICT and engaging online, but there is still a good bit to go. I note from the Department's statement of strategy that there is an intention with regard to the Department's own staff and the IT capabilities of the Department. Where are we at with the upgrading, reform and modernisation of applications for the public to engage with the Department?

Mr. John McKeon

At the moment, we have 90 different schemes and services. I will not count them up but I have two and a half pages of schemes that are available online. We continue to do that. Most of the Department's main schemes are now available for online service delivery. For example, during the year we put additional needs payments online and the working family payment online. I will give an indication of the benefit that has. Deputies are sometimes right at this committee and at the social protection committee. We used to have 30,000 or 40,000 people on the working family payment or the family income supplement. When people looked at it, they said that there should be more people on those schemes, based on looking at the economy. Since the payments have gone online, the number of applications each month has increased from approximately 600 to approximately 900. Approximately 70% of applications are now being taken online so we have seen a significant increase online. The Department is ambitious to do this. We had originally set a target of having 50% of our services online by 2025, and we are now up at more than 70%.

Deputy Cormac Devlin

Well done. Finally, will Mr. McKeon send a note to the committee about the appointments for public service cards? Will he give an update on how it is progressing and when and also give an update on recruitment?

Mr. John McKeon

I will mention another thing because I do not want to not mention it. The Department is currently trialling an online capability to apply for public service cards.

Deputy Cormac Devlin

That makes sense.

Mr. John McKeon

There will still be an individual at the other end of the screen and there will still be a photograph and all of that but people will be able to do it from their homes. The Department is trialling that at the moment and that would be a good development.

Deputy Cormac Devlin

That is good to hear. I thank Mr. McKeon.

An Cathaoirleach

I will move past Deputy Verona Murphy on the list and call Deputy McAuliffe.

Deputy Paul McAuliffe

I was called a little earlier than expected.

Mr. John McKeon

I can read the rest of my opening statement.

Deputy Paul McAuliffe

Not at all. I am trying to decide which question to come to first. I will start with the Domino's Pizza case and the misclassification. There have been a lot of accusations made at this committee with regard to the use of test cases. Both the Comptroller and Auditor General and Mr. McKeon have said very clearly at this meeting that test cases are not used to assess social welfare obligations. However, that continues to be contested publicly. I am sure Mr. McKeon is aware of those very public cases, both in the media and online, and the suggestion from the whistleblower who appeared before the committee, Mr. McMahon, that this is not the case. Rather than asking Mr. McKeon questions, I want to give him an opportunity to respond to the public suggestion that was made, which was not only that test cases were used, but also that Mr. McKeon misled the committee in some way with regard to their use.

Mr. John McKeon

I think I have been consistent at this committee and at the social protection committee. The claim that was made dates back to the late 1990s or early 2000s, which is long before I was in the Department. It refers to a time when the then Secretary General, in response to pressure from trade unionists and others about how to classify people as employed or self-employed, asked that a project be done to identify the factors that would give rise to a person being either self-employed or employed. The courier sector was used as an example. The five factors I spoke about earlier were derived from that and from the prior legal cases. There was a famous case - the Denny case - about people in supermarkets demonstrating foods and so on. The five factors were identified and the first code of practice in terms of determining employment status was agreed with the trade union partners, as one of the partners to the partnership agreements at the time. Test cases were used to identify the factors rather then determine the outcomes for any individual. That has been and is still my position. In my tenure as Secretary General of the Department, I have never seen a situation where a whole sector of employment or a whole occupational group was determined based on test cases. In my ability to trawl through records going back more than 20 years, I have not seen an example of it. I asked if somebody could give me an example. In the case I mentioned before, there are many couriers in the country who are classified as employees. We employ people as service officers to work as couriers in our Department and they are employees. Some of the big courier companies-----

Deputy Paul McAuliffe

I am conscious of time but I thought it was important to ask Mr. McKeon to respond to a consistent suggestion that is made. The Karshan case was a significant departure. Employment law is a very established body of law. The Karshan case was a departure, particularly with regard to obligations. It would be important for the Department to assess the implications of that as quickly as possible, and perhaps have a future opportunity to come back to the committee on it.

Mr. John McKeon

We are reviewing the Karshan case together with our colleagues in Revenue. It does fundamentally change the understanding of the matter in a way that we are supportive of and that, I think, will help us in a number of open, large-scale investigations under way. It certainly clarified that the approach the Department was taking was the correct approach.

Deputy Paul McAuliffe

The question that arises from it is whether it will also lead to a proactive review of all employment statuses or, other than those that come before the Department or are subject to investigation, whether there is also an obligation or an onus on the Department to review employment contracts that do not necessarily come before the Department in a proactive way.

Mr. John McKeon

The issue would be identifying them. We do respond. As I said, we set up the employment status investigation unit whereby we are particularly targeting sectors where we think there might be an issue. However, if you look at the number of people who are self-employed in the economy and the issue of the numbers, there are, for example, currently 235,000 people who are self-employed with no employee, in other words, own-account, self-employed people. We cannot go through 235,000 cases. The determination of employment involves the employer part and the worker part. Quite often they have different views. Sometimes they have the same view. Sometimes, if they have the same view, it is the contrary view to the Department's. We have to target our resources. We have 18 full-time inspectors and we are targeting our resources. If anybody comes to us, we will absolutely look at the case but we have to take a targeted approach. It should be borne in mind as well that when you look at the sectors of employment, about 60,000 of those 235,000 people are farmers. Another 17,000 are in transport, mainly taxi drivers. We are not going to investigate farmers or taxi drivers. They are clearly self-employed. We go after other sectors. We will do that but there will not be a big hit. If people want to come to us, we will certainly review their cases, but we are going after occupations-----

Deputy Paul McAuliffe

I appreciate that, and Mr. McKeon raised correctly the fact that often the concern is about employment rights rather than status, but, of course, there is also an employer contribution in the case of an employment contract and a loss to the State as a result, so there is a separate issue.

May I turn to the PUP payments and overpayments? Mr. McKeon gave a good outline as to what is planned; what we did not necessarily get was a timeline for that. That would be useful.

Furthermore, there is the idea that at some point one makes a bad debt provision. Debts may be written off and so on, particularly for those people who do not have an ongoing relationship with the Department. There are, however, a considerable number of people here who may never make a social welfare claim in their working lifetime, who have a PUP overpayment and who engaged with the Department for the first time during the Covid pandemic but who will at some point have an old-age pension claim on their retirement. I think there would be an onus on the Department that if there is an overpayment, that is not presented to somebody at the age of 66, when their old-age pension is presented to them, but that there is an opportunity to repay. I appreciate that that involves people engaging as well, but I would have a particular concern that either we would write off those debts when there is an opportunity for people to repay over a long period, and I do not think that would be appropriate, or that it would be presented in some sort of lump sum at that point, which would not be an appropriate method either.

Mr. John McKeon

The Deputy is singing our tune, and I do not say that in a facetious way. The Comptroller and Auditor General referred in his report on public services to the need to communicate with people, to let them know their status in terms of debts and so on. That is something we are continually looking at, and we are going to try to automate that process to remind people once a year, "You currently have a debt of X with the Department of Social Protection. We might not be chasing you for it now, but the next time you come in we might-----

Deputy Paul McAuliffe

So is it the case that if somebody with that PUP overpayment does not repay it over their working life, when they come to engage with the Department with regard to their social welfare, it would be recouped at that point?

Mr. John McKeon

That would be the intention. As to what we intend to do with PUP - and we will be sending letters out fairly soon to people on a rolling basis - most of the overpayments are probably a couple of hundred euro rather than thousands. We will offer them the opportunity either to repay or to agree a repayment plan with us. Now people can pay online. We do not take credit card payments but we will take bank card payments. They can go online and pay or we will agree an instalment plan with them. If they cannot do that, we will probably say, "That is fine when it comes to-----

Deputy Paul McAuliffe

Over someone's working career an insolvency plan could be an incredibly low amount.

Mr. John McKeon

It could be a very low amount. We are talking about a couple of hundred euro in most cases.

Deputy Paul McAuliffe

Yes, exactly.

Mr. John McKeon

This is not in the thousands-----

Deputy Paul McAuliffe

On the subject of constant contact, I have had an inordinate number of people come to me on means-tested payments who might not understand that they are means-tested. The main ones are the increase for a qualifying adult for people who are retired, whereby their partner might not have made PRSI contributions and they get their increase for a qualifying adult, and the carer's payment. Many people believe the carer's payment is not means-tested. There might be a ten-year period during which their own or their partner's economic circumstances change and there has not been constant contact. I have dealt with a number of cases where there is a substantial debt as a result, and that is not appropriate. We need more constant contact with those people. I actually think we need to move to the carer's payment not being means-tested, but that is a policy matter that I am not allowed to discuss here. In terms of managing the arrangements, however, we need to have more contact with people on means-tested payments over time because it is not fair where that is not well understood that we then present them with a case five, six, seven or eight years later.

Mr. John McKeon

There are a couple of things there. First, when we do award carer's claims or disability allowance claims, we make it clear to people: "It is a means-tested payment, and if your circumstances change, please tell us." There is a balance to be struck after that because, while we do need to contact people and say, "Have your means changed? Please tell us because otherwise you are working up a debt", and that is a positive thing to do, we also get representations saying: "Why are you bothering us? You are being suspicious. You are being intrusive." I get as many calls giving out to us for contacting people with very routine letters as I do representations saying, "This person now has a debt and you did not tell them." It is a matter of getting that balance. It is-----

Deputy Paul McAuliffe

But the consequences of not being contacted are far more severe and grave. I agree that we should not be contacting people too much, but the consequences of the two scenarios are totally unbalanced. For somebody to have accidentally accrued a debt because they did not fully understand the situation and to carry that debt is a totally different thing from their being annoyed occasionally.

Mr. John McKeon

We need to be careful about this because communications campaigns can be misinterpreted. There was a famous one a number of years ago. We are looking at doing a communications campaign whereby we say, "Remember, if you are in receipt of a means-tested payment and your circumstances change, please tell the Department." That has to be done very sensitively. We do not want to be seen to be accusing people. We might be able to do it in a targeted way through social media or some mechanism like that, but, again, it is a matter of getting that balance. I refer to people on disability payments in particular. I understand it. I myself would probably feel that way if I got a letter saying, "Please submit all your earnings." I would say, "I am disabled. How do they think I have changed?" Actually, however, people do change.

An Cathaoirleach

I call Deputy Verona Murphy.

Deputy Verona Murphy

Good morning, everybody. I was online. I am still online, apparently, in the office. I forgot to disconnect on the way over. The witnesses are welcome back to the committee. Any engagements I have had with the Department have been extremely positive and extremely helpful, and at all times we have resolved issues that have been very difficult for people. I refer, in particular, to Ms Leonard's engagement on some issues that have been very complex, such as misclassification for various people. They have gone on for years but they have been resolved since we last met here. I am grateful for that, particularly on behalf of the constituents.

Picking up on my colleague's comments on the means test, yes, I understand it is a policy issue, and I do not wish in any way to implicate the witnesses in policy formation, but is the Department involved in any review or reporting process to inform the Government as to whether or not we should host a means test for things like the carer's allowance? It must take up a significant amount of the Department's time.

Mr. John McKeon

Officials are currently engaged in an internal review of our means-testing regime.

Some of the means test limits for capital for jobseeker's allowance is €20,000. It has been like that for a long time. There is a question about whether some of those limits should be changed, and so on. The outcome of that internal review will not be published. This is an input to budget discussion, so it is obviously a budgetary matter. We are involved, and all politicians, not just Government politicians, are interested in these issues. They are concerned that the means testing system is fair. We have made a number of changes to means tests in recent years, as the Deputy will have noticed. They were policy decisions by Government. Different politicians from different parts, and I do not want to be political about it-----

Deputy Verona Murphy

No, no.

Mr. John McKeon

-----but I think everyone was calling for them. We increased the capital on income disregards for the carer's allowance. The increase is to €450 for a single person and €900 for a couple. When I started looking at this it was approximately €500. That is now approximately €900 for a couple. It is a significant disregard. The changes for fuel allowance were made for the over-70s and so on, who are getting access to fuel allowance. There were changes for the rent-a-room disregard. I cannot remember which Deputy raised it here approximately two years ago. I think it was raised as an issue for people on the disability payment in that case, but there are also other payments where people take somebody into their house. If you are in employment you get a rent-a-room tax relief but not a rent-a-room means relief. That was brought back to the Minister, who agreed to introduce that relief. There is an ongoing process of incremental changes, often based on representations from Members of the Oireachtas. However, this year we are doing our own internal review to inform the next round of budget discussions.

Deputy Verona Murphy

That is really where I am at. Will Mr. McKeon tell me the number of people who are in receipt of carer's allowance?

Mr. John McKeon

Carer's allowance recipients total 95,000.

Deputy Verona Murphy

What I am getting at here-----

Mr. John McKeon

Approximately half of those would be what is called the half-rate carer's allowance.

Deputy Verona Murphy

Which is not means tested.

Mr. John McKeon

That is means tested.

Deputy Verona Murphy

Sorry.

Mr. John McKeon

That would in particular be a pensioner couple where one pensioner is minding the other pensioner.

Deputy Verona Murphy

The 95,000 includes the half rate.

Mr. John McKeon

It does.

Deputy Verona Murphy

What I am getting at here is not encroaching on policy. Can we ascertain, as a committee, through a review by the Department, that the manpower involved in the means testing of 95,000 is worthwhile? Carers are, in effect, saving billions of euro for the State. Carers Ireland estimates that it is €20 billion per year. If it is €20 billion per year, are we saying it is continually worthwhile to means test, given the amount of administration the Department has to undertake employee-wise and in the man hours invested by the Department? Is it value for money? It might be counterproductive. Is that the way Mr. McKeon is looking at it to advise the Department as to whether or not it should be removed?

Mr. John McKeon

I know the answer would have to be in my review. It is, first and foremost, a policy decision, so I do not want to get into that policy domain. If we were to take away the means test and to make a universal payment for carers, you would be at looking at adding at least 40,000 to 50,000 to that. That is 40,000 to 50,000 multiplied by approximately €14,000 per year. It is a significant cost.

Deputy Verona Murphy

Will Mr. McKeon explain that to me?

Mr. John McKeon

We know the number of people in receipt of the carer's support grant. That is a payment to people. If you take the difference and say everyone on the carer's support grant were to get the carer's allowance as well, you are looking at a significant increase in expenditure, which would be orders of magnitude more than the number of staff we have.

Deputy Verona Murphy

Okay.

Mr. John McKeon

It is a policy issue and a significant figure. We can do those numbers out, because I am working off of the top of my head. I will be happy to send the committee a note on that. I know the answer. It is a policy issue.

Deputy Verona Murphy

I appreciate that, and I am not trying to drag Mr. McKeon into it. For the committee, it is about value for money. I also hear what he is saying about the support grant. However, equally there are people very much at the end of their tether, and not being financially supported means that the system will come under pressure, not on the social protection side, but on the actual care side. What we are not giving them in carer's allowance we will end up paying out, as an Exchequer, through hospitalisation, fair deal or nursing home. It is basically that people are not prepared to do this any longer. For instance, one woman put it to me that she was minding her mother in the marital home and having to be supported by her husband because of the means test. It is not policy we are going to discuss, but to my mind that is a system that is not going to last. It is demeaning. With the referendum coming up in particular we talk about lauding carers, and it actually does not make sense.

Mr. John McKeon

One thing for the Deputy to consider in her thoughts on policy is that our Department provides income supports for people who cannot work. Their income supports are not payment for work, if she gets my point. What the Deputy is talking about is a payment for the performance of the work of a carer. Whether that is appropriate to this Department or not is an issue, to be honest. We provide income support. There is challenge and inequity perspective from a policy perspective. If somebody cannot work because they are disabled, they get one payment. If they cannot work because they are caring should they get a higher payment? What the Deputy is really talking about is a payment for caring. The cost of caring and the cost of providing supports for carers, whether in a residential setting or a home setting, is really an issue for the Department of housing.

Deputy Verona Murphy

I absolutely accept that, but I think we also need to do a proper analysis on what we are really saving ourselves in the long term. I turn to the social insurance fund in the short time I have left. What is the provisional outturn for the social insurance fund in 2023, and was there a vote subvention required?

Mr. John McKeon

There was no vote subvention required. This year we will have a surplus of approximately €5.5 billion. The figures are provisional. It will end up between €5.5 billion and €6 billion. Total receipts will be between €15 billion and €16 billion.

Deputy Verona Murphy

It is upwards. It is continually going up. It indicates that the contributions from the self-employed Class S workers fell from €720 million in 2021, to €644 million. Though it is on the rise, that particular section is reducing while PRSI contributions are substantially increasing. Where is the difference there?

Mr. John McKeon

There is a quirk in the figures that the Deputy should be aware of. Speaking in general, self-employed social insurance contributions are at least one year behind. The reason is that people have until November the year after their tax year to file their self-employed returns. The Deputy is looking at self-employed returns for the period of the Covid-19 pandemic, where taxi drivers and others were just not working. That is the quirk. That will ease out and you will see the numbers come back up.

Deputy Verona Murphy

I accept that.

Deputy Alan Dillon

I welcome all of our witnesses this morning, and compliment each of them and their Department officials, along with the staff on the ground in each branch of the Intreo offices. They are helpful with any representations we receive, and very professional in how they deal with them. I compliment the Secretary General and the staff.

I start by focusing on the household benefit packages. It is something that is crucial in the current cost-of-living crisis, and also surrounding potential external impacts such as the war in Ukraine and Ireland's increasing age demographic. Will the Department provide more specific data on the current applications received and approved for each of the packages, and the costs associated with them?

Mr. John McKeon

I will ask my deputy, Ms Leonard, to take that. She has the figures in front of her. I would have to go searching for them.

Ms Teresa Leonard

The overall cost of the household benefit package is €294 million. That is the allocation for 2024. As of December 2023 we had 521,753 people in receipt of the household benefit package.

The rate of electricity and gas of the package equates to €1.15 per day, paid monthly. There is no increase in electricity in the household benefit package in this budget. The criteria for the household budget have actually expanded. The travel package, as the committee knows, has a huge number of people on it. There is well over 1 million people and when dependants are added, more than 2 million people are involved. I will have to verify that figure for the committee. There will be changes coming to it this year. People who cannot drive because of illness will be added to it. That is being introduced this year from July. This will bring in an additional number on to the free travel package, as well.

Deputy Alan Dillon

Is there any increase on the free bottled gas, free natural gas or free television licences? Has there been any substantial increase?

Ms Teresa Leonard

The licence is the licence. There is no increase for 2024 on those allowances.

Mr. John McKeon

To be fair, the Government took the approach of introducing, for example, energy credits. There is a very substantial round of energy credits. We also gave a very significant set of one-off payments. We paid approximately €2.5 billion in one-off payments over the last two years. That was the approach the Government took. There was a deliberate reason for that. Most of the household benefit package is related to electricity and gas payments. As we know, the prices spiked upwards but now they are coming down again. If we increased the rate because of the upward spike it would be very difficult, so they were temporary measures.

Deputy Alan Dillon

Regarding the sustainability of these packages, how is the Department managing the ageing demographic? Is there work being undertaken in this area? Do Mr. McKeon and Ms Leonard see any issues into the future around the sustainability of these?

Mr. John McKeon

This is one of the issues. The costs of these packages will be included in the actuarial review where it shows that by 2033, the surplus we now have on the Social Insurance Fund will be eroded and we will very quickly get to a situation where there will be multibillion euro deficits on the Social Insurance Fund. This is what is driving the increase in PRSI rates from the end of this year. Over the next five years, PRSI rates will increase by 0.7 of a percentage point. That will raise between €240 million and €250 million per year. Those are the revenues. We are trying to compensate for those increased demographic costs with those changes.

Deputy Alan Dillon

I want to move on to the-----

Mr. John McKeon

To clarify, that €240 million per year is the value of a 0.1% increase. When it gets up to 0.7% it will be 0.7 times that. In the next five years we expect to raise approximately €5 billion extra in social insurance revenues.

Ms Teresa Leonard

When spouses and companions are included, 1.75 million people have free travel.

Deputy Alan Dillon

Regarding the social welfare appeals office, I would like an explanation of the timeframe for appeals to be processed. This is a significant concern for applicants who are waiting weeks and months to hear what their appeal will reveal. What is the current timeframe for appeals to be processed?

Mr. John McKeon

At present, the average time to process an appeal is about 16 weeks. It does not vary that much anymore. It is 16 weeks on average and about 23 or 24 weeks for an oral hearing and about 16 weeks for a summary hearing. We are proposing to make a number of changes to how the appeals office works, which we have consulted on. I think we spoke about them briefly here last year and certainly at the social protection committee they were spoken about in detail.

The way the current system works - and it was not intended or legislated for to be set up that way - is that it has almost become an adversarial-type system where the appeals office gets an appeals submission. The appeals offices writes to the Department and the Department puts forward, in effect, a defence, and then the appeals office has to adjudicate between them. We want to move back to what was the de novo principle. This means that when the appeals office gets an appeal it will be considered as if it is being looked at for the first time. It asks if the person qualifies or not and it does not really matter - I am exaggerating to make the point - what the Department thinks. Looking at this decision afresh, with all the evidence in front of the appeals officer as to whether the person qualifies or not is where we are trying to get to. People will still need to refer to the Department and they will need to get information from the Department. At present, there is no obligation on the Department to respond within a certain amount of time.

Deputy Alan Dillon

Is that something that needs to be addressed?

Mr. John McKeon

Yes. We are making a number of changes to the regulations on appeals. We are increasing the amount of time from 21 days to 60 days that a person has to make an appeal. There is also the option, at the chief appeals officer's discretion, to extend that to 180 days. This will give people much more time to get an appeal. We are setting a period of three weeks for the Department to respond to any appeal. If the Department does not respond within three weeks, the appeals officer can determine the appeal based on the information in front of them. At present, the appeals officer can decide to determine the appeal on a summary or on an oral hearing basis. We are making it that if the appeals officer does so on a summary basis they have to set out the reason they did not do an oral hearing.

Deputy Alan Dillon

Do people have to request an oral hearing in those cases?

Mr. John McKeon

At the moment there is no right to request an oral hearing. This does not matter though because we allow people to request an oral hearing. In the regulations we are setting that out as a right. It does not necessarily mean that they will definitely get it. The appeals officer will still have to determine whether an oral hearing is necessary. However, if they decide it is not necessary they will have to explain why. In some cases, the appeals are very straightforward. They are on contributory schemes like invalidity pension, for example. If the person clearly does not have the contributions, there is no point in having an oral hearing about the matter. The appeals officers will have to use their discretion to make a decision. It is very important that people retain this discretion. I mentioned in my opening statement that we do not want our staff to be "jobsworths" who just apply the law and the bureaucracy. Like we expect gardaí to use a bit of common sense, we need our staff to apply common sense. It is important that people have discretion, so we are making those changes. We would hope that should speed up the process. At the moment, the appeals offices says that the Department takes from five to six weeks to return with information. In future, if we are not back within three weeks they can make the decision.

Deputy Alan Dillon

When will these regulations be in place?

Mr. John McKeon

We had the consultation throughout last year and it closed in October, I think. There were a lot of responses, generally positive. Some people wanted the 60 days to become 180 days and the 180 days to become 200 days and the Department not to have any time at all to respond. The general opinion was that what we were doing was right but that it should be made even more strict. We will probably stick with what we have got. The decision has gone to the Minister and a decision will be made very shortly.

Deputy Alan Dillon

What about additional resources if a quicker turnaround time is being sought?

Mr. John McKeon

At the moment we have 44 appeals officers. Not so long ago, we had fewer than 30. We have increased staffing in the appeals office and we think we probably have enough resources. There is a backlog to deal with and we may put in temporary staff to deal with this but it is difficult to do this in the appeals office and I will explain why. The social welfare consolidation legislation and all the regulations mean that we need experienced staff. It takes about a year or so for an appeals officer to get up to full speed, even with a lot of training. We can put in temporary staff in the claims processing area but in the appeals area, I think we just have to work through the backlog over a period.

An Cathaoirleach

We are going to conclude and I will suspend the meeting for ten minutes. Before that, I want to ask Mr. McKeon a question about the appeals. The limit is 21 days at the moment. Sometimes a person may get a letter six or seven days after it was sent. Did you say it changes from 21 days to 180 days?

Mr. John McKeon

It changes to 60 days with the discretion for the appeals office to take it within 180 days.

An Cathaoirleach

Yes, that is important. On the other change regarding judging the appeals afresh, there would be a feeling sometimes that whatever goes across from the Department is the final say on the matter and that decision has to be upheld. I am not saying that is the case but-----

Mr. John McKeon

The Department would have a different view.

An Cathaoirleach

A review system is still there. I find that helpful for people so that when further information comes to light there is no need even to waste time nor tie up resources. If a person spots that a certain piece of information is missing, it just needs a phone call to the Department, where the officials are normally very helpful. The person can supply that and copy that to them. Often that solves it. That is helpful. The key part is, if people come to when there is a glitch, that the system is there were we have a facility to actually call somebody. We do not have to do that very often. It is very useful because it can sort out many problems in a matter of five minutes that otherwise could go on for weeks on end, typing up people. I acknowledge the staff who are doing that work.

Mr. John McKeon

We are very conscious of that. One of my concerns and the reason I asked the appeals office to look at it and I looked at it myself, a number of legal firms have started to see this is a bit of a gravy train and are trying to turn it into an adversarial process. When I went back and read the legislation setting up the appeals office it was very clear that what the Oireachtas wanted was a relatively informal, administrative process, not one which is high bound. However, increasingly that is what we are seeing and that is not where we want to be. We want it to be the case that something will come in, get an appeal by an experienced officer considered very quickly and get the decision. There is always the option to go to the Circuit Court or whatever if they want to have legal advisers but we do not want to turn it into a courtroom situation.

An Cathaoirleach

Keep it away from the Four Courts.

Sitting suspended at 11.02 a.m. and resumed at 11.13 a.m.

Deputy Catherine Murphy

The witnesses are very welcome.

I have commented in the past that some of the work that the Department has done was really good, particularly during Covid, and acknowledged on how flexible and quick the Department was in responding. I want to primarily focus on the Karshan case and the implications. I take issue with some of the comments Mr. McKeon made. First, the issue is not just about benefits. It appears there are three different silos - the WRC, the Department and Revenue. There are implications for people who are self-employed in terms of employment law. How they are classified is important from that point of view. I also take issue with being told that test cases were not used. Test cases have been used and, indeed, he said as much himself in 2018. He can reply after I have set out my questions. I hope that I will have a second opportunity to come back in because there is a lot of ground to cover on this one topic.

First, this was a Revenue case as opposed to the Department's. According to the judgment, the issue was presented in the context of drivers who provide delivery services and, obviously, that was Domino's Pizza and Karshan is the company name. It states: "The respondent (‘Karshan’) contends that these drivers were engaged as independent contractors under contracts for services, while the appellant (‘Revenue’) argues that they were employees retained under contracts of service." There is a difference between courier companies and gig economy couriers. The latter are more vulnerable as they may not always know the employment rights. For example, some couriers are foreign nationals who have come here to work. All couriers, according to Revenue, are treated as self-employed based solely on decisions made by the social welfare appeals office. The judgment continues: "The resolution of that dispute determines which of two legal regimes governs the taxation." How can there be two different regimes? There must be one legal regime or it becomes hugely complicated and that is part of what this case tried to set out.

The judgment states: "While the question of whether a decision of the Social Welfare Deciding Officer of August 2008 that similarly positioned drivers were not employees generated any form of estoppel was not before this court, it strikes me at a very general level that Karshan would have a legitimate grievance if it were to be penalised by one arm of the State for conducting its business in accordance with the law as interpreted and applied by another department of government." The judgment references how costs might be awarded later on. That shows there is a real conflict between Revenue and the Department of Social Protection, and Revenue have taken the revenue obligation from a decision that was made by the Department and there are industries, or portions of industries, that are affected by this.

The previous Minister for Social Protection said to Martin Wall in an article for the The Irish Times, that she was considering amending legislation "to permit deciding officers to make determinations on the employment of groups or classes of workers who are engaged and operate in identical terms and conditions. At present, both employers and workers must agree such class decisions but they can be subject to individual appeals". If one person is employed on that basis, and that sample is tested, then others are similarly determined but they have the right of appeal, which is very different in terms of how decisions are made. We must, once and for all, get this matter understood. How far back did the Department go back? Under what legislation did it first make this declaration? It was only in 1995 that workers could be grouped together by employment status for tax purposes.

Mr. John McKeon

I can only repeat what I said earlier on and I take issue with some of what the Deputy said. I do not think that I have ever said that we determined anybody's employment on the basis of test cases and decided to apply that to everybody. I do think that I ever said that, to the best of my record. I know these accusations go back to 1995. I have looked at what I can look at. Certainly in my time that has not happened. I have been assured by the people who were involved at that time that this has never happened, and I can see no record or evidence of it. I am saying that my line has been consistent on that. For seven years at this committee, I have yet to get an example of a case that was determined in that way.

What we said previously, and what the Minister was referring to in that article and is what I also said previously, every case is examined on its merits.

We have not done this but there are cases where we might well do it. In a situation where a number of workers and just one employer such as a construction firm, but not across the sector, are in the same situation, we might, with the agreement of the workers and employer, determine that there are ten bricklayers and examine two or three of them. On the basis of that, we would then say that applied for that employer and those bricklayers. In each case, if the workers wanted, they could have a second view. That is what we have always said. There is no change in that.

Deputy Catherine Murphy

I have given Mr. McKeon a bit of latitude. We have very limited time. I understand he has to come back and clarify his position. The Revenue Commissioners have taken the decision of the deciding officer to determine the revenue. How does that happen if it is not a group of employees? Under what legislation will the Department of Social Protection have grouped those employees for the purpose of Revenue deciding the taxation treatment?

Mr. John McKeon

I cannot account for Revenue. I think the chair of Revenue will be here next week. My understanding is that Revenue operates the same way we do. The decision that was taken at that time, which is what I referred to earlier on, to look at workers in the courier sector, established the criteria and the five tests that would be used. It did not establish the outcome of the application of those tests for everybody. It established the criteria. I understand that one of the primary advocates of the counterview, as the Deputy put it, on appeal, was determined to be an employee. It established the criteria. It did not establish the outcome. The social partners agreed at the time to the criteria which came from that review, which was based on the application and consideration of a number of cases from the courier sector plus a consideration of the case law up to that point in time. The criteria were established. It did not determine the outcome. Each case is still dealt with individually if that is what the worker wants.

Deputy Catherine Murphy

We saw most recently-----

Mr. John McKeon

The Comptroller and Auditor General has looked at this twice. Both reports did sample surveys and, in both cases, found that every single one was reviewed on an individual basis.

Deputy Catherine Murphy

It is quite extraordinary that one will find whole groups of workers in particular industries. They are treated in the same way from a Revenue point of view. As I say, there is the law of the land rather than silos where there are different laws which people have to figure out for themselves. More than benefits is at issue here. I think Mr. McKeon will appreciate that. I understand that different Departments will do different things. There has to be symmetry between those.

Mr. John McKeon

That is why we are very conscious that the code of practice, which was updated in 2021, should be agreed by us, the WRC and Revenue. The law still says we make separate decisions. That is the legal position. I cannot change that. The legal position is that we make separate decisions. The employment rights ones are for the WRC. I agree with the Deputy that we do not have an issue between us. The main concern for workers, in our experience, is employment rights. That is an issue for the WRC.

Deputy Catherine Murphy

Employment rights may well be the main concern for the Department. I understand that pension, maternity leave and many things are included. Obviously, employment rights extend to whether the individuals will have a job next week.

Mr. John McKeon

That is an entitlement based on people's social welfare classification.

Deputy Catherine Murphy

It can be if they are employees as opposed to self-employed.

Mr. John McKeon

The situation with regard to employment rights, which I think the Karshan judgment made clear, is not determined by a social welfare or tax consideration. Employment rights go beyond that. That is something to be determined by the WRC and the Department of Enterprise, Trade and Employment. When we had responsibility for employment affairs, the Minister at the time announced that he was considering putting the code of practice on a statutory footing. I think that would be helpful but that is now not my Department.

Deputy Catherine Murphy

Employment rights depend on who determines one's social welfare status.

Mr. John McKeon

It should be the same determination if we all applied the code of practice. We determine it for social insurance purposes. We do not determine a person's employment rights. That is the WRC. I cannot emphasise that enough.

Deputy Catherine Murphy

We had RTÉ in last year. We know the scope section is going through hundreds of cases. I asked RTÉ how long it expected to take to go through all of the cases and it said 15 years, which was quite shocking. There were two people permanently on this. Mr. McKeon says there are 18 people in a unit that would be looking at many different sectors. How many individuals does he think are involved in the review that the particular unit is looking at? What timeline are we talking about here?

Mr. John McKeon

I will talk about numbers generally and then about RTÉ if I can. Last year, the number grew from 12 to 18. The unit looked at 1,000 different employments across 300 different employers. We are looking at 695 cases from RTÉ at present. Some 160-odd decisions have been reached. Two thirds of those found that the worker was an employee rather than self-employed. One third have found that the worker was in fact self-employed. Of those appeals, RTÉ has appealed 48 of them but subsequently withdrew 13 appeals. One of the workers has appealed the determination that they are self-employed.

Deputy Catherine Murphy

Can Mr. McKeon give me the totality of the numbers again?

Mr. John McKeon

There are 695 cases.

Deputy Catherine Murphy

Not for RTÉ but more broadly.

Mr. John McKeon

Last year, we looked at the cases of just over 1,000 workers across just over 300 employers. We do about 12,000 to 13,000 other employment reviews in the normal work on scope with our normal inspectors, where we would also be examining issues of employment status. That specific unit is taking a targeted look at sectors that are of concern and that is what we have looked at.

Deputy Catherine Murphy

What is the timeline for RTÉ?

Mr. John McKeon

We have done 160-odd out of the 695, which leaves roughly 540. I would be optimistic that we will conclude those. I originally hoped that would take us three years, not 15 years. We met RTÉ, which is an organisation that has been through a bit of turmoil. I met it myself. My sense is that we will be able to make substantially faster progress in the next year or two.

Deputy Marc Ó Cathasaigh

I thank the Secretary General and his officials for coming in. We often engage in the social protection committee. I was not surprised by his approach to appearing before the Committee of Public Accounts today in contrast to some of the people who we have before us. We got all of our documentation in a timely fashion. I found the briefing material very useful. I think there is a culture of transparency and openness and a pride, as Mr. McKeon mentioned in his opening statement. I think he has legitimate pride in the work that his Department has done. I have praised him at the other committee and am happy to praise him here, when considering the response in the lifetime of this Government and the buffeting that the Department has taken from all sides. When the Government announces a new payment, one-off or otherwise and of one type of another, I often think it is fine for a Minister to stand up and make the announcement, but I do not know how Mr. McKeon retains it in his head as he tries to implement those decisions. He has done an outstanding job over the past three or four years, including on the pandemic response, the Ukrainian response and the cost-of-living crisis that we have had to deal with. The Department of Social Protection has, by and large, done an outstanding job. I wanted to start by taking the opportunity to praise Mr. McKeon.

I will pick up on something Deputy Burke raised. Mr. McKeon did not have the figure to hand and has maybe got it since. He asked about the figure recovered through the pandemic unemployment payment.

Mr. John McKeon

I had it in front of me a second ago. I think it is just over €16 million so far.

Deputy Marc Ó Cathasaigh

Very good. I just wanted to give Mr. McKeon an opportunity to pick up on that, given he did not have the figure in front of him.

I want to dig a little into those figures on Ukrainians because the Department is very well placed to give us a snapshot of who is here and what the make-up looks like. Mr. McKeon said there is fairly substantial participation in the labour market from those people who are in a position to work. Because of the range of payments the Department makes, it probably has a clear picture not only of how many people are here or have gone back but also of who is here and the breakdown between children, people of working age, people with full-time caring duties and people who might be of a pensionable age.

Mr. John McKeon

About three quarters are women and children and about 5% to 6% are of pension age. About 14% are children and about 45% are of working age. Those figures are for females but it might be better if I give the total figures. About 27% or 28% are children, about 66% are of working age and about 6% are pensioners, which should come to 99% or 100% if I have done my sums right.

Deputy Marc Ó Cathasaigh

Mr. McKeon told us that about 17,000 are working. If roughly two thirds are of working age, what is roughly the percentage of people of working age who are working?

Mr. John McKeon

It is about 27% or 28% of people. It varies each month but it is hovering around the 30% mark for people of working age who are working.

Deputy Marc Ó Cathasaigh

Is that consistent with other populations or are there impediments? A lot of people who arrive here want to get out and work, and I understand it is more difficult to access the labour market when you have arrived in and there are-----

Mr. John McKeon

It would be lower than the general population but it would be higher than the employment rates for some other countries. The International Labour Organization, ILO, for example, estimated that the employment rate we would expect would be about 25% based on the characteristics. A lot of them, as I said, are women and children and we are looking at situations where a Ukrainian woman might have two children and be living in one bedroom in a hotel in, say, Mayo. When we take all those factors into account as well as the language factor, the ILO has estimated that a good outcome would be 25%, so we are a bit ahead of what it has estimated.

Deputy Marc Ó Cathasaigh

That is good and we would like to keep ahead of that. Maybe there are more targeted interventions we can make that will support people in working, especially if they have children of school age, where people often have a little more breathing space within their working day. It comes back to the idea of the working age payment, where you are not tied into being able to work only one, two or three days, or whatever it is. That is a wider policy question but it is something the Department is working on.

On overpayments, Mr. McKeon stated we are somewhere between 2.9% and 3.8%, which is a low percentage but, of course, because the Department's budget is so big, it translates into an enormous sum. Are we chasing a performance target? If we are performing at between 2.9% and 3.8%, are we saying that is grand and that is where we want to be or is there a percentage we are striving towards? Do we have a best-in-class example? Mr. McKeon pointed to the UK example as being slightly worse than where we are and described us as being more or less mid-table. I say this bearing in mind what he was talking about regarding the need to balance overpayments versus our desire to make sure the payments people require are made to people, and I fully accept the argument we should accept a certain level of overpayment to make sure we are humane and compassionate in our social protection system, but are we chasing a certain percentage and is there a best-in-class example to which Mr. McKeon could refer?

Mr. John McKeon

We do not have a percentage for the level of overpayments or a target. We have targets we would like to reach, such as 650,000 control reviews a year and those control reviews should feed into proper management. As for comparators, I quoted the UK example. The last time I looked, about a year ago, the figures in Australia and Norway were about 5% and the figure in Canada was about 4.5%. Not every social security administration publishes the details. The National Audit Office publishes the figure for the Department for Work and Pensions in the UK and is the equivalent of the Comptroller and Auditor General here. We are there or thereabouts. When we look at it on a year-by-year basis, sometimes we are a bit higher than the others and sometimes we are a bit lower but we are always there or thereabouts.

I would not say there is an exemplar. The closest analogue we have is the UK because, obviously, our social welfare system is quite often modelled on the UK, where there is a mixed system of social insurance and means testing. In Australia it is all means tested, which is why we would expect it to have a higher rate. Canada is predominantly social insurance but there is a bit of means testing, while Norway is almost entirely social insurance. To a certain extent, therefore, we are comparing apples and oranges but our closest analogue is the UK.

Deputy Marc Ó Cathasaigh

Mr. McKeon thinks that either side of 3% is probably the figure we are comfortable with, even if with that we have to accept that overpayment range of in or around €100 million or whatever it is.

Mr. John McKeon

I think that is where we are. The Deputy will have heard one of his colleagues talking earlier about one of his constituents who has a disability, where we took 12 weeks to determine the claim. We could have taken four weeks to determine it but that would have consequences. If we wanted to reduce fraud and error on, say, disability allowance claims, it could take a lot longer to award them and that is not in anybody's interest.

As I often say, I worked in the telecommunications sector for a long time with Telecom Éireann, Eir and Eircom. The bad debt rate in that organisation, which is considered a good bad debt rate, was about 5%. That is an organisation that had the ability to cut off the only telephone line a person had, and even with that it was 5%. Commercial businesses generally operate at about 5% bad debt. Retail businesses operate on what is called a leakage rate of 3% and that is their target. They target 3% leakage, which is basically pilfering. We are at or around the industry standard.

Deputy Marc Ó Cathasaigh

That is the figure where we think we are striking that balance between having proper controls on spending versus the need to have inbuilt compassion within the system, which is a social safety net. That is the whole point of our social protection system.

Mr. John McKeon

One thing I would say, and the Deputy will see this in the chapter, is that the rate varies between schemes. In the case of some schemes, we are up at 8%, so we need to have a look at those schemes in particular and review them. The overpayment rates on the schemes where the rate is higher tend to be lower. On the jobseeker's allowance, for example, it is a couple of hundred euro, whereas on pensions, for which there is a lower rate, it is a couple of thousand euro. We need to have a look at those schemes and we are continually looking at them to try to identify the risk factors. We do not want to get back to a situation such as in the case of the jobseeker's allowance where everybody had to turn up every week and sign on. We just do not like that kind of mentality, if I can put it that way, but we have to get better at identifying the risk factors and use our analytics capability to do that.

Deputy Marc Ó Cathasaigh

I wanted to put a question to the Department of Public Expenditure, National Delivery Plan Delivery and Reform on ex gratia payments. Mr. McKeon put forward a defence of why those ex gratia payments were made and I think I am happy with the rationale for having made the payments, but an approval should have been sought. I think it is accepted an approval was not sought. Has the Department of public expenditure engaged with the Department of Social Protection to make sure that lapse of communication has been remedied such that there will not be a recurrence?

Mr. Robert Scott

Yes. Since we were first made aware of the payment through the preparation on the Comptroller and Auditor General's chapter, that Department has been in contact with us and there is broad agreement on both sides that any ex gratia payments going forward need to be approved by my Department as part of the public financial procedures. Essentially, the matter has been dealt with.

Deputy Marc Ó Cathasaigh

Yes, but I am referring to the benefit of hindsight. We have heard the defence regarding the ex gratia payments that were made. Is Mr. Scott satisfied that, if the process had been entered into in the way we would have liked, his Department would have approved that ex gratia payment and does he accept the rationale for having made them?

Mr. Robert Scott

The correspondence from the Department of Social Protection reached us only recently and we are still assessing the rationale for the payment having been made in 2022.

Deputy Marc Ó Cathasaigh

That might be something that Mr. Scott could correspond with the committee on.

An Cathaoirleach

I thank the Deputy. I will go back to the classification of workers with Mr. McKeon for the moment. Different estimates have been put on this and we have discussed this with the Department here before. At this point, will the Department accept that there is still a significant problem with bogus self-employment or misclassification of workers in this State?

Mr. John McKeon

I am loath to say that I do or that I do not, Chair. That sounds like I am-----

An Cathaoirleach

I am interested in a "Yes" or a "No".

Mr. John McKeon

The issue, Chair, is that at an aggregate level, there is no real evidence that, for example, the level of own accounts self-employment, which is the type of self-employment which might be prone to this phenomenon, is growing. In fact it is reducing. At an aggregate level, incidences of this would appear to be reducing.

On the other hand, and it is something I often say, for example, when we talk about poverty or unemployment rates, and when we say that we are at full employment and there is only 4% on the live register. However, if a person is unemployed, that is a 100% experience. For the person who, therefore, is misclassified, even if it is a low percentage of misclassification, for that person, and this point was raised by Deputy Verona Murphy, it is a significant condition so I am not as solid on that.

An Cathaoirleach

Can I ask a follow-on question from that, please? What sectors does Mr McKeon believe that this phenomenon is most prevalent in, in his experience?

Mr. John McKeon

The sectors we are looking at at the moment would be the media and journalism sector.

An Cathaoirleach

The media, okay.

Mr. John McKeon

We are also looking at the airline sector and we intend to look at the higher education sector.

An Cathaoirleach

On the airline sector, would that apply across the board with the main companies operating - without the naming of any companies - or is it more or less confined to one or two particular companies?

Mr. John McKeon

I do not want to say too much to the Chair but there is a High Court case coming up in May from an investigation which we started back in 2012 or 2013, and it involves one company.

An Cathaoirleach

Okay. On the media, obviously the national State broadcaster, RTÉ, is a case in point and we have discussed this matter a great deal with Revenue, with Mr. McKeon's Department and indeed with RTÉ. On the 695 cases which are under examination at the moment, 160 have been determined already. Does that leave the 695 cases or does that 160 come out of the 695?

Mr. John McKeon

It is out of the 695, which is the total.

An Cathaoirleach

Obviously there is a role here also for Revenue. Is it a case with regard to those 160 cases which have been determined that Revenue would take the same position as the Department of Social Protection? Are there differences with regard to the approach of Revenue and the approach of Mr. McKeon's Department and, indeed, in the outcome?

Mr. John McKeon

I do not want to talk about Revenue. One of the things we do, and the chair of Revenue would have to confirm if this is the case or not, is that we do not look at what is called intermediary structure. For example, if I am someone who is employed but I am not employed in my own name but am employed in the name of a limited company which I have set up, we will look at that relationship and see if it is an employment or a self-employed relationship. Revenue may be limited in that when there is a corporate structure in place. It may not be able to look any further than that. I do not want to be quoted on that, Chair, as the chair of Revenue can speak to that.

An Cathaoirleach

As regards the Department's engagement with RTÉ, Mr. McKeon said he has been engaging with the organisation and has met RTÉ management on this issue. How many are employed in RTÉ on the basis that they are independent contractors as opposed to being employees? We know that there are approximately 1,800 employees in RTÉ so what does that translate to?

Mr. John McKeon

I believe Mr. Daly will probably pick up that number for the Chair. Of the 695, there are over 100 who are employed through a limited company rather than through direct employment with RTÉ. It is over 100, at any rate.

An Cathaoirleach

I will ask Mr. Daly. Where there are a number of other people who are not actual employees, how many such individuals in total does he estimate are working in RTÉ who are not employees?

Mr. John McKeon

We asked RTÉ for all of the records of people employed since 2018 on a contract rather than on an employed basis and the number we received was 695.

An Cathaoirleach

I thank Mr. McKeon as that answer captures this point.

On the educational sector, one of the things which surprised me over the past year or so, when one starts to look at this, is there that there seems to be a significant number of people in the third level institutions who are employed as contractors. Are these mainly lecturers or what is the situation there?

Mr. John McKeon

We have not commenced that investigation yet but looking at the employment data we have got, it appears to fall to being junior lecturers on the one hand and more senior people on the other.

Chairman

So are junior lecturers more likely to be independent contractors.

Mr. John McKeon

That is correct.

An Cathaoirleach

Is the examination to be carried out by the Department around the issue where there seems to be regular workers there. In other words, they are there this week, they will be there after Easter and they will be back after September. Is that the type of arrangement?

Mr. John McKeon

That is what we are looking at. I do not want to overstate the issue and I do not want to give the impression that there are hundreds of people in the education sector but when one looks at the numbers in the Centre Statistics Office, CSO, where I believe it has identified 11 sectors; one of the only sectors where the level of self-employment is increasing is the education sector. That is why we are looking at-----

An Cathaoirleach

At the start of this examination, it was thought that this phenomenon would perhaps be in the construction industry and among couriers. Certainly, one has now started seeing it in the media and education sector.

Mr. John McKeon

I have the number now for the Chair. There are 126 limited company contractors from the 695 in RTÉ.

An Cathaoirleach

Staying with the third level sector for the moment, has there been in engagement with the Department of further and higher education on this and if there has not been, will there be?

Mr. John McKeon

There will be as we are focusing on that sector which we are looking at next and I do not want to give the impression otherwise. We are looking at it purely because the data from the Central Statistics Office indicates that that is a sector where the self-employed status appears to be growing. It is a natural one-----

An Cathaoirleach

It is actually increasing in the third level sector.

Mr. John McKeon

Yes, as a proportion of the workforce.

An Cathaoirleach

We have identified that that is one area that the Department intends examining. Are there other areas? Is the media one of the other areas or are construction and couriers the main ones? What are the main areas which the Department intends to examine?

Mr. John McKeon

We started off, based on feedback from this committee, and we would also have met with the Irish Congress of Trade Unions, ICTU, and so on. We started off looking at the meat industry and construction but the pickings are very slim, if I can put it that way, in those sectors. We have had a look at 6,000 construction workers and, I believe, 25,000 workers in the meat sector. Out of both of them we came up with a total of six to seven people who had to be reclassified. The issue was not as widespread. The main issue we found in the construction sector were people who were on sites and claiming social welfare while they were working. The self-employment issue was not as big as one would have thought.

In the meat sector we came across 40 self-employed workers and three of them ended up having to be reclassified to employment status.

These were the sectors we started off from. The media and journalism sector came into our purview because, to be fair to RTÉ, it did a voluntary self-disclosure within the Eversheds' report and that is what brought this into our purview. That report was published in 2018 or 2019, which is why we started the investigation in 2020.

The airline sector has been one we have been engaging with for a long time and it is a long legal process.

An Cathaoirleach

If there is a case pending, I will not be asking Mr. McKeon to go into any detail. Those are some of the areas, however, the Department is looking at.

Back in 2021, if I understand this correctly, the employment status unit of the day looked at 90 cases and held that 44% of those were missed classifications. It that correct?

Mr. John McKeon

I believe those were the figures we gave to the committee before. They would be of that order of magnitude and it is about 44%.

An Cathaoirleach

I know that this process was targeted so I understand that that figure would be high.

Mr. John McKeon

We found - and I will give the Chair some figures on this - and we have now determined outcomes across approximately 1,800 workers. We have reclassified 148 as class S without any need for a referral to what we call our Scope section. We work by way of our inspectors doing the investigation. In many cases, as part of that investigation, as I was saying-----

An Cathaoirleach

Can Mr. McKeon give me those figures again, please?

Mr. John McKeon

There was a total of 1,739 workers across 523 employers. During the process of the investigation, 148 workers were reclassified as class S.

Subsequent to the investigation, another 56 were reclassified. That brings the total to 204. That was 204 people across 1,739 contract workers, which is approximately 11% to 12%.

An Cathaoirleach

It is high enough.

Mr. John McKeon

It is high enough. They are targeted is what I would say.

An Cathaoirleach

Okay.

Mr. John McKeon

If the Chairman looks across the work we have done in the construction sector and meat sector and then these more targeted ones, my own personal estimate, and I think we need to let the work run for another year or two before we can be definitive on an estimate, is somewhere between 1% and 5% overall of self-employed.

An Cathaoirleach

How much are we losing out on PRSI?

Mr. John McKeon

I am sorry-----

An Cathaoirleach

How much is the State losing out on?

Mr. John McKeon

If we look at it this way, and I have the figure here somewhere, each 1% misclassification would be approximately €7 million.

An Cathaoirleach

Each 1% is €7 million. Therefore, Mr. McKeon is saying around-----

Mr. John McKeon

Between 1% and 5%.

An Cathaoirleach

Okay.

Mr. John McKeon

I am sorry, Chairman; I do not want to be held to these figures. This is very early days. I am mixing up-----

An Cathaoirleach

That is because it narrowed because the self-employed contribution has increased.

Mr. John McKeon

That is right, so-----

An Cathaoirleach

That figure is as high as that.

Mr. John McKeon

I will put it this way. The average payment from self-employed contributors is approximately €2,000. If they were employed at class A, it would be approximately €7,000. Therefore, we are looking at €5,000 of a difference. If we apply that to the numbers who are self-employed in own-account self-employment, even if we take 10%, the money is not as great as people think. Having said that, there are a whole range of reasons we want to do it-----

An Cathaoirleach

The security of employment of people is a really big issue because of the ability to be able to hire and fire on a whim. People are not in constant jobs and the fact is that they cannot get a mortgage. It leads to all sorts of problems. There is the missing piece of the PRSI, but there is the workers' rights issue that Mr. McKeon mentioned around the entitlements.

Mr. John McKeon

I will say that the workers' rights issue is probably the most significant one. One thing that Deputies and others should be aware of is that people think the reclassification from class S to class A improves their social insurance position. In most cases, it does. It gives them access to illness benefit, which is the only scheme to which the self-employed do not have access. In some cases, however, it will reduce their benefits as well. I will give a made-up example. If I am a bookkeeper who works one week per month for a firm to produce its end-of-month accounts, if I am self-employed, that one week per month will give me 52 contributions. If I am an employee, it gives me 12. Therefore, these are consequences of which people need to be aware. The actual implications for workers are not all black and white, which is why one of the appeals from RTÉ is from a worker. Other workers, as we know, are not happy with the outcome. They are just not happy and they are appealing. Therefore, people need to be conscious of that as well.

An Cathaoirleach

There are unintended consequences. I will ask about the unemployment benefits, although it is a policy decision so I do not want Mr. McKeon to go there, and the proposal to increase the benefits in that there would be a graduated level of payments. What kind of timeline is on the implementation of that? I understand there will be legislation and all of that, which Mr. McKeon does not have control over, but what way does he see that working at the official level in the Department.

Mr. John McKeon

It has been referred for pre-legislative scrutiny to the joint Committee on Social Protection, Community and Rural Development and the Islands. Subject to that legislation, we are working to a timeline of quarter 4 this year so sometime between October and December.

An Cathaoirleach

It will be set at the level of the median wage. I think it is-----

Mr. John McKeon

It is 60% of a person's prior gross income subject to a maximum of €450

An Cathaoirleach

Okay. Has the Department based this on a model from another country? If it has, what country?

Mr. John McKeon

No. We are one of the few countries to do this. I think maybe there is only one other country that does not have a pay-related benefit in Europe and in the OECD.

An Cathaoirleach

Which country? I am sure the Department has looked at best practice.

Mr. John McKeon

We have looked at them and taken them on board. The replacement rates, if I can put it that way, vary between 50% and 80% but then, we cannot just look at the replacement rates. Nearly all of them have a cap and nearly all of them have durations of payment. Therefore, we have to look at the duration of payment versus the payment. Not to talk about pay related benefit, but to give the Chairman an example-----

An Cathaoirleach

What country, though?

Mr. John McKeon

We have looked at all the European countries.

An Cathaoirleach

The Department has obviously modelled it on something or seen a good model.

Mr. John McKeon

No, we have taken the inputs from all of them. We have reviewed all of them.

An Cathaoirleach

It has taken the best of a few.

Mr. John McKeon

We did. We consulted on it. There was a very wide consultation on this.

An Cathaoirleach

I will ask briefly about the impact of it. I know there is the level of payment and then there is the duration and, obviously, they are different things. However, in terms of the cost of the higher payment, what are the cost implications here for the Exchequer?

Mr. John McKeon

Well, it is-----

An Cathaoirleach

If very well-off workers will have 60% of their previous income, if a person is on €100,000 then he or she is going to get €60,000. That person is doing much better than someone who is on the minimum wage. What are the cost implications here?

Mr. John McKeon

We are conscious of that, Chairman. I will give two of the design features before I talk about the cost. There is a cap, which is €450. Therefore, the worker on €100,000 will not be getting 60% of €100,000. The cap is €450. We have also increased the minimum payment. There is a minimum payment on jobseeker's benefit at the moment of €100 per week. In fact, not many people realise that the existing jobseeker's benefit is pay related, but the pay related levels are so low that most people get the maximum rate. However, there is a €100 minimum rate. We have actually increased that to €150. That is what we are saying the new minimum rate will be. The cost to the social insurance fund is estimated at €130 million per year.

An Cathaoirleach

It is €130 million. Okay. The other cost, obviously, is the pension. The number of pensioners is increasing and the level of the pension is increasing.

Mr. John McKeon

The increase that Government-----

An Cathaoirleach

The estimated cost is €130 million per year.

Mr. John McKeon

It is €130 million per year. One of the factors in increasing the social insurance rates is the cost of personal retirement bonds, PRBs. For example, the actuarial review of the social insurance fund stated that the average increase in rates over the next five or six years should be just under 0.08 of a percentage point. We are doing 0.1 of a percentage point going to 0.2. The difference is to cover the extra cost of pay related benefit.

An Cathaoirleach

Okay. The next committee member to speak is Deputy O'Connor.

Deputy James O'Connor

I welcome everyone here this morning and this afternoon. The first question I want to ask is about the overpayments. Looking through the file and chapter 15 on the rising social welfare payments, there seems to be a consistent issue where around €100 million to €125 million has been paid out. It is put down to further evidence being gathered and people owing money back. I want to get a sense of how that process works and how that is identified in those situations. Is it through the Department's own initiative to investigate or does it come from people who put the lámha suas and say they have actually made an error or mistake and should not have received such a payment? To get a picture of that would be helpful.

Mr. John McKeon

I will ask Mr. Daly to come in on this, but it is mainly through our own work. We conduct approximately 600,000 to 650,000 what we call control surveys each year. Where we identify, we write out to people and ask them to update their circumstances and inspectors will look at it. Much of it is out of that. We have real-time look-ups with Revenue employment information where we identify people who maybe have gone back to employment but have not closed their jobseeker claim. It is mainly through those mechanisms. Does Mr. Daly want to expand on that?

Mr. Liam Daly

It is basically that. The overpayments fall into the categories of customer error, suspected fraud, official error or the estate cases. In terms of customer error, that would be where a person has failed to notify us in a timely manner of a change in his or her circumstances. We will pick up on that from our own investigative actions looking at, say, Revenue returns and so on. That is what is driving that.

Deputy James O'Connor

The Department has accrued a debt then of €495 million, which is what is owed in outstanding welfare payments and overpayments. One could argue the point that those who are in receipt of it are also in most need. It is regrettable that such an issue should occur in the first instance because, obviously, we see it in our constituency meetings with constituents where this type of payment applies. The reason it bothers me is that we see people applying for things like the fuel allowance. Elderly people come in who are borderline able to qualify for it. I cannot count how many times we have had to send letters back and responses from representations where people have been €1 over and were told they cannot get a specific payment and all of a sudden, the Department has an outstanding debt of €495 million. I do not want to be firing stones because I know we are dealing with a very large budget of €16 billion-odd for 2022.

Mr. John McKeon

It is €25 billion.

Deputy James O'Connor

It is €25 billion; I apologise. That is why it does annoy me. I think the euro is very cruel. I know we have to draw a line somewhere, but it keeps coming up.

If you go through the representations from Members of the Oireachtas and how many responses have been sent back - a single euro - it is so mean. It is wrong.

Mr. John McKeon

We spoke earlier about our deciding officers and how they should not be jobsworths. My experience is that you get a mix of people in every organisation. Some people apply the letter of the law in what the Deputy described as a very cruel way. They will never budge. Most of our deciding officers go above and beyond to find a way to say to that person "are you sure about this?" to try to find a way to get him or her over the line in those marginal cases. That is the culture in the organisation. Some would argue that this is the wrong culture and that they should draw the line hard and fast. Obviously, if it is €20 per week more than it should be, that is one issue but if it is 50 cent or €1-----

Deputy James O'Connor

I will accept that-----

Mr. John McKeon

The deputy Secretary General meets every member of staff in a forum of one type or another every year. We constantly reiterate the need to apply discretion and to do so in a sensible way.

Deputy James O'Connor

One of the most breathtaking statistics of 2022 was around immigration and payments for Ukrainians. I know it has been a difficult task for the Department but there is one irreconcilable statistic, which is that the EU average for the increase in migration from Ukraine from September 2022 to September 2023 was 7.2% while in Ireland, it was 72.1%. I think Elaine Loughlin of the Irish Examiner published an article on that. We must ask ourselves why this has occurred. One question that is on many people's minds and is worth asking because it is important that we do put these questions to Departments and relevant officials concerns the fact that weekly payments of €220 were being paid. Obviously, in recent times, there has been strong discussion and work done to reduce this to €38.80 per week and the 90-day limit. Does Mr. McKeon think that the decision to pay €220 per week over that sustained period had anything to do with the previous reference I gave involving the increase in numbers in Ireland?

Mr. John McKeon

It is nearly impossible to argue and it is all opinion and supposition. I am not familiar with the data mentioned by the Deputy. If I am correct, and I stand to be corrected on this, the share of the Ukrainian refugees Ireland has taken is about 2.3% of the population. The average across Europe is about 2% so we are slightly ahead of Europe in terms of population share. Some countries have a much lower figure while others have a much higher figure. They are in Sweden, Germany-----

Deputy James O'Connor

It is relevant to talk about our distance from Ukraine. Obviously Poland and neighbouring countries have taken in huge numbers and we acknowledge that.

Mr. John McKeon

I have said at a number of fora that the distance from Kherson or Donbass to Sligo is over 4,000 km. You have to cross six countries. You have to leave your home and your family. You have to leave your husband behind to take your two children. You have to give up your job and travel to live in the west of Ireland in one room for three people and you are coming for €220 per week. Do people really believe that? I am shocked that people would believe it. We spoke to the people with whom we deal. The English language is a huge issue. If I am Ukrainian, there is a good chance I can speak German or English but there is very little chance I can speak French.

Deputy James O'Connor

We have to be realistic here. The financial incentive is also something that is worth asking a question about.

Mr. John McKeon

Can I say something else about the financial incentive? People use comparisons and the comparison that is quite often used is with Belgium, where they just pay €30 or €40 per week. They pay €30 or €40 per week to a person who is in serviced accommodation. They pay €1,200 per month to a person who is not in serviced accommodation, which is in line with us, so what the Government has decided to do, and I think this is fair, is that where somebody is in serviced accommodation, the payment should reflect the value of the serviced accommodation. That is the primary purpose. We know that of the 80,000 Ukrainian refugees who are still in the country, roughly 50,000 are in serviced accommodation while 30,000 are not and have made other accommodation arrangements. It is fair that the latter group continues to get the €220 per week. If you are in serviced accommodation and are getting laundry and food, it is reasonable and that is what other countries have done.

Deputy James O'Connor

One of the reasons I am raising it is because it is deeply disturbing to see the rise of the far right and the political and social effect this is having. What has happened for the past couple of months is not in our nature. Obviously it does not relate to the 2022 accounts. What does relate to them is that staggering increase from September 2022 to September 2023 and, for want of a better word, the correlation with the very high payment, which has now been reduced. It was worth putting the question. Does Mr. McKeon think that paying out that amount of money-----

Mr. John McKeon

I think the decision to reduce the payment makes sense where somebody is in serviced accommodation. There is an inequity where if you were an Irish lone parent or jobseeker, you got €220 per week and you had to provide for your food, laundry, heating and lighting while somebody else was getting his or her food, laundry, heating and lighting so that inequity needed to be dealt with but I do not think it is necessarily driven by "let's stop them coming".

Deputy James O'Connor

Were there discussions within the Department when this amount was being settled on - that it was too high or too low? How did the Department come to that decision in terms of advising the Minister and, ultimately, Cabinet? What was the background to that discussion?

Mr. John McKeon

The background to that discussion was the point I just made, which was about the payment to people in serviced accommodation and respecting the value of that. The payment rate is set by the Department of Children, Equality, Disability, Integration and Youth. It is not set by our Department. We administer the payment. The policy decision about the appropriate level was made by a different Department. That Department decided to align it with the payment for people in international protection and that is the payment they get for living in similar accommodation. That was the policy rationale.

Regarding whether it has any impact in future on inflows, inflows have reduced over the past year or two, which you would expect. At one point, we were getting 500 per day. It is now down to about 60 per day. Who knows whether it will reduce that further?

Deputy James O'Connor

What is happening is that bypassed accommodation is coming in to replace it. We have had instances in some constituencies. It is concerning when tensions are so high. I wanted to ask the questions because it is important that they are asked.

An Cathaoirleach

Regarding the payment of €38 as opposed to the payment of €232-----

Mr. John McKeon

It is €38.80.

An Cathaoirleach

The proposal is that if somebody is not in serviced accommodation, he or she will get the full €232 subject to everything else being okay.

Mr. John McKeon

Yes.

An Cathaoirleach

Okay.

Deputy Catherine Murphy

Mr. McKeon has given an example. In the case of Karshan, the example involved the delivery drivers. I will read from a letter from all the way back but some of this does go all the way back to Jim Mitchell, who was the Chair of the Committee of Public Accounts. I am sure Mr. McKeon is very familiar with this one. In the middle of the letter, it stated that:

This process resulted in a decision by an Appeals Officer of the Social Welfare Appeals Office on 12 June 1995 who decided that a courier was self-employed. The Appeals Officer's decision established the criteria in relation to the employment status of couriers that has, since then, been generally accepted throughout the industry and also by the Office of the Revenue Commissioners for tax purposes.

That was a letter from a previous Secretary General to the Committee of Public Accounts. That determination from the appeals office goes back to 1995. Has that changed since or does that letter still stand?

Mr. John McKeon

I am familiar with that letter because obviously I read it. It goes back 24 years. The important part is that it established the criteria. That is what I have always said. It established the criteria. It did not establish the outcome. Those criteria have been generally accepted by the industry and the Revenue Commissioners. Subsequent to that, the partnership agreement took that criteria and put them into the code of practice so it was used to establish the criteria. People skip that word as if it is not in the sentence. It involves the criteria - not the outcome.

Deputy Catherine Murphy

The previous Committee of Public Accounts looked at the third-level sector and in fact it dominated the latter part of that committee's work.

Some very serious issues were raised. We then dealt with the precarious employment of people in that sector, which was a complaint. It tended not to be people on the old contracts, which suggests it is newer lecturers, increasingly, with part-time and more precarious contracts. I am pleased to see that is the case.

Mr. McKeon did not get to read out the section of the statement that states the unit has gone from 12 to 18 staff. He also stated that it can be very time consuming and complex for social insurance purposes. There are 18 staff and more than 1,000 people over 300 different employers. What, in an ideal world, is the scope the unit needs to grow to?

Mr. John McKeon

The Chair asked what we think the percentage is. At this point, my sense is it is somewhere between 1% to 5% of people who are own-account self-employed workers. It might be up to 10%. We need to let the unit work for a while and see what that percentage comes out at. If it is at the lower end, that would indicate, purely from a social insurance perspective, that the value of investing more resources to generate extra social insurance revenue would probably be fairly low. If it is at the higher end, we probably need to expand it. We need to leave it for the time being and let it run for the next year or so.

Deputy Catherine Murphy

Mr. McKeon provided the amount of the PRSI arrears bill since the unit was established in 2019, which now stands at just over €2.83 million compared with €1.13 million. It is beyond cost neutral in those particular cases. Mr. McKeon said in the construction and beef sectors, it did not find the kind of numbers expected. I understand that but, as Mr. McKeon qualified, it may be that people have put themselves into corporate structures, which is a different thing entirely. I think of the C2 process - I do not know if is still the C2 process - for the construction sector and the nature of the industry.

Mr. John McKeon

When we looked at the construction industry, we looked at those as well. Most self-employed people in the construction sector have workers. If I am self-employed and I have two or three workers, I am obviously self-employed. We looked at own-account self-employed workers, many of whom are brickies, plumbers and carpenters, etc., who do not just work on one site for one contractor but across a number of sites for multiple contractors. All the evidence is that they are self-employed.

Deputy Catherine Murphy

There are two other matters I wish to ask Mr. McKeon about regarding the same subject matter. I quoted from the judgment earlier, which mentioned about if they were to be "... penalised by one arm of the State for conducting its business in accordance with the law as [it was] interpreted and applied by another department of government". Another section states, "Whether that can or cannot be said ... will depend on the facts of the case before the Social Welfare Appeals Office, the specific agreements the subject of that decision and the exact composition of the assessments." When it determines costs, will the Department of Social Protection be invited to make submissions regarding those costs? Is there any factoring in of legal costs in the Department concerning that case? Has the Department made any policy changes yet or does it plan to on foot of that case?

Mr. John McKeon

First, that case was taken by Revenue.

Deputy Catherine Murphy

I know.

Mr. John McKeon

We are not involved in the case and the issue of costs does not arise.

Deputy Catherine Murphy

The reason I said that is because, very definitely, the judge stated in section 278 that the assessment of costs goes back to social welfare. I said from the outset this case was Revenue. I understand that.

Mr. John McKeon

We welcome the judgment because in another big case, we were working on the basis of the criteria, which have confirmed the five factors and clarified what mutuality of obligation meant. Some of the appeals I spoke about earlier are on exactly that point about mutuality. It is the approach we were taking anyway. It has confirmed the approach we were taking. I do not have the judgment in front of me but I read it a number of times. There is a high-level group between the Department and Revenue parsing it line by line. The Supreme Court has now clarified the issue of mutuality of obligation in a way that it was not before. The issue arises for an employer who may operate under its understanding of the common law as it was up to this decision. They may have employed me, genuinely thinking I was self-employed, but now this judgment means I am employed. Should we retrospectively go back and say to such a person they now need to change the record for that worker over a long period of time? I would say we need to change the record.

The second issue is whether you raise a retrospective charge. There are many small employers involved as well. They are not all big employers. If I am a small employer and I genuinely thought, on the basis of the previous judgment, the Barry judgment, that the person was engaged as self-employed, and now this case has clarified that they are not, which is what that part of the judgment is getting to, and Revenue has decided one thing as a consequence of this case, should Social Protection now go back and say to that employer they owe us tens or hundreds of thousands?

The other issue the judge got to in that situation was employment law, which I mentioned earlier. The judgment was clear that employment law is different. For example, regarding the Domino's Pizza case or some of the other cases with which we are dealing, I gave the example of the accountant who is working one week a month. Under employment law, you must have 12 months of continuous employment before you get employment rights. That is different from a person being an employee for 12 weeks a year, one week in each month of the year. Does the Deputy get my point?

Deputy Catherine Murphy

I do.

Mr. John McKeon

I think that is what the judge was getting at.

Deputy Catherine Murphy

Mr. McKeon spoke about home schooling. It is offered in my constituency to pupils who do not get a school place. It is not about a child with a difficulty going to school but where they do not get a school place. It is daft that there is a planning unit that cannot count. Revenue says the parent is the employer and the Department of Education uses the PAYE system, which Mr. McKeon said was for the convenience of parents. If your child has not been given a school place or your child really needs home schooling and you are the employer, there are a whole lot of other issues such as insurance and safety at work. Parents who are often in a situation with a vulnerable child then have another range of things to deal with. If the parent is the employer, why would the Department put it through the PAYE system? That suggests the Department is the employer. Many things are showing up where the State is several things but not the thing it should be.

Mr. John McKeon

I understand the confusion. I was confused myself and it took a couple of readings to figure it out. This is the situation as I understand it. Revenue will have to tell the committee whether it treats the person as an employer.

My understanding is that the grant is paid to the individual household. That household engages the tutor on a self-employed basis. For convenience reasons, as I said before, the payment is made directly to the tutor via the PAYE system. There is a reconciliation with Revenue at the end of the year to account for the tutor's payment on a self-employed basis. That is my understanding. While it works through the schedule E PAYE system, when it comes to reconciling the person's tax affairs, they are treated as self-employed. There is a collection mechanism which is used as if they are employed but, ultimately, for their tax affairs, they are still treated this way. That is my understanding.

Deputy Catherine Murphy

We will have Revenue in pretty soon. If Revenue treats the parents as the employer, that becomes a whole other issue.

Mr. John McKeon

There have been a number of cases which have gone to our scope section and appeals section. When the five factors are applied, in each case they have been determined to be self-employed. That includes applying the mutuality of obligations, substitution, integration and all those kinds of tests. Apparently that is the case.

An Cathaoirleach

Could we revert to the discretionary payment to the social welfare branch managers. The three offices in Laois are rated on that basis. I find them very efficient. In fact, one of them is nearly next door to me. Suzanne in the-----

Mr. John McKeon

It is very good.

An Cathaoirleach

We know it is operating well because we get very few people coming to us with glitches or problems. Sometimes, we have to contact the office. A 30-second phone call can sometimes sort out a problem. The people there operate very well, did great work during the pandemic and with the Ukrainian thing and so on, and I acknowledge that. Was the €1.4 million evenly distributed across the offices? Did it depend on the size of the office?

Mr. John McKeon

It was based on the size of the office's claim roll plus the Ukrainian population in the area.

An Cathaoirleach

Okay. I think Mr. McKeon gave a figure of 56 for those.

Mr. John McKeon

Yes.

An Cathaoirleach

When they are dealing with the Department with regard to the level of payment, since they are independent contractors, do they deal with the Department individually or as a body?

Mr. John McKeon

We deal with them at both levels. There is a representative body for them and we find that very useful rather than dealing with 56 people. There are 56 separate arrangements and each person is entitled to it, a bit like social insurance. We deal with them individually but they have a representative body. We think it is reasonable to deal with that representative body. We are very clear that we do not negotiate rates with that. We cannot do that legally but we certainly consult the body, take its views into account and we set the rate.

An Cathaoirleach

That payment was deemed to be irregular in nature because it did not have sanction from the Department of Public Expenditure, National Development Plan Delivery and Reform. Mr. McKeon's reasoning was that, because of the Covid crisis, the assumption was that it was okay. We have covered that ground.

I move on to the urgent needs payment or the additional needs payment. Could somebody please inform me about this? What is the difference between the additional needs payment and the exceptional needs payment? Briefly, please.

Mr. John McKeon

There is no difference, really.

An Cathaoirleach

Why have we a different name for it?

Mr. John McKeon

When we took over the community welfare service, CWS, there were two payments called the urgent needs payment and the exceptional needs payment. They overlapped and were causing confusion. We basically joined them into the one payment and said we would now call them an additional needs payment. That is, in effect, what has happened.

An Cathaoirleach

They are still all applied for on the yellow form.

Mr. John McKeon

One can apply online now.

An Cathaoirleach

It is like the supplementary welfare allowance. People apply for supplementary welfare allowance.

Mr. John McKeon

There are two types of supplementary welfare payment. There are a whole load of payments but the two main types of payment are what is called the basic supplementary welfare allowance, which is €230 a week for somebody who does not qualify under one of other schemes, and the additional needs payment, for which people can apply online or on paper.

An Cathaoirleach

If people apply on paper, do they apply on the basis of the supplementary welfare allowance form?

Mr. John McKeon

Generally speaking, most people turn up in one of our offices and the community welfare officer takes the details from them.

An Cathaoirleach

If somebody asks me if they can apply for those, Mr. McKeon has clarified that the urgent needs payment, additional needs payment and exceptional needs payment have all been amalgamated into one. They are all counted now as additional needs payments.

Mr. John McKeon

Yes.

An Cathaoirleach

Right. Particularly if people are not online, what form do they fill in?

Ms Teresa Leonard

To be honest, I cannot answer that question off the top of my head. As far as I am aware, there is just one form.

An Cathaoirleach

The one that says "supplementary welfare allowance".

Ms Teresa Leonard

Exactly.

An Cathaoirleach

That is all I want to know.

Ms Teresa Leonard

People fill out the form and it goes in. I can tell the Cathaoirleach that 20% of people are now applying online for the additional needs payment, so it has proven useful. As far as I am concerned, it is the one form, but if I have misled the Cathaoirleach in any way, I will let him know.

Mr. John McKeon

Many people apply on the phone too. We have a phone service that people can ring. We will take applications over the phone as well.

An Cathaoirleach

This issue with the forms is the one I wanted to clarify.

Mr. John McKeon

I think it is only the one form but Ms Leonard will confirm it.

Ms Teresa Leonard

If it is not, it will be.

An Cathaoirleach

Is it also available to people who are in low-income jobs?

Mr. John McKeon

Yes.

An Cathaoirleach

How many people who are in employment have received those additional needs payments since that change was made?

Mr. John McKeon

I do not know how many people who are in employment have received it. Generally speaking, before the pandemic, about 90,000 to 95,000 additional needs payments were made a year. During the pandemic, it dropped to about 50,000 because many people were getting the pandemic unemployment payment and so on. It is back up at about 95,000. Of those 95,000, about 20,000 are Ukrainian payments. For example, when Ukrainians turn up, as many do, with just a plastic bag with a few bits and pieces in it, we will give them an additional needs payment. About 20,000 of the 95,000-----

An Cathaoirleach

How many of those payments were made to people who were not in receipt of other social welfare payments?

Ms Teresa Leonard

We do not actually classify them. Most would be social welfare recipients but we do not actually classify them. They come independently.

An Cathaoirleach

I understand that, Ms Leonard, but I am asking-----

Mr. John McKeon

We will look and come back to the Cathaoirleach.

An Cathaoirleach

Will the witnesses come back with a figure? Out of those 95,000, are 10,000, 20,000 or 30,000 in employment? That is what I am trying to ascertain.

Mr. John McKeon

We will come back to the Deputy on that. The additional needs payment is obviously means tested, so most people who are on it would probably satisfy the means test for a social welfare payment.

An Cathaoirleach

What was the total value paid out in those claims in 2022?

Mr. Seamus McCarthy

A total of €57.7 million, according to the appropriation account.

An Cathaoirleach

Whether it is an urgent needs payment, an additional needs payment, or an exceptional needs payment, particularly if it is exceptional or urgent, one complaint we were getting was how long it took to process those payments. What is the average time now?

Ms Teresa Leonard

I can assure the Deputy that there is absolutely no delay in processing those claims nowadays. We have worked over the past two years, and definitely over the past year we have got it fully under control. I am nearly afraid to say it, but we are in a really good position with that scheme.

An Cathaoirleach

What is the average length of time?

Ms Teresa Leonard

It is inside a week to two weeks nowadays. Some 19% of the payments are made on the day on which they are applied for. We are responding very quickly to this.

Mr. John McKeon

Some of the payments are absolutely urgent and need to be paid that day, and we do our best to get them paid that day. Many payments are to deal with things like utility bills, where the utility bill is not due for three or four weeks anyway. One has to differentiate.

An Cathaoirleach

That can work the other way too, where sometimes that risk can be urgent.

Mr. John McKeon

Generally, that is the 20% that we would pay on the day.

An Cathaoirleach

The payments are administered by the community welfare officer. I know I raised this with the witnesses before but I am going to do it again. Mr. McKeon said 20% are online. Some 80% are not online. Sometimes, the people who are most vulnerable are the people who are not online. I think we would accept that.

The term "community welfare officer" tells me it is somebody who is in the community. I do not mean walking around the streets but I would take it to mean somebody who is available. What percentage of community welfare officers are working from home?

Ms Teresa Leonard

Every office and Intreo centre in the country has to have CWOs on duty in the office every day of the week. There has to be people available.

An Cathaoirleach

I wish to ask for clarity. Regarding the branch offices that are contracted, are some of those Intreo offices?

Mr. John McKeon

No. We offer community welfare services in some of them. For example, as well as delivering services, in some cases, the offices provide accommodation to us, so we would have a community welfare officer or employment services officer based in a branch office.

An Cathaoirleach

For example, Rathdowney, Portarlington and Portlaoise are contracted offices, so there is no community welfare dimension in those unless there is accommodation.

Mr. John McKeon

I am pretty sure there is one in Portlaoise but I will need to confirm that.

An Cathaoirleach

I acknowledge the importance of that and the work being done in those offices; it is amazing.

Mr. John McKeon

We have a control office in Portlaoise as well. We have our own premises.

An Cathaoirleach

The three branch offices do phenomenal work. You would not fault them.

I return to the issue around CWOs. The outreach services should be kept under review. Looking at a geographical area – forgive me for being parochial about this – let us take Graiguecullen for example. It is nearly 30 miles from Portlaoise. There is Ballylynan and places such as that, or let us take a town such as Mountmellick, which is closer to Portlaoise at 11 km or 12 km away. However, the second biggest town does not have that presence. The weekly opportunity for somebody to go in and speak directly to a community welfare officer is very important. It is important as well because when officers meet somebody, they get a more accurate assessment of what their needs are or what is going on than just online or a phone call. I ask that in respect of the towns where it is not supplied, the witnesses come back to me with where the community welfare officer-----

Mr. John McKeon

Certainly, that is something we are very conscious of. We have taken a view that, as a minimum, we need a full-time presence of community welfare service staff in our 58 Intreo centres. I will use the example of the county I am most familiar with. Everyone in Longford knows that if they go into Longford Intreo centre, there will be a community welfare officer.

An Cathaoirleach

Where is the Intreo office in Laois?

Mr. John McKeon

Just to give an example, prior to that, community welfare officers travelled around. For example, they would be in Drumlish for a half a day, the following day they would be in Granard and the following day in Lanesborough or wherever. You had to know where the community officer would be at what time. If you needed them on Monday and they were not in your town until Friday, you would have to travel the length of the county to get to them. Having them based permanently in Longford town means that everybody knows where they were from 9 a.m. to 5 p.m. In addition, we still travel to those satellite centres and, by appointment, we meet people in any location, including in their home if they want. They can ring us and if they say they cannot get into Longford town but they need to see us, we will send somebody out to them.

An Cathaoirleach

Which office in County Laois is the Intreo office?

Mr. John McKeon

There is not an Intreo office; it is the branch office that is in Laois.

An Cathaoirleach

There is a control office and three branch offices.

Mr. John McKeon

There is a CWO in Portlaoise.

Ms Teresa Leonard

I wish to add a point. We appreciate that meeting people is good. In addition, we provide a service through our phone service where people can talk directly to a CWO. We answer 98% or 99% of all the phone calls for the community welfare services. We prioritise that line, so it gets answered immediately. If somebody wants to talk to somebody there and then at that moment, we will do that and arrange to send an officer out to the person or meet them someplace immediately. We are fully there for everybody on an ongoing and daily basis. There is no area of this country that anybody who wants to see a CWO cannot do so. They will make themselves available.

If I go a wee bit further, with the Cathaoirleach’s permission, during the weather crisis over the past while, the community welfare officers were out in the community and responded very quickly. On each occasion, we were one of the first services co-ordinated with county councils and the local representatives in those areas to make sure that we had the service there. We take having them available very seriously, and we are available; I guarantee that. Some counties do not have it, and the Cathaoirleach mentioned Laois, and, in fairness, I recognise that. However, it does not mean that people are not available to the people of Laois. It is fully available to them.

Mr. John McKeon

With regard to the Intreo centre in Portlaoise-----

An Cathaoirleach

Before Mr. McKeon continues, can he come back to me and clarify in which offices in Laois a community welfare officer is available and when? I just want to sort out the status of those offices because it can be confusing.

Mr. John McKeon

Regarding the status, I mentioned the branch offices go back to 1909. They are family and they are entitled under their agreements going back to that date. Generally speaking, we have a very good branch office in Laois, so I am not too sure whether the difference between branch office and Intreo centre really matters in that context. If that family ever gives it up, we will do what we did in Enniscorthy and other places and put in an Intreo centre.

Deputy Catherine Murphy

By way of example, one of the offices my constituency office deals with is Newbridge, and it can often be difficult to get through to it. Is the phone answering capacity monitored? It may well be that there are times that are busier than others.

Mr. John McKeon

I will be honest in that we have a very good telephony service for community welfare services and some of our central schemes, pensions and so on but the service for our Intreo centres is not as good. Previously, every office answered its own phones. The offices were dealing with clients at the counter when the phone was ringing, so the phone could ring and ring. We are changing that model and setting up a centralised answering service for our Intreo centres using staff who work from home. We have set that up in the past year or so. We are investing in new telephony systems, trying to get the standard and speed of answer for our Intreo centres up to the same level we have for community welfare services and our centralised schemes. There is a bit of investment and a bit of work still to do, but we are getting there.

Deputy Catherine Murphy

I remember previously the issues of working from home were the cost of energy, that staff could not take computers home, security and so on. How was that overcome with staff working from home?

Mr. John McKeon

That was an initial response where we did not have laptops for everybody. Now staff have laptops. Regarding the Department’s energy efficiency, I think the target set by the public sector was to reduce energy consumption by 50% by 2030. We have reduced it by 44% already, so we are a bit ahead of the game.

Deputy Catherine Murphy

That was not the point but I thank Mr. McKeon for that.

An Cathaoirleach

I ask that the witnesses come back with a note on those branch offices, the services and the CWO. I ask them to send on a note on the difference between a branch office and an Intreo office and their services as well. It would be useful just for our own heads.

We have concluded questions. I thank the witnesses and staff at the Department of Social Protection and the Department of public expenditure for their work preparing for today’s meeting and the information supplied. I also thank the Comptroller and Auditor General, Seamus McCarthy, Ronan McCabe and Catherine for their assistance and the help they have provided the committee.

Is it agreed that the clerk to the committee will seek any follow-up information and carry out any agreed actions arising from the meeting? Agreed. Is it also agreed that we note and publish the opening statement and the briefings provided for today’s meeting? Agreed. I will suspend the meeting until 1.30 p.m., when we will resume in public session to address correspondence and any other business.

The witnesses withdrew.

Sitting suspended at 12.39 p.m. and resumed at 1.33 p.m.