JOINT COMMITTEE ON JOBS, SOCIAL PROTECTION AND EDUCATION díospóireacht -
Wednesday, 5 Oct 2011

Social Welfare Fraud: Discussion with Department of Social Protection

Chairman

I welcome from the Department of Social Protection Ms Anne Vaughan, deputy Secretary General, Mr. Niall Barry, assistant secretary, Ms Kathleen Stack, assistant secretary, Ms Patricia Molloy, principal officer and Mr. Philip Cox, principal officer.

Members are reminded of the long-standing parliamentary practice to the effect that Members should not comment on, criticise or make charges against a person outside the House, or any official by name in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence to this committee. If you are directed by the committee to cease giving evidence on a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

I ask Ms Vaughan to begin her briefing on the progress made on implementing the recommendations contained in the 2009 Joint Committee on Social and Family Affairs report on social welfare fraud; and current and future proposals to tackle fraud. Members should note that in addition to the presentation, they have received copies of a document setting out the Department of Social Protection's fraud initiative for 2011-13.

Ms Anne Vaughan

I thank the Chairman and members for the opportunity to address the committee. Members will have received a copy of my opening statement so I will go through it briefly. They also received a copy of the fraud initiative, which was launched recently by the Minister for Social Protection. This document sets out the Department's plans to address fraud and abuse in the system for the next two years. It also addresses issues that were raised in the 2009 report undertaken by the Joint Committee of Social and Family Affairs. My colleagues and I are happy to discuss this initiative and get members' views on a plan which as we regard as a work in progress. We need to be agile and responsive in this area of fraud control and, as such, we would welcome the committee's input.

Before discussing the control strategy in specific terms, I would like to set it in an overall context to provide the balance that I think we all agree is important in this discussion. Social welfare income and support services impact on the lives of almost every person in the State. Some 1.4 million people each week receive a social welfare payment and when qualified adults and children are included a total of almost 2.1 million people benefit from weekly payments. Over 600,000 families receive child benefit payments in respect of over 1.2 million children each month. The majority of people receiving social welfare payments are entitled to them. Total social welfare expenditure in 2011 will be €21 billion. This equates to 40% of gross current Government expenditure.

There are essentially three elements to the work of the Department. The first is income support payments, as I have just outlined, which are crucial in addressing poverty. The second is activation support and services. Following the reorganisation of departmental responsibilities, the Department now has a much wider role in the provision of activation, employment, community services and income support. Almost 2,000 community welfare service, CWS, have joined the Department since 1 October and FÁS employment services staff, who are due to join us from 1 January, together with responsibility for a wide range of activation programmes at local level, will enhance our ability to interact directly with all our customers of working age in more effective ways. The third element is control of fraud and abuse. It is essential that the Oireachtas, clients, stakeholders and taxpayers have confidence and trust in the social welfare system. Essentially, the objective is to pay the right person the right amount of money at the right time, as it says on the cover of the fraud initiative. Social welfare fraud undermines public confidence in the entire system as well as being unfair to other recipients of social welfare payments, taxpayers and businesses run on a legitimate basis. Therefore, in combating fraud and abuse it is important, first, to keep a balance between the three elements of the system and, second, to keep the interests of all stakeholders in mind. Also, the Department would always say that good customer service is one that encompasses efficient and fair delivery with good controls. Our discussions with the EU, IMF and ECB very much focus on the three elements of the social welfare system and in particular on the need for strong, activation measures and robust controls as a contribution to the overall savings requirement.

There is a lot of detail on the current activities and future plans in the fraud initiative document, which members have, so I will just highlight certain areas. I also wish to dovetail with some of the concerns of the former committee as set out in the 2009 report, which included fraud and error surveys, the level of fraud in particular areas, cross-Border fraud and a public service card. We can go into as much detail as members wish in the discussion.

There are a number of themes and approaches in the new plan, including greater inter-agency co-operation among public bodies at national and local level to combat fraud and abuse. This is helped by the integration with the community welfare service, CWS, and FÁS. Arising from that, a more integrated approach to fraud control can now be realised. A single customer view for control purposes will be created. There will be greater liaison at national level and, in particular, at local level with employers, their representative organisations and businesses generally to ensure good information exchange on emerging fraudulent trends in the labour market, and also to maintain a fair and level playing pitch for all enterprises. We have in mind that employers and businesses would discuss their concerns and issues with our local managers. We want greater visibility of social welfare inspectors on the ground. We are going to examine new ways to recover overpayments and also to examine increased penalties for those operating in the hidden economy.

It is considered that the combination of these elements of the plan will lead to more focused and efficient activity and better deployment of resources. The initiative covers the period 2011 to 2013 and will be reviewed periodically and updated, as required, given emerging trends. Clearly, any new initiatives will have to be examined from a legal, including data protection, perspective.

Over the years there has been and continues to be much discussion on the level of fraud and abuse in the system, including in the earlier work done by the former committee. All stakeholders quite rightly want to eliminate any abuses and, as already said, that is a key objective of the Department. There are a number of different, and possibly confusing, ways of discussing the issue. They include the following. The first is people's own general perceptions of abuse from what they observe around them. In that regard, I should say that approximately 190,000 people work and legitimately claim a social welfare payment. That is due to the deliberate flexibility in the system that encourages people to undertake some form of work. Second is the level of overpayment and recovery – the total level of overpayments raised in 2010 was €83.4 million or 0.34% of total expenditure. A key aspect of control policy is to ensure that appropriate sanctions are applied in instances where social welfare fraud has been detected. Effective debt recovery is seen as an integral part of the deterrent approach. It creates a climate where people who have been overpaid know that they have a responsibility to repay and that the Department will take appropriate steps to effect recovery. Under section 4 of the plan a number of initiatives are set out that will be examined. Third, is the value of control activity. Control savings measure the value of the various activities and are a good indication of how much social welfare expenditure would increase over time if this investigative and control work did not take place. Control savings are not actual moneys recovered by the Department but are an estimate of future expenditure that is avoided. The value of the work, some €540 million in 2011 terms, is already built into the estimates and is seen as core control work. This target is monitored on a monthly basis at scheme and regional level. The provisional target for control savings for 2012 is in the region of €625 million. The targets for control savings, reviews and employer inspections will be finalised later in 2011 and will be influenced by a range of factors, including the prioritisation of high risk sectors.

The Department undertakes fraud and error surveys based on large-scale random samples of clients. Based on these surveys, schemes for people of working age have been found to exhibit higher levels of fraud than other contingencies. In particular, the jobseeker's allowance, one-parent family allowance and disability allowance have shown more pronounced incidences of fraud risks compared to other schemes. Conversely, in schemes such as the State contributory pension fraud and error surveys have shown low rates of fraud or exposure to fraud risks.

In the past five years, the surveys found that the fraud and error rates among various schemes ranged from 1% in the case of the State contributory pension to 1.9% on non-contributory State pension and to 3.1% of expenditure on jobseeker's allowance. Surveys on disability allowance and on one-parent family allowance are currently nearing completion. Details of the programme of surveys planned for the Department in the medium term are set out in section 9.2 of the initiative.

Current measures to control fraud and abuse include desk reviews of claim papers, home visits, the issue of mail-shots, database checking, and medical reviews in the case of illness payments. Controls are exercised at both the initial claim stage and at subsequent stages during the claim life cycle. The target for reviews in 2011 is approximately 780,000. The target for future years under the plan will be set later this year in the context of the outturn for 2011. The provisional target for the number of employer inspections in 2012 and 2013 is in the region of 2,500 to 3,500 each year. These inspections have a good demonstration effect and are broadly welcomed by the business community.

The Department will hold a seminar in the next month or two with all stakeholders on this fraud initiative including representatives of social welfare recipients and business to get their view. As part of the drafting of this plan consultations took place with staff of the Department through eight regional seminars which were held in August. In addition, over the lifetime of this initiative the Department plans a targeted advertising campaign to take place at local level and through the website. That will highlight the negative effects of social welfare abuse on all of us.

As part of its fraud investigation and control activities, the Department works with a range of enforcement and compliance agencies. In particular, investigators work closely and collaboratively with other agencies to ensure that social welfare abuses are comprehensively deterred and detected. For example, we work with the Revenue Commissioners, the National Employment Rights Authority, NERA, the Garda Síochána, the Criminal Assets Bureau, CAB, the Garda National Immigration Bureau, GNIB, FÁS, the HSE, local authorities, An Post and the Taxi Regulator. In the context of cross-Border co-operation, the Department has established both strategic and operational structures to combat cross-jurisdictional social security fraud. That is both North-South and east-west.

The Department has, with the Revenue Commissioners, through the operation of joint investigation units, identified the risk inherent in the shadow economy as being a key corporate priority to be tackled. A sectoral approach is being taken with projects and control operations under this initiative focussed on the following - the construction sector; trade suppliers; streetscape projects in individual towns and cities; the taxi sector; white collar sectors which have the potential to engage in cash transactions; and other sectors including markets, casual trading, couriers, clothes recycling, car valeting, security sector, and haulage. The required joint approach here comprises agility and early response where new fraud or abuse trends are detected. Details of work in this regard are set out in sections 6 and 7 of the initiative.

Identity fraud and identity theft are issues with which public bodies are rightly concerned, both in terms of prevention and detection. The personal public service number, PPS number, is an individual's unique reference number for dealing with Departments and public bodies. It is necessary to have effective controls around the number registration process to guard against fraud and to protect the integrity of both the Department's and an individual's data. Evidence of identity is a vital element of the allocation of numbers process.

The Department will begin the phased introduction of the new card this week. The introduction of the card and the registration process is currently being piloted in a number of local offices in the Department, including Tullamore, Sligo and King's Inn in Dublin. It is anticipated that some 4,000 people will be issued with cards by end of year. Under this plan, roll-out of the card will commence this month and while it will be done as securely and speedily as possible, it will take a number of years to complete. The initial focus will be on roll-out to persons of working age.

The specification for the card provides for one which is a standard credit-card size with multiple protection mechanisms to prevent and-or detect tampering with the physical card and its contents. The card also incorporates identification features, including a biometric photograph and signature, thus making it harder for people to use false identities. It contains personal information, inscribed on the face of the card for visual inspection and also electronically encoded on the card for access by a secure card reader. This card will act as a key for access to public services in general, identifying and authenticating individuals as appropriate and where required. Further details are given in section 8 of the initiative.

I should say, because we have started roll-out or production this week, my colleague, Mr. Niall Barry, has brought along samples of the card so that the committee may see it. If members of the committee are interested, we can arrange in due course to issue anybody who is interested with a card in our King's Inn office in Parnell Street. We can do that, possibly during November.

I hope I have given the committee a flavour of the work in progress and I very much welcome its comments and views.

Chairman

I thank Ms Vaughan. Some of the members might want cards all right.

I will take questions from the members in twos, if that is acceptable to the officials, with Deputies Ó Snodaigh and Halligan first.

Deputy Aengus Ó Snodaigh

Gabhaim buíochas le Ms Vaughan as an méid atá ráite aici. There is a considerable amount of newspaper coverage on welfare fraud, which is often sensationalised. We as a committee, but also the Department, need to be careful that the figures presented here and on annual reports are not misrepresented.

The Sunday Independent headline on 25 September was, “1-in-4 lone parent claims are bogus”. That type of headline is sensationalist. It feeds in to those who want to reduce the welfare rates whereas, in fact, it is not accurate. If one reads the article’s fine print, it points out that this is a sample of 270 cases which were already suspected of fraud and out of that, only a quarter were fraud. It shows that often there is suspected fraud and, in fact, it is not fraud.

The other part of that same article referred to non-residents who were defrauding the State to the level of €105,000 per year. They could not do their sums correctly. If one worked on the figure reported, which was €3.24 million for the number of people, the level was actually €10,000. That is sensationalist. That is what publishers do to sell their newspapers, but we should never feed in to it.

I welcome the initiatives to deal with fraud because it is a scandal. Is Ms Vaughan concerned when those type of headlines arise? It makes the Department's work more difficult if everybody is saying that all of these social welfare recipients are ripping off the State, ripping him or her off, or whatever, whereas, as she correctly stated, the vast majority, 96% or 97% of recipients, are legitimately claiming their correct entitlements.

The level of error is another aspect. There are figures given of the level of error and overpayment. Clerical error, the error by the applicant filling out the forms in the first place, is also of concern. A report by the Comptroller and Auditor General dated September 2010 was critical of the Department stating that overpayments were not recorded properly. The Comptroller and Auditor General stated that the Department needs to improve its systems to measure and monitor the extent of which payments are stopped or reduced due to non-entitlement but where overpayment debts are not recorded. Often overpayment or error is lumped in with fraud, and I have argued that for a number of years. If they can be separated, then one can see where the human element is and then where there are those who are genuinely engaged in fraud who, in fact, should be prosecuted.

Another criticism that the Comptroller and Auditor General made was that the level of prosecution did not seem to match what was called fraud. I note, from the figures at the time, that there was an increase in those who were being prosecuted. Can Ms Vaughan inform us what has happened in that regard in the past year or so?

I have noticed once or twice in my constituency office cases where I have identified where somebody is receiving too much in the case of overpayment that the claimant is in absolute panic. Claimants fear that if they report it, not only will their weekly payment be reduced but they will be forced to make a repayment to deal with the overpayment even though it was not their fault. Sometimes that acts as a deterrent. Has there been any consideration given, for instance, to an amnesty, in this area not on fraud? I refer to an amnesty where claimants genuinely understand that they have been receiving an overpayment and they need to regularise it, where as fraud is where somebody specifically sets out to defraud the State of a sum of money. There are probably another few issues. I will leave them until later on when I can come back in.

Deputy John Halligan

I thank Ms Vaughan for her comprehensive document.

I concur with Deputy Ó Snodaigh that the vast majority of recipients of social welfare would be new entrants into the social welfare system who would have been working, perhaps all of their lives, and would not even know how to claim social welfare, and whose objective would be to avoid being on social welfare and to be working.

Since I have been in politics, year after year we hear of this fraud within the social welfare system. At times, it is incomprehensible. I am looking at the types of welfare fraud here. I went through the document carefully. For instance, on Ms Vaughan's analysis, number one was concurrent working and claiming, where a person claims a payment such as jobseeker's benefit or allowance, etc., takes up an employment and does not notify the Department. I would have thought it would be compulsory for an employer to notify the Department that he or she has taken on an employee. Would a simple way of finding out who is working and who is not be to put the onus on the employer first? I note Ms Vaughan later mentions this but she does state that this is one of the most significant types of welfare fraud and all of the newspapers report this continually. I cannot understand that there has not been a system in place where an employer, for instance, would notify the Department of Social Protection, the Department of Health and various other Departments that a person, stating his or her PPS number, P60 or P40, is working with him or her. Ms Vaughan might come back to me on that issue.

On multiple claiming or impersonation, there are as many using the banking system as there are on social welfare, and there does not seem to be as much fraud with credit cards, although, I accept, there is a percentage of it. We do not hear as much of it there as we hear of it in social welfare, and I am glad that the Department is bringing in a card system which may prevent that. I cannot understand for the life of me why this card, on which there is a person's number, etc. so that one could not be passed about and where the person's photograph is scanned on it, was not in place over the past number of years. I am pleased with the system.

I have a major issue with the indication in the delegates' document that in respect of persons in receipt of disability benefits, reviews will be done "on a systematic basis through personal medical assessments and case reviews". I dealt with a case some months ago where a constituent who had a serious medical condition, in respect of which she had the relevant documentation from her physician, was asked to come before a review board. I do not understand that. If a person has a doctor's or specialist's certificate indicating their eligibility for invalidity benefit, why should he or she be brought before a board? What is the operating cost of these boards and appeals boards? I understand members of these boards sometimes meet in hotels around the country to bring in people who have a bone fide certificate from a GP or specialist indicating they are incapable of working and are entitled to disability benefit. I am sure other Members have encountered constituents with the same experience. I have spoken to people with severe rheumatoid arthritis - one can see from their hands that they are unable to work - and been asked to represent them before a board. Why is a doctor's advice, particularly that of a specialist, that a person is not capable of working not accepted?

In regard to the section on future developments regarding debt recovery, we have been quick to give amnesties to people who have robbed the State through tax avoidance on a large scale. We should bear in mind that a percentage of people who receive an overpayment from the Department of Social Protection do not know what to do about it. They panic, let the matter go for several months and before they know it the overpayment has amounted to €4,000 or €5,000. They then face the worry that they will be liable to repay that sum all at once or that all their entitlements will be revoked. The Department must work on its public relations to reach out to genuine people who are concerned and unsure about what to do in the face of overpayment of benefits.

The same section states that following the death of a customer who owes a debt, "the Department will have a claim on the estate remaining". I am concerned about the implications of this for a person, for example, living in a family home with his or her parents. Will Ms Vaughan clarify this issue?

Ms Anne Vaughan

I will deal with the questions as they were asked and defer to my colleagues where necessary. I agree with Deputy Aengus Ó Snodaigh that sensational headlines are unhelpful. I emphasised in my opening statement, as in the document we supplied, the need for balance. Notwithstanding the fraud initiative, we wish to make clear that the core purpose of social welfare benefits is to address social inclusion and poverty. There must be balance in this regard.

In regard to the level of fraud and error, the Deputy raises issues the Comptroller and Auditor General has also raised. To clarify, in regard to overpayments raised, some 31% are due to fraud, 51% to error and 12% are in the estate area. In other words, yes, not all overpayments constitute fraud. To clarify - and this is a concern of the Comptroller and Auditor General to which the Accounting Officer of the Department will respond at the Committee of Public Accounts - it is not always possible to raise an overpayment. To do so, the deciding officer, who is statutorily appointed under the legislation, must have enough evidence that there was fraud in the past. Where we have the evidence, we will raise the overpayment and it will be categorised either as fraud or non-fraud. However, sometimes we do not have sufficient evidence to go back but we have sufficient evidence to stop the payment now and for the future.

In regard to prosecutions, we took 341 prosecutions last year as well as a number of civil cases. That figure includes personation cases and theft cases which would also have gone to the Garda. It is important to note that we do not see ourselves as primarily a prosecuting Department. It is a balance issue. We are aiming, especially under this plan, to work more efficiently and smartly through better use of data to identify at an early stage claims where there is fraud or abuse so that they do not run all the way to prosecution. That is a better approach. In terms of the types of cases we have prosecuted, the data bear out that we have been taking more high-level prosecutions. Fraud is fraud and abuse is abuse, but we must be targeted in our approach to prosecutions. The average level of overpayments in terms of the prosecutions has been increasing. That is our objective. There is, quite rightly, a huge amount of work involved in bringing a prosecution to court. That work is done by our inspectors, often in co-operation with other agencies. It is a better approach to seek to catch the difficulties earlier in the process.

Both Deputies Ó Snodaigh and John Halligan referred to constituents who had been paid too much in social welfare benefits and were panicking. That is understandable and is not desirable. The best advice I can give is for such people to go to their local office and talk to us about it. They will be dealt with sympathetically. I did not refer to it in my opening statement but a section of our document deals with the possible causes of fraud. We acknowledge that there is a complexity in the system - we hold our hands up in that regard - and a need for simplification, as many commentators have argued. We have spoken about rights and responsibilities and the possibility that people genuinely do not understand. We accept that we may need to do more work in the information space to address that. We also refer to behavioural norms and what is deemed acceptable in society, including what may have been tolerated in the past but is no longer accepted. Perhaps we sometimes have not made it easy for people to understand the system. As someone who has seen a large number of prosecution cases going over her desk, I always like to see how each case started and what defence the client is making. We must weigh the social inclusion elements on top of that.

On the question of an amnesty, I fully accept that Deputy Ó Snodaigh raised it in the context of the person to whom he referred. That case would be dealt with sympathetically and I would advise the person to talk to us. The question of a broader amnesty is a decision for Government. As with everything, there are pros and cons. The position of the Department is that we are not greatly in favour of full-blown amnesties, but I fully accept that was not the context in which the Deputy raised the question.

Deputy Halligan asked about co-operation with Revenue. We receive notification of commencement of employment from the Revenue Commissioners. Again, this is an area in which I would like us to be quicker and smarter in reacting. Many prosecutions are commencement of employment based. In a way, as I said, it would be better if we could catch them earlier. I will ask Mr. Barry to say something about the cards. It is good that we have them to show members and that they are welcomed.

When it comes to illness, all I can say to the Deputy is that there must be checks and balances. All of us - both in the Oireachtas and taxpayers - must have confidence in the social welfare system. In that context, the Department considers it needs its own medical advisers. We have independent advisers, including doctors and medical referees, who are employed by us and nobody else, and the chief medical adviser obviously oversees the process. It is reasonable that we review material coming to us from GPs and consultants, and sometimes there are issues in this regard. When somebody is called for a medical assessment, or at the appeals process, it is always open to him or her to bring additional medical evidence, and that often happens. I note there are a number of cases in which Deputy Halligan is unimpressed with us. If he wishes, I will ask the chief medical adviser to have a look at these cases, as I am genuinely interested. The Deputy is closer to the situation than I am, and I just need to see what the cases are. If he wants to me do this, I will. I will be talking to the chief medical adviser in this regard.

I will ask Mr. Barry to say a little about the card and then Ms Molloy will respond on the estate duty cases.

Mr. Niall Barry

The Deputy has asked about the amount of time it has taken to put the card system in place. I cannot comment on some of the things that happened beforehand, but we received approval to establish the card programme at the end of October 2009. We have since concluded contract negotiations, built a production plant in Bray, and designed the card and the system. We have carried out a number of related procurements and done a lot of software development work internally. Our systems, as Ms Vaughan said, are generating the card in local offices. The system is on trial. The key point is that it is pointless issuing the card, unless there is a secure registration process in place. Putting such a registration process in place in many of our busy local offices is something we need to do carefully and we must make sure it is done right. I am glad to say that after some time we are finally issuing the cards. As I said, I cannot really comment on what happened before we started.

Ms Patricia Molloy

On the recovery of overpayments from estates, section 4.2 of the fraud initiative details how repayments are obtained, as well as our proposals for the future. Where a person has an overpayment recorded against him or her - typically, obtaining more money than he or she is entitled to under one of our various schemes - and whether that was fraudulent or unintentional, the Department seeks to recover the money from the customer. Most overpayments are not fraudulent; last year just over 30% of all overpayments were suspected to be fraudulent or were fraudulent. For the sake of fairness to the people who supplied their full details and obtained only the amount to which they were entitled, and also as a deterrent against others trying to get more money than they are entitled to receive, the Department seeks to recover all overpayments while it can. However, we do this in a reasonable manner. In most instances where we are recovering overpayments, we are actually taking only €2 per week from a person in receipt of a social welfare payment. In other cases, customers want to and are able to repay more quickly, and we facilitate this in negotiation with them.

Recovery from a person's estate takes place when a person has not repaid an overpayment before death and where he or she has an estate. The Deputy mentioned the possibility of recovering overpayments from parents. That would not happen; it can only be recovered from the person's own estate. Most cases in which we recover from estates have to do with non-contributory old-age pension. We recovered almost €7.8 million from estates last year. These were old-age pensioners who had more money than they had disclosed, other assets or possibly other income or pensions they had not disclosed when receiving their pensions, and the overpayments usually had continued for a long time. When we obtained the details of their means after their deaths from the schedule of assets, we reassessed the pensions to which they would have been entitled and recovered the overpayments from their estates. However, while a person is alive, we recover only a certain amount that leaves him or her sufficient money on which to live. If anybody has a difficulty in making an overpayment, he or she should talk to someone in the local office.

Deputy Anthony Lawlor

I welcome the initiatives the Department has taken in the last couple of months. What is the timeline from inspection to criminal proceedings? From my own research in County Kildare, there is a 33% rate of criminal proceedings after inspections. Is this consistent throughout the country?

I have a suggestion to make. Most of us have seen the advertisement about insurance fraud on the television which shows a person taking money from somebody else's pocket. What about something like this, but with the national telephone number for fraud reporting? This would encourage the rest of us, including the 95% of claimants who are legitimate, to identify those persons claiming fraudulently, whether they are Irish or non-Irish citizens.

Deputy Seán Kyne

I thank the officials for their presentation. Having listened to their remarks and consulted the fraud initiative document, I am delighted to hear them talking about advertising and so on, as Deputy Lawlor mentioned, because a public awareness campaign would act as a deterrent to those committing fraud and reassure taxpayers that something was being done to tackle the problem. There is, unfortunately, a culture of entitlement, but there is at the same time a large number of genuine cases which every politician comes across in clinics - heartbreaking cases that we want to see processed more quickly. There is, however, a cohort of people who know how to defraud the State, not just through social welfare claims. Their line of reasoning is that as certain millionaires are getting away with it through legal tax loopholes and so on, why should they not take a few pounds also? Thus, there are two levels of fraud that we must tackle.

The officials commented on the addition of community welfare officers and FÁS personnel. Do the community welfare officers not already have access to social welfare systems? How will this combat fraud, or is there another reason such as efficiency improvements? What interaction is there between the IT systems of the Revenue Commissioners and the Department of Social Protection? Will the new card help this interaction? What schemes are most open to fraud? I imagine fraud cannot take place to a great extent in schemes such as child benefit.

As I mentioned when this issue was discussed first, there are things I would like to say in private session that I cannot say in public session, lest it get back to my local constituency. There are things that go on that we know about, but I would not really want to talk about them. Perhaps there is another forum in which we might be able to do so. There are certain things I could say, but, unfortunately, I am not brave enough to say them at this juncture. I commend the Department for its work in combating fraud.

Senator Marie-Louise O’Donnell

During the summer, we visited the Department and I went in with one attitude and came out with another. I remember saying to the deputy secretary general that she was running a mini-city.

Let me preface my remarks by saying most people do not defraud the system. We leave that to the clandestine behaviour of clever people who live offshore. However, I have to ask a few questions. The deputy secretary general spoke about social welfare inspectors and talked about their visibility. How many are in the Department? She stated that the biggest culprits are those on jobseeker's, one-parent family and disability allowance and that the Department has different measures to control that, such as home visits, data checking and medical reviews. Are the same inspectors involved in carrying out these measures? How many people are involved? At whom exactly is the advertising campaign aimed? Where will it fall? It is being aimed at the culprits, the general public or whistleblowers. How secure is the new public service card? I know of people who have five or six passports in this country and they work extremely well. How long will it take before the card is introduced at national level? I know it has been used on a trial basis with 5,000 people.

Ms Anne Vaughan

I will try to reply to most questions, but I will ask Ms Molloy to deal with the question raised by Deputy Lawlor about criminal proceedings.

The issue about advertising and free-phone numbers ties in with Senator O'Donnell's last point. The advertising on the radio, on billboards and so on is very expensive. Any sort of nationwide advertising will be extremely expensive and we have to take that into account. Having spoken to our officers at our eight regional seminars, we want to do advertising through local media. In particular, we have had much success with local radio over the years. That is the plan, rather than a national media campaign. We may change our minds, but that is what we have in mind at the moment so that it is cost effective and we can see the effect of it locally.

Deputy Anthony Lawlor

Is the Department then targeting areas to be considered black spots when it goes local?

Ms Anne Vaughan

One of the themes of our control initiative is to make better use of local knowledge and operate at the local level more efficiently with employers and enterprises. Where employers or businesses may not be impressed, they should come and talk to us about it, and we should react to it, rather than just talking generally. I am very keen on local engagement with representatives and I am very keen at national level to do that as well. Mr. Cox and I would be involved in quite a bit of that.

Advertising would obviously be in local newspapers, so that is out there for the community that reads those-----

Deputy Anthony Lawlor

Are the black spots then identified?

Ms Anne Vaughan

Yes. I identified in my presentation where we currently see high risk areas and this ties in with that. The so-called hidden economy is not about big or small enterprises, but the fact that they are cash based, which is where we focus. The campaign is local, targeted and would tie in with the point about visibility and with these street scape projects that we want to do. We would do them with the Revenue Commissioners and other agencies where it made sense. That is the plan of campaign.

I also said that we need to up our game a bit on the website. Our website is very good in giving information about entitlements, but we also need to beef it up a bit in respect of rights and responsibilities. We might do some work there.

Deputy Kyne spoke about entitlement culture and I spoke about it as well. Senator O'Donnell pointed out that there are people who always know how to defraud. The trick is to be agile and keep up with that. Mr. Cox heads up our special investigation fraud unit, which is specifically targeted at the high end of fraud. Fraud is fraud, and as far as the social welfare system is concerned, we need to address it. There needs to be credibility in the system. What happens elsewhere is for others to deal with.

I was asked about the community welfare service and FÁS coming into us, and how that will make a difference. Over the weekend, our staff numbers grew from 5,000 to over 6,000. It will make a difference in many ways. The community welfare service and the Department know each other well. That service has been with us on secondment since 1 January, and I can see how it makes a difference. There is more sharing of information and more trust between officers when they are part of the same organisation. The synergies and the savings will be in sharing local intelligence. At the same time, we are also trying to improve processing times in our own local social welfare offices and subsequently reducing recourse to the supplementary allowance payment from the community welfare service. It is more "once and done", and that is happening in many areas now. That will free up the community welfare officers to do other work in the social protection area. It may include inspection and more of what the community welfare service was originally set up to do, which is the welfare role.

We are very much in discussions with FÁS on a number of projects at the moment, but we hope that it will be joining us formally from 1 January. It is another pool of staff who are all dealing with the same customer group. There is a huge overlap in the customer group between what we traditionally dealt with in the Department, the community welfare service and FÁS. There are obviously differences, but in both the delivery space and the control space, there should be improvements.

I was also asked about revenue and social welfare. I will ask Mr. Barry to say a little bit about that, and ask Mr. Cox to say something about it in the non-IT space. That is very important and we are doing much work in that space.

As I said in my opening statement, schemes that worry us are in the working age space, the jobseeker's space and the one-parent family payment. Deputy Ó Snodaigh raised a point about some of the projects we set out in the fraud initiative. I want to be absolutely clear that they were targeted projects. The sign off rate was deliberately quite high. We would be worried if it was not, although I take the Deputy's point that it was not 100%.

Deputy Kyne referred to child benefit. Our main issue in that regard, on which major control work is carried out, relates to non-residency and ensuring people are still entitled to receive their payments. To be clear, under EU rules one does not have to be resident in the country in certain cases. An individual or his or her child can be non-resident.

I accept what the Deputy said about wanting to discuss matters with us in private session. No more than is the case with members of the public, we will take any information people wish to offer by means of our freefone service. Alternatively, I would be happy to meet any member on a private basis. As I stated in reply to Deputy Halligan, regardless of whether people have a delivery problem or a problem relating to fraud, so to speak, we are equally open to meeting them to discuss matters. It is much better that people inform the Department - be it at my level or at local level, whichever is more comfortable for them - and we will follow up on the evidence they provide. That is a theme I am trying to communicate to members of the public, employer and trade organisations and representative groups. Most people I meet do not condone fraud. If anyone wants to discuss matters with me off-line, that would be perfect.

Senator O'Donnell inquired about staff numbers. The work of approximately 600 staff in the Department involves control. Regardless of whether it is taking a claim at a counter or visiting someone in the community, there is an onus on all our staff to be vigilant in respect of control issues. There are over 400 social welfare inspectors, but not all of them are dedicated to fraud and control work. Since the level of unemployment increased, many of them have been involved in the processing of claims from new applicants. Initial claim-taking and claim investigation are almost more important than reviews. If we could stop abuse at the outset, it would be much better. Over 200 staff are dedicated to carrying out control work. The special investigations unit which Mr. Cox oversees and which, as stated, operates at the high end has approximately 89 staff. We can come back to the Deputy on that matter, if necessary.

I referred to the advertising campaign in reply to Deputy Lawlor, but Deputy Kyne asked a very good question about those at whom it is aimed. At one level, it is aimed at everybody. Regardless of whether it is persons who are in receipt or who hope to be in receipt of social welfare, whether it is taxpayers or Members of the Oireachtas, everyone has an interest in the matter. Depending on what we are trying to achieve and our level of local knowledge and intelligence, be it in respect of a small town, a village or a large urban area, we operate our campaign in different ways. In the context of the fraud initiative, we have provided samples of work done. Most of the information on the initiative refers to targeted work we carried out in areas in which we suspected issues had arisen.

If members wish to ask additional questions, they should not hesitate to do so. Likewise, if they consider I have not provided adequate answers, perhaps they might bring this to my attention.

I will ask Ms Molloy to deal with the position on criminal proceedings and Mr. Barry to comment on the security of the public services card. Senator O'Donnell asked when the card would be rolled out nationally. I have stated we hope to issue 4,000 cards by the end of the year. However, it will take a number of years to issue cards to all citizens. There will be a need to explore how we can form alliances with other groups in order to speed up the process. However, the plan is to proceed as quickly as possible. There is a balance to be struck between moving quickly and ensuring everything is secure.

Ms Patricia Molloy

Where a customer commits a social welfare offence, he or she can be prosecuted. In the past couple of years we have designed a weighting system or matrix on how to select cases for prosecution. This takes into consideration an number of factors, namely, the length of time for which the person concerned was defrauding the Department, the amount of the overpayment, whether the person has previous convictions for social welfare fraud and whether he or she incurred fraud overpayments in the past. We consider the amount of the overpayment in each case and run it through the matrix and apply the relevant weightings. We select cases for prosecution on that basis. In order to bring a case to court, there must be a good level of evidence. It must be substantial and we need to be satisfied that the person willfully and knowingly sought to defraud the Department.s

Last year the Department referred 209 cases directly to the Office of the Chief State Solicitor for prosecution. Most of these were across the various social welfare schemes and included a number of employer offences. In addition to these 209 cases, the Department referred over 130 cases directly to the Garda. These were more high-end fraud cases and typically involved social welfare customers who were claiming under a couple of false identities or under a name that was not their own through the use of someone else's PPS number. In total, last year the Department instigated civil proceedings in approximately 350 cases. Some 254 cases were finalised in the District Court in 2010 and fines were handed down in 165 of these. A total of eight individuals were given prison sentences, while 11 were sentenced to community service. A further 26 were dealt with under the Probation Act.

Deputy Anthony Lawlor

I think Ms Molloy may have misinterpreted my question.

Ms Patricia Molloy

I apologise.

Deputy Anthony Lawlor

My research indicates that 30 inspections were carried out in County Kildare in the first half of last year and that ten of these led to prosecutions. This indicates a prosecution rate of 33%. Would that figure be consistent across the country? The number of inspections carried out in County Kildare was very low, but the prosecution rate appears to be high.

Ms Anne Vaughan

Perhaps I might comment on the matter, in respect of which we previously wrote to the Deputy. As he indicated, there were infringements in ten of the 30 cases involved. However, it would not necessarily be the case that prosecutions were pursued in all of them. That was the position. The inspectors examined the position with regard to 30 employers and discovered difficulties with ten. What happened next? Prosecutions may or may not have been pursued. I must make it clear that there would not be a huge number of employer prosecutions. A figure of one in three - or 33% - is high in the context of infringements. There might be local circumstances - I do not necessarily mean from a business point of view - which obtain in County Kildare, but I know there are extremely experienced inspectors operating in the area and a good number of employer inspections would be carried out there. To be clear, the cases to which the Deputy refers would not necessarily lead to a prosecution.

Mr. Niall Barry

Deputy Kyne referred to connections with Revenue. We have a strong collaboration with it. In the context of the systems involved, we exchange information with it on a regular basis. It sends us files on cessations and commencements of employment, etc., on a weekly basis and we send it files on payments made under certain schemes on the same basis. There are other categories, in respect of which we exchange information with it. Some data are exchanged on an annual basis, while other data are exchanged weekly. A great deal of work is carried out between us at a technical level. There is a joint technical group involving staff from the Department and Revenue which meets on a regular basis to investigate additional ways in which we can work with each other. That is the information exchange and I hope I have answered that question.

Senator O'Donnell asked about the security card and there was a question on length of deployment. I could go into this in great detail but it is probably enough to say there are many security features built into the card. The card differs from many others in that it is polycarbonate and made up of many layers. The photograph is engraved by laser on a subsidiary layer of the card, which means it cannot be taken off. If attempts are made to change it, the work is very evident. There are other features, such as optical-variable ink, ultra-violet technology and micro-text. There is a host of security elements, some of which I would prefer not to talk about.

It is roughly comparable with the current passport. It has been mentioned that people have multiple passports, which highlights the fundamental issue; it is not the security of the document, card or passport that is at issue but the security of the registration process around it. That partly addresses the second question of how long it will take to roll this out. We must have a secure registration process and that is one of the reasons we have tried to get local offices to ensure our processes work. It will get rolled out as fast as we are able to securely register people.

Our primary aim, as a Department, is to target our constituents. We are in discussions with the Department of Public Expenditure and Reform about resourcing that aspect and we are also discussing how we could get a wider roll-out to other cohorts where public service agencies would have an interest. I cannot give a definite reply stating that this will be done in a year or two but we will hit new claimants on more critical systems, such as jobseeker's allowance and jobseeker's benefit, in the next year or so.

Senator Marie-Louise O’Donnell

It seems to be one of the most critical elements. I know it is time-consuming and all the boxes must be ticked within interdepartmental discussions. It seems to be the most critical issue is identification. The goal is to pay the correct amount of money to the correct person at the right time. The resources should be in place for this to happen.

Chairman

A vote has been called in the Dáil so we must suspend the meeting soon.

Mr. Niall Barry

I lost the thread of the question.

Senator Marie-Louise O’Donnell

It seems that the goal of giving the right money to the right person at the right time is the most fundamental part of what the Department is trying to achieve. Is it the case that the Department does not have enough money to initiate the programme faster or is there a problem with registration? The registration process seems to choke any movement. What needs to be put in place to make this happen faster, as it is a fundamental process?

Mr. Niall Barry

The primary obstacle is around the staff needed to register people and the extra time required. The engagement we have with the Department of Public Expenditure and Reform is very positive and it is not as if we are trying to get material that it is unwilling to give. We must determine what is needed. We had to run a pilot when all the information was in place to quantify what was needed. It would be pointless to say that we need "X" when we actually need "2X" or a half "X". There is a certain amount of groundwork to be done, which is complete, and we are engaged in discussion. There is nothing specific to stop it being rolled out.

Chairman

We must leave it for a few minutes. The Senator may ask further questions informally while we are in the Chamber.

Sitting suspended at 11.15 a.m. and resumed at 11.30 a.m.

Chairman

We will resume. I call Deputy McFadden, who will be followed by Deputy Joan Collins and Senator Healy Eames.

Deputy Nicky McFadden

I thank the witnesses for an excellent presentation and congratulate them on the card. I was a member of the former committee and the former Minister, Mary Hanafin, was a very strong advocate of the card. It is important to commend her.

Lone parents were identified as a risk area and I agree with Deputy Ó Snodaigh who spoke about sensationalism and concern around lone parents. However, I am a lone parent and I have serious concerns, although 57% of lone parents work. I have concerns in regard to families being able to live together, including mothers and fathers. That arose at the last committee and we discussed it at length. Will the officials comment on the disincentives to families being together and on ways to encourage families to be together legally and above board? Ms Vaughan said the majority of people receiving social welfare payments are entitled to them. I commend her on that and on her attitude.

Deputy Joan Collins

I thank the officials for coming in and giving us this comprehensive report. The fraud initiative is specifically on the agenda. I wish to re-emphasise the fact there is very little conscious fraud and if there is, it should be dealt with appropriately. There seems to be a lot of emphasis on the individual. What emphasis is being placed on employers and companies? Have there been many prosecutions in regard to employers knowingly paying someone when they knew they were on social welfare, whether jobseeker's allowance or otherwise?

Do the officials believe that not having more direct labour is causing more problems in regard to smaller companies employing people off the books? I spoke to a SIPTU shop steward who went on to a construction site to see if people were registered with the construction industry monitoring agency only to find that nobody on the site was registered and that people were all from the North. That type of thing is going on. We know newspaper companies are contracting work out to drivers. These are very real problems. There must be balance and the focus must not only be on the individual but companies and those responsible for employing must also be held to account. Have there been many prosecutions in that regard?

I have the greatest respect for community welfare officers and the services they provide. They are on the ground and they know what is going on. I welcome the fact that Ms Vaughan said they have been working very well together and that the people on the ground know what is going on.

We expect that €625 million will be saved as a result of fraud prevention. Is there any assessment of how much the Department saves as a result of people not claiming their proper entitlements? Many people going on to welfare are very new to it as they have worked all their lives and never had any reason to go to a dole office or the Department to find out what they are entitled to for their family etc.

I refer to the point made about the entitlement culture. There is very little of that. Certain people believe they are entitled to things but it is not prevalent. Most people do not want to be on the dole. They constantly say they want to work and to get back into employment. Ms Vaughan made an important point that people get what they are due.

Is there potential for a one-stop-shop? I know MABS plays a role and that we have the information centres. If there was a one-stop-shop people could go to it and say they have lost their job and they have so many children and a wife or a partner. They could be assessed very quickly and could be told what the State has put in place to protect them from poverty. That could be considered.

In regard to the question of lone parents, which was raised by a previous speaker, it is a very blurred area because fathers want to play a key role in their children's lives and want to be part of the family. I have come across instances where there has been a check because the father visits quite regularly and brings the children to school. People do not know what to do, whether they should get a divorce even though they are officially separated.

I am very wary of encouraging people to contact the Department to say someone is working when he or she is not supposed to be. We came across a situation where a young man was claiming and someone telephoned without giving a name, address or contact number to say he was working. The inspector spent almost two hours with the person going through all the papers and it turned out that he was not working. If there is a procedure and someone is allowed to telephone and falsely claim that someone is defrauding the system, the person's name, address and PPS number should be taken. If it is proved that there has been misuse of time, that person should be penalised because there will be situations where people will telephone and cause distress to families whereby children walk in the door to find an inspector talking about their father working at night and so on when it is untrue. Rights and responsibilities should apply to everybody.

Senator Fidelma Healy Eames

I thank Ms Vaughan for her presentation. I commend the officials on their work in trying to ensure the Department of Social Protection achieves social justice and gives payments where they are genuinely due.

Some questions related to the Department's work in the fraud area. Are there any grounds under which one can legitimately claim disability benefit and simultaneously earn a full-time income from the State? Does this constitute fraud? Was there ever a time when this was not fraud?

We talked about the type of information we get but at the same time, we do not validate ourselves. For example, a great ally of the Department of Social Protection could be the postman. Recently I was informed that a young person was using another address instead of the home address and was very annoyed with the postman when he delivered the letter to the home address. That type of issue raises questions and one wonders what that is about. The postman is in the local community. It is an area I am flagging.

Does the Department ever monitor baptisms? This may be a very small element of fraud but, nevertheless, it is fraud. We have anecdotal evidence of a child being baptised more than once in more than one parish using a different name. It came to light when a priest had to cover two parishes. Do people feel free to make such reports? Are such reports made?

I refer to carer's allowance being means tested and I hope that comes within the remit of this discussion. We all agree it is the one group which genuinely works for its allowance. Carers must be means tested but because their partners may work, they are over the limit. Many of the people, even though they work full-time for their allowance in genuinely caring, feel defrauded by the State when they do not qualify for the allowance. Does the Department intend to consider that issue?

Chairman

That does not really arise today.

Senator Fidelma Healy Eames

I appreciate that. I am merely pointing out that the issue arises in discussions about fraud.

Ms Anne Vaughan

I do not want to stray into the policy area but I will speak briefly about supports for lone parents. The fraud initiative document makes reference to the fact that the schemes can be complicated and the system needs to be simplified. The system was developed on an ad hoc basis over many years. The original arrangements for lone parents were developed in the 1970s with the unmarried mothers allowance, which was applicable to very specific circumstances. This and other reports by the Department have recommended we become more agile in the policy space. That is an issue for Government, however.

I accept Deputy McFadden's point that many one parent families work and that issues arise in this area. We have in place a contingency arrangement whereby people who cohabit are not entitled to the one family payment but given that other arms of our Department and the State encourage joint parenting, we face an issue in this regard. The Department has done a lot of work in this area and a number of policy documents were produced. One issue that arose was the introduction of a parental allowance as a possible solution, although such an arrangement would be difficult to afford in the current climate. However, the schemes are set out in legislation and we have to ensure people receive their entitlements.

In regard to joint parenting, where the father is named on the birth certificate we seek to determine whether he can make a contribution towards the lone parent allowance. The yield is low but it is important that we are seen to be in that space. All our investigations in this area have to be sensitive and, as I noted in my opening statement, a balance must be struck. There have been sensationalised discussions in the media, including interviews with different people in receipt of social welfare payments.

Ultimately, a three-pronged approach is required. People are entitled to a payment if they have an income need. An increasingly important part of the Department's work in what is called the activation space involves encouraging people to take up work or training so their longer term outcomes and life changes are improved. The third prong is control. The Department has to be seen to be active in all three areas. It could be argued in respect of one parent payments that income support is a passive type of activity and we need to become more active in the space of working age generally. Structural issues need to be addressed in this regard.

Senator Fidelma Healy Eames

I would be grateful if I could get an answer to my question as a vote has been called in the Seanad.

Ms Anne Vaughan

Senator Healy Eames asked whether an individual could claim illness or disability benefit while earning a full-time income. She clearly has a specific case in mind and we can discuss the matters arising separately. The short answer is "No". If an individual receives illness benefit, which is an insurance based payment, he or she is incapacitated and unavailable for work.

Senator Fidelma Healy Eames

Has that always been the case?

Ms Anne Vaughan

Yes. In respect of disability allowance or invalidity pension, exemptions can be made for people who take up employment of a rehabilitative nature to a certain level of income. We also plan to introduce a partial capacity payment focused on capacity as distinct from incapacity. It is another cultural shift. I concur with the Senator regarding the role of post offices. I will have to revert to her on baptisms.

Mr. Philip Cox

The answer to the question on baptisms is "No". I am aware of the anecdote the Senator referred to but, in terms of security of identity, we do not accept baptismal certificates as authentication.

Ms Anne Vaughan

Deputy Joan Collins referred to our focus on individual claimants and asked what is being done about employers and employer prosecutions. I am trying to get across the idea of shared responsibility. We see employers and businesses as playing a key role in the abuse area. We are anxious that businesses and employers engage with us at national and local levels. If a factory or a firm has a difficulty in transferring people from casual to full-time work when business picks up it should discuss its problems with our local office managers. One of my colleagues made a presentation to the committee last week. Given that a significant percentage of those on the live register receive the single rate of payment, there should not be a disincentive to going back to work. I will ask Mr. Cox to discuss sites because he is involved in this issue. I acknowledge the points that the Deputy raised.

Deputy Collins also asked about cases where somebody who has an entitlement does not take it up. That is a worry for us. People have entitlements to payments based on their insurance or means tested circumstances. If they have an entitlement no social welfare officer will argue differently. The entitlement is a right and it is our responsibility to meet it. If members encounter situations where that is not the case, we need to be informed. Ours is a demand-led service and if people meet the criteria, they qualify for it. There is no fuzziness at the edges. In the community welfare space certain discretionary payments arise but these are also covered by guidelines. Members may be aware that heretofore the back to school clothing and footwear scheme was operated at local level by the community welfare service and it is now being centralised. For a variety of reasons - some may be due to take-up - there has been increased demand on the service. Where the system is clearer one will get people to apply whereas if they have to possibly go and meet somebody and state their case perhaps they will not do that. I do not disagree with the point.

I accept what was said about the cultural issue. I would return to the point that we make the payments, we try to engage with people through training activation and we also have the control part of our work so that the system is robust and credible for everybody. There has been talk of one-stop-shops that mean different things for many years. It is one of those issues that make sense. We need to look at matters from the citizen's point of view in the sense that when something has happened to a person they need to interact with us.

The national employment and entitlements services, the NEES, as it is called has been set up. The community welfare service, FÁS and the Department of Social Protection have come together in a new organisation. We published our document on the NEES in August. It is envisaged that we would have what one might refer to as one-stop-shops. We plan to have four of them in the unemployment space next year where somebody can go and get entitlement to their payment and also something in the activation space. It is easier said than done. It will be difficult. I can think immediately of locations where it will be easier because the organisations are co-located, for example, in Tallaght. In other areas there may not be a FÁS office in the town. We will proceed in so far as we can.

I dealt with the point about lone parents and fathers. The point about anonymous reports comes back to balance. I accept what the Deputy said. They are anonymous reports, by definition, because we feel that if people had to give their name they would possibly not ring. There has been a significant increase in the number of anonymous reports. We take down as many details as we can but we can only follow up reports that make sense.

To emphasise what the Deputy said, at the beginning of my presentation I indicated that there are more than 190,000 people who are working to some degree and legitimately in receipt of a social welfare payment. If a neighbour of such a person sees that, they may think it is a problem. Clearly, if they give full information we would be able to quickly say that it is not an issue. We would not go back to the person with that information but we would be able to see it ourselves. We must strike a balance. Unless I missed out on a question I have dealt with them all.

Chairman

Does Mr. Cox wish to add to that?

Ms Anne Vaughan

I hope Mr. Cox will say something about the Revenue Commissioners.

Mr. Philip Cox

One of Deputy Joan Collins's questions related to employers and our treatment of them. I have responsibility for the Department's special investigation unit/joint investigation unit. We work closely with the Revenue Commissioners. I wish to preface my remarks with a point to reassure the Deputy, in any investigation we must deal in the currency of hard fact and evidence. In terms of looking at individual reports, our time is best spent only if the information is credible and gives serious information. I cannot deploy my resources on pointless chases of people.

In the context of employers, one of the key focuses we have in the special investigation unit and joint investigation unit is an active policing of the hidden or black economy. We work out a programme in advance with Revenue in terms of those sectors where we feel there is the greatest incidence of social welfare fraud but also where there is the greatest incidence of tax non-compliance. Our concentration is in those sectors that operate a business within a business and cash businesses.

The Deputy is correct. It is an important reference point. In the case of direct employees who are concurrently working and claiming benefits, that must be facilitated by employers. One of the aspects of our plan that we are interested in pursuing is refocusing the attitude and sanction we have against employers that are legitimate.

Deputy Collins specifically mentioned the construction sector. As members are probably aware, the sector has turned on its head. A total of 75% of the construction that is being undertaken is once-off builds. The other element is public procurement projects. We have been very active with Revenue in that space. In the southern region alone we have undertaken more than 400 site inspections with a resultant saving of approximately €1 million in social welfare. One of the most important issues for us - I must be careful about this because it is operationally sensitive - is public procurement projects. We cannot have a situation whereby a public procurement construction project is awarded and that there are any abuses of tax or social welfare. Currently, in conjunction with Revenue we are looking closely at that but I would prefer not to go into detail on the matter as it is operationally sensitive.

The other thing we have done and would do - the deputy secretary general, Ms Vaughan, has done it in conjunction with me which shows her commitment to it - is meet with trade representative organisations. We engage with them where they have concerns with all kinds of practices. Recently, we engaged with a number of trade and representative associations to great effect. We will continue to do that. What we are trying to do with the Revenue Commissioners is to regionalise and localise the approach. We are having four regional conferences with all the players - union representatives, employer representatives, ISME and small firms to see whether they have concerns. Everyone has a story to tell but if they have concerns that are affecting business or employment then let us get to the heart of the matter.

Deputy Brendan Ryan

I congratulate the Department on its efforts to deal with fraud. In a time of economic crisis we must make the best use of the resources that are available for genuine cases.

I have two questions, one on the methodology used in terms of pursuing fraud in areas that have been identified as having a high potential for fraud such as lone parents or those in receipt of disability payments. Is the Department utilising some kind of directive to inspectors or deciding officers to suggest that a particular area is to be pursued and that they should get a quota or suspend a certain number of cases in the interests of catching some people who are abusing the system but perhaps at the same time hurting genuine cases where people are not abusing the system? Is there a working assumption on lone parents, for example, that if there is a claim for a second child, that it must be disallowed and leave it up to the applicant to disprove the theory relating to possible fraud? I would welcome a comment in that regard.

My other question relates to travelling and non-Irish nationals. I raised this issue with the Department in July or August on foot of a person who came to me who works in an airport and knows what is going on. At the time of the ash cloud the Department suggested there was no evidence of a reduction in claims. It may have been a comfort to the Department. Since then somebody else who works in the airport came to me and had similar stories about non-Irish nationals coming into the country at the end of the month to make claims and leaving quickly.

The airlines, the DAA and others working on behalf of other State organisations, such as passport control, have information. There is a real opportunity to address the issue and disprove or get to the bottom of it. Since I raised the issue with the Department what efforts has it been engaged in to address it?

Deputy Aengus Ó Snodaigh

I had a list of questions, some of which related to issues that have been raised. Fraud and error are, in the main, key parts of the welfare code. The report of the delegation states areas where payment is the most complex are often where the greatest level of mistakes are made or fraud occurs. What steps have been taken to address the forms that need to be filled in? There can be problems with illiteracy, resulting in forms not being filled out correctly. Are there more regular reviews of cases in these areas than others that require simple payments?

Has an analysis being done on successful appeals? When people appeal it is often because they have not received the correct payments. Has an analysis been done of cases where there have been over payments in error to determine whether there is a commonality across the board in order that the problem can be addressed at an early stage rather than an overpayment happening over a period of months or years?

Another point in the report referred to recovering overpayments and that it cannot be done without making a person or family destitute. What changes is the Department seeking in this area? In cases where a substantial sum is involved is there any facility to write off the debt? It is a question of balance.

The delegation referred to good citizens reports and whistleblowers. There is an old wives' tale that payments were involved for people who made reports which led to a saving to the State. I do not know if it is true. What steps are taken to advertise the central telephone number rather than a local office that can be called to report observations?

People have identified particular industries such as construction. In the past people believed there was a lot of abuse in the taxi industry but the report suggests otherwise. There is a degree of abuse but not of the scale that was suggested. One case mentioned in the fraud initiative is that of a cleaning company which is involved in an ongoing investigation. Has the owner of the company concerned - I do not want him or her named - been prosecuted? It is what needs to happen in cases of fraud and it concerns how a message can be sent to employers. I cannot think of any major case where an employer with a significant number of employees has been prosecuted. A prosecution would send a message to employers because far too often an individual is prosecuted. However, employers have a duty to act within the law.

Individuals in all of our communities have the trappings of wealth, whether they are drug dealers, criminals or whatever. They are sometimes found to have defrauded the State through the social welfare system. In such cases can the Department take possession of such trappings of wealth rather than making a deduction on a weekly basis? That is what frustrates people. The Department works with the CAB on incidents but often it is at the highest level. We have been promised by Ministers for Justice, Equality and Law Reform over the years that CAB would investigate cases at lower levels in communities. How does the work of the Department relate to that?

Deputy Brendan Griffin

I thank the delegation for coming before the committee. It is a very important issue and I welcome the document that was circulated to us recently on the potential savings that can be made. It is very important and it is incumbent on all of us to ensure the initiative is as successful as possible. It is very important for the national finances because a significant percentage of the budget is allocated to the Department. It highlights how important it is to make sure the initiative is successful.

On debt recovery, what are the penalties when someone is found to have acted fraudulently? Are they imposed in addition to what is sought in recovery or is the amount of which the State was defrauded sought? On the non-residency project, 308 claims were terminated as a result of an investigation, a rate of approximately 11%. Deputy Ryan mentioned there are mechanisms in place at airports with which we could work in tandem.

If non-Irish people were applying for social welfare while available for work in the country I imagine they would have no problem surrendering their passports at social welfare officers. A lot of departmental expenditure is allocated to investigating the matter. One departmental investigation found 11% of suspected cases and resulted in €3.24 million in savings. Surely such a measure could be considered? It would not cost very much. If a person needed to go home for two or three days returning a passport would not be an issue. Has that possibility being investigated? It could be done.

The report makes a number of suggestions, some of which are very good. When will we have an update on their implementation? Is any form of name and shame being considered? We are in a new era, given that the country is in an emergency situation. Defrauding the Exchequer in any way cannot be tolerated. We need to apply the same rules as those imposed on someone who litters or defaults on his or her taxes. There is a limit of €15,000 for tax defaulters. If we are taking the good citizen approach that we are all in this together, then those who act outside the law ought to be publicly shamed. Their actions are wrong and unfair on those who depend most on the social welfare system and results in those same people suffering more.

In cases of genuine and unintentional overpayment, is there a formal appeals mechanism for those affected? How will the increased presence of social welfare inspectors be conveyed to the public?

Deputy Aodhán Ó Ríordáin

The words "social welfare" and "fraud" tend to be linked in the common consciousness. There is any amount of fraud throughout society, however, including tax evasion. It should not be automatically assumed, therefore, that there is widespread fraudulent behaviour among social welfare recipients.

The Department stated there was an increase in claimants for the back to school allowance this year. Can the witnesses give an exact figure for this? Are the parents of two and three year old children eligible for the allowance? If so, how much is this costing? It does seem somewhat strange considering two and three year olds do not attend primary school.

Regarding the tackling of welfare fraud in other industries, the committee met recently with representatives from the taxi industry. They pointed out how checkpoints targeting the social welfare status of taxi drivers were set up by the Department and the Garda several weeks ago. These were well received and the word went around, making it easier for full-time taxi drivers to ply their trade. Are there any plans to extend such checkpoints to ensure full-time taxi drivers are the main beneficiaries of the trade and not those engaged in fraudulent behaviour?

Ms Anne Vaughan

We spoke about several of the issues raised by Deputy Ryan when he visited the Department recently. Regarding how welfare inspections are determined, not all of our inspectors are in review work as there has been a large increase in new entrants to the social welfare system. The first point of contact is equally as important. That work would happen as claims are made to us.

Each scheme, region and local area has specific control targets to make which start from the top down, along with a bottom-up approach from individual managers to regional level to departmental level. Next year, the savings target is €625 million.

Those targets have to be met, but obviously there are different ways to do so. We want to keep a presence in as many areas as possible, but our focus is also on savings. Accordingly, we need to use local information and intelligence to get best value for our investigations. This would all be determined on a regional and local level. We have these activation and control teams locally which include various officers involved in control and fraud work. They now include representatives from the community welfare service and FÁS. We are all dealing with more or less the same group of people.

Targets are set down to be met but it is not a question of just ticking the boxes. In the case of a first-time claim or a review of a claim, a deciding officer, statutorily appointed, looks at the evidence and makes a decision based on that. It is not the case that there must be so many overpayments, sign-offs, etc. If there is an entitlement to a benefit, then that is that.

In the case of a lone parent applying for a second child, an inspector will more than likely visit the claimant to discuss the situation. It is not a visit with a preconceived idea of a "Yes" or "No" to the claim. The facts of the case will be determined individually.

The Minister for Social and Family Affairs is also concerned about the anecdotal evidence from her constituents working in Dublin Airport about welfare fraud and people flying in to make claims. During the air travel disruption caused by the volcanic ash cloud, the data did not show any difference from other times in the number of claims. There is a problem with some people flying into Ireland to claim social welfare benefits. We are addressing this through the variance residence checks.

Departmental inspectors do not have specific powers at ports and airports to conduct checks. It would require legislation to grant them such powers. We have ongoing intelligence collation with the Revenue Commissioners and the Garda National Immigration Bureau. I understand the Department of Justice and Equality has drafted legislation which may assist our Department in getting information on airline manifests. If that is a non-runner, we may examine granting our inspectors powers in a social welfare Bill. In all of this, we must be conscious of what is legally possible and of data protection concerns. This form of welfare fraud is an area of concern for the Department and the Minister.

Deputy Brendan Ryan

Is the Department actively pushing for a change in the legislation to allow it to get this information?

Ms Anne Vaughan

Yes. Deputy Ó Snodaigh raised the complexity of the difference between fraud and error. It is a difficult area. I accept our arrangements around jobseeker benefits are not the easiest with considerations such as how many days one is in casual employment and so forth. All we can do is up our game in the awareness area. There is a perception that if a person takes up a short period of work, it will take them some time to get back into jobseeker's payments. This perception has been brought up by many and I have taken it up with regional managers. It is not fact. If it is perceived to be a problem, then it is a problem. If a recipient is not aware of these arrangements pertaining, say, to taking up work for four weeks or an eight-week training course, we will suspend his or her claim and it will be set up again in a matter of days. While this information is given to recipients when they first apply, if there is still an issue around it, then we must get this message out more. Perhaps Deputies can assist us in getting this message out through their work in their constituency clinics.

Deputy Aengus Ó Snodaigh

Last week, I attended the launch of a new investment for a Christmas show in my area. Over the next five years, the company in question will provide 320 part-time jobs for five weeks. As this is over the four-week threshold affecting jobseeker's benefit recipients, it may act as a discouragement to some to apply for these jobs.

Ms Anne Vaughan

We can certainly talk about that offline and make arrangements with the local office. The four-week clause is not set in stone. Why is it not open-ended?

Deputy Aengus Ó Snodaigh

Maybe that is why it is not open-ended.

Ms Anne Vaughan

Suspending claims has an internal risk. They cannot be suspended for ever. If, however, the Deputy has a case like this of five weeks, I do not see a difficulty with making different arrangements.

Deputy Aengus Ó Snodaigh

It is a seasonal matter and probably affects other areas as well.

Chairman

Could a suspension of jobseeker's benefit for two weeks spoil a subsequent application for, say, a back to enterprise allowance?

Ms Anne Vaughan

It would depend on the benefit in question. Normally, common sense would apply in such cases.

A person can appeal a decision on the recovery of an erroneous overpayment. We are trying to improve our relationship with the appeals office, which is independent, and our decisions advisory office. The appeals office often gets additional information, such as medical information, about claims. We need to learn from when the appeals office sends a case back to the Department for revision. Mechanisms are in place to ensure we have as close a relationship as is possible with an independent office such as the appeals office.

Balance needs to be ensured when it comes to recovering overpayments. When we dealt with this issue in regional training seminars, it was felt, taking income need and social inclusion concerns into account, that recovering an overpayment through a €2 a week payment is the better course. We need to concentrate on how we increase our recovery of overpayments, however. We have set out several approaches to this but I have no specific measures as they will be subject to legislation and data protection issues. The Department will write off debts in such cases where the person has died and there is no recourse to his or her estate, for example.

We do not pay those who report suspected cases of fraud to the Department. We need to get more exposure for the dedicated reporting telephone number. It is on the website but we will try to beef up the control part of our website.

No additional penalties are charged in cases in which we make a debt recovery. If the person is in receipt of social welfare, any repayments cannot force that person below the supplementary allowance rate. In such cases, the charge will be, say, €2 a week. In certain areas, we have powers to impose penalty rates of payment. This would be in cases such as a jobseeker not taking up a FÁS opportunity.

Deputy Griffin suggested non-Irish citizens in receipt of social welfare benefits should surrender their passports to us. Under EU law, all EU citizens must be treated equally. Coming back to the public service card, which will be a proof of identity, registering for this card will involve producing one's passport. This will make proof of identity clearer.

Deputy Brendan Griffin

I was suggesting it as a method of preventing someone leaving the country.

Ms Anne Vaughan

The approach to that matter is through residency checks. There is a risk assessment made of claimants who may abuse the system and our investigations are targeted accordingly.

Deputy Brendan Griffin

A person who defrauds the Department has nothing to lose. All he or she will have to do is pay it back with no real penalty in place such as an interest charge on the amount claimed. This is fundamentally wrong. Charges and interest apply to those who defraud the Revenue Commissioners. Why not in the case of the Department of Social Protection?

Chairman

That is a policy issue and it is not fair to question a departmental official on it. The committee can examine it in its own deliberations.

Mr. Philip Cox

Regarding the point about a recipient's lifestyle not commensurate with social welfare dependency, the Department has personnel attached to the Criminal Assets Bureau, CAB. They examine cases of social welfare recipients with significant assets gained from criminality. However, it is true there is a tier below this whereby people are involved in various but not as significant levels of criminality. With Revenue, we have looked into this and have initiated a lifestyle and assets project. It is still in its infancy but it is going after the type of recipients referred to by Deputy Ó Snodaigh.

These recipients have, say, newly registered cars and are engaged in activities such as cigarette smuggling. In such cases, we have been able to obtain Revenue settlements, stop social welfare payments and even got welfare moneys back. We are operating a parallel CAB operation. The agency gave us invaluable advice and training in this regard.

The Department has already undertaken over 20 vehicle checkpoints with the Garda Traffic Corps and the Taxi Regulator. It has a high-visibility effort which the industry welcomes. However, that said, word goes around quickly where they are located, so we have to be more mobile to be effective. These checkpoints have an intrinsic value in demonstrating the Department is tackling social welfare fraud in the taxi industry. A review group in the Department of Transport, Tourism and Sport is examining social welfare fraud and tax evasion in the taxi industry. The Department of Social Protection has made a submission to this group. I have met with the Minister's officials and the Taxi Regulator and they are anxious to have the Department as part of the review group.

The Department has also run a series of investigations of employees in ethnic restaurants, fast-food and catering in conjunction with Revenue while specifically targeting scrap dealers and illegal dumpers with county environmental health officers. Our officers are involved in streetscape projects with Revenue whereby a town is picked and its businesses are checked. Previously our focus was on claim processing while now it is on visible checks.

Deputy Ó Snodaigh raised the case of a cleaning company implicated in welfare fraud. This involved individuals operating under false identities and PPS numbers. The employer involved co-operated fully with the investigation with all banking details made available. In fact, the employer was quite horrified that this had happened in his company.

The Department selected over 4,100 cases to review the extent of non-resident fraud. These were examined from a targeting and profiling point of view. Not everyone coming in and out of the country is a concern. However, 526 cases of the 4,168 reviews, 30%, have had their payments terminated which resulted in savings of €5.4 million. It is easy to confirm whether a person is in the State if he or she has child dependants. Certificates of attendance from their schools will be sought in any checks. No longer is jobseeker's benefit or allowance paid into a bank account directly - it must be collected by the claimant from An Post. Stricter identity checks have also been placed in post offices. The Department liaises with its counterparts across the Border to combat any fraud between the two systems.

Deputy Brendan Ryan

What kind of targeting does the Department do?

Mr. Philip Cox

While I have to be somewhat circumspect about what I can reveal, we have found those involved in welfare tourism fit a certain profile. They tend to be single, for example. It is easy to determine if a married couple's kids are in the State using HSE records and school attendance. Most involved in welfare tourism have certain other attributes which we watch out for when we begin a targeting project. I do not want to seem evasive about this but I am sure Deputy Ryan understands my point about not giving away too much.

Deputy Brendan Ryan

I do.

Ms Anne Vaughan

If the committee wished, the Department could give an update on the control plan at the end of March 2012.

Deputy Griffin called for a name-and-shame policy for those involved in welfare fraud. It has been examined in the past and several of my colleagues at the regional seminars thought it would be no bad thing. It can be reviewed but there are legal issues which must be discussed with the Attorney General's office. It would be a decision for the Government if the Deputy wants to go into that space.

I do not have the actual numbers of applications for the back to school allowance to hand but I will supply them to Deputy Ó Ríordáin later. We are working through a backlog in applications and have asked Members not to raise parliamentary questions about specific ones because that takes from dealing with the work. Centralising the application has addressed the take-up issue. It has also encouraged applications from people who will not qualify, but they will have to be processed. Under the old regime those people might not have applied but there is a genuine take-up in the middle.

Deputy Ó Ríordáin asked about a two year old going to school. The scheme's full name is the back to school clothing and footwear allowance and it originated from a footwear scheme. That is why small children are involved.

I think I have dealt with all the questions.

Chairman

I wish to clarify a few points. On the number of inspectors, there will be increased visibility but are there plans to have an increased number of inspectors? With regard to the card, which we discussed on the last occasion we met, is it correct that it will take two or three years to roll it out fully? Is there anything we can do to fast-track it? How confident are you that this card will make a difference? I believe it will. I presume the process will start with new people registering, and the fraud issue probably applies to those who are already registered in many cases. How quickly will we catch up on that?

Ms Anne Vaughan

The number of inspectors relates back to what I said earlier about the community welfare service now being part of the Department. This gives us more people. I am not saying we will turn them overnight into inspectors, but it means we have a larger cadre. Our staff grew by 1,000 over the weekend so we have a greater cadre of people and we must decide how we will deploy them and whether it will be as more of our traditional Department of Social Protection staff. We are not looking for additional inspectors as such, but we need to see what we can do better.

I should point out to the committee, with regard to the end of quarter one, that we suspect there will be a number of retirements before February and this will obviously affect how we do our business. Who is retiring and who is staying will not be clear until February. The staff in the Department tend to be older so a large number of people could possibly retire and that will have an effect on the business across the board. There is no avoiding that. However, we will have to see what we will do.

With regard to the card, we are very confident it will make a difference on the identity issue. The sooner we can get it out to the public, the better. That is the reason we are focused on working age and schemes that are giving us difficulty. I listened to your comments, Chairman. Niall Barry explained earlier where we are in the process. We need to complete our discussions with the Department of Public Expenditure and Reform. I hear clearly that you will give us any assistance you can and that you will seek any information you might need to know. It is absolutely the case that the sooner we get traction, the better. We are very excited by this project for all sorts of reasons. It is a services card but it also does a great deal in the control space. We have had some notable cases where people had multiple identities, which both Philip Cox and Patricia Molloy dealt with, and that would not happen in the new regime. I ask you to leave that with us, Chairman, and we can report back. However, there is no lack of willingness to see how we can roll it out as quickly as possible. Obviously, it is a balance between security, speed and cost, but we must examine all avenues, both in-house and outside, as to how we proceed. I am clear about what you and the members of the committee have said to us in this regard.

Deputy Brendan Ryan

Is there a possibility that there will be a new set of faces across from us after February?

Ms Kathleen Stack

Only if the package gets a little better.

Ms Anne Vaughan

I think the committee is stuck with us.

Chairman

On the procedure for getting the card, when is the picture taken?

Mr. Niall Barry

The picture is taken at registration. That is part of the reason we are doing the trials. Even little things such as how best to take a picture, lighting and so forth have had to be overcome, and they have been overcome. The broad process is that one comes into the office and applies. As part of the application, one gives extra information, gets one's picture taken and one is given security questions for when the Department deals with the client on-line afterwards. The unfortunate side effect is that it elongates the registration process, which is why it affects the staffing numbers. That is what we are trying to quantify at present.

Chairman

I thank our guests. I realise it was a long meeting again, and I again apologise for the interruption caused by the vote. However, the meeting was informative and will have been informative for people outside the Houses as well.

The joint committee adjourned at 12.45 p.m. until 9.30 a.m. on Wednesday, 12 October 2011.