Oireachtas Joint and Select Committees
Thursday, 20 October 2016
Public Accounts Committee
2015 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Vote 37 - Department of Social Protection
Chapter 9 - Regularity of Social Welfare Payments
Chapter 10 - Roll-out of the Public Services Card
Social Insurance Fund 2015
9:00 am
Seán Fleming (Laois, Fianna Fail)
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I welcome Ms Niamh O'Donoghue, Secretary General at the Department of Social Protection; Ms Anne Vaughan, deputy Secretary General; Mr. John Conlon, assistant Secretary General; Mr. Jim McDonnell, principal officer; Mr. Tim Duggan, assistant Secretary General; and Ms Kathleen Stack, assistant Secretary General. I also welcome Mr. Colin Menton from the Department of Public Expenditure and Reform. I ask members, witnesses and those in the Public Gallery to switch off their mobile telephones.
I advise witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the provision within Standing Order 186 that the committee shall refrain from inquiring into the merits or objectives of a policy or policies of Government or a Minister of the Government. Finally, members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
I call the Comptroller and Auditor General to make his opening statement.
Mr. Seamus McCarthy:
Expenditure in 2015 on social welfare and labour activation schemes totalled €19.3 billion, which was marginally up on the 2014 level. Some 60% of the expenditure in 2015 was funded by the Exchequer through the Vote for Social Protection, with 40% funded by social insurance contributions. The annexe to the Appropriation Account provides an analysis of the total programme expenditure under the Vote and the Social Insurance Fund. The total cost of administration of the programmes in 2015 was approximately €584 million, or 3% of the programme spend. The proportion spent on administration has remained relatively stable, averaging 2.9% over the past four years.
PRSI contributions are the main source of income for the Social Insurance Fund. Since 2008, contributions received have been insufficient to meet the expenditure of the fund. Initially, accumulated surpluses of the fund were used to fund the deficit but from 2010 the Exchequer met the shortfall. The amount of subvention to the fund from the Vote has fallen, reducing from €1.3 billion in 2013 to €119 million in 2015. The Social Insurance Fund is expected to record a surplus of contributions over expenditure amounting to €200 million in 2016.
I have given a clear audit opinion on both the appropriation account of the Vote and the financial statements of the Social Insurance Fund for 2015. However, I draw attention to the issues reported on in the chapters that are before the committee this morning.
Irregular welfare scheme payments arise where welfare recipients are paid amounts to which they are not entitled or which exceed their entitlements. Such payments can arise as a result of deliberate fraud by claimants, from claimant errors or as a result of the manner in which claims are administered by departmental staff. Fraud and error random sample surveys of welfare schemes carried out by the Department are intended to identify the types of cases where excess payments arise. The results of those surveys suggest that there was a material level of payment in excess of entitlements in 2015 on both the Vote and the Social Insurance Fund, and I have drawn attention to this in both audit certificates.
Chapter 9 of my report presents the results of the two most recent surveys completed at the end of July 2016 relating to farm assist and household benefits. The farm assist survey estimated a level of payments in excess of entitlement of 10.4% of the total amount in payment, which was €88 million in 2015. The equivalent value of household benefits in excess of entitlements was 5.4% of the cost of benefits, which was €221 million in 2015.
The chapter notes that the report on a family income supplement fraud and error survey had not been finalised, but I understand this is due for completion shortly. A separate exercise will be carried out by my office later this year to review the Department’s surveying methodology and to verify the rates.
Chapter 10 presents the results of the examination of the Department’s project to develop and roll out the public services card. At its inception, it was envisaged that the card would be used to access public services more securely, thereby helping to reduce the level of identity fraud. However, no single business case document was produced for the public services card project. I would have expected that a formal business case for a project of this kind would have set out, at a high level, all of the key information for the project, including scope, justification, funding required and project roles and responsibilities. It would also have provided a plan for setting out how and when the project’s benefits would be measured and who was responsible or accountable for their delivery.
The contract with the service provider commenced in 2009, with the intention to have 3 million public services cards issued by the end of 2013. As of June this year, just over 2 million cards had been issued. I understand that this has since risen to about 2.2 million cards.
Project delays led to a renegotiation of the contract on two occasions, namely, in 2012 and 2016. The delays included identification of the need to update the Department’s IT infrastructure; the project coinciding with an increase in demand for the Department's schemes; delay in receiving a technical specification for integrating the card with the integrated ticketing system from the Railway Procurement Agency; and the introduction of increased security features in the card.
Cost estimates for the card project prepared in 2012 provided only for the service provider's contract at €19.8 million, excluding VAT. This has increased by 16% to €23.1 million, excluding VAT, as a result of increased security features and delays. A substantial part of implementing the public services card project involves the Department’s own staff. The cost of those staff is projected to be an estimated €28.8 million by the end of 2017. The overall projected cost of the project is just under €60 million, including VAT.
The Department did not set a target for the potential savings that could be achieved from the card, given the difficulties in assessing the extent of identity fraud. Some €2.5 million in estimated savings to the end of July 2016 have been attributed to the card since its introduction.
At the beginning of the project, it was envisaged that the card would be used by a wide range of public bodies to authenticate the identity of users of their services. Wider use of the card required implementation of identity access management or IAM measures. The Department launched the IAM system in February 2016, which is available to other public bodies to authenticate service users online based on the card. Currently, the only services available online, using the card, are provided by the Department and relate mainly to jobseekers. The Department of Public Expenditure and Reform is working on legislation for the regulation of data sharing between public bodies and to provide the necessary safeguards.
Seán Fleming (Laois, Fianna Fail)
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I thank the Comptroller and Auditor General. On a minor point of clarification, referring to chapter 9, which deals with the farm assist and household benefits schemes, the Comptroller and Auditor General stated the farm assist survey "estimated a level of payments in excess of entitlement of 10.4% of the total amount in payment, which was €88 million in 2015."
Seán Fleming (Laois, Fianna Fail)
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The excess in that case is only €8 million.
Seán Fleming (Laois, Fianna Fail)
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The €88 million figure is not the extent of the problem but the total in payment.
Seán Fleming (Laois, Fianna Fail)
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The excess payment in household benefits was only 5% of the €221 million.
Seán Fleming (Laois, Fianna Fail)
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I thank the Comptroller and Auditor General for that clarification. I invite Ms Niamh O'Donoghue to make her opening statement.
Ms Niamh O'Donoghue:
I thank the Chairman for allowing me to make a brief opening statement. As well as examining the appropriation account for the Department of Social Protection and the Social Insurance Fund statutory accounts for 2015, I understand the committee wishes to examine the two chapters in the Comptroller and Auditor General’s Annual Report for 2015 on the regularity of social welfare payments and the roll-out of the public services card.
As requested, I provided the committee with an update on the two chapters, together with outturn figures for 2015, the Estimates for 2016 and the Department's annual report. Overall, I hope these documents indicate the scale and scope of the Department’s work.
The three key elements of the Department's business are: income support, activation of people of working age and the control of fraud and abuse. A longstanding objective of the social welfare system in Ireland has been the provision of income supports. This continues to be our primary objective.
Activation places a particular emphasis on measures to help long-term and young unemployed people find a route back to employment. I am pleased to report that the redevelopment of Intreo service centres across the country has now been completed. The development of Intreo, including active case management, plays an essential role in assisting many in their return to employment. For example, this year's Intreo careers fair took place in Dublin Castle on Tuesday, 6 September. Up to 3,000 jobseekers availed of the opportunity to meet employers across a range of sectors. Leading employers in retail, wholesale, home care services, transport, recruitment, consultancy, construction and technology were represented.
In addition, the Department's second jobs week took place from Monday, 26 September to Friday, 30 September this year. Every region in the country held various events which help jobseekers to become job ready. Jobs Week is also an opportunity to promote awareness of the suite of services, supports and products provided by the Department for both jobseekers and employers, which have been broadened and enhanced through the development of the Department's Intreo services and brand. This year, 150 events took place, some targeting jobseekers and some employers. Employers with vacancies were recruiting at these events also.
It is worth pointing out again that the Department considers that the vast majority of people who are supported by the Department are exercising their legitimate rights and receiving their appropriate entitlements. That being said, however, public confidence and trust in the welfare system requires us to be vigilant in both preventing and tackling fraudulent activity. To this end, the Department is keenly aware of the importance of continuing to enhance the systems and methods it employs to address the risk of non-compliance across its schemes. In early summer, we engaged in a number of control seminars with some 270 staff at which we discussed areas that should be reviewed. Suggestions and issues raised will be considered in the further development of our control strategy.
Turning specifically to the chapters being examined today, the Department seeks to ensure that social welfare fraud and abuse is minimised and that its control activity is focused appropriately. As I have outlined previously to the committee, fraud and error surveys are a key element of the Department’s overall control strategy. The surveys, which are a point-in-time measurement, identify areas of risk within schemes and the Department takes steps to address, ameliorate and eliminate the risks identified.
The surveys, which are a point-in-time measurement, identify areas of risk within schemes and the Department takes steps to address, ameliorate and eliminate the risks identified. The results of fraud-and-error surveys are used to focus the Department’s control activity where it is most likely to be effective. Chapter 9 of the Comptroller and Auditor General’s report looks at fraud-and-error surveys completed in previous years and, in particular, comments on the two most recently completed surveys, on farm assist and household benefits. While no specific recommendations have been made in this chapter, I understand a separate exercise will be carried out by the Comptroller and Auditor General to review methodology and verify figures later this year. We will continue to work with the Comptroller and Auditor General’s office to ensure that the surveys continue to meet the highest standards in terms of methodology and reporting of results.
The Department has agreed a schedule of surveys up to mid-2019 with the Comptroller and Auditor General’s office. This schedule commits the Department to doing an average of three surveys per year, which is challenging as each survey raises unique issues. A recommendation previously made by the Comptroller and Auditor General, in the 2014 chapter on regularity of social welfare payments, referred to a need to strengthen our capacity to carry our medical control reviews. I am happy to report that the Department has successfully appointed new medical practitioners as medical assessors and currently has 27.5 full-time equivalents, including the chief medical officer and deputy chief medical officer. A number of additional appointments are currently in train and, as a result, this number is expected to rise to over 29 full-time equivalents by January 2017. A further recruitment campaign will take place in November to ensure a panel is available to fill any vacancies arising in 2017 and to maintain these numbers.
Chapter 10 of the 2015 report refers to the roll-out of the public services card, PSC. The PSC is an important strand in modernising public service delivery and seeks to standardise and simplify how our public services are accessed. When a person registers through a secure registration process that provides a substantial level of assurance in relation to his or her identity, he is considered to be registered to a standard authentication framework environment, SAFE, level-2 standard. The PSC is a token of such registration.
The PSC is designed to replace other cards within the public sector, such as my Department’s free travel pass and the social services card, and to make it easier for providers of public services to verify the identity of customers in person and online. The PSC is now a requirement for first-time adult passport applicants in the State and for Irish citizenship. From the end of the year and beginning of next year, SAFE registration will be required by Revenue for first-time applicants for tax credits.
In terms of the roll-out of this project, some delays did occur, most notably around the time that the recession hit when, understandably, the Department had to prioritise other developments to deal with the demands that emerged at that time. However, the processes and the product itself have been considerably improved as a consequence. The PSC helps to safeguard the identity of individuals in that it makes it extremely difficult for others to commit identity fraud by stealing a person’s identity for the purpose o dealing with the public service. As a result, the PSC is, and will be, a key asset in the deterrence of identity fraud. Given the innovative nature of the project and the fact that there were not any ready references for comparison purposes, it was not possible in the early stages to determine precise costs and staffing requirements. It was not possible to estimate properly any cost until market testing via the procurement process had been completed in 2009. Staffing requirements could only be determined once the processes for registration and quality assurance had been designed and tested. This was completed in 2011.
To date, the Department has recorded €2.585 million in SAFE-related savings. It should be noted that these savings relate to the cases where the Department actually caught a person using a false identity. The Department cannot assess the actual savings that have been made in cases where a person signed off or claimed he or she no longer needed social assistance or a benefit instead of going through the SAFE registration process.
With over 2.2 million PSCs issued to date, my Department expects that the target of 3 million cards will be met by the end of 2017 and that the project will continue to provide considerable value to all individuals and public bodies for years to come.
The work of the Department in safeguarding the data underpinning the PSC and all other data relating to individuals who interact with us for income support and services is a critical element of our operations. Given the scale of its operations, the Department is one of the most significant data controllers in the State. I can assure the committee that the Department takes its responsibilities in relation to data protection extremely seriously and works closely with the Office of the Data Protection Commissioner to ensure that the highest standards continue to be applied in this regard.
I acknowledge the support of staff and colleagues and express my appreciation for their endeavours. The staff of the Department deal with many demanding challenges, across many schemes, programmes and projects. Please be assured that in delivering on our obligations, we are very conscious of our duties to our customers, the taxpayer and, of course, the Oireachtas. I am very happy to discuss any issues raised by the committee.
Seán Fleming (Laois, Fianna Fail)
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I thank Ms O'Donoghue for her opening statement. I propose that the lead speaker have 20 minutes in which to question the witness and that the second speaker have 15. All other members will have ten-minute slots. This will help to ensure everybody gets a fair chance within a reasonable period. Both the clerk and I will be keeping a close watch on the time and I will tell members when they have one minute remaining. If members have a further round of questions, they will be able to ask them on a second occasion. I ask for co-operation in this regard. Our lead speaker today is Deputy Peter Burke, who is to be followed by Deputy Catherine Connolly.
Peter Burke (Longford-Westmeath, Fine Gael)
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I thank the staff of the Department for presenting their response to the report of the Comptroller and Auditor General. Obviously, the Department is a major spending Department. I wish to focus on a few of the areas that the Comptroller and Auditor General has drawn attention to. When one adopts a sense of materiality within the whole Department, some areas can seem more concerning than they actually are. I fully appreciate that in terms of carrying out audits.
I understand that 1.6 million people receive a payment each week from the Department. Therefore, the scale is huge. The Department introduced a new debt-receipts accounting system in November 2014. Could Ms O'Donoghue confirm the cost of the system introduced? Who provided the system and how much internal resources were put in place to ensure it could go live and run effectively?
Ms Niamh O'Donoghue:
The actual contract for the development of the system was worth approximately €2.6 million. On the internal cost, the arrangement effectively involved a combination of staff within our control division and staff within our IS services who would have been involved in working with the consultant contractors to develop the system and implement it. I do not have a precise cost for the Deputy but we can work it out for him.
Peter Burke (Longford-Westmeath, Fine Gael)
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There is no detail on the charge for staff time during the implementation of the system.
Peter Burke (Longford-Westmeath, Fine Gael)
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Correct.
Peter Burke (Longford-Westmeath, Fine Gael)
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Who was the contractor?
Peter Burke (Longford-Westmeath, Fine Gael)
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So it received €2.6 million for the system.
Peter Burke (Longford-Westmeath, Fine Gael)
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How does the Department assess that the system has been working to date?
Ms Niamh O'Donoghue:
Basically, the system has streamlined and automated both the recording of overpayments and the debt recovery of those overpayments. As with any of our systems, there are ongoing checks, including management checks. This is to make sure the system is recording the information accurately. We have been able to deal with the identification of overpayments and put the recovery of those overpayments in process far more quickly since the introduction of the system than we were able to do previously. Previously, it would have been a quite manual process. Effectively, the new system, since full implementation, is now allowing us to recover approximately €7 million per month. This means that, for the people involved, there is very speedy identification of where a problem has occurred. It means there is no time lag creating additional difficulty for individuals concerned.
With the new legislation that we received a couple of years ago, the level at which we are able to recover overpayments has increased. Our deciding officers have been given increased scope to recover an overpayment quickly, which, again, has improved our ability to redress problems in a much more speedy fashion.
Peter Burke (Longford-Westmeath, Fine Gael)
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Can the system furnish an aged debt listing, together with cash balances, per Intreo office, as well as a total figure? I presume the Department can obtain a detailed report showing the activity level in each office of the Department.
Peter Burke (Longford-Westmeath, Fine Gael)
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Per office.
Seán Fleming (Laois, Fianna Fail)
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Per person.
Seán Fleming (Laois, Fianna Fail)
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What about per scheme?
Peter Burke (Longford-Westmeath, Fine Gael)
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What about different jurisdictions because I want to move on to-----
Ms Niamh O'Donoghue:
To clarify, an individual may be a customer under a number of schemes that pertain to different parts of the Department. We can certainly provide it per individual debt, per customer and per scheme, but not per office because the debt might cross a number of aspects of the Department.
Peter Burke (Longford-Westmeath, Fine Gael)
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I am confused by the difference in cash balances throughout the different offices. From reading the report, there seems to be a difference in the calculation. Will Ms O'Donoghue comment on this? How has the difference come about? I understood it was because of a difference in cash balances in a particular Intreo office and that the cash balance was different per system. There was supposed to be a per system figure of €122,000 in the office, but it was only €68,000. Is that correct?
Ms Niamh O'Donoghue:
The reason for that is we moved from the old to the new system where there was a reconciliation of the recoveries made in cash with recoveries made automatically from scheme payments. We are working to reconcile the reports across a number of our systems, including the accounting system and the debt recovery system. Local offices, Intreo offices, complete reports on a monthly basis on the amounts of cash held by them. There was a discrepancy of about €54,000 at the end of December; they showed a cash on hand figure of €68,000 compared to the accounting system which showed a cash on hand figure of €122,000. There is a difference of somewhere in the order of €50,000. We are working to identify the reason. It is about the transition from the old to the new system and reconciling information from two accounting systems.
Peter Burke (Longford-Westmeath, Fine Gael)
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It has been in place from the very start of November 2014.
Peter Burke (Longford-Westmeath, Fine Gael)
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The difference in cash balances is from the exact time the new system went live and has still not been rectified.
Peter Burke (Longford-Westmeath, Fine Gael)
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We are not aware of where it comes from either.
Peter Burke (Longford-Westmeath, Fine Gael)
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In terms of debtor balances at 31 December 2015, there is a difference of €515,000. In debt recovery there are balances of €78.7 million and €79.8 million, respectively. There is a difference of €1.1 million directly as a result of implementations of the new system. Do we have any detail on the reason for the difference?
Peter Burke (Longford-Westmeath, Fine Gael)
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Does Ms O'Donoghue believe the new system is operating effectively? As someone looking at the system, €2.6 million has been spent on the new software, yet in all of the key areas, there seems to be an issue in reconciling the differences. There is also a concern about the integrity of the system. Has it to do with staffing issues and what is being input into the system or the actual system?
Ms Niamh O'Donoghue:
We are very confident that the new system is working properly and enhancing considerably our ability to identify and recover debt at an early stage. There is no doubt that in the transition from the old to the new system there have been difficulties. We are working through them to identify how they may have occurred and what the problems were, but we are very confident that the new system is working properly.
Peter Burke (Longford-Westmeath, Fine Gael)
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Who operates the payroll system? What software is used and for how long has it been in place?
Ms Niamh O'Donoghue:
It is a CorePay system which operates across multiple Departments. Our contract with CorePay is probably for about 30 years. The Deputy will be aware that there is a Government decision to move all payroll systems to a shared services system over a number of years. CorePay is the payroll system being used by the shared services division. Our expectation is that it will be the end of 2017 before we move our payroll system to it.
Peter Burke (Longford-Westmeath, Fine Gael)
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Is Ms O'Donoghue happy with the shared services system and how it is operating?
Peter Burke (Longford-Westmeath, Fine Gael)
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There was a significant increase in the level of overpayments to staff within the Department at year end. The figure was approximately €3 million covering 1,361 cases. In 2014 it was €1.2 million. How does Ms O'Donoghue account for the difference?
Ms Niamh O'Donoghue:
The salary overpayments are due to issues that have arisen in the operation of the shared HR services. We have a very large number of staff, a large number of whom are operating on the front line. The number of staff absences in the Department is probably one of the highest in the Civil Service. Payroll overpayments are primarily due to absences due to sick leave. The build-up of overpayments has occurred in large measure because of the changes in sick leave pay policy and time lags in reporting absences and a return to work. This has caused problems. Sometimes the payroll can be run before a notification hits the system that somebody is absent. This is a critical issue for us. An assistant secretary from my Department is leading an interdepartmental working group which is working with PeoplePoint to identify the underlying causes and take mitigating action.
Peter Burke (Longford-Westmeath, Fine Gael)
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Do we know exactly where responsibility lies for the overpayments? We are detailing clearly the taking of sick days, etc. but in any organisation basic internal controls should pick up on these issues and report accurately on them to the payroll section. Where does responsibility lie to ensure the correct information gets to the payroll section?
Ms Niamh O'Donoghue:
It is shared by a number of players, including by the individuals concerned and local managers. It also lies with the operation of the shared services system in processing information. There have been difficulties and time lags in the reporting and interaction of information on sick leave and pay. As it is now a much more complex environment, there are many more complex checks that have to be carried out before a payroll instruction can be issued by the shared services division. That can mean somebody being paid when he or she is not entitled to be paid and the issue is only dealt with in arrears. There is shared ownership in taking action at Department level and in the shared services division.
Peter Burke (Longford-Westmeath, Fine Gael)
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Therefore, there is no one to take responsibility. When Ms O'Donoghue says responsibility is shared, we cannot pinpoint where there is a breakdown in terms of internal controls and communication. From my perspective, that is a huge concern.
Ms Niamh O'Donoghue:
There is not a breakdown of internal controls. There are problems in communication and processes and a lot of work has been undertaken in the past 18 months or so to try to rectify them. New procedures have been put in place. The working group has been working to identify exactly how it occurred and see what can be done at all levels by all stakeholders to improve the processes involved and their reaction to these issues.
When one goes to a shared services environment, these things happen until the teething problems have been ironed out.
Peter Burke (Longford-Westmeath, Fine Gael)
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We have paid €2.6 million to Accenture and Ms O'Donoghue said the Department was working internally to ensure that a new system went live and that all clients of the Department complied with policy and got their correct payments. Does it concern Ms O'Donoghue that over 53% of her staff have no recovery plans for overpayments from the Department? Is she concerned about how that might look to the public?
Ms Niamh O'Donoghue:
Absolutely, because the same standards should apply to our staff as to our customers. We work closely with PeoplePoint, the shared services environment, to ensure as much co-operation as possible in putting the arrangements in place. PeoplePoint is doing this, rather than the Department. There are a very small number of cases which the Department might have flagged as having particular circumstances, such as ill health, where greater sensitivity was required for a recovery plan but in all cases the Department would fully support PeoplePoint.
Peter Burke (Longford-Westmeath, Fine Gael)
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People on the front line tell me that overpayments to clients are taken very seriously and acted upon almost immediately. Clients are asked to put a repayment plan in place or face significant consequences but the cumulative figure has increased to 53% for staff within the Department who have been overpaid and who do not have recovery plans in place. The example the Department is setting to clients is a huge concern for me. Those clients are working in challenging and sensitive conditions and sometimes are not aware of certain things but they are required to meet overpayments. I accept that they have to be dealt with appropriately but the Department must lead from the front in this regard and a cumulative figure that suggests it is not being dealt with sends out the wrong message.
Peter Burke (Longford-Westmeath, Fine Gael)
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It has not been solved, though.
Ms Niamh O'Donoghue:
The arrangements for recovery of overpayments are handled by the shared services centre, not at the behest of the Department. We have been working with the shared services centre to ensure that as many issues as possible are dealt with to ensure recovery plans can be put in place as quickly as possible. The figure is 50% of overpayments, not 50% of the staff of the Department.
Peter Burke (Longford-Westmeath, Fine Gael)
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It is 53% of 721 cases relating to 1,361 staff.
Ms Niamh O'Donoghue:
The Department rightly has a responsibility to its customers to recover overpayments as quickly as possible. We have been facilitated in doing that through the new system we have put in place but the recovery of overpayments from staff when they have occurred through PeoplePoint is a responsibility for the latter to manage. We have been working closely to ensure that how it is handled is improving and will continue to do so, precisely because of concern over the signal effect.
Peter Burke (Longford-Westmeath, Fine Gael)
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I do not deem this acceptable on the part of the Department and it needs to be rectified urgently. It sends out a very poor message. We can shift responsibility back and forth but my concern is over the fact that it is continuing and has not been solved.
Why is there a delay in registering fixed assets?
Ms Niamh O'Donoghue:
In recent years, the Department has been under significant pressure for a number of reasons, not least as a result of the increase in our customer numbers across our working-age and illness-related schemes, as well as institutional changes which, in 2011, the previous Government- and the one before that in 2010 - put in place. The latter meant that we redeveloped our business model and our entire public office offering. We introduced new Intreo centres and have been involved in a very significant period of organisational change. We have been trying to develop the tagging system for fixed assets and in 2015 we carried out inventories of 42 of the Department's locations, with a further inventorising programme taking place this year. We expect to make significant inroads into this issue in the next year or so.
Peter Burke (Longford-Westmeath, Fine Gael)
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A total of 42 out of 450 is fairly slow progress. Has the position improved in 2016?
Ms Niamh O'Donoghue:
Yes, but a lot of the 450 locations would be very small and the main office infrastructure is made up of the 60 Intreo centres, ten or 12 centralised headquarter buildings and between 150 and 200 offices where we just run clinics and have a small infrastructure. It is a little misleading to speak of 42 offices out of 450 because the figure probably covers a large proportion of the Department's stock.
Peter Burke (Longford-Westmeath, Fine Gael)
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Is Ms O'Donoghue happy with the complement of staff she has at her disposal and is it enough to carry out the Department's strategy? I note that departmental staff numbers decreased to 6,596 in 2015 from 6,671 in 2014.
Ms Niamh O'Donoghue:
The Department has to operate in a public service context and within Government decisions on public service numbers. As with any head of any organisation, if I had more staff I could do more but within the numbers the Government has approved for us we have to prioritise our activities across our core functions and our control activity to ensure we deliver the best service we can and take advantage of as much business efficiency technology and automation as we can to get best value for the staff we have.
Peter Burke (Longford-Westmeath, Fine Gael)
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I hope when we look at the next report the payroll issues will be sorted.
Peter Burke (Longford-Westmeath, Fine Gael)
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I hope also that the reconciliation differences in the system can be identified.
Seán Fleming (Laois, Fianna Fail)
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After Deputy Connolly, the next speakers will be Deputies Madigan, Catherine Murphy and Cassells.
Catherine Connolly (Galway West, Independent)
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I welcome the witnesses. I found the report at the end of 2015 very interesting. Social Justice Ireland has pointed out that, in 2014, in the absence of social welfare benefits half of the Irish population would have been living in poverty so the Department has a very onerous task on its hands in respect of equality. I agree with my colleague that the Department has a huge budget, at more than €19 billion, and mistakes will obviously occur.
I will come back to those mistakes because they were not mentioned in the opening statement. However, fraud is mentioned. Recently, the Connacht Tribunepublished a headline "War on Social Welfare" in Galway. The story stated there was a crackdown on fraudsters with Revenue and social welfare officials and gardaí out on the streets of Galway. The Department's policy document and Ms O'Donoghue's opening contribution state that the vast majority of recipients are not cheaters. Is that correct?
Catherine Connolly (Galway West, Independent)
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They get what they are entitled to, yet we have to read these headlines. Obviously, departmental officials are not responsible for them but the reporters are basing them on what they heard from Revenue and the Department of Social Protection. Gardaí are on the streets of Galway stopping cars. The report says they are stopping 4X4s because of cheaters. That is an unhelpful message and I might come back to it later.
The roll-out of the public services card seems to have been an unmitigated disaster and I choose those words reluctantly. Following expenditure of €60 million, everybody still does not have a card. Is that correct? A total of 3 million cards were to be rolled out by 2013 but, in 2016, 2.2 million have issued. That is a huge problem. Ms O'Donoghue has given reasons-----
Catherine Connolly (Galway West, Independent)
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I accept Ms O'Donoghue's response.
Catherine Connolly (Galway West, Independent)
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It was 2004.
Ms Niamh O'Donoghue:
Yes. The Government made decisions at that point that this was worth pursuing. The Department went to the market in 2009 in the first phase of the development to ascertain whether the market could respond and give us what we were looking for in terms of a secure identity card, which could be used for accessing public services based on the information we hold in our client identity services, and a registration process that had yet to be designed
Catherine Connolly (Galway West, Independent)
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That has been outlined clearly in Ms O'Donoghue's opening statement. It was highlighted that the Department did not have a business plan, did not assess the risk, and did not assess the competency of the contractor to roll this out. Why was the project not re-tendered when all these problems emerged? Was that ever considered?
Ms Niamh O'Donoghue:
I do not accept that we did not have a business plan. We did not have a single document business plan. We have provided all sorts of documentation, which the Comptroller and Auditor acknowledged in his report, and it contains most of the elements that would have been contained in a single business plan. However, it is fair to say it is not in a single document.
The point I was making about the history is incredibly important because in terms of risk and what might happen, few people in 2009 would necessarily have been able to foresee exactly what would happen over the following three to four years in terms of the general environment in society and, most particularly, its impact on the Department. That is quite apart from the project itself. In the first place, when we signed the contract in 2009, we envisaged absolutely that we would focus on this as a priority project over the following couple of years and would roll out public services cards but, in 2010, 2011 and 2012, our baseline activity changed out of proportion to anything we experienced previously. As a consequence, we had to prioritise providing income support service people over and above anything else we were doing. Additionally in 2010, the Government made a decision we would not have been privy to in 2009 to change the entire institutional infrastructure of the Department in respect of how we dealt with people of working age. We were required to integrate staff from the community welfare service and the employment services of FÁS and build a new business model and offering. This was an enormous organisational programme change that we could not have foreseen in 2009.
With regard to the project itself, there were difficulties. The company involved had to build a plant to effect production and, therefore, that phase of the project to see whether it could produce a card within time came on board. Our expectation was that in the initial stages, priority would be effected to giving the card to those entitled to free travel. That was to be the first offering because we wanted to replace the free travel card. As it happened, despite the goodwill and effort of ourselves and the National Transport Authority, NTA, there were delays in developing the infrastructure for the Leap card and so on, which meant the NTA was unable to integrate with our card. There were all these reasons-----
Catherine Connolly (Galway West, Independent)
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Ms O'Donoghue is saying events overtook the project relating to the economy and pressures on the organisation.
Ms Niamh O'Donoghue:
Yes, at the time we were developing the card, we were operating on the basis that potentially the registration processes would be carried out by the Department, but that was by no means an absolute assumption. It was also possible that this would have been contracted out to another tenderer if we had felt that was appropriate. However, when we got into full production of the card and put the infrastructure in place to register people, the production volumes we managed to deliver were very much in keeping with what we envisaged in the original plan for the card. Over a three to four-year timespan, we will have issued 3 million cards, which was our intention in 2009 but for the things that overcame us.
Catherine Connolly (Galway West, Independent)
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The intention was to have the 3 million issued by the end of 2013. I acknowledge Ms O'Donoghue's reply, and the Comptroller and Auditor General's examination team has been fair in its analysis. Green lights have been given for certain aspects of this but two issues stand out: assessment of the organisational capacity to undertake the project and the benefits realisation plan. That was not mentioned at all by Ms O'Donoghue. What savings did she mention in her opening contribution?
Catherine Connolly (Galway West, Independent)
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What is the figure?
Catherine Connolly (Galway West, Independent)
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However, there was no analysis of what the Department was going to save having spent €60 million. The project is still unfinished. Is there any guarantee that 3 million cards will issue by the end of 2017, as anticipated by the Department?
Catherine Connolly (Galway West, Independent)
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We are beyond hope. What is planned? What is the Department's capacity to deliver?
Ms Niamh O'Donoghue:
Basically over recent years, we have focused on rolling out the card to the Department's customers in the first instance. The value of the card is its use across the wider public service, and we have now built the infrastructure, which the Comptroller and Auditor General has mentioned, to use the identity set in an online setting, which is an increased attraction across other public service offerings. This was not envisaged in 2005. The card has been a cornerstone of the public service reform plan and the Civil Service renewal plan. It has been adopted as a specific whole-of-government project by the Civil Service management board. A new cross-departmental committee has been put in place, which is all about designing the expansion of the use of the card to others.
I mentioned the fact that Revenue will use the card in the context of registrants for tax and that the Passport Office is now using the card in the context of applicants for passports. We are in discussions with the Road Safety Authority in terms of driver licensing and vehicle registration. All of those give me confidence that we will achieve the 3 million cards.
Catherine Connolly (Galway West, Independent)
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We would expect a business plan and that the Department would lay out the anticipated savings, and that was not done.
To finish with legislation, privacy and the Data Protection Commissioner, part of the plan was an activation of the card. Is that right? What did that cost?
Catherine Connolly (Galway West, Independent)
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I accept that, and I see it, but then it was stopped. Will Ms O'Donoghue clarify why it was stopped and the reason the Data Protection Commissioner no longer had any concerns?
Catherine Connolly (Galway West, Independent)
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When I get the card, I ring back, and the code is confirmation that I am the right person.
Ms Niamh O'Donoghue:
Yes. In terms of the basis on which we are operating now, first, the card issues within a matter of days of a face-to-face engagement with the individual. Various verifications have taken place at that face-to-face engagement, including verification of address, mobile telephone number, etc.
Catherine Connolly (Galway West, Independent)
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Is the Data Protection Commissioner satisfied with that?
Catherine Connolly (Galway West, Independent)
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The Department's justification for the activation scheme that cost €2.6 million was the Data Protection Commissioner's concerns.
Catherine Connolly (Galway West, Independent)
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Did he then come back and say the Department no longer needed to do that?
Catherine Connolly (Galway West, Independent)
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So perhaps the €2.6 million expense was not necessary in the first place.
Ms Niamh O'Donoghue:
Possibly, but it is a matter of viewpoint. This was a requirement from the Data Protection Commissioner at the time, which we adhered to.
The Deputy spoke about the benefits analysis. The critical point about benefits is that this is a whole-of-Government project. The benefits will be realised across the public service. The Department is not in a position to identify the benefits across the public service because most of the benefits are small. It is about people having to repeat an identification verification process in their transactions with every public service provider. They are small in individual item but they build up. It is hard for us to articulate that.
Catherine Connolly (Galway West, Independent)
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At some stage could this committee have a report on the savings from the relevant Department for the €60 million spent?
Catherine Connolly (Galway West, Independent)
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With regard to privacy, I understand legislation is promised on the sharing of data.
Catherine Connolly (Galway West, Independent)
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With regard to social protection and fraud, I refer to Ms O'Donoghue's opening statement where she said that the three key elements are income support, activation of people of working age, and the control of fraud and abuse. Error is not mentioned in that statement.
Catherine Connolly (Galway West, Independent)
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First, that is significant because as my colleague pointed out, the Comptroller and Auditor General highlighted significant errors from the Department's point of view, with cost implications. That is not mentioned in the opening statement. Second, and this is important, the Department has a very important role in policy that it did not mention in the opening statement. To go back to the document, I see one of the Department's roles as being to formulate appropriate social protection and social inclusion policies. The Department's policy role is very important given the role of social welfare in keeping most of our citizens out of poverty. It is significant that Ms O'Donoghue left that out of her opening statement, and she is zoning in on three areas. Obviously, the support for people is very important, but the control of fraud and abuse, as opposed to the Department's policy role and the errors made by the Department, is very important. I ask Ms O'Donoghue to reflect on that.
Catherine Connolly (Galway West, Independent)
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It is in here, with reference to Ms O'Donoghue's Department. It refers to the Department, its business and organisation. It states that the main functions of the Department are to advise Government and formulate appropriate social protection and social inclusion policies.
Catherine Connolly (Galway West, Independent)
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It is the Department's role to do that. It is one of its major aims.
To come back to social protection and the overpayments-----
Catherine Connolly (Galway West, Independent)
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I accept Ms O'Donoghue's reassurance on that. It is just not included in the statement. When we look at these screaming headlines we can see the narrative in regard to social welfare.
Catherine Connolly (Galway West, Independent)
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No, but something has to emanate from Departments for that to find its way into the newspaper.
I will make use of the three minutes I have left. Can Ms O'Donoghue help me with the area of personal injuries and legal costs? It is on page 35 of the appropriation account. With regard to personal injuries, there are claims by employees of the Department and claims by members of the public.
Ms Niamh O'Donoghue:
Yes. We operate a range of public offices, so we will have people come into offices and, unfortunately, have accidents such as slipping on steps, falling ill or whatever. Personal injuries claims could arise in that regard. There are a range of different aspects, both in terms of personal property, medical expenses and personal injuries.
Catherine Connolly (Galway West, Independent)
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Is there a rise in the number? Has the Department reviewed them? There are injuries as a result of people coming into the Department's premises and then injuries within the staff are recorded.
Ms Niamh O'Donoghue:
Yes. Again, because of the increased number of customers coming into us and the increased activity, there has been an increase in recent years but in the scheme of things it is a very small number. Obviously, we take everything very seriously in regard to anything that might happen.
Catherine Connolly (Galway West, Independent)
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My last question is on the renting of premises. I understand the Department of Social Protection owns one premises.
Catherine Connolly (Galway West, Independent)
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Rented premises.
Catherine Connolly (Galway West, Independent)
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Could Ms O'Donoghue clarify that for me? If not now she might revert to me on the number of buildings that are owned by the Office of Public Works and the number that are rented. I understand the one in Galway is rented from a private individual or a company.
Catherine Connolly (Galway West, Independent)
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Does Ms O'Donoghue have the figures for the rent of that?
Catherine Connolly (Galway West, Independent)
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I would appreciate that because I asked a parliamentary question on that, and I understand the figure is more than €500,000, but what I did not clarify was whether it was for the whole building or for different floors. Where would I find the figure for the rent in the accounts?
Catherine Connolly (Galway West, Independent)
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So that rent is paid by the OPW and not by the Department of Social Protection.
Catherine Connolly (Galway West, Independent)
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What is the figure for the rent? I thought Ms O'Donoghue's colleague knew it.
Seán Fleming (Laois, Fianna Fail)
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Ms O'Donoghue can send it on to the committee.
Catherine Connolly (Galway West, Independent)
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Ms O'Donoghue's colleague said it was for the whole building, so I was wondering-----
Catherine Connolly (Galway West, Independent)
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I know the Department does, but there are a number of floors in it.
Seán Fleming (Laois, Fianna Fail)
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Does the payment come out of the Department's Vote or the OPW Vote?
Seán Fleming (Laois, Fianna Fail)
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We will write directly to the OPW.
Seán Fleming (Laois, Fianna Fail)
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No. On the bottom of page 10 there is a breakdown of the net allied services expenditure.
Mr. Seamus McCarthy:
Sorry, yes. I am using a different code. The Chairman will see that in Vote 13 - Office of Public Works, there is a figure on expenditure on the OPW Vote of €13.9 million related to the provision of services and accommodation to the Department. There is a notional rent figure of €10.9 million for buildings that are State owned. That is an estimate of the value of those. It is an accommodation bill of about €25 million in total for all the buildings.
Seán Fleming (Laois, Fianna Fail)
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We will get details.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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I thank Ms O'Donoghue and her team. Nothing irks the average taxpayer more than welfare fraud or benefits fraud as they call it in the UK. It is a real scourge that is difficult to police. Ms O'Donoghue referred to the savings that have been made from the detection of fraud. When clients commit fraud and are caught are they put on a naughty list or blacklisted? How does the Department keep checks and balances on the behaviour of offenders into the future? I take into account that people redeem themselves and try to become law abiding citizens. What does the Department do to ensure compliance with the law?
Ms Niamh O'Donoghue:
There is no naughty list. People are entitled to a social welfare payment or they are not entitled. At any moment in time regardless of their previous history, they either have an entitlement or do not have an entitlement.
People may have been overpaid for some reason or other in the past and we will have sought to recover that overpayment. In certain circumstances where we were convinced there was serious fraud involved we may have prosecuted the individual and he or she may have suffered a sanction on foot of the prosecution. That has no bearing on their entitlement at any moment in time.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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There is no asterisk put beside their name to mark it for the future. Is is forgotten about?
Josepha Madigan (Dublin Rathdown, Fine Gael)
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Okay. I suppose my question is whether people are then under surveillance for a period into the future. Obviously they are entitled to their benefits if they are entitled to welfare. Do leopards charge their spots? Of course, a person is entitled to redeem himself or herself but we need to ensure that we do not have repeat offenders. I am trying to find out if there is a process in regard to repeat offenders.
Ms Niamh O'Donoghue:
If something has happened in the past which has given rise to an overpayment, obviously we look to recover the overpayment. In many instances the recovery could be over a long period so that a recovery of funds for something that happened some years ago might be taking place now. We would risk assess clients. We have an investigation process that is based on the risk assessment but the critical point is that if somebody establishes an entitlement at a moment in time he or she has that entitlement.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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That is fine. I understand that gardaí have been seconded to the Department and I would like to know the control work they do and establish their particular value.
Ms Niamh O'Donoghue:
First, this is a relatively new venture which started at the end of 2014. Two years ago 20 gardaí were seconded to the Department of Social Protection to work in our special investigation unit. Their primary function is to detect social welfare fraud. They are an integral part of the unit and work with other officers in the unit. They work on joint investigations with Revenue or with the National Employment Rights Authority, NERA. They also assist in fraud investigation. A key priority of a joint operation is the shadow or hidden economy.
On the question of the value they have brought to the Department, it is two-fold, in addition to their powers under the social welfare Acts they have powers under the Garda Acts so we benefit from quicker investigation and detection of cases, more enhanced powers of investigation, transfer of knowledge skills and best practice. That means we can get more speedy access to the system of prosecution for serious cases than we would otherwise have been been able to do. This is quite apart from the normal savings that they would generate.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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How many Garda are seconded at present?
Josepha Madigan (Dublin Rathdown, Fine Gael)
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Does Ms O'Donoghue notice a big difference?
Josepha Madigan (Dublin Rathdown, Fine Gael)
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Ms O'Donoghue said that the staff absence rate in her Department is greater than in other Departments. That ties in with my question on whether sections of the Department are under more pressure in terms of processing claims. What is the reason for the absence?
Ms Niamh O'Donoghue:
In fairness, people appreciate and most of the people who interact with the Department will appreciate the sheer escalation and volume of activity that staff have had to deal with in the past four to five years. There is an increase in the numbers presenting and the type of interaction we have now is different from the interaction we would have had previously because not alone are we providing income support but we are also trying to assist people through activation services into employment. One is dealing with people who can often be in very difficult circumstances. That is stressful. Obviously many of our staff work on the front line. We have a high proportion of staff who are absent on stress relative to other Departments. It is the nature of the activity in which they are involved.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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Are there supports in place for staff?
Ms Niamh O'Donoghue:
Yes, absolutely. We have quite an extensive range of training supports, an employee assistance service and we regularly try to look to see what other innovations can be introduced in order to try to support staff both through their own training or local management support in terms of dealing with the circumstances they face.
In respect of the areas that face particular challenges, there is no doubt that as the live register reduces, obviously we have fewer people of working age presenting to the Department looking for working age supports, however, we are seeing some pressures in the sections dealing with in-work supports because as more people go into employment we have many more people availing of in-work supports. Equally in the whole illness related schemes - illness benefit, invalidity pension, disability allowance, carer's allowance - undoubtedly we have experienced quite a lot of pressure. That is something we are working through and trying to improve.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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I see there was an overpayment of disability allowance and illness payments which are notably higher than other payments according to the Comptroller and Auditor General's report. Does Ms O'Donoghue think that is a result of error or fraud?
Ms Niamh O'Donoghue:
Obviously to qualify for an illness payment, quite apart from whether it is means assessed or the issues in relation to accessing the payment, there is a whole medical eligibility. A deciding officer has to make a decision at a point in time based on the evidence available. Often when one comes to the review process those circumstances may have changed.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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Does Ms O'Donoghue have a breakdown of the distinctions?
Ms Niamh O'Donoghue:
Within the particular schemes there is a breakdown of fraud and error. In fairness, the fraud elements would not be very high. In fact the overall figure for the scheme is not high, but it is higher because of the medical component. One of the issues is whether it be at initial claim or at the review, we need to see the full picture, we need to see all the medical evidence that is available in order to support the claim.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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Ms O'Donoghue mentioned in her report that the Department is one of the most significant data controllers in the State, which we know. She states that the Department protects the data, but how is that done?
Ms Niamh O'Donoghue:
We take data protection extremely seriously. There is a range of issues. People in the Department have to have access to data in order to carry out their business. If somebody presents, obviously the data is captured and that has to be captured in the systems. They must have systems access in order to carry out their business. We try to ensure that people only access the cases in which they are directly involved. Obviously if people access things in which they are not involved, that is a problem. We deal with it. We have a range of different procedures. We have an ongoing annual statement that staff are invited to sign indicating that they are aware of their obligations and aware of the practices and protocols around accessing data.
There is an ongoing range of presentations to staff around the country. There are all kinds of different communication initiatives. We have a data protection awareness week that is carried out and highlighted. We have a high-level working group in place. We have a constant programme of meetings with the Data Protection Commissioner to avail of best practice knowledge and apply that knowledge back in to the Department.
It is about awareness raising in the first instance. Of the data protection breaches that come to our attention, the vast majority of them would be accidental breaches. There are some serious data protection breaches - there is no doubt about it - but they are dealt with very seriously.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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My last question relates to the Social Insurance Fund. Are the bands sufficiently healthy for the short, medium and terms? What about Brexit? Has the fund buffers against that?
Ms Niamh O'Donoghue:
As the Comptroller and Auditor General, in his opening statement pointed out, we will be moving this year for the first time back into a surplus in the Social Insurance Fund and I hope that continues to be healthy over the short-to-medium term.
The long-term viability of the Social Insurance Fund is entirely dependent on the demands that are made of the fund. There is an actuarial review about to be commenced, I think, at the end of this year. At the begin of 2017, we are required to commence it. Previous actuarial reviews would have highlighted a difficulty, because of the demographic profile, the ageing population, the demands from pensions, in particular, on the State pension, that if there were not changes made to either entitlement or the provisioning of the fund, we would have problems into the future. In the longer term, that would be a difficulty, and I would not expect the next actuarial review to make findings that are too much different from that.
There have been steps taken over the past number of years, particularly in the context of pension entitlements. The age at which somebody is entitled to old age pension has been increased. There is a programme of further increase in 2021 and 2028 which was signalled many years ago. The eligibility conditions to allow one access State pension have also been changed. All of those are with a view to tightening up on the entitlement side. The provisioning is another side, which is the rates at which workers pay PRSI. The viability of the fund and its ability to operate in the longer term is really a question of the balance between the two, the demand and supply aspect.
In terms of Brexit, the Government will be part of the European response. At present, the UK remains a member of the EU and all of the existing entitlements continue to be in place. The Department is participating in all of the different working groups at Government level with a view to inputting and trying to assess what the possible implications of Brexit might be, but all of that will dependent on what is negotiated.
Josepha Madigan (Dublin Rathdown, Fine Gael)
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I only want to ensure the fund is insulated from an economic shock.
Shane Cassells (Meath West, Fianna Fail)
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I thank Ms O'Donoghue. It has been an interesting morning hearing about the vast scope of work for which her Department is responsible and the significant impact it has on the country. In Ms O'Donoghue's opening statement, she spoke of the functions of the Department. Naturally, most associate the Department with income support but Ms O'Donoghue went on to speak about, in particular, the activation of those of working age and the Department's role in that respect. Briefly, I will touch on that.
Ms O'Donoghue spoke about the second jobs week that was held in September of this year and the fact that it was held in every region. I ask her to speak about the success of earlier events and the direct correlation between those coming off the live register and the schemes and events the Department runs. I ask that Ms O'Donoghue speak about the areas, by geographical region, age group and black spots, that remain a worry for her as well.
Ms Niamh O'Donoghue:
It is very hard to be specific in terms of the Department's contribution. The institutional reform I referred to earlier, in terms of bringing together the activation services with the income support services, has meant that kind of seamless engagement with people which has allowed us to tailor the supports that we offer, to profile people in terms of their own ability to exit from the live register or to identify those who might need greater help and assistance.
Shane Cassells (Meath West, Fianna Fail)
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In terms of profile, where are those seeking employment and what are the demographic factors involved?
Ms Niamh O'Donoghue:
Probably the best way to put it is if somebody goes into an Intreo office now because he or she has become unemployed or has never worked but is looking for employment and looking to access both activation services and income support, the first thing we will do is capture a history of that individual. We will register such individuals for a public service card, we will capture their educational and work history, that is, the kind of skills and expertise that they may or may not have, and on the basis of that information we will calculate a score which is related to what is called the probability of exit, a PEX score. The PEX score can be high, medium or low, but the critical point is that the score will determine the intensity of engagement that we have with that individual over the coming weeks and months.
All who come in to register with us will be invited to a group information session where they will be given all kinds of information in regard to their entitlements, but also the kind of supports and schemes that might be available to them. For those who have a low PEX score who are deemed to be in most need of support, within a very short space of time they will be scheduled for a one-to-one engagement with a case officer and they will develop with the case officer a personal progression plan, which will involve them looking at addressing some of the skills deficits or basic needs that they might have, or looking at whether other education or training might be beneficial, and then referring to that.
Shane Cassells (Meath West, Fianna Fail)
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In terms of areas of concern I asked about, does youth employment remain stubbornly high, and by geographical area? There is an upturn in the economy and we have seen the unemployment figures come down, especially in this part of the country. Looking at other parts of the country, where are the black spots and is youth unemployment remaining stubbornly high?
Ms Niamh O'Donoghue:
Actually, it is not. Youth unemployment relative to general unemployment is higher. It is about twice the rate of general unemployment, but if one looks, whether across time or across Europe, the rate of youth unemployment has halved from the worst point of the recession. Youth unemployment, at the height, was 33%-----
Shane Cassells (Meath West, Fianna Fail)
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That was the national average.
Ms Niamh O'Donoghue:
-----and it has now come down to approximately 15%. General unemployment has come down from approximately 15% to 8% or 9%.
Where are we most concerned still is with older people over 50 who are long-term unemployed, the very long-term unemployed who are unemployed for over five years who have now established very considerable distance from the labour market and who are maybe more vulnerable and in need of greater attention, and those who do not have a residual skill, as in they did not come from a skilled background into unemployment and are starting from scratch.
In terms of what has progressed over the past years, probably contrary to expectations arising from previous exits from recession, the general long-term unemployed numbers have come down much quick than has been the previous experience, youth unemployment figures have come down in the way in which I have said and the transition from short-term, if someone went into short-term unemployment, to long-term unemployment has reduced as well. Those indicators have been very positive in this context compared to previous economic upswings.
Shane Cassells (Meath West, Fianna Fail)
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What of the geographical spread? I keep stressing this point because the national framework plan is currently being devised. It will set out objectives in terms of infrastructure, housing and employment zones.
The previous spatial strategy got things wrong on a number of levels. In terms of her statistics, could Ms O'Donoghue speak about whether she has identified specific areas of deprivation or areas where rent supplement payments are higher? Could she point to statistics like that where the Department makes payments across the board?
Shane Cassells (Meath West, Fianna Fail)
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I am sorry for interjecting, but is that quite noticeable? Are rural areas suffering more than urban areas?
Ms Niamh O'Donoghue:
Yes, probably the way I would put it is perhaps not that they are suffering but that the recovery is not as quick there, and the set up of jobs. Obviously, that is something that is now being tackled through the regional Action Plan on Jobs. At local level we are working very closely with both the agencies that are involved in terms of attracting industry and with the local employment offices at county council level to try to address that. We are trying to take a very local perspective on issues as they arise, but there is no doubt if one is unemployed and living in-----
Shane Cassells (Meath West, Fianna Fail)
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Did Ms O'Donoghue feed that into her submission to the national framework plan? Did she perceive that there is a definite trend in rural areas where unemployment is persistently high? She spoke about engaging with people in terms of the skill sets they have and feeding that into the national framework plan. Having gone to the briefing, it is evident that there is a very big problem there.
Shane Cassells (Meath West, Fianna Fail)
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In terms of skills shortages that have been identified, is there a noticeable difference from a geographical point of view in terms of skills shortages of people presenting to the Department, or is there a contrast between urban areas and other rural areas or between the east coast versus the west coast?
Ms Niamh O'Donoghue:
Again, the skills of people on the live register in various areas are very much a function of what the industry or employment opportunities were pre-recession. One is looking at trying to build new skills or to enhance skills. We feed information in through the ETBs and there is constant engagement with SOLAS to identify different training programmes and skills-building programmes to put in place in various areas. There have also been tremendous successes. One can look at some of the clusters of industry, for example, the biopharma cluster in the midlands where there has been very close interaction between our offices and the industry as a whole. There has been huge success in terms of moving people from unemployment into those sectors where they previously would not have had experience. We work with the employers to provide the skills to ensure people are equipped to take up the jobs in the sector.
Shane Cassells (Meath West, Fianna Fail)
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In terms of payments, the National Youth Council last week described the increase to young people of €2.70 as opposed to €5 as miserly, mean spirited and further discrimination against young people. In response to Deputy Connolly, Ms O'Donoghue said the Department did advise on policy. Did she advise on that policy and did she endorse it? Could she also speak about the impact of it?
Shane Cassells (Meath West, Fianna Fail)
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That is fine, but I am just asking whether Ms O'Donoghue had any input in that regard as she said she did advise on policy. We are talking about job activation and so forth. Did she advise on that?
Seán Fleming (Laois, Fianna Fail)
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Discussion on policy will be for the Minister.
Shane Cassells (Meath West, Fianna Fail)
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I appreciate that, Chairman, but in a previous reply to Deputy Connolly, Ms O'Donoghue did say the Department did advise on policy and I am only asking in terms of the impact on job activation whether there was advice from the Department on it. I think I phrased the question correctly, Chairman.
Seán Fleming (Laois, Fianna Fail)
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What advice did the Department pass up the line?
Ms Niamh O'Donoghue:
As one will appreciate, in framing any budget, the Minister of the day will have a range of different ideas as to how he or she might spend money if it were available. What the Department does in terms of providing advice is carry out a social impact assessment of different options and make that available, but it all feeds into an overall approach.
Shane Cassells (Meath West, Fianna Fail)
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On that, because it was done for a very specific reason, in terms of the social impact, is it the case that it will drive young people further into poverty or into taking up cash-in-hand jobs to supplement their payment which is already lower than the higher payments?
Ms Niamh O'Donoghue:
As the Deputy will appreciate, the structure of the payments to young people at the moment is such that there are age-differentiated rates, but there are also increased rates available for people who take up education or training opportunities, so there are opportunities for people to move into higher payment rates.
Shane Cassells (Meath West, Fianna Fail)
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I appreciate that but I am just talking about the impact of the measure. Does Ms O'Donoghue feel that the impact is to drive a further wedge or have a detrimental impact because the National Youth Council has come out and spoken on behalf of young people? Is it driving young people further into poverty rather than helping them?
Shane Cassells (Meath West, Fianna Fail)
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In terms of the crackdown on fraud, Ms O'Donoghue spoke about the work of the Garda within the Department as well. I would like to hear about the measures taken because when there is an upturn, small business people who are operating legitimately are paying their taxes, expenses, VAT and rates but if people in the black economy are undercutting or undermining them and also claiming benefits, that is hurting the overall economy as well. Ms O'Donoghue referred in her opening statement to the Department's vigilance in tackling fraudulent activity and the importance of enhancing systems to address it. Could she speak to some of those measures the Department is undertaking in terms of underground deployment in order to stamp out such activity as the economy improves?
Ms Niamh O'Donoghue:
There are a number of different things. First, the Department receives a lot of data from other organisations and cross-matches data with other organisations with a view to ensuring that people have the proper entitlements. For example, we have regular nightly feeds from Revenue in relation to the commencement of employment data to make sure that where people are legitimately working that they are not also receiving a social welfare payment to which they are not entitled. Data matching is a huge piece of that control activity for us. In addition, we have, all told, somewhere in the region of 1,100 staff working in control activity from inspectors to the special investigation unit, SIU, to people working in control activity at different scheme levels, all focused on trying to ensure that we minimise problems that might otherwise occur.
I mentioned to Deputy Madigan that the focus of the SIU is very much on the shadow economy, identity fraud and things like that. We operate on a joint basis with other agencies, Revenue, and the National Employment Rights Authority, NERA. Deputy Connolly was not impressed with the coverage of the multi-vehicle checkpoints but they-----
Catherine Connolly (Galway West, Independent)
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Ms O'Donoghue's expertise will be very helpful in relation to the other tax evasion measures the Government will put through the Finance Bill.
Ms Niamh O'Donoghue:
The point is that we have been involved in multi-agency vehicle checkpoints specifically to tackle shadow economy activity and focused on people who might be working but who are in receipt of a social welfare payment. We have been carrying those checks out now for six or seven years. They are very successful and are generally received extremely well by legitimate business people within towns.
Seán Fleming (Laois, Fianna Fail)
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We are coming to the end of the Deputy's questions.
Shane Cassells (Meath West, Fianna Fail)
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You are very hard on me on time, Chairman. It is shocking. I think you have favourites.
Could Ms O'Donoghue speak to the figures relating to farm assist payments? It was stated that 10.4% of the total payment of €88 million was in excess of entitlement. Could she tell me what type of fraudulent behaviour was involved?
Ms Niamh O'Donoghue:
This is a very tricky scheme. It is a small scheme involving approximately 8,000 recipients.
Only approximately 6% of farmers claim farm assist. It is a tricky scheme, given that it is based on income at a point in time and unfortunately, as most people know, farming income fluctuates wildly and many of the elements that feed into income are unpredictable and variable. Many of the issues with the scheme are around cases in which, on review, people's circumstances, such as their costs or income, had changed during the period in question and they had not necessarily advised us of it, and an overpayment or underpayment had arisen.
Shane Cassells (Meath West, Fianna Fail)
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So they were not necessarily engaging in fraudulent behaviour.
Shane Cassells (Meath West, Fianna Fail)
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From the IFA briefings I notice a reluctance on the part of some farmers to engage, due to a stigma or whatever. The IFA told us there was a stigma attached to availing of it. It would be terrible if a statement were put out or there were a feeling that it was knowingly done. Ms O'Donoghue is saying it is not the case.
Ms Niamh O'Donoghue:
As with any scheme, there will be an element of fraud. My point is many of the concerns or issues would have arisen because of the difficulties and the variables of the scheme. In many other schemes, calculating the entitlements is more straightforward. The variables in farm assist are often beyond the control of the individual and, on a year-on-year basis, people may not perceive that they need to notify us all the time when their circumstances change. Unfortunately, this might give rise to overpayments. The Comptroller and Auditor General carried out an audit in 2014, so both the findings from this audit and those from our fraud and error survey have informed a fairly significant change in practice in terms of the documentation we use and the review processes we have in place and how we capture information. We have worked closely with the Department of Agriculture, Food and the Marine to get more sensitised information so we better understand the nature of the particular type of farming and what the expectations are.
Shane Cassells (Meath West, Fianna Fail)
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I would like to ask the Comptroller and Auditor General, looking at the other figures for the other categories, if it is quite a high figure in terms of the range of schemes.
Seán Fleming (Laois, Fianna Fail)
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They have a second chance.
Shane Cassells (Meath West, Fianna Fail)
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The word "fraud" has serious connotations when assigned to the farming sector and it would be very worrying. I wanted to explore it in case people are not actively or knowingly trying to pursue fraudulent payments. It is a high figure when one sees that it is up there under disability allowance.
Alan Farrell (Dublin Fingal, Fine Gael)
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Good morning to our guests. The vast bulk of my questions have been well covered by my colleagues. My recollection was that in 2012, the previous Government changed policy on the treatment of those most commonly known as the stay-at-home child care providers, primarily stay-at-home mums. The practice has been in existence for decades, and I refer specifically to those who were forced, either through custom and practice within the public sector or the private sector through agreements, to leave employment when they married. I have had extreme difficulty, as other Deputies have had, in determining the number of people - primarily, although not exclusively, women - affected in the public sector and in some private sector organisations that mimicked what I believe was a requirement rather than a legislative provision in certain areas of the public sector. I would like to determine some figures and get some information. I do not expect all the answers, given that I am putting Ms O'Donoghue on the spot. The Comptroller and Auditor General may wish to chime in if he has an answer in any areas.
When did the practice commence? When did it cease? I believe it was 2012, but I am asking it in terms of the Department of Social Protection's recognition and ability to give such a person a full contributory old-age pension despite the fact that the person did not have the required stamps because she was at home. What numbers are involved? Would the Department care to estimate, based on the numbers involved, the total cost to the Exchequer to deal with such individuals who are currently excluded and receiving only a percentage of their State pensions? The only people who have come to me about the matter over the years have been pensioners, including somebody only yesterday. It is very important that I try to quantify the figure. I have asked others in the Department and I have been unable to get the figure. I seek the total number, the estimation of the cost of a policy change to give them full entitlements and the impact of pension increases to be introduced, of which they are to receive only a percentage, as Deputy Shane Cassells mentioned a few minutes ago.
Ms Niamh O'Donoghue:
To tie back to some of my earlier comments, during recent years some decisions have been made on trying to improve the sustainability of the Social Insurance Fund. Some of those decisions were signalled a long time ago while others were taken more recently. I presume the Deputy is talking primarily from the changing contributions from 260 to 520. Changes were made to the bands of entitlement, depending on the individual's contribution history. These changes were implemented during recent years, albeit they were signalled some time ago.
We are talking about accessing the contributory pension. For a contributory pension, the thinking at the time was that the number of contributions required, 260 over the course of a lifetime of work, was relatively low compared with international experience. This was part of the thinking that went in. Although home-maker credits were put in place, there are issues in this regard. The Department has signalled that it is looking at reviewing the entire suite of pension offerings, such as moving from a fixed number of contributions to a total contributions approach. All the changes are enormously tricky. There are winners and losers and it is very complex in terms of the interaction between people's State pensions and whatever private pensions they may or may not have provided for. In all cases, the pension suite is underpinned by the non-contributory pension. People who have no contribution history can qualify for a non-contributory pension and the rate of payment is not significantly different from that of the contributory pension.
Alan Farrell (Dublin Fingal, Fine Gael)
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While I accept Ms O'Donoghue's point, for a person in receipt of such an income, it is a significant difference. Their costs are the same.
Alan Farrell (Dublin Fingal, Fine Gael)
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I understand where Ms O'Donoghue is coming from but it is a major issue for such individuals.
Alan Farrell (Dublin Fingal, Fine Gael)
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Yes.
Alan Farrell (Dublin Fingal, Fine Gael)
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I appreciate Ms O'Donoghue's answer very much. I would be delighted to engage with her on this matter. The Minister has made a number of overtures. To be fair, the former Minister did the same.
Alan Farrell (Dublin Fingal, Fine Gael)
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We are all realists in this room. We all appreciate that this is an ability-to-pay issue. If we can quantify the issue and ascertain whether a particular amount of money is involved, a political decision can be made on whether the State has the resources to meet the demand.
Alan Farrell (Dublin Fingal, Fine Gael)
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I suppose the fundamental point is that there has been unfairness in the system for decades. In many cases, these individuals, who are primarily women, were completely unaware that they were going to find themselves in this position later in life when they needed State support. They probably removed the need for significant amounts of investment by the Exchequer because they stayed at home and reared their children.
Alan Farrell (Dublin Fingal, Fine Gael)
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It is fundamentally unfair that they are penalised by the same State.
Alan Farrell (Dublin Fingal, Fine Gael)
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Great.
Ms Niamh O'Donoghue:
We have estimated that if we were to extend the homemakers' scheme, which I have mentioned, to allow everybody involved to avail of the full 20-year provision under the scheme, it would cost €286 million in 2017 terms. This would involve including periods prior to 1994, which is when it took effect. That cost would increase over the years.
Alan Farrell (Dublin Fingal, Fine Gael)
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I see.
Alan Farrell (Dublin Fingal, Fine Gael)
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It is a significant amount.
Alan Farrell (Dublin Fingal, Fine Gael)
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I appreciate the provision of that information, which is somewhat enlightening. I know some people are reluctant to have a public service card in existence. I think it is daft that we do not have such a card. We are very happy for banks, mortgage providers and the Department of Social Protection to have all our information. Some people are opposed to the production by the State of a national identity card that contains all of our information. I cannot understand that logic. I would like to get the perspective of the Department. It is clear from the documentation provided for this meeting that there has been an escalation in costs. Difficulties have been encountered with the production of cards. The deadline for the production and issuing of 3 million cards has been missed and just 2.23 million cards have been produced to date. Reference has been made to an additional €60 million. The issues with the computer systems have been documented. I think the precise reference was to "technology". Will that be an ongoing issue as efforts are made to get out the full allocation of cards, or is it a one-off cost associated with upgrading existing technologies within the Department?
Ms Niamh O'Donoghue:
I would like to pick up on a couple of aspects of what the Deputy has said. The actual cost increase is very small. According to our projection for what the 2017 figure will be compared to what we set out, there will be a cost increase of €3 million. I absolutely accept that the cost of registering and delivering the card to individuals was not included in the initial cost. If that cost is added on, it brings the entire cost up to €60 million. Contrary to what has been portrayed, it is not a cost increase of €24 million or €27 million. The cost of the actual contract has increased by €3 million or so. There are specific reasons for that. There have been delays in reconfiguring the production contract. I referred earlier to all the things that delayed the project in taking a foothold. Obviously, we had to reconfigure the financials with the provider. We also had to pay for some enhancements to the card to deliver certain variants and to take account of other users, for example by integrating it with the Leap card, etc. It costs more to build in additional functionality under the card. The Government has accepted that it has always been our ambition to ensure the card itself is a relatively simple product, albeit an extremely secure one. In other words, identity information but nothing else is contained in the card.
Alan Farrell (Dublin Fingal, Fine Gael)
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Yes.
Alan Farrell (Dublin Fingal, Fine Gael)
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Yes.
Ms Niamh O'Donoghue:
As I have said, the only exception is that it has the functionality to allow people to access the Leap process for the purposes of integrated ticketing. The computer configuration that had to take place in the Department went way beyond the actual card production. We had to redevelop our entire business in 2011-12 to take account of a range of additional businesses that the Government asked us to take on. We then had to change the fundamentals of the computer infrastructure we rely on. That once-off investment was not attributed to the card per se.
Alan Farrell (Dublin Fingal, Fine Gael)
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Yes.
Ms Niamh O'Donoghue:
It certainly contributed to the delay in reaching production capacity. Obviously, the Department faces the ongoing cost of having registration centres in place. The benefits of this approach from our perspective accrue not only from fraud savings but also from administrative efficiency and the improved customer experience. It is hugely beneficial for customers to be able to use the same token to access a range of services across the public service. Those benefits will increase. We know from our engagement with other public service providers that the functionality of the card and the information on which it is based will increase dramatically in the years to come.
Alan Farrell (Dublin Fingal, Fine Gael)
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I have a follow-up question on that specific issue. My understanding of what Ms O'Donoghue is saying is that the card allows access to the information-----
Alan Farrell (Dublin Fingal, Fine Gael)
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-----and the State provider then has the opportunity to access the information.
Alan Farrell (Dublin Fingal, Fine Gael)
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Okay, that is fine. I would like to ask about the ability of the technology itself to move with the times. Difficulties can arise when technologies become antiquated and unusable within five to ten years of being produced and have to be redone. I hate the expression "future-proofing", but I assume some sort of future-proofing is built into the production of this card. I ask Ms O'Donoghue to enlighten me in that regard.
Ms Niamh O'Donoghue:
That is the case in terms of the card itself, which has a magnetic stripe on the back and a chip on the front. People will be familiar with such features. The chip is where the future is at. The magnetic stripe is very much a symptom of the older technology used to access payments, etc. In the course of the development of the card, we upgraded the magnetic stripe because the technology enabled us to do so. This was one of the additional costs. The most critical element of future-proofing relates to the use of the data that underpins the card to allow people to verify their identity when they are accessing online services. It is future-proofed to that extent. We have built the infrastructure to allow us to do that. Hopefully that is future-proofing us, certainly for a while.
Alan Farrell (Dublin Fingal, Fine Gael)
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I appreciate Ms O'Donoghue's answers.
Seán Fleming (Laois, Fianna Fail)
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I call Deputy Catherine Murphy.
Catherine Murphy (Kildare North, Social Democrats)
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I would like to ask about the big €60 million investment in the public service card. Was that unique to the Department? Was it from the Department's Vote?
Ms Niamh O'Donoghue:
It was. It came from a kind of ring-fenced element of the Vote - the subhead for e-government projects that are within the responsibility of an individual Department but are considered to have cross-governmental impact. This would have been a big e-government project within our Vote.
Catherine Murphy (Kildare North, Social Democrats)
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I would also like to ask about a sum of €3 million.
There was an additional €3 million relating to some contractual changes.
Catherine Murphy (Kildare North, Social Democrats)
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What specific contractual changes were they?
Ms Niamh O'Donoghue:
There were a couple of different elements. One was that we had to extend our original expectation that we would be in production and have produced the three million cards by the end of 2013. For reasons relating to the producers of the card and take-up of that, we have had to extend the contract so we have had to revisit the financial aspects to take account of it to a very small extent. We updated the magnetic stripe on the card so that imposed an additional cost. Due to the fact that we wanted the card to be used as a seamless token in integrated ticketing, we paid for an additional development to allow Leap card functionality to be built into the card. We have also done similar work in terms of making the card ready to be used as a European residence permit so we have a public service card variant that is available for us in that context. Again, certain functionality has been built into the card so we had to pay for that. Those different things were taken together with the activation costs I spoke about to Deputy Connolly where we were required by the Data Protection Commissioner to put in place a process to verify that the individual who registered received the card.
Catherine Murphy (Kildare North, Social Democrats)
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The Leap card relates to the provisions of public transport. What is the function of the Department of Social Protection in respect of that?
Catherine Murphy (Kildare North, Social Democrats)
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In respect of the lack of an overall business case to begin with, I take Ms O'Donoghue's point that this was cross-departmental but was there a cross-department business case in advance of it, is there a plan and has that plan been updated?
Ms Niamh O'Donoghue:
It is continually updated to take account of the opportunities that arise for use of the card or its data set for different purposes. The original thinking for the development of the card came from an inter-departmental group in the first instance but because of the client base of the Department and the fact that we had a token in place with a social services card that we figured we needed to replace and also hold PPS end data and client identity data, we were the logical lead Department together with the Department of Public Expenditure and Reform.
Catherine Murphy (Kildare North, Social Democrats)
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I was surprised that the Department did not consider an online function in 2005 if we are talking about future proofing in terms of what the card might be used for in the future. In respect of the tendering process, the company had to build a plant. I would have thought the capacity of the company would have been one of the key issues in awarding the tender.
Ms Niamh O'Donoghue:
The capacity of the company was a key issue but it related to its expertise. It is a very secure card that is built to the highest international standards. If my memory serves me right, the tender involved an Irish company based in Bray and input from a Dutch technology company which is a world expert in this kind of secure card provision. The company in Bray had never physically produced these type of tokens before so it had to build the facility in Bray to do that, which it did. That has also led to other benefits. The company has had other Government business on the back of that investment it made. I cannot remember what the Deputy-----
Catherine Murphy (Kildare North, Social Democrats)
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I asked about the online function.
Ms Niamh O'Donoghue:
It is not that we had not envisaged having online services. The critical thing is that what we have built now is a facility for the agency providing the service to be able to verify the person's identity even though they are in an online environment. I will not say it is new technology but we are at the leading edge in terms of being able to do this. The facility that is now being put in place would not have been there in 2005.
Catherine Murphy (Kildare North, Social Democrats)
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A total of 3 million cards were due to be issued by 2017. A little over 2 million have been issued but only 1.2 million have been activated.
Catherine Murphy (Kildare North, Social Democrats)
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A total of 800,000 people have not rung to say they have received the card. Does market research or a public information campaign exist? It seems very wasteful not to activate a card if someone has it because it could easily go out in the bin and the Department would have to reissue it.
Catherine Murphy (Kildare North, Social Democrats)
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So they use them but they have not been activated?
Ms Niamh O'Donoghue:
As I said, the activation process was a particular process that we were asked to put in place when we started this process and when the roll-out of public service cards was in its very early days. We came to a conclusion some time ago that the activation process did not add any value but in a context where we were renegotiating with the card provider about an extension to the end of 2017, it was not an element of the contract we were going to turn off until we had concluded those negotiations. We have stopped that now.
Catherine Murphy (Kildare North, Social Democrats)
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What about the lifespan of the cards?
Ms Niamh O'Donoghue:
The original cards had a lifespan of five years while the more recent cards have a lifespan of seven years. Some of that is to take account of the points about obsolescence and emerging technology and if we need to include something additional. Another factor is that we were able to evaluate that. Five years was too short because of the functions of the card.
Catherine Murphy (Kildare North, Social Democrats)
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Turning to how the Department's functions, there is a very different narrative. I take the point made by Deputy Connolly. I must say that it jars with me as well. It is very difficult when one hears the narrative about people not being tax compliant. It is called aggressive tax planning and there is talk of loopholes. Even the Government refuses to take an appeal involving a large amount of money. There is a presumption of honesty in respect of taxpayers while there is a narrative around fraud when it comes to social protection. I completely accept that the Department has a function in making sure people get what they are entitled to and nothing more but that narrative is important and it is important that it is balanced when it is being talked about.
There have been a number of changes in how the Department works. The community welfare officers used to be related to the HSE but are now within the Department. They had a much wider function but the number of offices people can visit has been seriously reduced and is being further reduced. This means that people are finding it more difficult, for example, their phone calls are not answered. Has this been a cost saving exercise? Since some of the offices have closed, I have noticed that I end up answering far more questions. You get the questions anyway but I think the Department is taking face-to-face interaction with the public out of the system. Is that saving money? What is the point in doing that? If there is no point, why would the Department do it?
Ms Niamh O'Donoghue:
There were cost savings but they were on renting clinics for an hour per week or whatever they might be in a variety of different places around the country. The changes that have taken place have been with a view to improving the service and trying to ensure greater consistency in service delivery. If the Deputy is seeing things that are different, I would welcome hearing about that so we can look at it.
Certainly from what we have looked at, we have consolidated into Intreo service centres where we can, which means that we can offer an appointments based service and we can offer our clinics over a much more prolonged period of time than we would have been able to do when we were dispersing the same number of staff or a smaller number of staff to a whole range of different clinics throughout the country.
The functions of the officers in the community welfare service have not changed. They still have a statutory power of discretion in relation to payments.
Catherine Murphy (Kildare North, Social Democrats)
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I personally have not seen that it is an improvement but I will come back to Ms O'Donoghue on that more directly.
Catherine Murphy (Kildare North, Social Democrats)
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Constituency offices of politicians might be a good target for finding out more because we know what additional work is generated and people tell us that calls to the Department are not being answered.
The housing assistant payment, previously rent assistance, is another function that has transferred to the local authorities in large parts of the country. This transfer will have freed up departmental staff.
Ms Niamh O'Donoghue:
In theory. Rent supplement, when it was put in place, was always designed to be a short-term payment. The problem with rent supplement, particularly in the last number of years, is that the numbers involved and the length of time they stayed on rent supplement went way beyond anybody's consideration. The difficulty from a rent supplement point of view was that rent supplement was only payable to somebody who was unemployed. If one was employed, one was not entitled to rent supplement. The design of the housing assistance payment, HAP, was to try to break that link and effectively make a supplement available to people who are employed. What has happened so far is that I think somewhere in the order of 12,000 or 13,000 people have moved to the housing assistance payment. We still have about 50,000 people on rent supplement. HAP will never replace rent supplement entirely. However, in servicing, we are very much in this transition period as HAP is beginning to move up and we are working with the local authorities in terms of identifying people and moving them across.
Catherine Murphy (Kildare North, Social Democrats)
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On working with the local authorities, increasingly one meets people who are unable to obtain a letter from the Department of Social Protection to give to the local authority to verify rent or to change rents. We are talking about citizens - I have a problem with the Department's practice of calling them "customers" - and while there is co-operation, sometimes it is not at citizen level. I am not sure it saves time or personnel because it eventually ends up being done. That should be viewed as a comment because my time is short.
Catherine Murphy (Kildare North, Social Democrats)
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On delays in payments, some contributors have placed emphasis on fraud and so on. I have noticed six-month delays in having a pension application turned around. That is the kind of timeline involved in cases I am dealing with.
Catherine Murphy (Kildare North, Social Democrats)
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It is a contributory pension.
Catherine Murphy (Kildare North, Social Democrats)
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No, there have not even been acknowledgements. I am not talking about a single case. I am looking at trends because I-----
Catherine Murphy (Kildare North, Social Democrats)
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Yes, for contributory pension and I am finding the delays are getting longer, unless I am getting very unusual-----
Catherine Murphy (Kildare North, Social Democrats)
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There are very lengthy delays for respite grants. Four months looks like the-----
Catherine Murphy (Kildare North, Social Democrats)
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These are respite grants where the reply came in.
Ms Niamh O'Donoghue:
The vast majority of respite grants are paid to people who are in receipt of a primary payment - not all of them but most of them - and these are automated. There are a number of people who are entitled to respite care grants who are not in receipt of a primary payment. If it is an issue there, we will certainly-----
Catherine Murphy (Kildare North, Social Democrats)
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I will come back to Ms O'Donoghue directly with these cases. The point I am making is that there is a large number of staff available and I wonder how the Department is managing this. We are talking about the experience of people who have contributed all their lives and face an inordinate delay getting something to which they are entitled.
Ms Niamh O'Donoghue:
Certainly over the last number of years, we have experienced problems in different scheme areas, depending on the numbers who are claiming in different scheme areas. We have taken a whole range of different measures including trying to improve the technology that is at play, providing additional staff into those areas, diverting staff into them or looking at process improvements. I absolutely acknowledge that the area where we are under pressure is the illness-related schemes because of a number of different things, including the legal aspects that changed in accessing illness based schemes and also the need for the medical intervention, as I think I said in my opening statement. We now have improved our own capacity at medical assessor level so we are managing these and trying to address them and bring the figures down. They are not at the level I would like them to be at but in other instances where we have experienced those kinds of problems historically, we have been able to address them and bring the processing times down to what is a reasonable level, bearing in mind all the different things that have to be satisfied. We will be working to continue that.
Seán Fleming (Laois, Fianna Fail)
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Deputy Catherine Murphy may contribute again in a few minutes. Before we move to a second round of questions, I will ask some questions. If Ms O'Donoghue does not have the information I seek, I ask her to have it sent to the committee afterwards. The Department does not have a social welfare office in some counties. Will it provide a list of its social welfare offices? The position is similar to the position of An Post, which has offices in certain locations and contractors who also have offices. County Laois, where I live, does not have a social welfare office.
Seán Fleming (Laois, Fianna Fail)
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It is like the post office. The staff are on contract and are not departmental staff.
Seán Fleming (Laois, Fianna Fail)
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I ask for a note on the matter. While I do not have an issue with the service provided, it is unusual that the Department does not have a direct public office in County Laois.
We heard that the ballpark cost for the public services card will be €60 million. Is €20 a valid cost for a public services card? When it commenced, did the Department think it would spend €5, €10 or €50 per card? Did it have any idea of how much it wanted to spend on each card?
Ms Niamh O'Donoghue:
If I can refer back, at the time, what we were looking at back primarily in the initial stages was the cost of producing the card itself. I think that works out at something like €8 or €9 per card. Obviously, the registration process adds to that. The registration process is about verifying the individual who is sitting in front of one so, yes, I am very happy that if one is taking that once-off registration process, the entire cost of that intervention is €20. That is very good value for the State.
Seán Fleming (Laois, Fianna Fail)
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With regard to all the people who did not show up, is this followed up?
Seán Fleming (Laois, Fianna Fail)
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From whom do they get letters?
Seán Fleming (Laois, Fianna Fail)
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From the Department.
Seán Fleming (Laois, Fianna Fail)
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However, the Department has still not got to a large number of people because they did not show up or whatever.
Ms Niamh O'Donoghue:
Yes. I think in terms of people who are in receipt of payments, we have pretty high percentages of cover across most of our schemes. Bear in mind again that what we did was we focused on the scheme where it was easier for people to register. To take our customer base, if one likes, the kind of areas which we are focusing on at the moment would be people who are in receipt of illness or disability payments and they are a little bit more difficult.
Seán Fleming (Laois, Fianna Fail)
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Are we talking about adults?
Seán Fleming (Laois, Fianna Fail)
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We are only talking about adults-----
Seán Fleming (Laois, Fianna Fail)
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-----and some people who are in payment of disability benefit and are 16 years of age.
Seán Fleming (Laois, Fianna Fail)
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Will Ms O'Donoghue send the committee a note on the percentage of people on one of the schemes who have been captured?
Seán Fleming (Laois, Fianna Fail)
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It should be very high.
Seán Fleming (Laois, Fianna Fail)
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The rest of us might be on neither scheme so we can understand why our registration rate might be lower.
Seán Fleming (Laois, Fianna Fail)
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I believe officials have had to go to houses to take photographs for some people.
Seán Fleming (Laois, Fianna Fail)
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The officials have to call to houses to take the photograph when people cannot make it to the office.
Seán Fleming (Laois, Fianna Fail)
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It is a big process.
Seán Fleming (Laois, Fianna Fail)
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It would be good for the Department as well to have it on the public record, just to complete the picture. There was talk a couple of years ago about the Department employing external contractors for job activation. Did that happen and is it happening?
Ms Niamh O'Donoghue:
Yes, it did. It is basically to add to the Department's ability to provide employment services. A contract called JobPath was signed by the Government. There are two providers. It is based around the regions of the country in which the Department operates and there are two providers in two regions, Seetec and Turas Nua.
Seán Fleming (Laois, Fianna Fail)
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Have they been successful?
Ms Niamh O'Donoghue:
In terms of the numbers that have been referred to JobPath, probably approximately 60,000 people have gone through that process. The outturn of that will only be measurable over a period of time because there is a 12 month engagement, during which the individuals hopefully will be placed in employment and obviously the payments and so forth related to that.
Seán Fleming (Laois, Fianna Fail)
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When did that commence?
Seán Fleming (Laois, Fianna Fail)
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So you would not have-----
Seán Fleming (Laois, Fianna Fail)
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Perhaps you would send a note on it to the committee. It is useful information. One question always intrigues me. I believe the social welfare appeals office is not under the Department's Vote.
Seán Fleming (Laois, Fianna Fail)
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You got away very lightly there. When cases are turned down by the Department and people go to the appeals office, what is the percentage success rate from the claimants' point of view? A ballpark figure will do. Is it 40%?
Ms Niamh O'Donoghue:
No, it is high. According to the chief appeals officer's report, in 2015 approximately 25,000 appeals were finalised and favourable outcomes were 58% of the overall outcomes. A significant proportion of those would also have been decisions that would have been referred back to a deciding officer, so more information would have been available to allow them.
Seán Fleming (Laois, Fianna Fail)
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Why is that, when the Department has gone through the full process and the people concerned have gone through the hoops, when they seek an appeal the majority of them are successful? What does that say to you? What lessons do you learn? Is the Department too quick to give a refusal?
Ms Niamh O'Donoghue:
We decide on approximately 1.7 million claim applications per year. There are 25,000 appeals, so that is approximately 1% of the entire range of decisions that go to appeal. Looking within that, in a very significant proportion of the appeals the people making the appeal provide additional information which allows for a different decision to be made either by the deciding officer or the appeals officer. However, we have put very strong links in place to try and learn so that if there are process problems or misinterpretation problems, that will be fed back into the Department. We have what is called a decisions advisory officer in the Department which has a strong link with the appeals office, not on individual case level but to examine trends and practices and see what learning is available. That can be fed back into the training regimes for our deciding officers.
Seán Fleming (Laois, Fianna Fail)
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Perhaps you will send us a note on that office.
Seán Fleming (Laois, Fianna Fail)
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Members of the House have extensive experience with the appeals office.
Seán Fleming (Laois, Fianna Fail)
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They come to us.
Seán Fleming (Laois, Fianna Fail)
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Yes. My next question is a tricky one that has arisen recently for me. I will ask some broader questions after that. The Revenue Commissioners collect PRSI from the self-employed for the Department.
Seán Fleming (Laois, Fianna Fail)
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Are they the Department's agent or do they do it separately? Are they doing it on the Department's behalf or is it their statutory function to do it and they give the Department the money?
Seán Fleming (Laois, Fianna Fail)
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Does the Department have a service level agreement with them?
Seán Fleming (Laois, Fianna Fail)
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I will come to that. The difficulty I have encountered is that when people reach 66 years of age and claim their State pension the exact amount of their contributions can rule them in or out for the contributory pension. It is absolutely crucial that what the Revenue Commissioners collect tallies with the number of contributions people believe they should have because if it does not, they can lose their entitlement to the State contributory pension. I tabled a parliamentary question on this subject in the last week or two and I received a letter in reply. I am sure the question was withdrawn once I received a satisfactory letter. However, the letter stated that the Revenue Commissioners collect PRSI on the Department's behalf but they can only collect it for a full year. They cannot collect it for part of a year. That means that in the year the person joins the scheme the Revenue Commissioners collect it for the full year, which is 52 weeks. Let us say somebody is coming to their retirement birthday, it is their last year in the scheme and they might have two weeks or 48 weeks in the last year before they reach their birthday. The Revenue Commissioners cannot collect that because it is not for a full year. People can lose their entire entitlement to the State contributory pension because, as the Department told me in writing, the Revenue Commissioners can only collect PRSI for a full year, which is 52 contributions. It specifically stated that they cannot collect it for part of a year. I want a detailed note on that because people can lose their entire entitlement on this basis. Do you understand my question?
Seán Fleming (Laois, Fianna Fail)
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I suspect your officials know the point I am making. I think this has been in court.
Seán Fleming (Laois, Fianna Fail)
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How many contributions are required to get a State contributory pension?
Seán Fleming (Laois, Fianna Fail)
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Fine. The person might have 518.
Seán Fleming (Laois, Fianna Fail)
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I know. It is scaled down.
Seán Fleming (Laois, Fianna Fail)
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Yes, because it affects their entitlement to the State contributory pension.
Seán Fleming (Laois, Fianna Fail)
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We mentioned rent supplement and there is a decrease in the payments for that because it probably transferred to housing assistance payment.
Seán Fleming (Laois, Fianna Fail)
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My other question is on mortgage interest supplement. We are due to pass a Finance Bill, although that is not your Department, to give tax breaks to people to buy houses at prices up to €600,000 while at the same time the mortgage interest supplement paid by the Department of Social Protection in 2013 was €21 million and €12 million in 2015. What are this year's and next year's figures?
Seán Fleming (Laois, Fianna Fail)
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What do you think the figure is for this year? One of the officials can find it while we are discussing this. We are going in different directions whereby under the Finance Bill, if one is on a high income one will get a tax relief to buy a house, while somebody struggling to pay a mortgage is on the scheme under the Department. It is a policy issue, so you cannot talk about that. The Department has abolished that scheme.
Seán Fleming (Laois, Fianna Fail)
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No, it is because the scheme is closed.
Seán Fleming (Laois, Fianna Fail)
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I wish to move on to debt recovery. There was an interesting conversation on that here today. I wish to discuss two debts - one is amounts owed to the Department by various claimants under the Vote and the other is amounts due to the social insurance fund from employers in respect of redundancy and insolvency payments. I never hear the same level of animation about chasing the debts under the redundancy and employers insolvency fund. I will outline the figures so people will understand what I mean.
Of the Social Insurance Fund, the amount paid out in 2014 in respect of which the Department of Social Protection made a contribution as a result of insolvency or statutory redundancy was €41 million. The Department recovered €8 million from employers, but it wrote off €19 million.
We will turn to the Department's Vote in respect of people who have been in receipt of payments. The detailed note on this matter is on page 34. Ms O'Donoghue knows the figures well. The Department deemed that there were overpayments for various reasons of €88 million. That is fine. The Department recovered €65 million, but it wrote off €2 million. The amount outstanding on that account is €377 million and the amount outstanding on the Social Insurance Fund from employers is €447 million. The amount that the Department has written off for employers under the fund is far in excess of what it writes off on the other side. Some companies have gone bust and we understand that there are reasons for the Department being unable to collect money, but there has never been the same level of chasing people on that side of the house as there has been on the other. Every Deputy is hearing from people who have stopped getting €30 per week or 15% of their payments.
I must be critical. The Department of Social Protection is one of the best Departments, but the issue of debt recovery has caused difficulties. We are hearing from people whom, after working for years and reaching State pension age, the Department has told they owe it €7,000 for the previous 18 years over a jobseeker's allowance or adult dependant payment, for example. The Department hits them when they reach pension age. It checks all of that, but it did not give them an opportunity during their working lives to repay the money.
The Department is swift. I admire that. I will cite an example. The Department makes an attachment order on some people's bank accounts if they have money in them. It correctly sent a letter to a person who called to my clinic on a Wednesday because there had been an overpayment of €29,000. The Department wrote to his bank on the Wednesday saying how much was owed. He had exhausted the full process and arrived in my office 36 hours later on Friday morning. When I telephoned the person who wrote the letter, I was told that the Department had got the money from the man's bank account the previous night. The Department was able to activate an attachment order within one working day. Would it try to do this on the other side of the Social Insurance Fund? Some of the people involved on that side will reappear as employers under someone else's name the following month. How many attachment orders has the Department made in respect of the Social Insurance Fund versus the Vote and what were the amounts recovered?
Seán Fleming (Laois, Fianna Fail)
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Ms O'Donoghue understands the contrast.
Ms Niamh O'Donoghue:
Yes, but I will make a point or two. The redundancy and insolvency payment scheme came to the Department in 2011. It had a long tail of debt attached to it. We have added to that considerably because of the number of redundancies and insolvencies in the intervening period.
Pursuant to an audit conducted by the Comptroller and Auditor General in 2013 or 2014, we undertook to engage in an extensive review of the debt that was on our books. We have completed that exercise. Our difficulty is that the majority of the debt is attached to insolvent companies, so we are not in a position to recover it. We cannot write that debt off while the insolvency process is ongoing. It may not be the answer that the Chairman wants to hear, but the number will decrease considerably in 2017 or 2018 because of the number of firms that will have exited or concluded the insolvency process and we will not be able to recover that debt. At a best guess, some 90% of that figure is probably not recoverable.
Seán Fleming (Laois, Fianna Fail)
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That leads me to my second question on the Social Insurance Fund account. According to a note on page 12, the Department wrote off €36.7 million on 1 January 2015 because the opening balance was not correct. I have a problem with this. The previous year's figures, as presented to the Oireachtas, were overstated. According to page 13, a further adjustment to the redundancy debt figure may be required upon the completion of the internal review in 2016. Ms O'Donoghue signed the account for the Comptroller and Auditor General. The Department is essentially saying that the balances outlined in the set of accounts before us are not real. Does Ms O'Donoghue get my point?
Seán Fleming (Laois, Fianna Fail)
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If Ms O'Donoghue is going to tell me-----
Seán Fleming (Laois, Fianna Fail)
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Ms O'Donoghue's Department got it from the Department of Jobs, Enterprise and Innovation. I understand.
Seán Fleming (Laois, Fianna Fail)
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I will ask the Comptroller and Auditor General in a moment about the approximately €500 million that may vanish from the State's balance sheet. It is an extraordinary situation. This amount is probably counted in our EUROSTAT figures as something that we are owed, yet Ms O'Donoghue is saying that we might not get 90% of it.
I will revert to my first question, as I want details on attachment orders.
Seán Fleming (Laois, Fianna Fail)
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There must be some mechanism through the Companies Registration Office. Limited liability is a factor, but some of these people will re-emerge having gone through the redundancy process, closed their companies and opened other companies under other people's names.
Seán Fleming (Laois, Fianna Fail)
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Does the 17 figure relate to the Social Inclusion Fund?
Ms Niamh O'Donoghue:
I am sorry. They were not. I beg the Chairman's pardon. The answer to the Chairman's question is "none". It takes five or six years to finalise cases in the redundancy and insolvency payment scheme. There is a feed from the redundancy and insolvency system into our new debt recovery system that did not exist previously. The same kinds of norm will apply where we can recover debt.
Seán Fleming (Laois, Fianna Fail)
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We will have to delve into that. The situation grows more unsatisfactory the more we discuss it. Ms O'Donoghue is telling me that some of the poor people who, for example, have been in receipt of disability allowance have been subjected to attachment orders whereas no attachment order has been issued in respect of anyone under the redundancy and insolvency scheme. There is a disparity in the Department's approach. It seems to go after the little guy and not the big guy. It is confirming this through its inaction in respect of the fund. If the Department sought to get €5,000 back from someone because of a years old overclaim of disability payment only to have that person tell it that there was an ongoing process and that the situation would be reviewed when it ended in five or six years' time, the Department would not wait. It does, however, wait when a company says that a receivership or insolvency has been put in place. Why does the Department not move aggressively and get its money first? Has the Department the authority to made an attachment order on a company that is going through an insolvency process or is being managed by a receiver?
Seán Fleming (Laois, Fianna Fail)
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We will stick with companies. When a company is in receivership-----
Seán Fleming (Laois, Fianna Fail)
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Why not make an attachment order at that point? Why does the Department wait until everything has gone wrong and there is no money left? Why is it not more aggressive?
Seán Fleming (Laois, Fianna Fail)
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Receivership legislation trumps the legislation on recouping money under the Social Insurance Fund.
Seán Fleming (Laois, Fianna Fail)
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Ms O'Donoghue can understand our line of questioning on this issue.
Seán Fleming (Laois, Fianna Fail)
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There seems to be a large imbalance.
Ms Niamh O'Donoghue:
We have gone through a process of trying to come to an agreement with an individual on a recovery plan.
Where we are aware that he or she has assets, we will attach, but it is on the basis of the very end of a long process of engagement. We are dealing with a very different entity and a very different issue there, where we have overpaid somebody, to a legal entitlement under the redundancy and insolvency scheme and us having to operate the process that applies there.
Seán Fleming (Laois, Fianna Fail)
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Before I call in the Comptroller and Auditor General on the topic of this fund, I understand and acknowledge that in the case with which I dealt, Ms O'Donoghue has gone through the entire process. I did not even quibble. She was right, and I have no argument with the process, but she went through the process with the punter and not with the company.
We will come to the Comptroller and Auditor General, but I want to ask Ms O'Donoghue one other question on this account. If the account is not a valid one and will magically banish some of these figures, such as the €500 million owed, that is an issue we as a Committee of Public Accounts must consider.
Another question I want to ask Ms O'Donoghue - we will discuss it with the Comptroller and Auditor General in a minute - concerns a passage in page 15 of the same account. I refer to the investment account for 2015. People will find this intriguing. We will have to follow it up. Essentially, up to 2015, when funds were available in the account, they were lodged with the Central Bank. The middle sentence in the paragraph is clear when it states that all sums are now payable into the current account and that in total there were five settlement transactions in the investment account in 2015, including a payment of €35,682 in respect of the European Central Bank negative interest rate for 2014. What that says to me is that the Social Insurance Fund lodged money overnight or for a period with the Irish Central Bank and because it was paying a negative interest rate, the Department's investment fund lost €35,682 by merely lodging money with the Central Bank. It is exasperating from our point of view that State organisations lose money by placing it with another State organisation. I know Ms O'Donoghue will say, and I presume from what I have just read, that the Department has moved away from the Central Bank and is putting its money in some bank that at least will not take money off it. I know we are in a negative interest rate, but is my reading of the account correct? It is an issue for the Central Bank separately and not the Department's problem.
Seán Fleming (Laois, Fianna Fail)
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I will come to the Comptroller and Auditor General on debt recovery. He might make an observation about the Central Bank and how many other State agencies have lost money by placing money with the Central Bank. As a result of this, we will write to the Central Bank to find out what other State organisations have lost money as a result of placing money with the Central Bank because it is the first time I have seen it in the case of a State body.
Seán Fleming (Laois, Fianna Fail)
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We will write to the Central Bank.
Seán Fleming (Laois, Fianna Fail)
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Where are they?
Seán Fleming (Laois, Fianna Fail)
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Is EUROSTAT therefore quite happy not to include, in EUROSTAT figures, amounts due from companies under the insolvency and redundancy payments?
Seán Fleming (Laois, Fianna Fail)
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Are they on the Irish balance sheet?
Seán Fleming (Laois, Fianna Fail)
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Then EUROSTAT dictates the rules of the Irish balance sheet as to what is on or off balance sheet. We will not even go there with Irish Water. We will check through the CSO and EUROSTAT whether they happy not to include any amounts from companies that owe redundancy and insolvency payments on the State's balance sheet. I am intrigued to hear that. If that is the way EUROSTAT operates, it is looking after the big corporations well again. That is all I will say.
Catherine Connolly (Galway West, Independent)
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The Chairman is in danger of leaning one way.
Seán Fleming (Laois, Fianna Fail)
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No, I am providing balance. I am hitting the two sides.
Mr. Seamus McCarthy:
We had a chapter last year in the 2014 account on redundancy and insolvency debts because we had a concern that there was this very large sum which was being treated as a contingent asset and whether the debt management of it was sufficiently progressive. The Department was always aware that a lot of this money would not be collected, and on that basis we were drawing attention to the fact that it had more or less stopped having write-offs of the debt so that the figure was incrementing every year but that there were not write-offs of what was effectively unrecoverable. We therefore made recommendations last year but we have been working with the Department for a number of years to try to get a better fix on who owes the money and what action the Department was taking on its recovery.
Seán Fleming (Laois, Fianna Fail)
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On that point, Mr. McCarthy has introduced a phrase I have not heard here before, namely, "contingent assets". We hear about contingent liabilities all the time. Are there are any other contingent assets out there, to his knowledge, or is it to the CSO we inquire about-----
Seán Fleming (Laois, Fianna Fail)
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Mr. McCarthy might send a note to the committee on contingent assets because it is the first time I have encountered a contingent asset at the Committee of Public Accounts.
Mr. Seamus McCarthy:
What is important with the balance sheet is that one recognises liabilities that are likely to hit the income and expenditure in the future. Therefore, to be conservative, one provides for liabilities one thinks will happen. With assets, the conservative approach is, unless one is fairly sure of getting them, to not recognise them.
Seán Fleming (Laois, Fianna Fail)
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Regarding Vote 37, where the outstanding balance on the payments-----
Seán Fleming (Laois, Fianna Fail)
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-----or the overpayments, as Mr. McCarthy calls them, is €376 million, is that a contingent asset?
Seán Fleming (Laois, Fianna Fail)
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Is it not on the balance sheet either?
Seán Fleming (Laois, Fianna Fail)
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Is that right?
Seán Fleming (Laois, Fianna Fail)
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We will ask Mr. McCarthy to help us because I would have thought, looking at these accounts signed by Mr. McCarthy, and the appropriation accounts, that there is a figure of €376 million outstanding on one account and a figure I mentioned earlier of €477 million, that is, almost €1 billion between the two, and now we are told they do not appear on the State's asset sheet as approved by EUROSTAT. We have learned something new today.
Seán Fleming (Laois, Fianna Fail)
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I understand that but I put it to Ms O'Donoghue, because she is the Accounting Officer, that the amount of debt recovery that is there is €447 million outstanding, and would she not sell it off to Cerberus to see what we might get and let them go and collect it? I am serious. Has she not considered trying to recover some of this money by putting that debt book up for sale? I suggest to her that it must be an option because, from what is being said, anything that will be got this way will be more than what will be got if it is not done. Then let us see how it gets on. Will it be as lenient with these companies? It is out of our hands, and we might have got some money in these hard-pressed times. Could Ms O'Donoghue make an observation on that? It sounds flippant but it is probably so far outside the box that maybe we need to look at it.
Seán Fleming (Laois, Fianna Fail)
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We might have an observation which we will come back to. It is-----
Seán Fleming (Laois, Fianna Fail)
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I will conclude on this. The question we must look at here is this €800 million. Is this system the best one to do this job? Does Ms O'Donoghue know what I am getting at?
Seán Fleming (Laois, Fianna Fail)
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Please do.
Ms Niamh O'Donoghue:
-----but in terms of individual overpayments, we are recovering that debt. The amount we recover of an overpayment in a year does not necessarily refer to the debt that arose in that year because the majority of overpayments are recoverable over a period of time, so there is very little write-off of that individual debt. As far as we are concerned, if somebody has a social welfare debt, going back to the case the Chairman mentioned, that will live with people right up to time. The difficult we have in cases of company debt, where companies are going through an insolvency process, is that first of all, it takes a considerable time to do that. We are preferred creditors, as I have clarified, but it is a different process in terms of our ability to recover that debt than from an individual.
Seán Fleming (Laois, Fianna Fail)
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It requires a different approach.
Seán Fleming (Laois, Fianna Fail)
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Ms O'Donoghue might be able to answer my last question.
To what date is the Secretary General working in respect of paying out the increases in social protection payments in 2017?
Seán Fleming (Laois, Fianna Fail)
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Do we have an exclusive here this morning?
Seán Fleming (Laois, Fianna Fail)
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Across March. Okay, that is the answer I expected. I call Deputy Connolly.
Catherine Connolly (Galway West, Independent)
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The Chairman asked one of the questions I had noted down. My other question relates to the Central Bank. Regarding overpayments on the Social Insurance Fund, the Department was carrying a debt of €94 million on 1 January 2015, as set out on page 11 of the document. Is that correct?
Catherine Connolly (Galway West, Independent)
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That is for overpayments.
Catherine Connolly (Galway West, Independent)
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That is adjusted. That is broken down into fraud, claimant error, estate and departmental.
Catherine Connolly (Galway West, Independent)
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The same is done-----
Catherine Connolly (Galway West, Independent)
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Yes. The exact same breakdown is shown there The fraud there is tiny. Is it?
Catherine Connolly (Galway West, Independent)
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Yes.
Catherine Connolly (Galway West, Independent)
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Of them all, claimant error is the largest.
Catherine Connolly (Galway West, Independent)
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Yes.
Catherine Connolly (Galway West, Independent)
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The fraud there is tiny. Is it not?
Catherine Connolly (Galway West, Independent)
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If we look at the recovery of welfare overpayments, the Department is carrying a considerable amount, that of €3.46 million. Is it?
Catherine Connolly (Galway West, Independent)
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That explains that. That is broken down with fraud accounting for €39 million. Is that right?
Catherine Connolly (Galway West, Independent)
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Claimant error accounts for €30 million. There is no fraud there but departmental error accounts for €1.8 million.
Catherine Connolly (Galway West, Independent)
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Estate cases account for €16 million.
Catherine Connolly (Galway West, Independent)
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That accounts for the overpayments.
Catherine Connolly (Galway West, Independent)
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What percentage does the Department attribute to fraud?
Catherine Connolly (Galway West, Independent)
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Okay. The Department looked at three schemes in 2015.
Catherine Connolly (Galway West, Independent)
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For 2015, the Department looked at three schemes. One was the farm assist scheme, the detail of which I will not go into as Deputy Cassells dealt with that. What were the other two schemes?
Catherine Connolly (Galway West, Independent)
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All three have not been reported on-----
Catherine Connolly (Galway West, Independent)
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By the Department. I do not think the Comptroller and Auditor General's office had enough time to look at the three.
Catherine Connolly (Galway West, Independent)
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What percentage of fraud are we looking at?
Catherine Connolly (Galway West, Independent)
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Fraud of 10.4% has been reported in respect of the farm assist scheme.
Catherine Connolly (Galway West, Independent)
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With all the questions that have been raised by Deputy Cassells in relation to that.
Catherine Connolly (Galway West, Independent)
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What about the third one?
Catherine Connolly (Galway West, Independent)
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Okay. Are those findings a result of random checks?
Catherine Connolly (Galway West, Independent)
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Does the Department pick them from a computer or how does it handle that?
Catherine Connolly (Galway West, Independent)
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That feeds into the Department's policy as to how to avoid fraud or mistakes.
Catherine Connolly (Galway West, Independent)
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What has the Department learned?
Ms Niamh O'Donoghue:
As I said, on the farm assist scheme, with respect to the combination of items recommended by the Comptroller and Auditor General in regard to the application forms in terms of the categorisation of scheme activity, we have increased our liaison with the Department of Agriculture, Food and the Marine. There are various things.
Catherine Connolly (Galway West, Independent)
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Various criteria come up that the Department looks at.
Catherine Connolly (Galway West, Independent)
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In the overall scheme of things, the Department has put in a huge effort and 20 gardaí have been specially consigned to the relevant unit. They are on the streets of Galway. Fraud is a minor part of the overall budget, most people comply and when we look at the insolvency figures and the redundancy figures, the incident is much bigger but the money has not been gone after for various reasons. I am not criticising the Secretary General, I just note that from the figures.
Catherine Connolly (Galway West, Independent)
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Absolutely. The Secretary General is perfectly right. I fully support her in that regard.
Catherine Connolly (Galway West, Independent)
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I question that but today is not the day to do so. I will stick to the facts. However, I certainly question that and resources going into it. The Secretary General is not in a position to tell me what the Department saved as a result of all those resources that have been invested.
Catherine Connolly (Galway West, Independent)
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From where is the Secretary General reading? We do not have that document. From what document is the Secretary General reading?
Catherine Connolly (Galway West, Independent)
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Okay.
Catherine Connolly (Galway West, Independent)
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I do no have that document and the Secretary General might-----
Catherine Connolly (Galway West, Independent)
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Yes, that would give us an idea of the position.
Catherine Connolly (Galway West, Independent)
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Okay.
Ms Niamh O'Donoghue:
Regarding the annual savings, there are two elements. One is whether there is a change to the actual payment or a cessation of payment in which case we are looking future payments. The control savings is a calculation of the future payments which would not now be made because of the fact that we have stopped it. The other element is overpayments, which is actual cash where we have a deciding officer who has said somebody has been overpaid on the basis of the evidence provided to the extent of whatever the amount is and that is an overpayment. That is hard cash and recoverable as hard cash.
Catherine Connolly (Galway West, Independent)
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It is, but we do not have the figures of what this is costing with the deployment of 20 gardaí and everything else that is going into it.
Catherine Connolly (Galway West, Independent)
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We will have to use all the expertise relating to the people who are not paying tax under the Finance Act.
I have a specific question regarding refugees. A figure is given for the direct provision allowance expenditure. The subheading under which it appears has been changed. The total outturn was €43 million.
Seán Fleming (Laois, Fianna Fail)
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What page is that on?
Catherine Connolly (Galway West, Independent)
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It is in the briefing-----
Seán Fleming (Laois, Fianna Fail)
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Is it the briefing from our liaison officer?
Catherine Connolly (Galway West, Independent)
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Yes, on page 7. What is the direct provision allowance expenditure? I am reading a figure of €43.915 million. It is stated that it went from subhead A11. It refers to other working-age income supports. It is only a direct question as to what it is and for what it accounts.
Catherine Connolly (Galway West, Independent)
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Will the Secretary General repeat that?
Ms Niamh O'Donoghue:
This is the weekly payments to people who are in direct provision centres or direct provision arrangements. It is under the aegis of the Department of Justice and Equality. These are the payments of €19.10 per adult and €15.60 per child.
Catherine Connolly (Galway West, Independent)
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Is that total figure of almost €44 million strictly for the-----
Catherine Connolly (Galway West, Independent)
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What is that figure of €43 million?
Catherine Connolly (Galway West, Independent)
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It is not just direct provision.
Catherine Connolly (Galway West, Independent)
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With regard to that exceptional needs payment, which is very helpful for people in terms of a deposit, I understood they could not get rent in advance. However, I read in the Department's policy document that they can get rent in advance. Is that correct?
Catherine Connolly (Galway West, Independent)
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There is discretion in that regard.
Catherine Connolly (Galway West, Independent)
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In regard to the Department's remit for the water conservation grant scheme has that process ceased?
Catherine Connolly (Galway West, Independent)
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What was the total number of applications? The figure I have in that regard is 887,000.
Catherine Connolly (Galway West, Independent)
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Was the Department of Social Protection reimbursed that money?
Catherine Connolly (Galway West, Independent)
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By whom?
Catherine Connolly (Galway West, Independent)
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What was the total reimbursement?
Catherine Connolly (Galway West, Independent)
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Was all that money recouped from the former Department of the Environment, Community and Local Government?
Catherine Connolly (Galway West, Independent)
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On HAP, Ms O'Donoghue provided figures earlier in respect of the number of people who have transferred to this scheme. It is stated on page 49 of the report that up to end 2015, 18 of the 31 local authorities were operating the scheme. The target is to achieve an additional 10,000 transferred cases in 2016. Has that target been achieved?
Catherine Connolly (Galway West, Independent)
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Am I correct that there are 50,000 cases yet to be transferred over?
Catherine Connolly (Galway West, Independent)
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What is the Department's strategy in terms of the transfer process?
Catherine Connolly (Galway West, Independent)
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The important thing in this regard for the applicant is whether they end up with a local authority house or a private house under the HAP scheme. I was told by a council on Monday that applicants have no choice from now on; HAP is the only game in town. This means a person on a local authority waiting list will be either lucky and get a local authority house or unlucky and be accommodated in a private house under the HAP scheme and this will dependent on the manner in which each local authority deals with its list.
Catherine Connolly (Galway West, Independent)
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I understand that. I just want to know about the transfer process. Does the Department randomly hand over files to the local authorities or are cases selected on the basis of the length of time people have been on the waiting lists or in receipt of rent allowance?
Catherine Connolly (Galway West, Independent)
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Yes. Does that still exist?
Catherine Connolly (Galway West, Independent)
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I understand that. I am obviously not making myself clear. The point I am making is that in terms of the handing-over process a person in receipt of the payment will either end up in a private house under the HAP scheme or be lucky enough to get a local authority house.
Catherine Connolly (Galway West, Independent)
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Good. I welcome that clarification.
Catherine Connolly (Galway West, Independent)
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I understand that.
Catherine Connolly (Galway West, Independent)
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I am not questioning that. It would be helpful if Ms O'Donoghue could forward a note to the committee on how the system operates because there is confusion in this regard.
Catherine Murphy (Kildare North, Social Democrats)
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I would like to ask a couple of brief questions about JobPath. This scheme is also in operation in the UK. There was much criticism in advance of it being rolled out here. Did the Department undertake an analysis of the UK scheme? What contractual obligations have been already entered into and what has been the experience?
Ms Niamh O'Donoghue:
The UK and other countries have a long tradition of this type of scheme. The scheme we put in place is a little different from that in operation in the UK specifically because we wanted to learn from what happened elsewhere. We contracted with an advisory group to specifically give us advice on how the model for the scheme should be developed. The purpose of this scheme was to increase our capacity to provide activation services for people. The aim was to add to the case officer cadre within the Department and the network of local employment schemes, LES, and JobsPlus and so on, which continue to be in place.
JobPath is a results based payment to the companies involved, subject to adherence to minimum standards of service. There are commercial agreements in place in respect of the payments. In terms of the service, a client is referred for 12 months; guaranteed a baseline service, including a personal progression plan; and given intensive support and guidance to assist him or her in gaining sustainable employment. The client retains his or her social welfare payment while on JobPath. If there are to be any changes in social welfare entitlements those decisions are taken by Department officials rather than JobPath officials. Once a client is referred into the programme, participation is mandatory. The supports from the providers continue while the person is in work. During the period of initial attachment to work clients can participate in other education and training while in JobPath. It is in terms of these elements that our scheme differs from that of the UK.
There have been a small number of complaints from the two providers, but in the context of 60,000 referrals, which breaks down to 30,000 to each of the two providers, there were 42 complaints in relation to one of the providers and 77 complaints in respect of the other one. Some of the complaints related to the client or customer's reluctance to engage in the process and others were complaints about data protection, the attitudes of the people they are dealing with and so on. We work closely with the providers to try to address any complaint that is brought to our attention. As I said, there are minimum levels of service required as part of the contract. An independent survey of client experience is under way, the result of which are expected to be available by the end of this year. Payment penalties can be applied if the results indicate poor customer service.
Catherine Murphy (Kildare North, Social Democrats)
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How much are the contractors paid?
Catherine Murphy (Kildare North, Social Democrats)
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Will Ms O'Donoghue forward the information to the committee?
Seán Fleming (Laois, Fianna Fail)
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I would ask Ms O'Donoghue to forward whatever information she can to the committee.
Catherine Murphy (Kildare North, Social Democrats)
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In regard to mandatory participation in the scheme, what quality controls are in place in terms of the suitability of the offers made?
Catherine Murphy (Kildare North, Social Democrats)
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In regard to other activation measures, it would appear that JobPath takes prominence over Tús. Is that how the Department designed it?
Ms Niamh O'Donoghue:
There is a protocol between the two. Because JobPath is relatively new there had been some timing issues as it was rolled out, whereby people have been referred perhaps to Tús or community employment, CE, or whatever other course, and at the same time have been part of a referral into JobPath and the issue arose as to which took precedence. JobPath is about getting people into employment and that is the first priority of the Department's strategy in activation, namely, to try to move as many people into employment as we can, but there are protocols. I think the problems that arose at the beginning have diminished and there are protocols in place in relation to how to handle situations as they arise when somebody finds themselves caught between two options.
Seán Fleming (Laois, Fianna Fail)
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I thank Ms O'Donoghue. We will now conclude. Could she provide information to us on the payment plans that are in place for individuals who are in receipt of payment? Some people will have payment plans which are by way of deduction from their future payments-----
Seán Fleming (Laois, Fianna Fail)
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----- and other people might have agreed to make payments by instalment to the Department or by other means. Could she provide a comprehensive note of the amounts and numbers broken down by scheme if the information is available? The figures are shown for what has been recovered and the Department has plans in place that will bring in money next year and the following year. If Ms O'Donoghue could send us a detailed note then we would have the full picture.
Seán Fleming (Laois, Fianna Fail)
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On behalf of the Committee of Public Accounts I thank all the witnesses from the Department of Social Protection and the Department of Public Expenditure and Reform, even though they got off lightly today, for participating in today's meeting. I also thank the Comptroller and Auditor General and his staff.
Could we agree to dispose of the 2015 Appropriation Accounts, Vote 37, and the 2015 Comptroller and Auditor General's report, Chapter 9 and Chapter 10? Agreed. I am not of a mind to dispose of the Social Insurance Fund under any circumstances. We are keeping that under review in light of this contingent asset that is somewhere out there. I do not know where it is yet.