Joan Burton (Dublin West, Labour) | Oireachtas source

I thank all the Deputies, including Deputy Terence Flanagan, for their contributions and constructive approach to this debate and I will try to cover as many of the key issues as possible in the time available.

I listened closely to the debate around the concerns of Deputies about the position of An Post and social welfare payments. I categorically refute the argument that the proposals before the Dáil will in some way diminish the position of An Post in society. On the contrary, these proposals will strengthen the position of An Post in the delivery of cash payment services for my Department. This is particularly important in rural areas, but it is also important in many suburbs and towns. The measure in the Bill provides added and necessary protections, both to me, as Minister, and to An Post, in relation to the contract now in place.

The awarding of an open-ended contract to An Post to provide cash payment services for the Department is incompatible with EU competition law. The European Commission had made it quite clear to us that we could not extend our contractual arrangement with An Post.

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My Department must comply with EU procurement law or otherwise face fines and-or penalties. That is why the Department went to the market to procure cash payment services. This requirement for competitive procurement and formal contracting provided all potential market providers with the opportunity to compete for the business, and the services are procured and delivered to give best value for money to the taxpayer.

I am glad to say that An Post was the successful bidder and won the tender to provide cash payment services for my Department. The contract has been awarded for two years commencing on 2 January 2014 with the potential to extend the contract annually for up to four years thereafter – an accumulated period of up to six years in total. This contract gives certainty to An Post in the delivery of cash services, enabling An Post to build on its payment services provision for potential future contracts. No other arm of Government has given any such certainty to An Post.

I have to emphasise that the absence of a formal procurement competition would have left the Department and the country exposed again to the potential for another legal challenge, as happened previously. The ruling from the European Court of Justice, in 2007, made it clear that any further contract without a formal and public competition would put us in breach of EU directives. The current legislation was not updated after that ruling. Not updating it left an exposure in the Statute Book, which left my Department open to some future challenge from third parties who might feel aggrieved about existing legal provisions and may wish to argue that it reflects a denial of opportunity for them to compete on a level playing field.

I am sure Deputies will appreciate that across our economy more and more financial transactions are carried out by electronic fund transfers, rather than through cash payments. Customers of my Department are no different and are increasingly seeking to elect to receive their payments from my Department via electronic fund transfer to their bank accounts. This is a reality that we cannot ignore.

The position of An Post as a provider of cash payments is set out in regulations. It is also a definite option for a significant number of people. Some people go for EFT, while others opt for cash. As Minister, I have been committed to seeing An Post being involved in making the personal cash service available. Amendments to these regulations in respect of payment service providers will continue to reflect the position of An Post as a provider of cash payments. In addition, given that people have to turn up to receive certain social welfare payments, An Post provides a significantly important service in the control of fraud detection.

What has not been mentioned in the debate thus far is that the legislative amendments provide An Post with the power to withhold a payment to a customer who has not authenticated his or her identity to the standard required. These authentication requirements are agreed between the Department and An Post, understood by the client, and are applied on each and every occasion a client presents for a cash payment.

The proposed legislative amendment also strengthens the capacity for an exchange of information between the Minister and An Post concerning payment transactions. Examples of these new arrangements being put in place include information on the documentation provided by the client to authenticate him or herself before payment, or the provision of a copy of a signed receipt by a client in order to verify receipt of that payment. This information is invaluable where a case is being prepared for prosecution.

Furthermore, provision is being made to enable An Post to confiscate the public services card or social services card presented, and surrender it to the Minister in instances of fraud where the cards are being used unlawfully. In this way, the role of An Post as a partner in combatting welfare fraud is secured and our control regime is made more robust and resilient. Many of the opposition Deputies who raised this matter during the debate are not present in the Chamber now. I hope, however, they will get a chance to read my remarks. If so, they will see that this is a key area of our relationship in terms of the critical services provided by An Post.

The Department is already a significant customer of An Post's services both in terms of mail delivery and through the contract for the delivery of welfare payments in cash. This is reflected in the scale and volume of business during 2013 with 14 million mail items to a value of over €11.5 million and some 43.7 million over-the-counter cash payment transactions with a value of over €57 million. Additional business is generated by way of secondary selling and additional services such as household budgeting services, and more recently the deduction of rents when customers are in the post offices transacting welfare business.

The Minister for Communications, Energy and Natural Resources is currently undertaking an examination of the scope for new businesses which An Post is well placed to deliver to ensure their continued viability in the towns and villages throughout Ireland. My officials are engaging with officials from the Department of Communications, Energy and Natural Resources to contribute to that review.

The prevention of fraud and abuse of the social welfare system is an integral part of the day-to-day work of the Department of Social Protection. As Deputies will know, it is one of the largest spending Departments in the State with a budget of some €20.3 billion in 2013. The Department processes in excess of 2 million applications each year and makes payments to some 1.4 million people every week.

Given the scale of its expenditure, a key priority for the Department is to ensure that resources are targeted at the people who need them most. As it currently stands, where fraud or error is discovered and when there is sufficient evidence available, an overpayment is raised. This is only right and proper. This approach creates a climate where people who are being overpaid know that they have a responsibility to repay the monies concerned and that the Department will take appropriate steps to effect recovery of the monies involved.

Effective debt recovery is an integral part of the deterrent to fraudulent claiming. All debts owing to the Department, as a result of benefits received in excess of entitlement, are repayable in full. The Department does not apply interest or penalties on the amounts owing, unlike other Government agencies. All overpayments, regardless of the cause, must be repaid. It should be noted that almost 50% of the value of the overpayments raised in 2013 were as a result of fraud and less than 5% were as a result of departmental error.

The overall objective of the Department’s debt recovery policy is to maximise the recovery of overpayments to protect public money at a time of scarce resources. The Social Welfare Act 2012 introduced a provision allowing the Department to make a recovery from an individual’s social welfare payment of up to 15% of their personal weekly rate. That means that if there are other payments into the household, regarding a dependent spouse or children, for example, including child benefit, those payments are not affected in any way. It is only the personal rate that is affected, so if a person is on €188 per week, it is 15% of that. The legislation enacted preserves a minimum entitlement of 85% of a beneficiary’s personal payment in all cases of overpayment, leaving increases for dependants and rent supplements completely intact.

In addition to the legislation regarding deductions from social welfare payments, I also introduced measures in the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013 to allow for the recovery of social welfare overpayments by way of notice of attachment to earnings and-or money held by an overpaid person in a financial institution. The measures were designed to improve the Department’s ability to recover overpayments from persons with disposable assets or earned income, and who generally are no longer dependent on social welfare payments.

In all cases of overpayment the debt holder is given the opportunity to engage with the Department with regard to their particular circumstances.

In general, the recovery amount proposed would be the maximum repayment the person can afford in order to pay back the overpayment as quickly as possible. The new provision in the Bill will allow for the existing powers of recovery by way of a notice of attachment to be extended to other State payments. This will allow the Department to consider recovering social welfare debts from amounts due to be paid to its debtors from State funds. Given that State payments are ultimately financed by the taxpayer, it does not make sense that the taxpayer would give money to a person who has an outstanding overpayment without seeking the repayment of the debt. As is already the case with my Department’s current powers of attachment, the thrust of this provision is not aimed at persons who make a genuine attempt to discharge an overpayment due to the Department, but specifically at those who fail on a continuing basis to fulfil their obligations to repay what is legally due to the State.

As I said at the outset, total social welfare expenditure in 2014 will account for some 40% of gross current Government expenditure. Protecting the integrity of this expenditure must be a top priority of this Government, and key to this is tackling fraud and abuse within the social welfare system. I gave the Deputies the recovery figures for last year, €73 million, and pointed out that this is almost as much as the annual cost of the much-valued free travel for our pensioners, which costs approximately €77 million.

The Department has not received any applications for redundancy payments or insolvency payments in respect of the employees of the Paris Bakery. I have made arrangements that employees of the business can contact the community welfare service to assist them with their immediate needs and every assistance is being given to those who have approached the Department. There are cases in which companies have ceased trading without engaging in a formal winding-up process, and in some such cases those employers owe money to their employees. Such employees are not eligible for payments under the insolvency payments scheme. My Department is reviewing the position to establish what, if anything, can be done to progress payments to individuals in these situations.

As Minister for Social Protection, I am in favour of ensuring the comprehensiveness of our social insurance system. Following the extension of social insurance to part-time and self-employed workers, spouses of self-employed workers constitute one of the few categories of worker not covered by social insurance. This measure will give those who work alongside their spouses or civil partners in a self-employed capacity the right to access social insurance. Up to now, only one of the couple could be insured as a self-employed worker for social insurance benefits. The spouses and civil partners who will now have to access social insurance will be required to make a return and pay PRSI where their annual income exceeds €5,000, similarly to other self-employed workers. This will give them an entitlement in their own right to maternity benefit and widow's, widower's or surviving civil partner’s contributory pension as well as the State contributory pension.

Exact numbers of those affected by the current exclusion are difficult to estimate, as this group is outside the social insurance system. Census 2011 data suggest the current exclusion from social insurance affects fewer than 6,000 spouses or civil partners who assist in family businesses. The 2011 data indicate that there are 5,872 “assisting relatives”, of whom 3,315 are female and 2,557 are male. Some of these assisting relatives could be family members other than spouses or civil partners. This provision will extend the possibility to spouses of self-employed people such as farmers to enter the social insurance system and be fully insured. I thank all the Deputies who welcomed this progressive measure for spouses of the self-employed.

I am glad so many Deputies have welcomed the changes in the provisions relating to family income supplement. Deputy O’Dea raised the issue of the requirement for a certain number of hours to be worked to qualify for payment of this supplement. The full-time employment condition has been a fundamental part of the FIS payment since its introduction in 1984, although the number of hours worked in order to satisfy this condition has been reduced considerably. When the scheme was established, a minimum of 30 hours of work per week was required to qualify. This was subsequently reduced to 24 hours in 1986, 20 hours in 1989 and 38 a fortnight or 19 hours a week in 1996. Further reducing the hours worked requirement would have expenditure implications and could be decided on only in a budgetary context.

It is also important that FIS does not inadvertently subsidise unsustainably low earnings or encourage employers to offer minimal hours of employment. Some Deputies outlined a scenario of zero-hour contracts in which employment in some cases would have amounted to one or two hours per day, with social welfare paying for the rest of the time. Some of the Deputies must think through their proposals on this. FIS provides an important support in reducing poverty in working households. FIS also provides an incentive to remain in employment in circumstances in which the employee might be only marginally better off than if he or she were unemployed and claiming social welfare. This year we will spend €280 million on FIS, a very considerable increase in expenditure. FIS benefits 44,000 families and 98,000 children, which is a very significant assistance to families in work on low incomes. It is important that we support such families.

Deputy Ó Snodaigh asked why the Bill needs to be enacted before the summer recess. The main reason is the need to comply with the 5 August 2014 deadline for the transposition of Articles 7 and 8 of EU Directive 2010/41/EU, which gives the right to spouses of the self-employed to participate in the social insurance system. While the transposition of the main provisions of this directive was required by 5 August 2012, Ireland availed of a two-year derogation on the transposition of Articles 7 and 8 of the directive. Article 7 requires that member states take the necessary measures to ensure spouses and civil partners of self-employed workers who participate in the business of the self-employed worker have access to social protection. Article 8 requires that member states take the necessary measures to ensure that female self-employed workers, spouses and civil partners be granted sufficient maternity allowance cover during periods of interruption of their occupational activity due to pregnancy or motherhood.

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