Oireachtas Joint and Select Committees
Thursday, 1 May 2014
Public Accounts Committee
2012 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Vote 37 - Social Protection
Chapter 16 - Expenditure on Welfare and Employment Schemes
Chapter 17 - Regularity of Social Welfare Payments
Chapter 18 - Welfare Overpayment Debts
Chapter 19 - Domiciliary Care Allowance
Chapter 20 - Invalidity Pension
Social Insurance Fund Annual Accounts 2012
10:55 am
John Deasy (Waterford, Fine Gael)
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I apologise for the delay. The Chairman will be back and I am taking his place until his return.
We are examining the 2012 Appropriation Accounts and annual report of the Comptroller and Auditor and General: chapter 16 - expenditure on welfare and employment schemes; chapter 17 - regularity of social welfare payments; chapter 18 - welfare overpayment debts; chapter 19 - domiciliary care allowance; chapter 20 - invalidity pension; Vote 37- Social Protection; and social insurance fund annual accounts 2012.
I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses or an official, by name or in such a way as to make him or her identifiable.
Members are reminded of the provisions within Standing Order 163 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.
I welcome Ms O'Donoghue, Secretary General, Department of Social Protection, and ask her to introduce her officials.
Ms Niamh O'Donoghue:
I am accompanied by Mr. John Conlon, assistant secretary in charge of finance; Ms Teresa Leonard, assistant secretary with responsibility for illness and disability schemes, and Mr. Seán Reilly, principal officer in our accounts branch.
On my left is Ms Anne Vaughan, Deputy Secretary; and Ms Kathleen Stack, assistant secretary who is in charge of, amongst other things, our control division.
11:05 am
John Deasy (Waterford, Fine Gael)
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Also in attendance is Mr. Menton from the Department of Public Expenditure and Reform.
John Deasy (Waterford, Fine Gael)
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I ask the Comptroller and Auditor General to make his opening statement.
Mr. Seamus McCarthy:
Expenditure in 2012 on welfare and employment schemes was just over €20 billion, some 3% less than the peak expenditure in 2010. Around two-thirds of the expenditure was funded by the Exchequer through the Vote for Social Protection, and one third by social insurance contributions. Chapter 16 presents a consolidated view of the expenditure funded by the Vote and the Social Insurance Fund, as well as the trends in the main categories of expenditure. The Department has undertaken that, in future, a consolidation will be published with the appropriation account of the Vote. This will improve the transparency and accountability about the cost of schemes.
PRSI contributions provide the main source of income for the Social Insurance Fund. Since 2008, the contributions received each year have been insufficient to meet the annual expenditure of the fund. Initially, surpluses accumulated over a number of years were used to fund the deficits but since 2010, the Exchequer has met the shortfall. This Exchequer subvention is provided through the Vote and amounted to just over €2 billion in 2012. In addition, as provided for in the Social Welfare and Pensions Act 2012, a sum of €300 million was advanced from the Central Fund in December 2012 to meet a temporary cashflow shortfall arising from the timing of PRSI receipts. This advance was repaid to the Central Fund before the end of 2012.
I have given a clear audit opinion on both the appropriation account of the Vote and the financial statements of the Social Insurance Fund. However, I have drawn attention to a number of matters in each certificate.
Note 6.5 of the Vote discloses four cases of possible misappropriations by staff of the Department, with a total estimated loss of €1.3 million. My audit certificate draws attention to the Department’s response to those cases which is outlined in the Accounting Officer’s statement on internal financial control. The response includes the assignment of additional staff to the Department’s internal control support unit and more rigorous monitoring by the unit of controls at local level. The 2013 audit will examine the extent to which these enhancements have been implemented.
In my audit certificate on the Social Insurance Fund, I have drawn attention to ongoing control deficiencies in relation to bank reconciliations and the procedures for confirming balances due to An Post. These issues have been referred to in the audit certificates for recent years and were previously examined by the committee when it considered Chapter 39 of the 2010 report. The statement on internal financial control for the fund outlines the actions being taken by the Department to resolve these issues.
The issue of the level of irregular scheme payments is referred to in the audit certificates for both accounts. Irregular scheme payments arise where welfare recipients are paid amounts to which they are not entitled or which exceed their entitlements. Such payments can arise from administrative error by Departmental staff or from claimant error or fraud. Fraud and error surveys of welfare schemes carried out by the Department potentially provides a basis for estimating the level of irregular payment. Based on the results of the surveys, I consider that there was a material level of payment in excess of entitlement in 2012 on the Vote and on certain Social Insurance Fund schemes.
Chapter 17 presents the results of the latest fraud and error surveys as well as the findings of an examination of the survey process applied in the four most recent surveys. These related to disability allowance, one-parent family payments, child benefit and jobseeker's benefit. As well as an estimate of the overall scheme loss, these surveys now also provide an estimate of the overall net loss to the Department, which takes account of the fact that claimants found to be in receipt of excess payments on a scheme may instead be entitled to payment under a different scheme or may become a dependent on another person’s entitlement. The estimated net Departmental loss for three of the schemes was significant at 4.1% for disability allowance, 2.7% in the case of one-parent family and 1.6% for jobseeker's benefit.
The fraud and error survey process is resource intensive but the results provide valuable information about the underlying level of payments in excess of entitlement and the risks associated with particular schemes. For this reason, they should be developed and enhanced. The examination of the survey process found that, in general, the surveys were carried out in accordance with the Department’s procedures. There were, however, a number of technical areas identified where improvements could be made that would improve the efficiency of the process and increase the reliability of the results.
Chapter 18 examines the trends in recorded overpayments, as well as the level of legal action related to debt recovery. Overpayment debt outstanding amounted to €375 million at the end of 2012. Overpayments of €97 million were recorded in 2012, some of which related to excess payments spanning more than one year. Overpayments of €54 million were recovered in 2012 which represented 13% of the debt recorded for recovery. We found that the Department’s overpayments recording system is not effective as a debt management tool and cannot produce all the information necessary to monitor the effectiveness of debt management. I understand that the Department expects to have a new debt management system in place before the end of this year.
Chapter 19 presents the results of an audit of the domiciliary care allowance scheme. The allowance is payable to carers of children under 16 years who have a severe disability and require constant care and attention, substantially in excess of that required by another child of the same age. Responsibility for administration of the scheme transferred to the Department from the Health Service Executive in 2009. Total expenditure in 2012 was €102 million. In addition, recipients of the allowance have automatic entitlement to the respite care grant resulting in associated expenditure of a further €45 million.
At April 2013, the average time taken to process an application for domiciliary care allowance was eight weeks. Around 5,000 applications for the allowance are received each year. For the period 2010-12, the initial decision on applications was to disallow over 60% of cases. A high proportion of cases disallowed are appealed with around 2,100 appeals each year. In just over 60% of the appeals cases resolved in 2012 the allowance was granted either as a result of a decision by the appeals officer or a prior revised decision by the deciding officer.
Around 70% of the cases in payment were originally processed by the HSE. The Department did not receive case files from the HSE for the transferred cases and has little information on the medical eligibility of those cases. Medical review of cases is a key control in determining ongoing eligibility but no programme of reviews for those cases had been put in place. An examination by the Department in early 2012 of a random sample of the transferred cases found that up to half could be ineligible. Around 50% of cases put in payment by the Department and reviewed in 2010 and 2011 were also found to be no longer entitled to the allowance. A review of the scheme policies and processes was announced in May 2012 and all medical reviews were suspended pending completion of that scheme review.
The recommendations of the review group were brought to Government in April 2013 and their report was published. The recommendations are set out at Annex A of the chapter. The Department is implementing the recommended administrative changes and the policy recommendations will be considered in forthcoming budgets. The Accounting Officer will be able to brief the committee on the current status of the recommendations and on the recommencement of medical reviews in domiciliary allowance cases.
The results of an audit of the invalidity pension scheme are set out in Chapter 20. Invalidity pension is payable to those who are incapable of work because of illness and who have sufficient social insurance contributions or credits. In 2012, €603 million was paid to around 50,000 claimants. In 2012, there were 11,500 applications for the pension which is almost 50% more than in 2008. Over 60% of claims decided in 2012 were either disallowed or withdrawn. The number of appeals received doubled between 2011 and 2012 to 4,700. Three quarters of appeal cases resolved in 2012 resulted in a revised decision.
A person may no longer be entitled to invalidity pension if they recover the capacity to work. Therefore, medical review of cases is a key control. Departmental procedures require that a medical review status is assigned to all approved claims. That status indicates whether or not the claim should be reviewed in the future and, if so, when that review should take place.
Some 5,800 or 12% of the claims in payment were found to have no review status recorded. The Department has indicated that due to resource constraints it has not been possible to review all cases as scheduled. The Department examined a sample of 170 cases to assess the risk of ineligibility. At mid 2013, it estimated that approximately one in ten of the sample cases were no longer eligible for payment. The Department indicated that it is examining ways to increase its capacity to carry out medical reviews.
11:15 am
John Deasy (Waterford, Fine Gael)
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Thank you. I invite Ms O'Donoghue to make her opening statement.
Ms Niamh O'Donoghue:
Thank you for allowing me to make a brief opening statement this morning. As well as examining the Appropriation Account for the Department of Social Protection and the Social Insurance Fund statutory account for 2012, I understand that the committee wishes to examine the five chapters relevant to the Department that were in the Comptroller and Auditor General's Annual Report for 2012. As requested, last week I provided the committee with an update on the recommendations contained in the five chapters, together with up to date expenditure figures, the provisional outturn for 2013 and estimates for 2014.
When I last appeared before this committee in July 2013, I briefed it on the three key functions of our Department - income support, activation of those of working age and control of fraud and abuse. Our work continues on all three streams. In seeking to realise our ambitions in each of these areas, we are mindful that this is, and will continue to be, a balance in terms of engagement with our customers and deployment of our resources.
The Department's Customer Charter and Action Plan 2013-2015, published in 2013, sets out our commitments to delivering an excellent standard of service to all our clients. The issue of delays in processing claims has been a cause of concern to some members of the committee. Over the course of the past year we have worked to ensure that backlogs are cleared and that services are delivered to a high level to customers of the Department, particularly in the areas of illness and disability related payments and family income supports. I am also pleased to report that the Department now has 44 Intreo offices in place. These are one-stop shops for jobseekers with access to both income and employment supports. It is planned that the full Intreo service will be rolled out to all of the Department's offices by the end of 2014, which I know will be challenging.
The Intreo service is a new way of doing business for the Department. The service offers employment services and supports for jobseekers and brings together income support and activation in a meaningful way for customers. In the context of the Intreo service, we have made significant efforts to develop our relationship with employers, particularly through offering practical assistance and support in regard to the recruitment of staff from the live register. This is an area of business that we will continue to grow and develop over the coming years.
I will now move on to the chapters in the report. As chapter 16 of the comptroller's annual report outlines, the Department spent €20.1 billion in 2012 on welfare and employment schemes. The comparative provisional spend for 2013 is €19.6 billion and the estimate for 2014 is €18.9 billion. These figures exclude expenses incurred on the administration of the schemes which was in the order of €600m in 2012. The number of recipients of weekly payments from the Department at end 2013 was 1.47 million which was at the same level as in 2012. This was because increased pensioner and employment support claimants balanced the fall of 40,000 in working age income support claimants. An increase of 7,000 claimants was also recorded in the illness, disability and caring programme, mainly due to elimination of backlogs in these schemes in the period 2012-13.
A range of measures are employed by the Department to ensure that social welfare fraud and abuse is minimised and that its control activity is focused appropriately. Over the past number of years, fraud detection and control systems have been refined and enhanced. The progress and achievements include the roll out of the public services card, PSC, which acts as a key tool in the prevention and detection of identity fraud and provides an enhanced level of assurance as to a person's identity. To date, approximately 660,000 cards have been issued, including 140,000 PSC free travel variants; a number of legislative provisions have been introduced to strengthen the Department's capacity to tackle abuse; systematic and regular data matching exercises on both internal systems and with external agencies are ongoing; and the Department is now in a much better position to recover overpayments through increasing the contribution from persons on social welfare and by way of notice of attachment to earnings and money held in a financial institution.
Looking to the future, the Department published its new compliance and anti-fraud strategy for 2014 to 2018 last week. A copy of the new strategy has been provided to the committee along with my briefing paper. A key aspect of the new strategy is the harnessing of the potential of risk analytics to enhance the effectiveness and efficiency of our current control activity. This will involve the statistical analysis of large amounts of data to uncover complex patterns which will be used for predicting future risks.
In addition, the Department's requirements in regard to debt management have evolved and expanded significantly in recent times particularly with the enhancements in debt recovery legislation. It is now in the process of developing a new, more robust and reliable system to maximise the efficiency and effectiveness of the Department's debt management functions. Development of the new system will enable the Department to deliver its debt management objective, which is an integral part of our overall deterrent approach. In addition, the Department has committed to deliver the requirements in relation to debt management identified by the Comptroller and Auditor General.
Chapter 19 deals with domiciliary care allowance, DCA, and I know that this support is a very important one for the parents and guardians who currently receive it in respect of some 27,400 children. The comptroller's recommendations in regard to obtaining evidence in support of claims and the need to have a standard medical review process are accepted. The Department is making the necessary preparations to ensure that medical eligibility and entitlement reviews recommence in Quarter 2 of 2014. The committee will be aware that the Minister initiated a review of the operation of the DCA scheme in 2012 and the new review arrangements take cognisance of the administrative recommendations included in that report.
In chapter 20 the comptroller recommended that medical review status should be assigned to all invalidity pension cases and that as far as possible medical reviews should be carried out as scheduled. The Department is conscious that there is a need to increase the numbers of medical control reviews carried out on invalidity pensioners in order to ensure that they continue to meet the medical criteria for the scheme. The ability to achieve this is dependent on the capacity of medical assessors to carry out this control work. The committee will be aware from the briefing I provided that the Department is continuing its efforts to increase its capacity to carry out medical reviews and that this is a particular challenge for us. In this context and in an effort to maintain customer service levels, priority has been given to new claim assessments, reviews of new claims disallowed on medical grounds and appeals against decisions to disallow new claims.
I wish to acknowledge the support and co-operation of all staff of the Department of Social Protection in our efforts to deliver and continually improve our services. It is through their ongoing commitment to customer service that we have successfully implemented so many positive changes to date. I am very happy to discuss any issues or proposals raised by the committee.
John Deasy (Waterford, Fine Gael)
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Thank you. May we publish Ms O'Donoghue's opening statement?
Kieran O'Donnell (Limerick City, Fine Gael)
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I thank Ms O'Donoghue and her colleagues for coming before the committee. The first area I would like to touch on is the overall budget for 2014 and the various expense headings and categories. How much is the total budget for 2014?
Kieran O'Donnell (Limerick City, Fine Gael)
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How does that compare with the budget for 2013?
Kieran O'Donnell (Limerick City, Fine Gael)
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In a context where the live register figures have fallen, seasonally adjusted from December 2013 to end-April 2014, by 10,300 and the unemployment rate has reduced from 12.4% to 11.7%, are the Department's spending headings above or below the profile?
11:25 am
Ms Niamh O'Donoghue:
In total, they are more or less on profile. They are marginally behind profile but the budget for 2014 took that into account. The provisions were made on the basis of an assumption that there would be a reduction in expenditure on live register and jobseeker payments - both JA and JB.
Kieran O'Donnell (Limerick City, Fine Gael)
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Is the Department ahead or behind profile on JA and JB?
Kieran O'Donnell (Limerick City, Fine Gael)
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So the Department is actually spending less than it would have anticipated.
Kieran O'Donnell (Limerick City, Fine Gael)
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When Ms O'Donoghue says "marginal", what figure would she anticipate?
Kieran O'Donnell (Limerick City, Fine Gael)
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So the Department is behind profile in terms of jobseekers?
Kieran O'Donnell (Limerick City, Fine Gael)
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On jobseeker's benefit and jobseeker's allowance?
Kieran O'Donnell (Limerick City, Fine Gael)
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What type of profile did the Department build into the end of April in terms of live register figures being reduced? How do they compare with the Department's figures?
Kieran O'Donnell (Limerick City, Fine Gael)
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For the year?
Kieran O'Donnell (Limerick City, Fine Gael)
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What did Ms O'Donoghue anticipate it would be at the end of April?
Kieran O'Donnell (Limerick City, Fine Gael)
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The context is that our employment figures are increasing while our unemployment figures are falling. Ms O'Donoghue may say that it is relatively on target, but I am looking for precise figures, which I would expect her to have. Is the figure €1 million, €2 million, €10 million or €20 million?
Kieran O'Donnell (Limerick City, Fine Gael)
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Does Ms O'Donoghue not have them to hand today? I am referring to the precise figure for jobseeker's allowance and jobseeker's benefit. What savings have been made under that heading to date? I would have expected Ms O'Donoghue to have that figure to hand.
Kieran O'Donnell (Limerick City, Fine Gael)
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Why not? I mean no disrespect, but I would have thought that figure would be in the normal report that Ms O'Donoghue received at the end of April.
John Deasy (Waterford, Fine Gael)
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Will we give them a few minutes to see if they can come up with a figure?
Kieran O'Donnell (Limerick City, Fine Gael)
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Yes. Is it possible for Ms O'Donoghue to locate that figure?
Kieran O'Donnell (Limerick City, Fine Gael)
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That is great. Thank you.
What is the cost to the Department or to the Government of someone being on the live register? The maximum payment for an individual is €188 a week. What is the total cost to the Exchequer of someone being on the live register?
Kieran O'Donnell (Limerick City, Fine Gael)
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On average.
Kieran O'Donnell (Limerick City, Fine Gael)
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Per annum?
Kieran O'Donnell (Limerick City, Fine Gael)
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All these new schemes have been set up, so what is the cost of putting someone through these schemes? What is the average cost for an individual presenting to the Department of Social Protection to work through the schemes? Has Ms O'Donoghue looked at the cost of providing that service per individual?
Ms Niamh O'Donoghue:
We have not specifically done that because it is early days yet in terms of our engagement through the Intreo service. As I mentioned in my opening statement, we have not yet got that service rolled out throughout the country. The whole point is earlier engagement. Because we are profiling people when they present, it is earlier engagement through the employment services and, hopefully, earlier referral to some sort of support or training initiative. We can work out that kind of model and provide it.
Kieran O'Donnell (Limerick City, Fine Gael)
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I asked about jobseeker's allowance and jobseeker's benefit, but what about the other expense headings? Are they ahead of or behind profile?
Kieran O'Donnell (Limerick City, Fine Gael)
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Okay. I want to move on to the Department's anti-fraud strategy. Ms O'Donoghue referred to the fact that the Department had just launched a new plan.
Kieran O'Donnell (Limerick City, Fine Gael)
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It makes for welcome reading. I commend the work of the Intreo offices, which is very good. The fraud issue comes up every year. I welcome the fact that the Department has published a compliance and anti-fraud strategy for the period 2014-18. Some of it makes for interesting reading. The document refers to a particular case of an individual who had €400,000 on deposit and was in receipt of social welfare. What type of social welfare was that person in receipt of?
Kieran O'Donnell (Limerick City, Fine Gael)
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Means-tested job seeker's assistance?
Kieran O'Donnell (Limerick City, Fine Gael)
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Was the individual male or female?
Kieran O'Donnell (Limerick City, Fine Gael)
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That particular person received an overpayment of €30,000. Over what period was that for?
Kieran O'Donnell (Limerick City, Fine Gael)
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How would that have arisen? What is the process whereby someone applies for a jobseeker's allowance? Was this person on jobseeker's benefit prior to going on jobseeker's allowance or assistance?
Ms Niamh O'Donoghue:
I do not have that background to the individual case. In this context, it does not matter whether somebody who applies for jobseeker's allowance has previously been in receipt of jobseeker's benefit. This is part of the rights and responsibilities that now exist and which are very much built into claiming social welfare systems. People are required to disclose their means and give such other information in relation to their circumstances to allow a decision to be made on their eligibility. In this particular case means were not disclosed, so that information was not available to the Department or the inspector who would have assessed the eligibility of the individual.
If the Deputy will forgive me, I will explain the context of what happened in terms of managing to establish this information. A number of years ago we established a high-level group between the Department and the Revenue Commissioners to look at new opportunities for operational co-operation and to see if there were things that either organisation could do to assist in the work of the other. There was some media coverage last year about the Department of Social Protection providing information on pension payments, which enabled the Revenue Commissioners to examine the tax compliance of people in receipt of those payments. Similarly, in 2012, we received new data from the Revenue Commissioners on people who had money on deposit in financial institutions which attracted a payment of interest that certainly indicated that those deposits were substantial. We received that information in respect of people who were in receipt of means-assessed payments from the Department of Social Protection.
Through that matching exercise we were able to focus on, identify and send for investigation cases in which it appeared means had not been disclosed to us. This was one such case.
11:35 am
Kieran O'Donnell (Limerick City, Fine Gael)
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What link is there between the Department of Social Protection and the Revenue Commissioners, through computer systems and so forth?
Ms Niamh O'Donoghue:
There have been data exchanges for many years between the two Departments because Revenue is a collection agency for the Department. It collects PRSI through the tax system and provides the data for us that enable us to keep eligibility records and contribution histories for those who have paid PRSI. We are also required to provide information for Revenue on payments made where they are potentially subject to tax. We have been enhancing our ability to do this in recent years.
The high level group established four or five years ago set up a sub-group to see if there were other data sets we could exchange regularly. We exchange significant data, for example, when somebody takes up employment and the employer or employee registers for tax, we receive notification of the commencement of employment which enables us to match and minimise the risk of overpayment. We have considerably enhanced our ability internally to take that data and match it on a real-time basis across all of our means-assessed payment schemes. Revenue holds various other data that we receive either systematically or an ad hoc basis. Both organisations have to respect data protection principles and social welfare and tax law on the exchange of information.
Kieran O'Donnell (Limerick City, Fine Gael)
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What was the value of fraud detected in 2012 and 2013?
Ms Niamh O'Donoghue:
There is no overall level of fraud for the entire social welfare system. There are levels of fraud which are indicators. The fraud and error surveys to which the Comptroller and Auditor General referred and which are the subject of a chapter in his report are a snapshot of what is perceived to be the level of error or fraud in a particular scheme at a particular moment. They are designed to identify areas of risk to enable us to refine and develop our control policies to put in place new measures to try to deal with such things. The best estimate I can give of an absolute concrete figure is the level of overpayments the Department has identified, roughly 0.5% of total expenditure across all schemes.
Kieran O'Donnell (Limerick City, Fine Gael)
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Am I correct in saying that in 2012 total overpayments amounted to €97 million; that the figure for client error was €36 million; fraud, €41 million; estate cases, €13 million; and departmental error, €7 million? The figure for client error was 37%; fraud, 42%; estate cases, 14%; and departmental error, 7%. In total, the figure for fraud amounted to €41 million out of a budget of €20 billion.
Kieran O'Donnell (Limerick City, Fine Gael)
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A figure of 0.5% appears very low. What resources has the Department put into special investigation in this area?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is there an assistant secretary in charge of dealing with fraud?
Kieran O'Donnell (Limerick City, Fine Gael)
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What staffing structure is in place?
Ms Niamh O'Donoghue:
We have a central control unit based in Carrick-on-Shannon, with approximately 50 staff exclusively studying control measures. It focuses on fraud, but it also tries to eliminate customer and departmental error. There is an inspectorate which, at its hard level, is the special investigation unit, with 91 officers who are based throughout the country but report to a principal officer nationally.
Kieran O'Donnell (Limerick City, Fine Gael)
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Is this a new structure?
Kieran O'Donnell (Limerick City, Fine Gael)
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What does Ms O’Donoghue mean by “enhanced”? Are there extra staff?
Kieran O'Donnell (Limerick City, Fine Gael)
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Has that happened?
Kieran O'Donnell (Limerick City, Fine Gael)
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In total, there is an assistant secretary, 50 staff-----
Kieran O'Donnell (Limerick City, Fine Gael)
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That gives a figure of approximately 143 and another 20-----
Kieran O'Donnell (Limerick City, Fine Gael)
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How does Ms O’Donoghue think the fraud proceeded? People are entitled to have legitimate claims processed as fast as possible, but the general public and those in receipt of legitimate payments are entitled to know that the system operates with integrity. What has the Department done with its new anti-fraud strategy that is new and creates a system that will stand up to scrutiny and get results? One has to ask whether there is room for improvement on the figure of 0.5%, or €41 million out of a budget of €20 billion. What is new?
Ms Niamh O'Donoghue:
The figure for overpayments identified has increased considerably in recent years, which is a direct result of the Department’s increased activity in this area at different stages in the evolution of a claim. The Deputy is quite right; I said in my opening statement that we had to achieve a balance between customer service and ensuring it was directed at the right people. We must keep that balance constantly in mind. It is a question of the degree to which we process a claim speedily versus the degree of investigation. That investigation will be informed by our risk identifiers.
Kieran O'Donnell (Limerick City, Fine Gael)
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I know all that. What practical additional resources has the Department put into this area? Apart from giving me the policy statement, will Ms O’Donoghue tell me about the practical additional resources the Department has put into this area?
Kieran O'Donnell (Limerick City, Fine Gael)
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That is very general information. I want specific numbers.
Kieran O'Donnell (Limerick City, Fine Gael)
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That is general. Twenty extra gardaí will come in. What extra staff has the Department put into this area? It is welcome that there is an assistant secretary in charge of the area, but what specific, targeted resources has the Department put into it? How many extra staff are there?
Ms Niamh O'Donoghue:
It is very difficult to single it out because all staff have a control responsibility in processing claims. I have given the Deputy the numbers of staff who are dedicated, whose job is control and nothing else. Beneath this there are control sections in every local office, in all areas in which schemes have headquarters.
We have put new measures in place - for example, new data matching so that once a claim is in payment we are actually interrogating the eligibility and the information we hold on people. We have provided new and enhanced training for staff. These measures are all to do with raising awareness about control and also refining the tools we use both in terms of the processing of claims in the first instance and the review and examination of claims once they are in payment.
11:45 am
Kieran O'Donnell (Limerick City, Fine Gael)
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Fifty people and an assistant secretary deal with fraud. They are based in Carrick-on-Shannon. Ninety-one people are involved in the special investigations unit and 20 gardaí are specifically assigned to that area. That is a total of 165 people specifically dealing with fraud.
Ms Niamh O'Donoghue:
They are full-time, but in addition, it is important to note that in total there are somewhere between 900 and 1,000 staff in the Department who have some dimension of control activity. Our inspectorate is involved in this work, as are those involved in the community welfare service and those involved in taking information and claims.
Kieran O'Donnell (Limerick City, Fine Gael)
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It seems the new element is the inclusion of 20 gardaí in the structure.
Kieran O'Donnell (Limerick City, Fine Gael)
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There was €97 million in overpayments in 2012 and fraud accounted for €41 million of that amount. What was the total overpayment figure in 2013? How much of the amount related to fraud?
Kieran O'Donnell (Limerick City, Fine Gael)
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The figure for fraud has increased from €41 million to €62 million and the figure for overpayments has increased from €97 million to €127 million.
Kieran O'Donnell (Limerick City, Fine Gael)
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An issue arose in the audit about possible misappropriation of public funds by employees. There were four cases of possible misappropriation of public funds by employees, estimated at approximately €1,279,190, during the period 2003 to 2012. How did these four cases come to light?
Ms Niamh O'Donoghue:
Prosecutions in some of these cases are ongoing. It is difficult to give too much detail about them at this point. We have provided an update on the four cases to the Comptroller and Auditor General. In one of the cases, on foot of investigation it was found that there was no evidence to support the allegation. The four cases then became three cases. In one case a member of staff was misappropriating - as a customer of the Department, the person was claiming a benefit to which the person was no longer entitled. In the other two cases, members of staff were allegedly misappropriating funds by making payments to others that were not appropriate.
Kieran O'Donnell (Limerick City, Fine Gael)
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Were they making payments to fictitious persons or was collusion involved?
Kieran O'Donnell (Limerick City, Fine Gael)
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What has been the outcome in the case where the person was receiving the payments? It seems the person had been receiving a payment and was then not entitled to receive the payment. What has happened with regard to that person's situation?
Kieran O'Donnell (Limerick City, Fine Gael)
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What about the money?
Kieran O'Donnell (Limerick City, Fine Gael)
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Has it been recovered?
Kieran O'Donnell (Limerick City, Fine Gael)
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When was the person fired?
Kieran O'Donnell (Limerick City, Fine Gael)
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What was the amount of money involved in the other two cases? In the case where the person continued to claim, was the amount large?
Kieran O'Donnell (Limerick City, Fine Gael)
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For years?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is the Secretary General at liberty to say what was the reason for the payment?
Kieran O'Donnell (Limerick City, Fine Gael)
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How did it come to light?
Kieran O'Donnell (Limerick City, Fine Gael)
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Ten years is a long time for someone to be in receipt of a payment and also to be working. Was there collusion involved in this case?
Kieran O'Donnell (Limerick City, Fine Gael)
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Was this person involved in making that payment to himself or herself?
Kieran O'Donnell (Limerick City, Fine Gael)
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The person just continued to receive the payments. Did this come to light as a result of a random selection or was it as a result of a tip-off?
Kieran O'Donnell (Limerick City, Fine Gael)
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People working for the Department of Social Protection do a great job.
Kieran O'Donnell (Limerick City, Fine Gael)
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Are the other two cases with An Garda Síochána?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is the amount of money significant?
Kieran O'Donnell (Limerick City, Fine Gael)
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What are the general parameters of the cases? Is collusion involved?
Kieran O'Donnell (Limerick City, Fine Gael)
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What were the specific circumstances? What types of payment are involved?
Ms Niamh O'Donoghue:
These were payments where the officers involved had discretion over payments to be made. Payments have come to light that were being made over a period of time to a range of different individuals based on either alleged circumstances or for the provision of services or whatever.
Kieran O'Donnell (Limerick City, Fine Gael)
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What area were they involved in?
Kieran O'Donnell (Limerick City, Fine Gael)
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Community welfare officers do great work.
Kieran O'Donnell (Limerick City, Fine Gael)
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Over how many years was this going on?
Kieran O'Donnell (Limerick City, Fine Gael)
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Over a period of six years. How did it come to light?
Ms Niamh O'Donoghue:
Again, because of new management controls which the Department had put in place and through audit procedures. I stress that it is now a very significant feature of our internal audit programme. I am very glad to say I have received considerable assurance from the audits that have been carried out under that programme since 2012 that this is not widespread.
Kieran O'Donnell (Limerick City, Fine Gael)
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What has happened to the two individuals involved?
Kieran O'Donnell (Limerick City, Fine Gael)
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Are they suspended on pay?
Kieran O'Donnell (Limerick City, Fine Gael)
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When was the matter referred to An Garda Síochána?
Kieran O'Donnell (Limerick City, Fine Gael)
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We are talking about three cases and a total of €1,279,290. In the case of the individual in receipt of a payment to which the person was not entitled, I would have thought the amount involved was probably in the order of €100,000 or more.
Kieran O'Donnell (Limerick City, Fine Gael)
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It is about €100,000, I reckon.
Kieran O'Donnell (Limerick City, Fine Gael)
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We are talking about €1.2 million involving two individuals. That is a staggering figure. It is taxpayers' money. It is shocking that this is €600,000 on average for the two individuals.
Kieran O'Donnell (Limerick City, Fine Gael)
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Can I take it from what the Secretary General says that we are talking about 60-40, 70-30?
11:55 am
Kieran O'Donnell (Limerick City, Fine Gael)
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May I take it that one of the cases involves an amount in excess of €1 million?
Kieran O'Donnell (Limerick City, Fine Gael)
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That is incredible. Some €1 million in taxpayers' money was defrauded from the Department over a six-year period by one individual. That equates to something over €150,000 per year or just over €3,000 per week. Deputies refer people who are in direct circumstances to community welfare officers, CWOs. Why was this level of fraud not identified earlier?
Kieran O'Donnell (Limerick City, Fine Gael)
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Were the two individuals working in the same geographic area?
Kieran O'Donnell (Limerick City, Fine Gael)
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So they were working separately.
Kieran O'Donnell (Limerick City, Fine Gael)
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Was there collusion with other members of staff or did they collude with individuals coming into the offices in which they worked?
Ms Niamh O'Donoghue:
It is in respect of payments to others that the question of collusion arises. In other words, inappropriate claims were made and facilitated. That is my understanding. The Deputy will appreciate that they are very complicated claims and that there is a very complicated investigation taking place.
Kieran O'Donnell (Limerick City, Fine Gael)
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Has the Department sought legal advice from counsel at this point?
Kieran O'Donnell (Limerick City, Fine Gael)
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So it does not fall within the remit of the Department in any way.
Kieran O'Donnell (Limerick City, Fine Gael)
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When is it anticipated that investigation will be completed?
Kieran O'Donnell (Limerick City, Fine Gael)
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What procedures has the Department put in place to ensure that something of this nature will never happen again? What is being done to prevent it happening right now? We are discussing fraud at a time when ordinary people who are in receipt of social welfare payments are under enormous pressure. The Department is trying to make payments to them as quickly as possible. These individuals are often directed to their local CWOs and in many instances it is not possible to obtain payments for them. A number of these people are very deserving of payment. It is extremely important that there is flexibility in the system. However, one individual has taken €1 million in taxpayers' money to use for their own ends. That person held a position of enormous responsibility and what was done has undermined the system. The actions of the individual involved were extremely unfair to other staff who work in the Department of Social Protection, to ordinary people who are in receipt of social welfare payments and to the taxpayers whose money funds the system. What procedures has the Department put in place to ensure that something of this nature is not happening now and that it will not occur in the future?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is it not extraordinary that in excess of €150,000 - or approximately €3,200 per week - was being taken per annum for a six-year period and that this went undetected?
Ms Niamh O'Donoghue:
It is extraordinary and that is why we have moved very quickly - now that we have responsibility for the relevant operations - to put in place the same level of controls we have in place in respect of the remainder of our payment functions. The Deputy will be glad to hear that we have done a number of things. We have drawn up control checklists and requirements for officers working in the community welfare service and instituted new training for them on an ongoing basis. Our internal control unit is now monitoring local management audit checks on a monthly basis. In addition, quarterly compliance reports must be made to divisional managers. The unit has completed inspections at over 23 locations and six internal control staff briefings have been held throughout the country. Furthermore, the unit has carried out 12 reviews of community welfare services since January 2012 and while a number of areas have been identified for improvement - recommendations have been implemented in this regard - an assurance has also been given that the kind of issues identified in the cases in question are not widespread.
Kieran O'Donnell (Limerick City, Fine Gael)
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Ms O'Donoghue stated that money is being recouped from the person who was overpaid. What will be the length of the period over which that money will be recouped? Less than €100,000 of the €1.2 million relates to one individual, while the remainder - €1.1 million - relates to another person. How much of this money has been recouped to date?
Kieran O'Donnell (Limerick City, Fine Gael)
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Over what period?
Kieran O'Donnell (Limerick City, Fine Gael)
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How much of the €1.1 million has been recouped?
Ms Niamh O'Donoghue:
As I said, those cases are still under investigation. The outcome very much depends on to whom the payments involved were made. In addition, the Deputy referred to collusion and we must establish whether claims were made inappropriately and whether there are moneys which we must recoup.
Kieran O'Donnell (Limerick City, Fine Gael)
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So none of it has been recouped to date.
John Deasy (Waterford, Fine Gael)
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The matter needs to take its course before the Department proceeds.
John Deasy (Waterford, Fine Gael)
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For clarification and in the context of the €1 million, one individual colluded with regard-----
John Deasy (Waterford, Fine Gael)
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Yes. The person potentially colluded with regard to facilitating multiple claims on the part of other individuals. Is that the case?
John Deasy (Waterford, Fine Gael)
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So one individual is at the centre of the matter-----
John Deasy (Waterford, Fine Gael)
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-----but there are potentially multiple claims in respect of other people involved.
John Deasy (Waterford, Fine Gael)
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So that is what we are dealing with here.
Áine Collins (Cork North West, Fine Gael)
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I thank Ms O'Donoghue and her team for coming before the committee. I wish to focus on activation measures, fraud and domiciliary care.
I understand that there is only 3% activation in respect of the Gateway scheme. I am not sure if an update is available in the context of what is currently happening with the scheme. JobBridge has attracted mixed reviews. Is Ms O'Donoghue in a position to indicate the number of jobs that have been created for people who went on this scheme? What percentage of such individuals return to the live register? There is a specific issue with Tús in that when one accepts a placement on it, one becomes an employee. As a result, one is obliged to pay employees' PRSI. There are people who are married with children and who are in receipt of larger social welfare payments of €400 plus per week. If they go on Tús schemes - many of them have the urge to do so when asked - they receive an additional €20 per week but they actually come out with less money because they are obliged to pay the universal social charge, USC, and PRSI. That is unfair and it would not happen if they were on community employment, CE, schemes. Will Ms O'Donoghue comment on those points?
Ms Niamh O'Donoghue:
I will take the Deputy's final point first. The application of the taxation system to individuals such as those to whom she refers is no different than it would be to people in public or private employment who are earning that amount of money. This comes down to a decision made by Government previously in respect of PRSI and the disallowance relating thereto.
As the Deputy will be aware, JobBridge is an internship programme. It is designed to give people work experience, in the first instance, and encourage employers to consider the appropriateness of creating new jobs. An evaluation carried out by Indecon shows that progression rates from JobBridge into employment are extremely high in comparison to those which obtain in other European states. In the region of 51% of interns move directly into employment. After a period of five months, this increases to 61%. Those jobs may not necessarily be with the employers with whom the people involved served their internships. Obviously, however, the objective behind JobBridge of providing work experience has legitimate currency in the labour market.
If one looks across Europe, that is a hugely positive outcome for JobBridge when compared with the types of internship programme that exist in other countries.
The Deputy's third question pertained to the Gateway scheme. There is no doubt that Gateway has been much slower in terms of the Government's intention to provide for a significant number of placements. I believe the original target in 2014 was 3,000 placements. New arrangements now have been put in place, as well as new dialogue regarding governance of that scheme to try to remove any impediments that might have existed or any confusion regarding access to the scheme. I am pleased to report that as of today, 177 participants are employed on the scheme and more than 250 job offers are pending. The target we had was to have 1,200 placements by mid-year, and with those numbers, this obviously is extremely ambitious. However, we are working hard to try to achieve that. Obviously, it involves working with partner local authorities and trying to ensure that all the different parameters are teased out in this regard.
12:05 pm
Áine Collins (Cork North West, Fine Gael)
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While I appreciate the Department might not achieve its target by the middle of the year, is the Secretary General hopeful that it will be achieved by the end of the year?
Áine Collins (Cork North West, Fine Gael)
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Although there has been some cynicism in the media about JobBridge, it is actually working.
Ms Niamh O'Donoghue:
Absolutely; there is no question about it. The evaluation evidence and the evidence we receive from the vast majority of participants are incredibly positive. There has been a lot of media focus on some negative elements. Obviously, for some interns, their experience is not great and there have been all sorts of allegations about employers. That has been absolutely minimal. There are regular controls and monitoring in place and there are opportunities for interns and indeed for employers who are dissatisfied with their experience to report back to us and for us to take that into account.
Áine Collins (Cork North West, Fine Gael)
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What monitoring is in place? Does the Department monitor what the employer would do with someone participating in JobBridge and what training is being given, or is that overly bureaucratic?
Ms Niamh O'Donoghue:
One thing we are trying to do is to achieve a balance in this regard by not over-complicating the matter, while at the same time ensuring there is some support or security for participants. In the first instance, in applying for JobBridge employers are required to indicate what precisely they have in place and what they propose to provide by way of training and experience to the individual. We actually have a significant programme of inspection of employment. Moreover, we have ramped that up considerably in response to some of the suggestions in the media. As I stated, we are satisfied that for the vast majority of residents, it has been a very successful programme.
Áine Collins (Cork North West, Fine Gael)
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I support that and thank the Secretary General.
I believe that a real issue exists in respect of Tús. As I am a tax consultant by profession, I understand the taxation system very well. However, the Secretary General will appreciate that someone who is participating in a Tús programme is still in receipt of social welfare. I acknowledge that he or she is working and gaining experience, but this work usually is in a community scheme. It is very valid from a social point of view and is fantastic with regard to giving someone conference and getting activated. However, such participants still are getting a payment from the Department of Social Protection, and this issue must be examined. I appreciate that it is a policy issue for the Government, and the Minister will be obliged to consider it. I am unsure whether there is a major issue in the sense of there being a large number of people on the higher level who would hit the tax and universal social charge, USC, thresholds. With the community employment scheme, it does not come into the same-----
Áine Collins (Cork North West, Fine Gael)
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The Secretary General can appreciate that if one is getting €20 more per week to go out to work and one is coming home with less and one still is getting paid by the Department of Social Protection-----
Áine Collins (Cork North West, Fine Gael)
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It is my understanding that in the CE scheme, the supervisor gets paid that amount. He or she pays the employee portion of the PRSI, but it is allowed in the cost of the scheme, if the Secretary General knows what I mean.
Áine Collins (Cork North West, Fine Gael)
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Will the Department please do so? It is an issue.
Áine Collins (Cork North West, Fine Gael)
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My point is that an allowance or something should be given to the people who are providing the Tús programme.
Áine Collins (Cork North West, Fine Gael)
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This is something that could be examined and I would appreciate that.
I have one question on fraud and how social protection payments are made. As I am working from memory, my percentages might be slightly awry, but my understanding is that 45% of all payments go through An Post, while 55% go directly to the bank.
Áine Collins (Cork North West, Fine Gael)
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Okay. I have heard that in the case of the payments going to An Post, approximately €7 million is coming back to the Department where errors have been made. However, this is not happening when the payments go directly into the bank.
Ms Niamh O'Donoghue:
In one sense, the position on giving people an option as to their payment mechanism changed in 2008 or 2009 or thereabouts. At that point, the Department took a view that electronic funds transfer, EFT, no longer would be an option for those payments that were considered to be riskier and that people would be required to take their payment through An Post. This was particularly in the context of jobseeker payments. Part of the reason was that there was greater assurance with regard to the presence of the individual in the country, and there was the potential for better identity checks. The payments that go to people via EFT primarily tend to be what would be considered low-risk payments. More often than not, they are pensions - that is, contributory State pensions - child benefit in many but not all cases, disability payments and invalidity payments. More recently, certainly over the past five or six years, we have moved a lot of illness benefit customers into EFT on the basis that most of those people have an attachment to the workforce. Again, it is to do with the risk of their presence or otherwise.
Áine Collins (Cork North West, Fine Gael)
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Jobseeker payments cannot be paid into someone's bank account.
Ms Niamh O'Donoghue:
We made an exception last year for jobseekers who are over 62. They now have the option of a different signing regime and of having their moneys paid into a bank account. Otherwise, however, at the time when the numbers of jobseeker applicants began to increase very substantially, in 2008 and 2009, the decision was made that all those payments would be made through the post office system, because greater controls were available to us at that point in time through that system.
Áine Collins (Cork North West, Fine Gael)
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I wish to ask about a subject about which one hears a lot on the ground, especially when one talks to business owners. It relates to dealing with people who are on the black market - that is, people who are in receipt of jobseeker's payments but who also are working. Everyone is familiar with the sectors about which I am talking. If people wish to give information to the Department, is there some easy accessible way to so do, and can it be promoted? My information is that when people ring up in this regard, they are asked all sorts of detailed questions.
Ms Niamh O'Donoghue:
There are extremely simple ways of doing this. It can be done through our website and anonymous reports can be made either through the website or through a dedicated telephone line. Some information will be sought to establish whether there may be something that must be investigated or otherwise. The Deputy will appreciate that occasionally someone might make a report to the Department where they see someone claiming a social welfare payment who potentially is in some sort of employment, but in fact that might be allowed under the terms of the scheme.
Áine Collins (Cork North West, Fine Gael)
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Yes.
Ms Niamh O'Donoghue:
While such detail is to allow us to establish the veracity or otherwise of an allegation, it is on an anonymous basis. This has been responded to by members of the public to an incredible extent in recent years. In 2011, for example, there were just under 17,000 reports of fraud and abuse, and that figure increased to 28,000 in 2012.
It fell slightly, to just over 24,700, in 2013 but it is still a very substantial area of activity and information for the Department.
12:15 pm
Áine Collins (Cork North West, Fine Gael)
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Is there an easy way of doing it?
Áine Collins (Cork North West, Fine Gael)
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Is it easy to get the number of that dedicated telephone line?
Áine Collins (Cork North West, Fine Gael)
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Does one have to go to the website?
Áine Collins (Cork North West, Fine Gael)
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I will ask about the kind of work the Intreo offices are doing, particularly with those who have been unemployed, the retraining, etc. What kind of training are they doing? Are there a lot of soft skills involved? Is it in, and around, building confidence? From speaking to those who have lost their job, if they do not get re-employed in the first six or 12 months their confidence hits an all-time low. It is a big issue.
Ms Niamh O'Donoghue:
There has been a very significant shift in the last couple of years in regard to how we engage with our customers. The Deputy may appreciate that up to about two years ago we operated on the basis of what was called an employment action plan where there was a mechanism for referral of people who presented for unemployment that after three months on the live register they were referred to FÁS at the time and consideration given to whether employment support or training was required. That was a very blunt instrument in so far as that referral was done after three months regardless of the skills, background or experience of the individual who presented.
What has changed in the last couple of years is that we have introduced what we call a profiling model. This is a model that was developed with the ESRI to actually look at what are the kind of indicators of the potential for somebody to exit the live register of their own volition or what degree of support. It is probability of exit from the live register. It is called a PEX score.
In 2012, we started profiling new applicants and, really, the thrust under the original Pathways to Work document and mandate that were given by Government was to try and prevent a drift into unemployment by engaging with people early and looking to identify people who needed support to a greater extent, and referring them early for such support. What Pathways to Work did was shift the emphasis somewhat to the long-term unemployed. I am glad to say that in the course of 2013, working with the ESRI, we have profiled the entire stock of long-term unemployed that exist on the live register and we are now engaging through the Intreo service with this cohort. The whole thrust of that is to find out what their previous experience and vulnerabilities and needs are and to develop a personal progression plan with them that is absolutely tailored to their particular needs. It is a combination of engaging with them, as part of a group in the first instance, to give some basic information about the process and structures and then, on a one-to-one basis, develop this plan. Whether it is referral for soft-skills training or whether it is referral into a structured training programme, all of those opportunities exist. Our case officers - we have substantially increased the number of case officers within the Department - have some funding available to them to allow for those kind of interventions, particularly for those who are in vulnerable situations or who need additional support over and above somebody who has, maybe, a professional background or work experience in the not-to-distant past.
Áine Collins (Cork North West, Fine Gael)
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I am hearing that the integration of the FÁS side into the Department of Social Protection has embedded and is working well. Is that the experience?
Ms Niamh O'Donoghue:
I am delighted Deputy Áine Collins is hearing that. It certainly would be our understanding that there is a lot of learning, a lot of cultural change, a lot of business process change and very significant progress. The fact that we have been able to change the surroundings, that people have worked together and reformed the teams that they are in to support the whole Intreo process, has been a huge benefit to both sides of the service. That will be rolled out across the entire office network by the end of this year.
Áine Collins (Cork North West, Fine Gael)
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On a personal note, I have an issue in Charleville, which is part of my constituency, with an activation officer because it is situated at the end of two counties - it is between Limerick and Cork. I have brought it up previously. Charleville has a population of almost 3,500. Ms O'Donoghue might look into it and come back.
Áine Collins (Cork North West, Fine Gael)
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The issue with domiciliary care, as I understand it, is that it was transferred to the Department in 2009 from the HSE. There is a 60% refusal rate, 60% of the appeals are being accepted but the process is long and cumbersome and applicants can be waiting up to nine or 12 months.
Áine Collins (Cork North West, Fine Gael)
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How long is Ms O'Donoghue talking about? How long does it take to process a form?
Áine Collins (Cork North West, Fine Gael)
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What is the percentage of applicants are successful?
Áine Collins (Cork North West, Fine Gael)
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Are 60% of the 52% successful?
Ms Niamh O'Donoghue:
The 48% moves to 60% following the whole process. Not everybody, who is refused, appeals, if I can put it like that.
In terms of times for appeal, in 2012, for summary decisions, the time was 32.5 weeks. That reduced to 27.6 weeks in 2013. For oral hearings, it started, in 2012, at 41.4 weeks and that reduced to 34.4 weeks in 2013. It is a significant amount of time but the Deputy will appreciate that in many instances, when there is either a request for a review or a request for appeal, there is very considerable additional evidence adduced. That then has to be considered again and it takes some time.
Áine Collins (Cork North West, Fine Gael)
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In regard to a person's eligibility, my understanding is that a person is entitled to domiciliary care where a child has extra needs due to a condition, but sometimes the condition cannot be identified or there might be no diagnosis. For example, there may be a case of a person with very serious learning difficulties but, as such, no diagnosis.
Ms Niamh O'Donoghue:
It is an illness-related scheme. The scheme is about providing assistance to somebody in regard to the additional care and attention that is required but there is a fundamental requirement that has to be identified. It is not because a child has X condition or Y condition. It is because of the nature of the additional care and attention that the child requires.
Áine Collins (Cork North West, Fine Gael)
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Does one have to be diagnosed with a disability?
Ms Niamh O'Donoghue:
It is not a disability scheme but the evidence would have to support the requirement that is in law.
Áine Collins (Cork North West, Fine Gael)
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I appreciate that but we have seen recent reviews in relation to autism. A child with autism clearly needs greater care and attention than a child of the same age who does not have autism.
Ms Niamh O'Donoghue:
Indeed, but the Deputy would be aware that there is a huge range on the autism spectrum which is part of the reason why the Minister set up the review process, which involved parents and representatives from the different advocacy groups, in terms of trying to work out processes that were seen to be more transparent and fairer. As the Comptroller and Auditor General has pointed out, we are putting those recommendations in place.
Áine Collins (Cork North West, Fine Gael)
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On those recommendations, Recommendation No. 14 states: "That the Department explore the feasibility of putting in place a multi-disciplinary panel, comprising professionals working in the area of children's disability that can be consulted by medical assessors to support them in forming their opinions". Has that recommendation been put in place?
Áine Collins (Cork North West, Fine Gael)
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The Department is considering and, therefore, it has not been put in place.
12:25 pm
Áine Collins (Cork North West, Fine Gael)
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What is the qualification of a medical assessor?
Ms Niamh O'Donoghue:
They are all registered medical practitioners. The medical assessors in the Department in the main also have some form of specialist qualification. They all have received some sort of disability awareness training.
Áine Collins (Cork North West, Fine Gael)
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Are they all doctors?
Ms Niamh O'Donoghue:
The medical assessors are all doctors. There are nurses who work with those doctors. In the main, they have occupational training as well, and also disability training.
Áine Collins (Cork North West, Fine Gael)
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There is a lot of criticism that there are desktop appeals being examined by medical assessors. They are making decisions that are different from those of specialists in the area who have actually met the child and recommended extra care and attention for him or her. Despite this, it seems to be-----
Ms Niamh O?Donoghue:
The application process is very comprehensive but it is desk-based in the first instance. It is absolutely reliant on the amount of information and evidence that is provided by the person making the claim, from wherever that might be. Whether it is medical or non-medical, the person is invited to give as full a spectrum of information as he possibly can. That process has been upheld in a court case. There is no automatic assumption that there should be an in-person assessment, provided the assessment is seen to take into account the full range of evidence provided.
Áine Collins (Cork North West, Fine Gael)
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In the recent court cases, the judge was quite critical of some aspects of the approach.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I welcome the witnesses. As I say on each occasion, they are in a very efficient Department. If the HSE and a few more organisations were like it, we would have a much better country.
With regard to some of the specifics, I want to touch on a couple of different topics, the first of which is the overpayments issue. The Department recouped €70 million in overpayments in 2013. It states in the document that its target for this year is €75 million. If somebody is owed arrears from the Department and it is spotted that there has been a previous overpayment, the sum is deducted from the arrears. That is fine and I have seen it happen. It is right. Can the Department give me a figure for the value of the arrangements it has put in place? Definitely in recent times I have encountered many cases in which the Department settled for a bit less than the 15% it was looking for. Aside from what it actually collected in 2013, or its target, what was the value of the overpayments in respect of which the Department has arrangements in place for collection? In other words, the Department might have an agreement with a person to take €20 per week over two or three years to clear a debt. The Department is happy with that. If the Department does not have the figure, it should send it on.
Seán Fleming (Laois-Offaly, Fianna Fail)
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However, Ms O'Donoghue knows where I am coming from.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I suspect it is a growing figure because the Department’s power is now much greater in this area. In most cases, people make repayments over a couple of years.
Ms Niamh O'Donoghue:
The Deputy will appreciate my position. I do not have a figure to hand but the Deputy will appreciate that the vast bulk of overpayments are very small. Given the powers we now have and the level of overpayments we can recoup, a very considerable number of debts can now be satisfied within the course of a 12-month period.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I accept that.
Ms Niamh O'Donoghue:
I understand what the Deputy is saying. I will determine whether we can extract the figure. To confirm, the arrangements we have currently in place to recover a debt over a particular period, and to ascertain what that might amount to, which is obviously more than an annual-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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For how much of the amounts to be recovered is there an arrangement in place?
Seán Fleming (Laois-Offaly, Fianna Fail)
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It might take nine months or 19, or another period.
Let me make a suggestion to the Department on recovery. The Department's system has obviously identified people who have been overpaid, for various reasons. In the past, when the Department could collect only €2 per week, it was not bothered going after it and it sat there. I now see that when somebody is to receive a new payment, the Department checks immediately to determine whether any arrears are due. That is fine. I have dealt with cases of people who received overpayments, perhaps through FIS or another scheme, or perhaps because their spouses got some part-time work that would have made them ineligible. I have seen cases where, although X thousand euro might have been due during an individual's working life, the Department waited until he or she applied for the State contributory pension before reclaiming it. An individual might be identified by the Department as owing €3,000, yet it does not recoup it until the individual hits pension age, at which time he or she is on a reduced income. Individuals ask why the money was not taken from them by the Department when they were working and could afford it rather than when they reached 66. One can believe what one likes about whether the overpayments were forgotten about or whether it was hoped the matter would not be noticed. The Department waits until it receives the State pension application before taking action.
I suggest that where the Department knows moneys are due, bearing in mind that there is now a much better exchange of information with the Revenue Commissioners, it should reclaim them during the working life of the recipient. The recipient might be in employment, but the Department seems to wait until he or she comes to it for another payment before taking action. The witnesses know the point I am trying to make.
Seán Fleming (Laois-Offaly, Fianna Fail)
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It would be easier on the client.
Ms Niamh O'Donoghue:
There are a number of facets to what we are trying to do. We now have power of attachment to earnings, which we did not have previously. The Deputy is correct that when our recovery limits were quite small, there might not have been the focus that we would have wished for. That has obviously changed. We now have powers of attachment and we are seeking to extend them to other State payments where they might arise.
Second, we are now trying to eradicate and recoup overpayments at the earliest possible date so the situation described will not arise. Unfortunately, we do not actually become aware of some of the overpayments until the recipient passes away and it becomes an estate issue for us.
Seán Fleming (Laois-Offaly, Fianna Fail)
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The Department collects money from estates. I am talking about the State pension.
Ms Niamh O'Donoghue:
Absolutely. However, one of the points is that we have better IT systems and platforms in place in relation to making our payments. As I stated at the start of the meeting, we are now in the process of developing a new debt management and recovery system. We will have it in place by the end of this year. I think it will allow us to be even more efficient in getting money quicker.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Getting it in earlier?
Seán Fleming (Laois-Offaly, Fianna Fail)
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That is fine. The witnesses get the point. I propose that money be collected a bit earlier, if possible. If the recipient of overpayments is in employment, he might be in a position to write the cheque and pay, but he is not necessarily asked to do so.
On the compliance and anti-fraud strategy and procurement, the Department proposes to undertake site visits, especially where contractors are working on public service projects. Obviously, we are talking about schools. I am on public record several times as having said several schools have been milked in my constituency. Busloads of people were claiming social welfare outside the county and were being bussed back to the county in the afternoon where they continued to work as normal. They showed up on a Thursday morning. This is public information and the story has been publicly covered. The Minister for Education and Skills announced a measure on this a while ago. It applies to road contracts and other contracts. Why has action been so slow? The Department seems to have done very little on this. It has required agitation among workers who might not have got a job on a site and also complaints to the Department through the unions or individuals. These workers say they are registered tradesman but cannot work on a particular site. They state they know there are people on the site who are doing the work of tradesmen but who are claiming the dole somewhere else. It has taken a lot of shouting and screaming and complaints by people who are entitled to work on the various sites for action to be taken. The Department has been a bit slow in that area.
Ms Niamh O'Donoghue:
I would not agree with the Deputy. We are doing that work. We are not just doing it on our own behalf; we are also doing it as part of joint operations with both NERA and the Revenue Commissioners. We have had some successes in a number of sites, but in other sites that we visited we found the workers and employers are compliant. Obviously, if the Deputy has details, we would be happy to follow them up.
Seán Fleming (Laois-Offaly, Fianna Fail)
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It is too late now; they are gone.
Will the postcodes being introduced next year help the Department in tracking people down? People are on the move. It will probably be of assistance in knowing where someone is living.
Ms Niamh O'Donoghue:
Ultimately, it will be of great assistance to us. However, I would not underestimate the effort that will be required on the part of the Department in terms of the adjustments made to payment systems and our communication with all our customers. We will now have to allow for postcodes that previously did not exist. Therefore, there will be quite a job of work for us to put that in place. It is a development that we welcome and one we are co-operating on and will be involved in.
Seán Fleming (Laois-Offaly, Fianna Fail)
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How many people are paying the local property tax through deductions to social welfare payments?
Seán Fleming (Laois-Offaly, Fianna Fail)
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What are the key payments from which the tax is being deducted?
Seán Fleming (Laois-Offaly, Fianna Fail)
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The State pension?
Ms Niamh O'Donoghue:
Yes.
There are 22,971 customers using the weekly deduction at source facility. At the end of 2013, we had deducted €1.9 million. Obviously, €1.5 million was deducted at the end of March. The expected deduction over the course of this year will be €6 million. The schemes from which people have asked us to make deductions are the contributory and non-contributory State pension, the widow's or surviving partner's contributory and non-contributory pension, the blind pension, the invalidity pension, one parent family payment, carer's allowance and disability allowance. We did not extend the facility at the time to people who were in receipt of jobseeker's benefit because of the churn on the live register.
12:35 pm
Seán Fleming (Laois-Offaly, Fianna Fail)
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A total of 22,971 people will be paying their local property tax adding up to approximately €6 million in 2014, as Ms O'Donoghue said. When the legislation relating to the local property tax was introduced, arrangements were put in place where it could be deducted through a person's employer. Employers are required under legislation to give a statement at the end of the year regarding the amount deducted. There are arrangements in that legislation that specifically say that the Department of Agriculture, Food and the Marine is obliged by law to give a statement at the end of the year to people who make their payments for the local property tax from moneys received from the Department. When it comes to the 22,971 people who pay through the Department of Social Protection and who are probably by definition people on the lowest income level, there is no requirement in the legislation for a receipt or statement to issue automatically to these people at the end of the year.
I put down a parliamentary question to the Minister for Finance some time ago relating to the cases I mentioned. I was informed that this decision was made after consultation with the Department of Social Protection so I want to know why the 22,971 people who are paying €6 million through the Department this year are the only people in Ireland who are not getting an automatic receipt for their local property tax. I think this was bad service on the part of the Department. It probably felt there was a cost involved and that people could request a statement of what they had paid. That is not the point. Everybody else gets it automatically from Revenue, their employer or the Department of Agriculture, Food and the Marine. Everyone else is covered. The Department of Social Protection was involved in the decision not to give the receipt to its customers unlike every other customer in Ireland. The Department was not treating its customers fairly. I would ask Ms O'Donoghue why this is the case and whether the Department would not reconsider at least giving people an annual statement because people forget. Three or four years on, a person might die, the question of whether he or she paid the local property tax arises, people scramble around the place and there is no evidence, proof or receipt in the box or cupboard at home while a receipt or at least an annual statement is issued for every other payment of the local property tax. Could Ms O'Donoghue comment on that because I have felt that it is unfair and have said that I would raise it with her?
Ms Niamh O'Donoghue:
As part of putting arrangements in place for the local property tax, we were asked to act as agents for the Revenue Commissioners in terms of collection. We did so on the basis that our understanding was that all communications with the individuals involved would be done by Revenue. We have no direct communication with the customers involved. All of the customer communication is with Revenue and we operate on instructions from Revenue. It is a different arrangement than perhaps exists for others because we are paying people on a weekly basis.
Seán Fleming (Laois-Offaly, Fianna Fail)
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It is not the agent. This is not something Revenue came up with. The section in the legislation specifically states that people will receive an automatic receipt from employers or the Department of Agriculture, Food and the Marine, but the Department of Social Protection is excluded from that section. It is included in the other section setting out where these payments can be made through but it is specifically omitted from the section relating to the receipt. Ms O'Donoghue just told me that most of these people are on State pensions. They are old age pensioners aged between 70, 80 and 90. Ms O'Donoghue has said that they are people on blind pensions. The Department is an agent but it is coming through it. The employer is an agent for Revenue but it is obliged to give a receipt.
Ms Niamh O'Donoghue:
I am not aware of any discussions in respect of that particular issue. I am certainly aware that the general principles that were agreed between Revenue and ourselves at the time were that all communications with the customers would be serviced by Revenue and that we would simply act as an agent on instruction from Revenue. I am not aware that there were any discussions to differentiate us.
Seán Fleming (Laois-Offaly, Fianna Fail)
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The Department deducts council rent.
Seán Fleming (Laois-Offaly, Fianna Fail)
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So it does not do this through any of its social welfare payments?
Seán Fleming (Laois-Offaly, Fianna Fail)
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There are deductions relating to some social welfare payments.
Seán Fleming (Laois-Offaly, Fianna Fail)
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That is an An Post arrangement?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I ask Ms O'Donoghue to revisit the issue because my information is that the deductions still come through the Department's computers and records.
Seán Fleming (Laois-Offaly, Fianna Fail)
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For the local property tax.
Seán Fleming (Laois-Offaly, Fianna Fail)
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The Department would have a record of it.
Seán Fleming (Laois-Offaly, Fianna Fail)
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If the Department is aware that it is handing over €6 million, it must have a record of the customers and the weeks that add up to €6 million.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Ms O'Donoghue gets the point.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I think the Department's customers are not being treated equally compared to every other citizen when it comes to getting a receipt for the local property tax.
In respect of the medical assessors, I know that the original forms, be they for illness benefit or disability or carer's payments, were filled out by the GP because we all get them back under FOI or when we look for the forms and see what was on them. Is Ms O'Donoghue able to tell us how many medical assessors the Department has for illness benefit, disability allowance, blind pension, carer's allowance, domiciliary care allowance and the respite care grant? Could she give me a breakdown? It does not have to be off the top of her head. She can send the information on to us.
Seán Fleming (Laois-Offaly, Fianna Fail)
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How many does the Department have?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Are they whole-time posts?
Ms Niamh O'Donoghue:
Yes. We have been trying to increase the number of medical assessors within the Department but as we have looked to recruit, we have also been losing medical assessors to retirement and indeed to other careers, which is one of the issues that has been raised in terms of our capacity. Our efforts so far to increase our pool have not amounted to much.
Seán Fleming (Laois-Offaly, Fianna Fail)
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What is the salary scale for a medical assessor?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Some €85,000.
Seán Fleming (Laois-Offaly, Fianna Fail)
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So Ms O'Donoghue is telling me that the Department of Social Protection has jobs on offer for €85,000 for doctors and it cannot get them?
Seán Fleming (Laois-Offaly, Fianna Fail)
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That is extraordinary. I am agreeing with Ms O'Donoghue but if that is where we are, it is an extraordinary situation.
Ms Niamh O'Donoghue:
We have concluded a competition that was advertised before the end of last year and will be immediately going back to market to look to recruit. As soon as we get them, we lose them. It is a difficult job. There is a lot of work to be done. We have an agenda to increase that amount of work so we are having to look at other ways to supplement our cadre and that is what we are doing at the moment.
Seán Fleming (Laois-Offaly, Fianna Fail)
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We accept that they must be medically qualified as it is only right.
Seán Fleming (Laois-Offaly, Fianna Fail)
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There has been a reduction in rent supplement. Could Ms O'Donoghue give us the lowest rate for rent supplement for a single person? As she knows, rents are increasing. Does she have any concerns that the reduction in rent supplement is increasing homelessness to some level? I know it must be controlled but we have crossed the tipping point where cutting it was right to keep landlords in check. People now cannot afford rent, particularly single people on a reduced jobseeker's allowance.
It is contributing to homelessness and we hear about cases on a daily basis. I am not referring to some of the contrived cases that often receive publicity - every Deputy knows the difference - but to genuine cases.
12:45 pm
Ms Niamh O'Donoghue:
The rent supplement scheme was designed to be a short-term solution. It has not been designed to meet an individual's long-term housing needs. There is no doubt that particular difficulties arise in certain areas of the country, but these difficulties have more to do with the supply of housing than the level of rent supplement provided. At one stage the Department was heavily criticised for the level of rent supplement in that it was driving rents and playing a disproportionate role in the rental market. Approximately 78,000 people are in receipt of rent supplement, which shows that it is at least working in these cases. There is no doubt, however, that in particular areas of the country supply is a huge issue. I am not sure that increasing rent supplement would necessarily address the issue. It would possibly drive rents upwards in these areas. The supplement is reviewed on a regular basis. It was last reviewed in the middle of 2013 and the current arrangements are scheduled to remain in place until the end of this year. We are aware of the particular difficulties that arise. There is very limited discretion in regard to circumstances where particular vulnerabilities present.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I know that Ms O'Donoghue will tell me it is on the website, but she might send the information to the clerk for circulation.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I have examined the changes to social protection payments made in the last couple of years. Ms O'Donoghue probably does not have the relevant information to hand, but I will indicate the figures that I would like her to supply.
There has been a reduction in the standardised maternity benefit payment. It goes without saying the individuals affected are female. Perhaps Ms O'Donoghue might outline the numbers and amounts involved in respect of the reductions in child benefit since 2012 and how many recipients of this payment were male. I imagine 80% to 90% of recipients of the one parent family payment are probably female, but Ms O'Donoghue might give us the actual figure. The one parent family payment was reduced in two respects. The age of qualifying children has changed, which means that fewer people will qualify for the payment. I ask for a breakdown between males and females in this regard. The inclusion of the age of the youngest child in the equation also has a knock-on effect in that some people are not eligible for the one parent family payment, depending on the age of their children, and they are transferring to jobseeker's allowance. I encountered several cases last summer where the income disregard for the one parent family payment was higher than the income disregard for jobseeker's allowance. I estimated that some people had lost €50 per week just by changing the title of their payments. I understand a transition arrangement was put in place, but I ask for a breakdown of the figures, including the numbers of males and females. The carer's respite grant was cut from €1,700 to €1,300. Most of the carers I know are female. How many males and females are in receipt of that grant?
Changes were made recently to eligibility rules for the State pension in respect of the total number of contributions required over an individual's career and the average annual contribution. These changes discriminate against women who left the paid workforce to do unpaid work. I ask Ms O'Donoghue for an estimate of the numbers of males and females affected. The only cases I have dealt with in my office involve women.
There have also been changes to the household benefits package, including the telephone and fuel allowances. As women live longer, there are more older women and widows in society. More power to the women present for having a longer life expectancy than the Chairman or I might have. However, I will not get into that debate. All of the aforementioned changes have affected women more than men.
In respect of each of the budgets and the options for changes and impact assessments - I am leaving aside policy decisions - were gender proofing exercises conducted on these changes? If such exercises were conducted, can we have the relevant documents? I do not know what to say to the witnesses if gender proofing was not used in assessing the impact of cuts on different groups. I presume these changes could have not been made in the absence of some proofing of their impacts. I was surprised that most of the people who had come to me to complain about budgets and cuts in the Department of Social Protection were women. Other cuts apply to men, but I am singling out the aforementioned areas.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I did not expect Ms O'Donoghue to have it.
Ms Niamh O'Donoghue:
We can certainly supply it. Significant changes have been made to the structure of social welfare payments in recent years. They include significant changes to the means assessments and income criteria. In many cases, this involves standardising, but, obviously, these are decisions that Governments take in moving towards a common platform. Similar changes have been made to the farm assist payment, in respect of which the majority of claimants are men.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I accept that.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Did I miss any payment?
Seán Fleming (Laois-Offaly, Fianna Fail)
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In my honest opinion, I have dealt with more complaints from women than men about these payments.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I am not getting into policy issues. Governments are elected to make decisions, but I am concerned that the information behind the decisions was not adequately investigated.
John Deasy (Waterford, Fine Gael)
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The Comptroller and Auditor General and Deputy Kieran O'Donnell referred to the issue of there possibly being a large misappropriation. I am trying to figure out its scale and the number of individuals who might have participated in it. We are no stranger to fraud and potential fraud at this committee, even when it comes to Irish Aid money going astray in places like Uganda. However, I have never come across anything of the scale involved in the social welfare area. Notwithstanding the fact that an investigation is ongoing and that Ms O'Donoghue is limited in what she can say, can she give us any idea of the potential number of participants in this scheme?
John Deasy (Waterford, Fine Gael)
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Can we get an idea of the number and types of claim involved?
John Deasy (Waterford, Fine Gael)
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It took place over the course of six years. If it amounted to more than €1 million, we would have to be speaking about a sizeable number of people. It would be something that was very organised and involved a large number of participants.
John Deasy (Waterford, Fine Gael)
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Overpayments seem to be the topic of the day. The legislation made provision for reductions of 15% in welfare payments to provide for better recovery.
The Act also provided for the use of attachment orders. How effective and how widely utilised has this been since the enactment of the legislation? Previously, there was a deduction of €2 or €3 a week. We talked about this issue a couple of years ago and Ms O'Donoghue suggested the figure had ended up being included in the legislation. How has it worked out?
12:55 pm
John Deasy (Waterford, Fine Gael)
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By how much? That is important.
John Deasy (Waterford, Fine Gael)
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Does Ms O'Donoghue attribute this specifically to the provisions included in the Act?
Ms Niamh O'Donoghue:
It is primarily due to the 15% provision but not exclusively because we have upped our game in pursuing payment recovery at an early stage. We are not recovering 15% in all instances because a deciding officer has discretion. While we seek to recover 15%, if the circumstances of the individual are such that it would cause great hardship, the deciding officer can come to a different arrangement.
John Deasy (Waterford, Fine Gael)
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The point of including it in the legislation was to improve it and Ms O'Donoghue is saying definitively that it has worked.
Ms Niamh O'Donoghue:
Absolutely and we expect it to continue to improve in the coming years. The attachments facility has had a twofold impact. The fact that we have the facility to attach, whether to bank accounts or earnings, has been very significant and it is a power of influence over people to come to voluntary arrangements with us. In some instances, the fact that we said we had this power and would use it has encouraged people to come to an arrangement that has stopped short of our putting it in place. There are cases in which we are in the process of putting attachment orders in place. So far this year, 57 cases suitable for attachments have been referred for consideration in the Department and engagement is happening in most of these cases. Final demands have issued in only 12 of these cases, ten for attachment of earnings and two for attachment to amounts held in financial institutions. In six of the 12 cases people have begun to repay their debts or approached us with acceptable payments to do so. In the other six we are moving to the next stage of putting the attachment procedures in place.
John Deasy (Waterford, Fine Gael)
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In the Act is there a provision to deduct amounts from other State payments?
John Deasy (Waterford, Fine Gael)
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If it has been so effective so far and there is progress on the overall overpayments issue, is the Department moving towards this?
John Deasy (Waterford, Fine Gael)
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The reaction when people know the Department has these powers is interesting.
John Deasy (Waterford, Fine Gael)
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If the Department allows itself additional powers, the position is likely to improve further. Is that the thought process?
Ms Niamh O'Donoghue:
Absolutely. A number of years ago when we had this conversation at the committee, I signalled that we were considering taking a multi-strand approach to recovering debt. The 15% provision was one element, among others. We are seeking to pursue everything we can and it is all about trying to protect the Exchequer. Ultimately, we want to try to ensure overpayments do not occur in the first instance.
John Deasy (Waterford, Fine Gael)
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The number of applicants for invalidity pension in 2012 was 50% higher than in 2008. To what does Ms O'Donoghue attribute this?
Ms Niamh O'Donoghue:
The most significant single contributory factor was the change in the criteria for the payment of illness benefit. Illness benefit is a short-term, contribution-based payment for people in work who are ill. As it originally had no particular term, one could have been in receipt of illness benefit for multiple years. The scheme was changed and the first impact was felt in 2011. The length of time for which one could receive illness benefit was limited to two years. Many people who might have stayed on the payment were no longer eligible and the next progression was to invalidity pension.
John Deasy (Waterford, Fine Gael)
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In the headline figures included in her opening statement Ms O'Donoghue quoted €18.9 billion for 2014, outside the €600 million in administration costs. Is the reduction from €20.1 billion accounted for largely by reductions in income supports or do other reductions in the Department account for that lower figure?
John Deasy (Waterford, Fine Gael)
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When will the card be rolled out completely?
Ms Niamh O'Donoghue:
The contract we have in place is to issue 3 million cards by 2016. As I indicated in my opening statement, we have issued 660,000. Our target is to issue 900,000 in 2014, a similar number in 2015 and approximately 600,000 or 700,000 in 2016. We issue the card only to adults, not to those under 18 years. With such numbers, it goes way beyond the customer base of the Department. Because it is a public service card with major potential as an authenticator of identity, we are talking to various other organisations about the use and deployment of the card and it would help in engaging with customer bases.
John Deasy (Waterford, Fine Gael)
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Because of the new checks, what impact does Ms O'Donoghue envisage it will have on security issues, overpayments, fraud levels, etc.?
John Deasy (Waterford, Fine Gael)
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Does it work?
Ms Niamh O'Donoghue:
Absolutely. There are 15 cases in which we have definitively identified the fraudulent use of identity for claiming. This has generated savings of several million euro for the Department already; it is an instant tool. When somebody comes in to claim and his or her photograph is taken for a public service card, that photograph is compared almost in real time with what is contained in the Department's existing database of photographs and it identifies potential matches.
Where potential matches are identified, they are eyeballed to ensure we are looking at the same person or whatever and then referred to investigation if necessary. As I said, there are 15 cases where there was suspected fraud and where we have been able to investigate, cease claims and generate savings for the Department.
1:05 pm
John Deasy (Waterford, Fine Gael)
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Expenditure on pensions totalled €6.3 billion in 2012, which is an increase of 7% on 2009. A further 3% increase was projected for 2013. I would like to shift to something in which the Department is involved intimately, that is, the Waterford Crystal pensions issue. Rather than outline the background, of which Ms O'Donoghue will be aware, perhaps she could outline the Department's involvement in this and the current position when it comes to dealing with those representing the workers. The High Court has set a date in the autumn. Many people, including me, are unhappy about that because this has dragged on a long time but perhaps Ms O'Donoghue can address the current position, the Department's involvement and, broadly, the issue of underfunded pension funds in the State. What is of interest to me is how we got to this position, how the massive under funding of the Waterford Crystal pension scheme was allowed to happen, how we will deal with the numerous other under funded pension schemes that are discussed regularly, which probably amount to billions of euro, and how we deal with the governance of these schemes, for example, how the trustees acted and so on. It is a significant issue.
Ms Niamh O'Donoghue:
The Waterford Crystal case arose because of a case taken to Europe in the context of what was called a double insolvency where a pension fund was insolvent and the company then became insolvent. Workers, therefore, were caught by a double insolvency and the question arose in respect of the State's liability to protect their pension rights in that instance. The court made findings that the State had an obligation and had failed in its obligation in regard to a particular directive to establish a rate at which such protection could be offered. In terms of how that would be addressed, legislation was passed last year to address the gap that was identified by Europe. The mechanism is now in place in terms of future proofing to ensure there is some protection for workers but, obviously, a number of companies, including Waterford Crystal, are caught in that gap between the directive and last year's legislation. Given that it is the subject of a court case, I cannot comment on it except to say the court case is ongoing but the predominant group is the workers n the Waterford Crystal case. A small number of other schemes are in the same situation with a much smaller number of workers.
John Deasy (Waterford, Fine Gael)
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The Department has made an offer to the group representing the workers. The issue that will be decided by the High Court in the autumn is how much or what percentage of their pension they will get ultimately. The Department is actively engaged with the people who represent them. Am I correct that an offer has been made by the State to provide a particular level of payment?
John Deasy (Waterford, Fine Gael)
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Is the Department in contact with the High Court regarding the setting of dates or is that an independent function of the court?
John Deasy (Waterford, Fine Gael)
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Is Ms O'Donoghue in contact with the Attorney General's office?
John Deasy (Waterford, Fine Gael)
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Ms O'Donoghue, therefore, liaises with the Attorney General's office regarding its communications with the High Court. Can she understand the difficulty for the workers? I know people who have died since this process began, going back to when the court case was taken to the Europe. It is estimated 30 former workers have died since this was initiated and that is an issue for us. It has gone on too long. There is a huge issue with under funding of pension schemes but-----
Ms Niamh O'Donoghue:
It is a huge issue in the State and Ireland is not unique in terms of problems with defined pension schemes and the funding of pension schemes. A number of things have happened. There has been a restructuring of the governance arrangements. The Pensions Authority has been put in place to replace the Pensions Board, which had responsibility in this area for regulating the application of the Pensions Acts. The funding standard has been restored and engagement is going on with all the schemes in respect of their plans to meet that standard over a number of years. It is, therefore, an active space at the moment but it is challenging and difficult. That is not unique in Ireland.
John Deasy (Waterford, Fine Gael)
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Ms O'Donoghue has explained the nexus regarding the Government generally. The Department is in communication with the Attorney General's office and it might be in contact with the office of the President of the High Court. Some indication needs to be given by Ministers or the Department, although it does not speak for Ministers, with regard to the urgency required. It has been dragged out for too long and there needs to be some resolution regarding this scheme, notwithstanding the massive issue of under funded pension schemes. Has the Department examined the governance of the Waterford Crystal pension scheme and how that hole came to be in the first place? Has this been investigated?
John Deasy (Waterford, Fine Gael)
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"No" is the answer. The Department is dealing with this perspectively or from this point on.
Kieran O'Donnell (Limerick City, Fine Gael)
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I refer again to the misappropriation of funds, the €1 million and the CWO. Am I correct that the scheme was funded by the Department but administered by the HSE and CWOs were employees of the HSE?
Kieran O'Donnell (Limerick City, Fine Gael)
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Under what internal control mechanism did the CWOs operate?
Ms Niamh O'Donoghue:
The local area committees. The CWOs had a role within the HSE but I do not know how their control mechanisms operated.
Kieran O'Donnell (Limerick City, Fine Gael)
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Did the Department set down such mechanisms in the context of how the fund was administered by the HSE?
Kieran O'Donnell (Limerick City, Fine Gael)
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Was the CWO based in a health centre or was it a more senior person such as the head of the local CWOs? What exactly was the individual's-----
Kieran O'Donnell (Limerick City, Fine Gael)
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Does Ms O'Donoghue understand that internal controls failed?
Kieran O'Donnell (Limerick City, Fine Gael)
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How was the issue highlighted? Did it arise when the CWOs were transferred from the HSE to the Department following an overall review?
1:15 pm
Ms Niamh O'Donoghue:
When the community welfare officers came from the HSE they became part of, and reported into, the local management structure within the Department. The fact that there seemed to be a problem or divergence was identified and investigated and it became clear it was substantial.
Kieran O'Donnell (Limerick City, Fine Gael)
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Was it down to the sheer volume of payments being made in a particular week?
Kieran O'Donnell (Limerick City, Fine Gael)
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Individual amounts?
John Deasy (Waterford, Fine Gael)
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I thank Ms O'Donoghue and her officials for coming before the committee today.
Kieran O'Donnell (Limerick City, Fine Gael)
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Does Ms O'Donoghue have it to hand?
Kieran O'Donnell (Limerick City, Fine Gael)
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If it is okay and not too detailed, perhaps Ms O'Donoghue could provide it now.
John Deasy (Waterford, Fine Gael)
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Go ahead.
Ms Niamh O'Donoghue:
At the end of April, Department of Social Protection expenditure was approximately €5.5 million above profile. In one sense this is because of particular issues which arise in payments. Today is 1 May and Monday will be a bank holiday, so single euro payments area, SEPA, payments had to be made in advance.
Kieran O'Donnell (Limerick City, Fine Gael)
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Does Ms O'Donoghue have specifics? I am more interested in the employment side and jobseeker's allowance.
John Deasy (Waterford, Fine Gael)
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With regard to Waterford Crystal, does Ms O'Donoghue know whether the Attorney General has raised the issue of the delay involved? Ms O'Donoghue is in touch with the Office of the Attorney General.
John Deasy (Waterford, Fine Gael)
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Who in the Department is the point person for this issue?
John Deasy (Waterford, Fine Gael)
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How often does the Department communicate with or meet the Office of the Attorney General on this issue? These are important questions and even from an operational standpoint I would like Ms O'Donoghue to answer them.
Ms Niamh O'Donoghue:
It depends on the stage an issue is at. This is an ongoing case and advices must be obtained even with regard to the changes made in the legislation last year and what it prompted or otherwise. At that time there was very regular communication because of other developments, and perhaps it is less regular at present. With regard to whether the Attorney General has raised the specific issue of the delay, I cannot answer the question, but I can raise it.
John Deasy (Waterford, Fine Gael)
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Does Ms O'Donoghue know what type of contact the Office of the Attorney General has with the office of the President of the High Court?
John Deasy (Waterford, Fine Gael)
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I thank Ms O'Donoghue. Is it agreed to dispose of Vote 37 and Chapters 16 to 20, inclusive, of the 2012 annual report and appropriation accounts of the Comptroller and Auditor General and the 2012 Social Insurance Fund annual accounts? Agreed.