Mr. Andy Harkness:

Expenditure in 2016 on social welfare and labour activation schemes totalled €19.2 billion. Some 56% of that expenditure was charged to Vote 37 Social Protection. The remaining 44% was charged to the Social Insurance Fund, which is funded through social insurance contributions. The Comptroller and Auditor General gave a clear audit opinion on the accounts of both the Vote and the Social Insurance Fund for 2016, but drew attention to the issues reported on in the chapters before the committee this morning. These are interrelated matters, on which he has previously reported.

Chapter 16 deals with the regularity of social welfare payments. Irregular payments may arise where welfare recipients are paid amounts to which they are not entitled, or which exceed their entitlements. This may be as a result of deliberate fraud by claimants, or as a result of errors made by claimants or by staff of the Department. The results of fraud and error surveys of welfare schemes carried out by the Department over many years suggest that there is an underlying material level of payment in excess of entitlements in 2016 on both Vote and the Social Insurance Fund schemes.

Chapter 18 deals with Department reviews of welfare schemes. In addition to its fraud and error surveys, the Department carries out targeted reviews of claims in payment, referred to as "control reviews". These aim to ensure that current recipients of scheme payments continue to meet the relevant qualifying conditions. The need for control reviews is greater where schemes are means or income-based, and for medically-based schemes, as these are respectively more susceptible to fraud and error or non-conformity with eligibility criteria. Chapter 18 looks at the Department’s performance in implementing its planned control reviews.

Overall, the Department set a target to carry out one million control reviews in 2016. As figure 18.1 in the report indicates, it achieved almost 95% of this target. The examination noted that medical control reviews of medically-based claims are not being carried out as planned. When a claim is approved for payment, a medical review status should be assigned to it, indicating whether and when the claim should be reviewed in the future. Data relating to over 55,000 invalidity pension cases in payment at the end of December 2016 showed that over 4,000 claims, or 8% of the claim load, had no medical review status indicator assigned. Even when a review status had been assigned, it was evident that cases were not reviewed within the planned time. For example, over 4,000 cases had not been reviewed for three to five years despite having a review indicator of two years or less assigned to the claim. The report recommends an increase in the number of cases in payment being medically reviewed each year, and that a process be implemented to ensure all cases are risk categorised by having a medical review status indicator assigned including "do not refer again" where appropriate.

With regard to the family income supplement scheme, the report found that more than 10,000 claims had been automatically renewed by the Department in 2014-15, due to resourcing constraints, without being subject to the usual checking procedures. This created a risk that some claimants may have received payments to which they were no longer entitled. The report recommends that where normal controls are bypassed and claims are automatically renewed, additional steps be taken to reduce the risk of excess payments occurring.

There were more than 34,500 beneficiaries of the domiciliary care allowance scheme at the end of 2016. The report notes that no review of scheme claims had taken place since 2012. It also notes that although a 2013 working group recommended an appropriate control policy and procedures be developed for the schemes, this had not occurred.

On management of social welfare overpayments, where excess payments are identified through control activity, the Department stops or reduces the payment and may, depending on the circumstances of the case, record an overpayment debt for recovery. Chapter 17 examines the trends in recorded overpayments, as well as the level of legal action related to debt recovery.

The examination found that the introduction of a new debt recording and accounting system in 2014 has provided the Department with better information about overpayment debt, resulting in improved debt management.

Overpayment debt outstanding at the end of 2016 amounted to €482 million. New overpayments of €110 million were recorded during the year, and debts previously recorded totalling €11.5 million were cancelled.

The age of debts has a bearing on the likelihood of recovery. Overpayment recovery in the first year after identification is about 30%, and increases to between 50% and 60% after three to four years. At the end of 2016, almost half of the outstanding debt was over five years old, while almost a quarter was over ten years old.

The amounts due for recovery vary very significantly. Some 36,000 debts were less than €100 each. These were either small debts recorded in the first instance, or the residue of debts the bulk of which have been recovered. At the other end of the scale, over 1,100 debts each in excess of €50,000 accounted for a total of €90 million due. Those large cases are being managed by the Department's central debt unit. I understand that, as a result of additional resources being assigned, debts of €30,000 or more will in future be managed by the unit.

Whether an overpayments debtor remains in receipt of a welfare payment also has a bearing on the recoverability of a debt. About one third of debtors were in receipt of a welfare payment at the end of 2016. Half of these were actively repaying their debt in instalments, through deductions from their current welfare entitlements. The remaining two thirds of debtors were no longer in receipt of a welfare payment and just 8% of these were actively repaying their debt.