Dáil debates

Friday, 18 January 2013

Social Welfare (Amnesty) Bill 2012: Second Stage [Private Members]

 

10:30 am

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I move: "That the Bill be now read a Second Time."


Ar dtús báire, ba mhaith liom buíochas a ghabháil leo siúd a thug cabhair dom an Bille seo a chur le chéile agus a thabhairt chun cinn. Ba mhaith liom freisin buíochas a ghabháil leo siúd a thug comhairle dom maidir leis an tairiscint difiriúil agus an samhlaíocht atá taobh thiar de.

An fáth gur thosnaigh muid ag plé maithiúnais ná amnesty ná chun déileáil leis an sáinn ina bhfuil siúd ata gafa sa chóras leasa shóisialaigh a shíleann - nó a bhfuil a fhios acu - go bhfuil an iomarca á fháil acu, no a fuair iomarca i dtréimhse atá thart, ach atá eagla orthu sin a admháil toisc nach mbeadh sé ar a gcumas an t-airgead a aisíoc, in aineoinn nach orthu atá an locht go minic. Sin an fáth go bhfuil muid ag iarraidh déileáil le seo agus sin an comhthéacs don Bhille seo.


What I am putting forward today is a simple, innovative and practical proposal to deal with a situation in which many people on social welfare find themselves. A social welfare amnesty would allow those in receipt of social welfare overpayments, often through no fault of their own, to come forward without fear of penalties, prosecution or demands for repayment, regularise their payments and have a line drawn in the sand under past irregularities.


We are living in distressing times and everyone has been focused on the economy and the cost of everything in recent years. Irish people are probably the most knowledgeable people in the world in respect of how the economy works or falters. Due to the scale of the collapse and the significant burden of having to shoulder repayments of debt that is not theirs, and because the approach of this Government and previous Governments is failing and increasing the burden on ordinary people, people are, as the saying goes, looking outside the box. They are being imaginative, and I have been lobbied, as have other Deputies, by many citizens with interesting proposals on how to extract themselves and this State from the crisis we are in, how to share the burden more fairly or how to land it where the fault lies most - namely, on the gamblers, speculators and financial institutions.


My party and I have been challenged by this Government and the previous one to come up with alternatives and back up the proposals we have made. We have published these annually as alternative budgets, only to have them rejected without proper analysis by blinkered Government ministers and often by their backbenchers. I urge Government Deputies, particularly Labour Party Deputies, even at this late stage, to pause and take time to read the Sinn Féin submissions, or, if they are afraid they may be contaminated by them, to read the TASC and Social Justice Ireland reports or submissions by the trade union movement. There are alternatives, with logic behind them, to austerity and the course that was taken by Fianna Fáil and has now been adopted with gusto by this Government. There is always an alternative, which is sometimes unpalatable, riskier or more complex. The common thread in all the submissions I mentioned is that they seek protect the vulnerable in the first instance and go after the wealth that is being held by a few in our country.


It is in that context that I set about my social welfare amnesty proposal. Rather than just proposing a small saving to the Exchequer and letting it lie there, I decided that I would put meat on the bones of an idea that came about in discussions with the Minister and Department officials in the Oireachtas Joint Committee on Education and Social Protection about control savings, fraud, overpayments and underpayments. It is acknowledged that many people are caught in a bind. We are acutely aware that most social welfare payments are inadequate to meet the needs of dependants, but that is the level they are at. Many social welfare-dependent households are well below the poverty line and are struggling to pay the bills or put food on the table. If they receive an overpayment of €5 or €10 per week through human error, be it their own or that of the Department, it makes a significant difference to their lives.


We regularly see media headlines screaming about dole fraud and cheats and a figure of €500 million or €600 million is bandied about although the real figure is much less. The actual figure recovered last year will be in the region of €30 million. In the past, it has been between €20 million and €24 million or €25 million. The hugely inflated figure of €500 million or €600 million is a control saving, which is an estimate of what the Department would have spent over time if the overpayment had not been identified and corrected. It is an accounting mechanism with its own reasoning but it is not good enough to bandy it about in the way that has been done. As I have stated in the explanatory memorandum that accompanies the Bill today, the level of fraud and error in the State's social welfare system is estimated to account for an average of 3.4% of the total spend on social protection and, of this, fraud accounts for a shrinking minority of less than one third.


There is no denying that there are a number of people receiving more than they are entitled to, but they are afraid to put up their hands and alert the Department because they simply cannot afford to pay it back. They are caught in a bind because if they come forward, they will end up with less money weekly and their children will suffer. One might say this is taxpayers' money that does not belong to them and, technically, one would be correct, but I will cite a recent example to show how this State has one yardstick for the poor and another for the rich. A report in the Irish Examiner on New Year's Eve said it all for me and showed that while the State will attempt to recoup every last cent from a pensioner or single mother who makes an error and receives an additional €10 per week for a year, no attempt will be made to recover the €160,000 that was overpaid in error to the HSE director designate, Tony O'Brien, since 2006 through no fault of his own. There is no slight on him. It was a clerical error but no attempt will be made to recover that money.

There is one rule for one group and another for the others. This has happened even though the Department of Health asked the HSE to take corrective steps.

Any of us in this Chamber could list several of the cases in which we were approached by people in distress because they or the Department noticed an overpayment. These individuals are struggling to deal with the regularisation of those payments. One case which came across my desk while I was preparing this legislation last September involved a person moving from a disability payment to the partial capacity payment. The women in question spotted an error and reported it but it fell to her to pay it back. It was a stressful period in her life because her brother had just died and she was facing a major operation. She was honest enough to point out that the Department made a mistake but she suffered the consequences for doing so.

When the media run their banner headlines, often fed by Ministers, about €600 million in social welfare fraud they forget to acknowledge that most of it is due to clerical or, sometimes, applicant error. They forget to say that the reason for such a high level of error is the complexity of the various social welfare schemes, the means tests employed and the complexity of some of the forms that need to be completed. Upwards of 20% of the Irish population have poor literacy skills. If further proof was needed of levels of error and complexity one needs only look at the success rate of social welfare appeals, the reports of the Comptroller and Auditor General or the Department's fraud and error survey. A random sample of 1,000 jobseeker's allowance cases which were reviewed in September 2010 revealed that 16% of claims were either over or under paid and these payments were adjusted or terminated accordingly. The explanations for the adjustment and terminations were as follows - 3% due to suspected fraud; 8% due to claimant error; and 4.4% due to departmental error.

If the error is not detected early enough, the overpayments mount up very rapidly. An additional €10 per week for two years amounts to more than €1,000, which the Department then demands to be repaid. Somebody who is in receipt of the full rate of social welfare payment does not have an alternative source of income and the repayments must come from his or her weekly stipend from the State. Anybody who tries to eke out a living on the social welfare payment will understand how daunting it can be to be asked to come up with €1,000. I urge the Minister to take on board the constructive proposals we have made and, if need be, allow the Bill to go to Committee Stage so that we can tease out its details in order to take an innovative and one-off approach to social welfare errors.

10:40 am

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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Gabhaim buíochas leis an Teachta Ó Snodaigh as ucht an Bille seo a thabhairt isteach. I commend my colleague and friend, Deputy Ó Snodaigh and his staff on bringing forward this Bill. He has long been an advocate for a fair and adequate social welfare system and this Bill is evidence of his knowledge of the subject and his dedication to producing solutions as an alternative to attacking welfare recipients. The Bill aims to correct problems with overpayments of social welfare. However, when we speak about overpayment we must be clear that we do not imply that people are currently receiving large sums of money which allow them to live lavishly because of a mistake in processing or elsewhere. The overpayments we speak of are simply situations where people are receiving more than the law states they are entitled to at the present time.

Social welfare provision in this State is inadequate and inefficient because it is not founded on the idea that people are entitled to a living wage which allows them to live in comfort. The purpose of the social welfare system is simply to allow people to survive until they can find a job. It is true that some people on social welfare have never worked but these are a small percentage of the nearly 500,000 people who are unemployed and live on meagre amounts despite what the vitriolic bile of the right wing press might claim. If we were to provide a minimum living wage for all we would be able ensure a decent living standard for our people and cut out many of the inefficient and costly structures and schemes that currently exist.

There is no reasonable way the Government can oppose this Bill. We might wrangle over some of the details but the idea is sound and it deserves measured and constructive debate. Social welfare forms can be complicated. The people who fill them out and process them can make mistakes. It is estimated that 3.4% of expenditure on social welfare is lost to fraud or error, with error being more common. Mistakes are made and people are technically overpaid. We are regularly told of the high cost of our social welfare system and about the large budget the Department commands, which underlines the importance of examining areas in which savings can be made without cutting people's existing entitlements and rights. This one-off opportunity for people to declare their overpayments, wipe the slate and have them corrected is surely something on which we can agree. We have offered amnesties to many different types of people. Certainly we have had amnesties for those who earned vast sums and knowingly failed to properly declare their taxes. We should afford the same opportunity to those who are struggling to survive and might be suffering sleepless nights worrying about overpayments they are afraid to declare for fear of being asked to pay back money they do not have.

The most recent report by the Irish League of Credit Unions revealed that over half of the people it surveyed had less than €100 after essential bills at the end of the month and that 1.6 million had €50 or less. This gives us a clear understanding of how people are struggling. Many of these people are working but we can be sure that social welfare recipients are not leading the table of disposable income. They get a small sum which they spend locally on essentials. It is a considerable burden for anyone in this difficult situation to have to worry about a debt they accidentally accrued, never mind requiring them to repay the money if they are found out. We have seen cuts to carers, single parents, the elderly and all the other social welfare recipients in this State. People are struggling to keep their heads above water, feed and clothe their children and keep their homes warm. We must explore every avenue before we impose further cuts on the most vulnerable in our society. This Social Welfare (Amnesty) Bill 2012 is a fair, level headed and realistic approach to dealing with an issue which is costing the State money. I urge Members to support the Bill.

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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I welcome the initiative which enables Members to introduce Private Members' Bills. It is certainly a major improvement, although I question why the Government continues to operate the new system so timidly. The Order Paper sets out dozens of Bills dealing with important issues which will never see the light of day. It is like somebody who issues an open invitation to a party only to slam the door after the first ten people have arrived. I have several Bills on the Order Paper dealing with issues that are no less important than the business before us today but chances are that they will never see the light of the day. I have to depend on a lucky dip for them to be selected. Perhaps I would have a better chance if I tabled more Bills, on the basis that the more lottery tickets one buys, the better one's chance of success. I urge the Government to build on this initiative.

In regard to the Social Welfare (Amnesty) Bill 2012, a myth has been perpetuated to the effect that social welfare fraud is widespread. However, like other myths which are accepted as established fact by sections of the commentariat and the public, this is a patent untruth. If one compares the totality of what the Department of Social Protection overspends in any one year to that spent by social welfare departments in other countries, it is roughly in line. I examined the figures last night and I suspect that if one constructed a league table of OECD countries we would probably be at the lower end of it. As Deputy Ó Snodaigh noted, the figure that is generally bandied about is a notional or control figure. It is an estimate. Of the actual overpayments taken back by the Department, only 30% are due to fraud. In fact the proportion of overpayments due to fraud continues to decrease significantly.

For example, in the four year period 2007 to 2010 total overpayments due to fraud have reduced from 42.4% to 31% on average. This is a significant reduction and the trend continues, not least because of developments in technology which make fraud easier to detect. With regard to the figures for 2010, overpayments amounting to €83.4 million were made, of which only €26 million involved suspected fraud. This represented only 1.2% of the total social welfare payout in 2010.

There are two situations where an overpayment can occur. First, an overpayment may be innocent. This happens in 70% of cases, where either the client or usually the Department makes an error. Sometimes the client makes a genuine mistake in filling in the forms, while the Department lacks some information that results in the client being paid less.

I am extremely perturbed by section 13 of the Social Welfare Bill which we did not get a chance to debate because the time was used to "talk out" earlier sections to save the blushes of certain Government backbenchers who did not want to continue to vote against some of the amendments we had submitted. However, there is a section in the Bill which allows and envisages a deduction of up to 15% on a weekly basis from a person's income where an overpayment has been made. That is grossly unfair where the overpayment has been made as a result of a genuine error. Take, for example, a single person in receipt of €188 a week. A deduction of 15% would amount to approximately €27 a week. In a case involving a genuine error for which a married person claiming for his wife had no responsibility the Department is empowered to deduct €47 or €48 per week. This is occurring at a time when the Irish League of Credit Unions informs us that some 1.6 million people, including social welfare recipients, have approximately €50 in disposable income per month. I suggest social welfare recipients would not even have that much left after all their bills have been paid.

The Minister pointed out repeatedly in the debate on the Social Welfare Bill that she did not want to see people who deliberately scammed the system only having to pay back the money at the rate of €2 per week. That is fine, but that section of the Bill is not confined to those persons who deliberately scam the system. A person who was overpaid as a result of a genuine error - perhaps the error of an official in the Department - could have to pay up to 15% of his or her meagre income per week. That is wrong and grossly unfair and the matter should be revisited. I deplore the fact that we did not get a chance to debate this section properly during the debate on the Bill.

Other jurisdictions have adopted various methods to combat social welfare fraud. Some have found that the simpler the social welfare system is the easier it is to avoid overpayments or to detect fraud. In addition, other jurisdictions have resorted to increasing publicity. Almost every jurisdiction of which I am aware has a policy in place to prosecute and name and shame people found to be deliberately defrauding the system. The key factor in this regard is developments in technology. This puts social welfare Departments all over the world in a better position than hitherto to combat fraud and prevent overpayments. In Australia, for example, the data matching system is supported by a national database of customer records. A similar system was proposed in France, but I do not know if it has come into operation yet. Most countries are now in a position to focus on primary prevention measures, namely, the prevention of fraud in the first instance. New developments in ICT include the development of data matching processes in real time and neutral networking analysis. However, the most recent report of the Comptroller and Auditor General argues that the control activities of the Department of Social Protection have not been fully utilised to date. It also states the data matching process could be more timely. I urge the Minister to give serious consideration to this issue.

As I said, overpayments fall into two categories. International practice is to prosecute fraud cases rigidly on the basis that letting people off the hook tends to undermine the integrity of the system. In the United Kingdom, for example, efforts to recover debts and prosecute offenders have been stepped up significantly and a one, two and three-strike policy has been introduced. In other words, the more often one is caught, the longer one will be excluded from the social welfare system. A similar approach applies in France, the United States, Australia and elsewhere. Canada, for example, has developed a system of integrity information sessions for high risk clients.

Looking at the figures for 2010, if deliberate fraud accounts for such a small proportion of the total social welfare spend and if the methods of eradicating and combating fraud continue to increase, I must ask whether an amnesty is really justified at this time. I accept the points made about the tax amnesty, although it is well known that I was not a great advocate of it and argued against it at the time. However, there are significant differences between it and the amnesty being proposed in the Bill which I have no doubt is being proposed in good faith at a time when the public finances are in considerable need of reinforcement. In the case of the tax amnesty, however, a settlement had to be made immediately. I admit that people who deliberately evade taxes are on the same moral plane as those who deliberately scam the social welfare system, but the tax amnesty resulted in a considerable boost for the Exchequer because there was an immediate settlement and those involved were brought into the Revenue system at the proper rates. Therefore, there was a significant gain to the Exchequer. By their nature, amnesties are always difficult. They tend to reward cheats at the expense of those who do not involve themselves in cheating, fraud or blackguarding the system. In defence of the tax amnesty, however, it can be said it resulted in an immediate huge boon for the Exchequer at a time when it was badly needed.

It is claimed that if we introduce a social welfare amnesty along the lines suggested, it will result in an immediate benefit of €55 million or so for the Exchequer. As a member of the Opposition, I have a natural tendency to support Opposition Bills, but I would like to see more evidence of how this amount will be achieved.

It seems from the notes that accompany the Bill that it is based on two assumptions; first, that 10,000 people who have been involved in deliberate fraud will come forward - obviously those who do not know they are involved in fraud cannot come forward - and second, that they would have been able to continue to scam the system for the immediate future to the tune of another €7,500 or so if they had not come forward. I have to say with respect that I think both assumptions - that 10,000 people will come forward and that they would have been able to get away with an average of €7,500 over a certain period of time - are pretty questionable.

My primary problem with the Bill is that its definition of those who are going to be protected is very widely drawn. As long as the State can afford it, I have no problem with letting those who have been over-paid as a result of errors off the hook. I certainly think they should be treated much more generously than facing the prospect of having 15% of their weekly wage deducted in order to pay off the over-payment. However, it seems perverse to say there will be no prosecutions, no penalties and no monetary recompense to the State in the case of somebody who has deliberately set out to defraud the social welfare system. There are people in this country who have done that in the past. Some of them have been convicted. I find it difficult to support the proposition that the State will not be entitled to recover one penny of the over-payment in the case of deliberate fraud.

I compliment Deputy Ó Snodaigh on his initiative in bringing forward this Bill. When the Minister speaks, I do not want to hear anything from her about drafting errors etc. I think the Bill is pretty well drafted, by and large. We are all prone to drafting errors. When Deputies go to the trouble of preparing legislation without the support of the machinery of the State - I know how difficult it is because I have done it myself - I have a natural tendency and inclination to support them. I remain to be persuaded in this case, however, because the legislation encompasses the idea of deliberate fraudsters being left entirely off the hook and because it will not lead to any immediate financial benefit to the Exchequer, as far as I can see.

11:00 am

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I would like to share time with Deputy Boyd Barrett.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Is that agreed? Agreed.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I want to support this Bill because I think it represents a step forward. It is necessary as we try to deal with this issue. I do not need to repeat all of the points that have been made. I suggest that the Department of Social Protection is particularly responsible for perpetuating the dangerous myth that loads of people are defrauding the system. Those who receive social welfare payment for genuine reasons are being tarred with the same brush as those who are involved in the fraud bracket or system. The real figures have been pointed out already in this debate. They are not significantly in excess of the international norms that are generally encountered. The real figure is much smaller than the €640 million we often hear people talking about. Many of the over-payments that are made result from genuine errors and mistakes on the part of the social welfare recipient or the Department.

Many people who are aware that they are receiving too much money are afraid of the bureaucracy they will encounter if they go into one of the Department's offices and the criminal outcomes that could result from the bureaucratic process. They fear that their incomes, which are already very low, will be cut. This legislation will give such people an opportunity to come forward, make it known that they believe they are being overpaid and allow the Department to investigate the matter. Deputy Ó Snodaigh made the point that the proposed one-off amnesty would last a month and would be succeeded by a two-month intensification of the Department's existing anti-fraud and control activities. I think many people who have genuine fears about going to the Department to declare that they may be receiving the wrong social welfare payment - I emphasise that they comprise a small minority of all social welfare recipients - would come forward in such circumstances.

I would like to mention the case of a man in my constituency, who contacted me to tell me what happened after someone made a complaint to the Department to the effect that he was defrauding the system. An inspector knocked on the door of his house and asked loads of questions. It turned out that he was not defrauding the system. We do not know the person who made the complaint. Perhaps he or she had something against my constituent. A great deal of time was wasted when the inspector had to call to the man's house. I suggest that those who make complaints about suspected fraud should have to provide their personal public service numbers and identify themselves.

It is not unusual for this State to consider the provision of a tax amnesty. It has already been mentioned that amnesties tend to be offered to the very wealthy. I remind the House that five tax amnesties were provided to tax defaulters over a six-year period between 1988 and 1993. At the time, it prompted a cartoonist to label Ireland as "amnesty international". As recently as 2009, another tax amnesty was given to the well-heeled. I refer to the stamp duty incentive scheme that was introduced in the Finance Act 2008. A 56-day waiver period was provided, along with amnesties on penalties and on up to 30% of the amount payable. I understand the amnesty related to stamp duty not paid in respect of land and property deals at any time in the previous ten years. The Revenue offices stayed open until midnight on the last day of the amnesty because of the amount of people who were coming forward. While the number of social welfare recipients who would avail of the proposed amnesty in this instance might not be as great, many people are concerned that they might be on the wrong payment and afraid that they might have to face the machinery of the Department on their own.

If Deputies are concerned about aspects of this legislation, which I think is progressive, they should table amendments to be debated on Committee Stage. I contend that the main substance of the Bill is robust and should be taken on board. The Minister should give serious consideration to it. If there is a good response to and take-up of the amnesty, it would reduce the amount of work that has to be done by departmental officials who receive telephone calls asking them to go to investigate prospective cases of fraud. That, in turn, would allow more time to be devoted to the provision of front-line services to those who turn up in departmental offices to get advice on their social welfare needs and entitlements in areas like domiciliary care.

I support this Bill. I hope the Minister will be positive about taking it on board. It will serve the Department well in the long term as it tries to do its everyday work. I reiterate that the emphasis on fraud tends to portray genuine people who need various State supports to keep them alive and keep food on their tables - they may have lost their jobs or started to need domiciliary care - in a negative way. We need to ensure they are not tarred with the same brush as those who are defrauding the State. This Bill will deal with many aspects of the issue. It will alleviate the concerns of many people who genuinely need the support of the State at this bad time in our country's history, when the austerity measures that are affecting people's lives are failing to bring us out of recession.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I commend Deputy Ó Snodaigh and his Sinn Féin colleagues on the introduction of this Bill, which is welcome for a number of reasons. I will speak in a moment about the specific provisions in the legislation which will offer an amnesty to people who have been overpaid, in most cases through no fault of their own. It is extremely important for us to highlight an issue that is raised by this Bill. I refer to the often hysterical media commentary, and sometimes political commentary, about social welfare fraud.

Such commentary promotes a popular belief that there is massive, widespread social welfare fraud perpetrated by so-called dole spongers. The screaming headlines imply that people who are on social welfare are somehow milking the system. This Bill is very welcome because it disproves that by simply discussing the fact that the level of actual fraud, in terms of the overall social welfare bill, is just over 1%. Of course, that needs to be addressed but it is very much less than the public are encouraged to believe is the case by the screaming headlines about social welfare fraud and by opportunistic political comment by certain people implying that fraud is widespread.

The Bill is very welcome and it must be stated, in the clearest possible terms, that the vast majority of people are in receipt of a social welfare payment because they need it. Furthermore, the vast majority of people who are overpaid social welfare - and the numbers are very small - are overpaid because of the Department's own mistakes and not because of wilful or malicious fraud. If nothing else, I hope that fact is recorded arising from this debate. If the Government or the commentariat wants to do something about the very large social welfare bill, frankly, it should stop talking about fraud, which is minuscule and start talking about unemployment and the unemployment crisis.

In the 1980s a Governor of the Central Bank, whose name escapes me, spoke about social welfare spongers and there were screaming headlines implying that huge numbers of people who were on the dole at the time were spongers who were milking the system. At that time it was very hard to argue that this was not the case and that the vast majority of people in receipt of a social welfare payment were in receipt of it because there were no jobs and it was impossible for them to get a job. The sponger argument was definitively refuted with the rise of the so-called Celtic tiger. Notwithstanding the huge problems underlining it and the flawed basis of the Celtic tiger, one thing the economic boom proved was that when jobs are available, the vast majority of people choose to work. That is what it proved. Unemployment reached negligible levels when work was available so the idea that people wilfully milked the system and stayed on social welfare because they could not be bothered to work was disproved during the boom. The vast majority of people, when jobs were available, chose to take those jobs and that remains the case today. We now have hundreds of thousands of people dependent on social welfare because of the economic crisis caused by politicians, the wealthy, bankers and so forth and because of the failure of this and the previous Government to deal with the unemployment crisis and to provide jobs for people. That is why so many people are in receipt of social welfare and it is no fun being in receipt of a social welfare payment because the income is miserable and reducing. We must absolutely dispel the notion that there is widespread fraud in the system.

If the Government refuses to grant this small measure, namely an amnesty to the tiny number of people who were overpaid, then it is guilty of gross hypocrisy and double standards and of applying one law to the rich and another to the poor. The whole tax policy of this and the previous Government is based on the premise that we must not tax the rich because if we do, they will dodge their tax. That is the main argument put forward by this and previous governments who gave tax amnesties to the super rich in this country. The argument at the time of the tax amnesties was that tax fraud was widespread and that it would be beneficial for the State and the public Exchequer to give an amnesty because it would then take in large amounts of money. Governments chose to reward the super rich tax fraudsters and then actually reduced taxes on the rich, including corporation tax and income tax on high earners. When Deputies like myself argue that instead of attacking social welfare, cutting public services and cutting jobs in the public sector, the Government should tax the rich, the Government's answer is that it could not possibly do that because if it taxes the rich they will all leg it out of the country with their money. They will all become Gerard Depardieu. In fact, the tax policy is tailored for the Gerard Depardieus of this world, for the super rich who do not like paying taxes. The policy ensures that the rich are not interfered with and that there is not too onerous a tax burden placed on them. That is not just the policy in this country but right across the world. It is the neo-liberal consensus which maintains that we cannot tax the rich because it is too difficult, too complicated and if we push it too far, they will simply dodge their tax liabilities. An alternative view is that the Government should go after them with vigour and make them pay their fair contribution towards the infrastructure, public services and the financing of this State.

This Bill is a minimal acknowledgement of the fact that some people, mostly through no fault of their own, have been overpaid by the Department and that it is cruel to force them to repay that money at up to 15% of their weekly payments, which are already miserable and which have them on the poverty line as it stands. We are forcing people to pay that money back when, in the majority of cases, the overpayment was not their fault. At the very least, the Government should do this. It should do a hell of a lot more, frankly, but at the very least it should apply this amnesty. If there are technical issues with the Bill or particular arguments to be made about elements of it, they can be dealt with on Committee Stage. If the Government has any semblance of fairness in its approach to these matters it should accept this Bill.

11:10 am

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I wish to acknowledge the work of Deputy Ó Snodaigh in bringing this Bill before the House and his interest in the area of social welfare fraud. I also wish to thank all of the Deputies for some interesting contributions to the debate so far.

The Bill aims to provide social welfare recipients with the opportunity to disclose voluntarily and report any irregularities in their existing social welfare payments and to have their rate of payment regularised. The incentive for the individual is that the Bill provides that any consequent overpayment, including as a result of serious fraud, would be waived or cancelled.

At the outset let me say that the Government is opposing the Bill as it does not believe it will achieve its desired purpose. What is more, there are serious flaws in the proposed legislation, not least the provision which would essentially allow those who defraud the State to escape scot-free. Such a clause should be deeply troubling for any member of this House.

The Labour Party has always championed the ability of the social welfare system to be a safety net for those who need it most. It is for this reason that we have protected core social welfare rates in successive budgets. It is also for this reason that our rates are so far in excess of the current rates and proposed future rates in Northern Ireland, of which we should be conscious. Those who defraud the system do so without thought of the consequences for others.

At a time when resources are scarce and every euro of spending is strictly monitored by the troika, every cent of the social protection budget must be protected for those who need it. People scamming the system are taking money from others such as pensioners, carers and people with disabilities. Supporting the Bill essentially would give a charter to raid that budget at the expense of those who really need it. If Sinn Féin believes that is a sensible way forward, so be it.

Aside from the financial implications of fraud, there are basic practical realities. Social welfare amnesties have been tried at least twice before and demonstrated to be ineffective. In each case the number who availed of the amnesty was in the region of 500 and the Department had already detected the bulk of these. Therefore, people whom the Department had approached because they were committing fraud had to be given an amnesty, with the tiny number who had come forward and put their hands up. Rather than implement measures that will not work, the Department's fraud initiative has been implemented and is working. We are combatting fraud to ensure there will be more money available for those who are genuinely entitled to it and whose payments we want to secure.

The prevention of fraud and abuse of the social welfare system is an integral part of the day-to-day work of the Department which is the largest spending Department in the State with a budget of some €20.2 billion this year. Even Deputy Richard Boyd Barrett's figure of 1% represents a cool €200 million. At budget time I spend months on figures that tot up to €200 million. Let us be realistic: 1%, 2% or the 3% Deputy Aengus Ó Snodaigh mentioned, or €600 million, is a lot of money, even for the troika. The Department processes in excess of 2 million applications each year and makes payments to 1.4 million people every week. Given the scale of its expenditure, a key priority for the Department is to ensure resources are targeted at those who need them the most. The majority are utterly honest with the Department, as they are in every other element of their lives, set out their circumstances honestly and receive their entitlements, no more, no less. Everybody in the House accepts this, but there is a worrying, if small, percentage who account for a significant sum of money that we need to address. There is a balance to be struck in this, as in many other matters; we pay people who are entitled to money and overwhelmingly utterly honest, but, equally, we go after those who are being overpaid or scamming the system because they are taking bread out of the mouths of others, not to mention workers who pay PRSI to fund the social welfare system and have a say and stake in this, too.

The objective of the Department's fraud initiative 2011-13, launched in late 2011, is to ensure the right person is paid the right amount of money at the right time. Sometimes people see social welfare fraud as a victimless crime; we have heard some suggestions of this here. but it is not victimless. Workers who pay tax and PRSI are paying for it and somebody else in receipt of social welfare payments could perhaps do with more money. Those taking excess money from the system are taking it from these individuals. The programme for Government commits to a zero tolerance approach towards social welfare fraud. In our fraud initiative we work with agencies such as the Customs service, the Revenue Commissioners, the Taxi Regulator and so on to ensure that, as far as possible, we can identify those who are working and claiming. This is important. We are updating the Department's systems for identification and seeking to build matching information and data to find people who are claiming more than one social welfare payment which, unfortunately, is a small but costly problem if it is not detected, as well as those who are working and claiming. Departmental staff are working hard to reduce all these practices to a minimum. Where fraud is committed, we have to ensure there is effective and timely recovery of overpayments. The Department is cognisant of the balance to be struck between people who are overclaiming, being overpaid or directly defrauding the system and the majority who are completely honest in respect of their social welfare and other obligations.

An amnesty of this kind would be financially misguided. I will set out some of the recent figures and explain why debt recovery is important. In 2011 departmental officials prevented overpayments of €645 million through control activity, that is, by high numbers of checks to see whether people were getting the right amount. If the Department did not do this work, the social welfare spend would be approximately €645 million higher. We have carried out many such checks. Last year we reviewed approximately 1.2 million social welfare case files. Deputy Joan Collins implied that inspectors' calls to people's doors were based on tips from the public, but they are not. Inspectors make random visits to houses, which is an essential part of control activity. One of the jobs of social welfare inspectors is to check the circumstances of individuals who have forgotten to tell their local social welfare office about their circumstances. If people are never at home because they are busy at work, or their family circumstances do not match what they told the local office, the inspectors do an important job. It is not very pleasant for the person next door to an individual who abuses the system, who is getting up at 7 a.m. and going to work all week, working hard for his or her money and paying for transport to feel he or she is paying not for the pensioner who needs a pension but for somebody who is abusing the system. That does not wash well with most working people and people are fairly knowledgeable about the state of the lives of others. Even with the dedicated efforts of departmental officials, there was a total of 63,310 overpayments, amounting to €92.4 million, in 2011, of which €51.5 million was recovered, up from €34.5 million in 2010, the figure mentioned by Deputy Aengus Ó Snodaigh. The recovered overpayments amount to a significant sum of money. I do not yet have a figure for 2012, but I think it is roughly in line with the figure for 2011.

I wish to clarify a point Deputy Willie O'Dea made about the recovery of up to 15% from social welfare payments. In the past somebody on a road or a landing in a block of flats who had been scamming the system was required to pay the money back at a rate of €2 a week. The recent change will mean that in respect of their principal payment, not that of their partner or their children's payments or child benefit, the Department will request him or her, based on a review of his or her circumstances, to pay up to 15% a week. That is not a mandatory figure. It will be based on a review of the circumstances of the case. It could mean a figure of up to €26, but I assure the Deputy that his example which included the spouse's income would not apply.

It will relate to the principal individual who has been involved in the situation.

11:30 am

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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It is not confined to FÁS courses, however, it also applies to cases where innocent overpayments occurred.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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It is only taken from the principal individual.

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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I understand that but in the case of an innocent overpayment to an individual who is in receipt of €188 per week, he or she could be obliged to pay up to 15%.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Yes and that might be appropriate in some circumstances, while it might not at all be appropriate in others. Members who have dealt with officials of the Department of Social Protection will know that most of them are extremely concerned with regard to the welfare of individuals. I merely wished to clarify the point.

It is somewhat offensive to the majority of people that some quite notorious individuals can give two fingers to the remainder of the community by being allowed to make repayments of €2 for ever in respect of an overpayment of the order of €17,000. Of the €92.4 million in overpayments and fraud detected, €34.9 million, or 38%, related specifically to fraud or suspected fraud.

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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What was the percentage?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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It was 38%, or €34.9 million.

People often use the word "error". However, there are those who make claims at social welfare offices who do not fully reveal their personal circumstances. In some instances, this is because they are genuinely mistaken or they forget to provide some detail. In other instances, they are given the benefit of the doubt because matters are not pursued once their actual circumstances have been identified. Last year, we referred approximately 300 cases of serious social welfare fraud to the authorities for pursuing prosecutions. Deputies will have seen and read the reports relating to the court cases which arose as a result. It is important to send out a message that the State is not a pushover for those who take badly needed social welfare payments away from other people. As already stated, the former are giving the two fingers to those in employment who pay PRSI and tax and to people who really need social welfare payments. We must be absolutely clear about that matter.

Where evidence of an overpayment comes to light, the repayment of said overpayment is then sought. I am of the opinion that this is the correct approach. Deputy Ó Snodaigh is very knowledgeable with regard to social welfare and he will be aware that community welfare service officers are now in the direct employment of the Department of Social Protection. These officers are extremely caring in their attitude towards people. I accept that there can be complaints in respect of individual social welfare officers. However, I meet large numbers of people in the course of my work as Minister for Social Protection and they are extremely complimentary about the staff of my Department and about how considerate they are with regard to individual family circumstances, special needs payments, etc.

I cannot accept the Bill because it is flawed. I am of the view that the two social welfare amnesties which occurred in and around the early 1990s were hopeless. Some 500 people came forward on each occasion but the Department had already detected their cases. Those individuals were given a complete amnesty. Deputy Ó Snodaigh suggested that what is proposed in the Bill will only cost approximately €50 million, the amount we recovered last year. No more than the €200 million to which reference has been made, €50 million is a great deal of money. I do not know that taxpayers and, in particular, those who pay PRSI - to whom I, as Minister for Social Protection, am accountable - would thank Sinn Féin for stating that their PRSI and tax should increase by €50 million in order to provide for an amnesty relating to a failure to recoup moneys paid through error and fraud.

Photo of Brian StanleyBrian Stanley (Laois-Offaly, Sinn Fein)
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First, I wish to correct the Minister who stated that the cost of what is proposed would be €55 million. However, it is designed to bring about a saving of €55 million. She also referred to the previous amnesties. Everyone knows why those amnesties did not work. People who were in receipt of social welfare payments of £70 or £80 per week at that time and ran up arrears of between £4,000 to £6,000 either as a result of fraud or on foot of an error on the part of the Department. The key point is that if the fraud or error is brought to a halt at that point, then the €55 million saving to which I refer will begin to accrue. We want to save money for taxpayers and we want social welfare payments to go to those who need them most. We are all on the same page in this regard. The Minister either misunderstands what we are suggesting or she is deliberately misrepresenting it. Let us deal with the facts. The previous amnesties did not work because there were no incentives and because people on social welfare payments were placed in a completely impossible situation. What we are trying to do is to stop money being wasted, to save money, to put a stop to fraud and to ensure that errors on the part of the Department will be corrected. We want Fine Gael and Labour to take that on board.

This Bill is not about taking a shot at the Government, it is about putting forward a constructive suggestion. I thank Deputy Ó Snodaigh for introducing the Bill, which is a real and serious attempt to try to deal with the matter in question. The Bill is imaginative, progressive, fair and just. Most importantly, what it suggests is achievable.

We are acutely aware that social welfare payment rates are completely inadequate and that they result in many households being below the poverty line and struggling to pay bills or put food on the table. While driving to Leinster House from Offaly this morning, I heard a radio interview with one of my constituents who is in receipt of the back to enterprise allowance and who is trying to make a go of it. The man in question is in his 50s and after he pays his rent - he is not in receipt of rent subsidy - he has only €3.40 per day left to live on. He uses this money to pay for food and he cannot afford heating. He outlined what he is able to afford to buy from the point of view of food out of €3.40 and I can inform the Minister that his is a fairly rough life.

In the run-up to the introduction of the budget each year, there is not a week that goes by without the appearance of headlines which scream about the activities of dole scroungers, dole cheats and fraudsters. One could easily be fooled into believing that everyone in receipt of social welfare is somehow defrauding the system and that if we could only put a stop to the activities of these individuals, all our woes would be over and there would be no need for the troika, property taxes or cuts to child benefit. Many newspaper headlines are devoted to fraud but the reality is that the majority of overpayments arise as a result of genuine errors. In fact the level of fraud and error in the social welfare system is estimated to account for an average of 3.4% of total expenditure. That is a damn sight less than what Government spokespersons would have us believe is the figure and it is broadly in line with international comparisons. Of the 3.4% to which I refer, fraud accounts for a shrinking minority of less than one third or a grand total of less than 1%. We agree with those who state that the latter figure should be cut out completely. The remaining two thirds of the 3.4% relates to genuine customer or departmental error.

A significant number of people have become aware that they are being overpaid. These individuals are afraid to alert the Department because they simply could not afford to repay the money they have received. This is the difference between what is proposed in the Bill and what happened in the two previous social welfare amnesties. We all agree that those amnesties failed. The fact that they cannot afford to make repayments causes major anguish for the individuals concerned. If they put their hands up in respect of what has happened, it would lead to the Department avoiding excess expenditure. Let us save money for taxpayers.

Ireland is facing into a deep economic crisis. In that context, we are all trying to identify ways in which money might be saved. The economic crisis to which I refer is rooted in the free market, deregulation, the greed of bankers and the failure of the previous Government to regulate the activities of banks and developers. The latter were assisted and encouraged in those activities by their cheerleaders in government and in the media.

The crisis threatens our sovereignty and the viability of our communities. It has affected the reputation of the country. It is a banking, fiscal, economic and social crisis. Sitting on the Opposition benches it would be easy to oppose everything and propose nothing, but that is not the politics of Sinn Féin. We do our best to bring forward serious alternative policies. To date, in this Dáil, Sinn Féin has introduced 14 Bills and 22 Private Members' motions and produced two substantive alternative budgets. Sinn Féin's politics and policies are solution-based and this Bill is such an attempt.


Each year in our alternative budget which Members on the other side of the House shout down before they even read it, Sinn Féin makes social protection spending proposals and identifies sources of revenue to cover the cost. For example, in our most recent alternative budget entitled, Making the Right Choices, Sinn Féin proposed an increase and extension of the fuel allowance scheme in order to restore the six winter weeks taken away, the restoration of the energy component of the household benefits package, and a capital programme to reduce spending on rent supplement. In addition, we have made detailed proposals to reform the rules of various schemes, including domiciliary care allowance, JobBridge and working age payments. The Bill presents a practical way of making a saving of €55 million in the Department of Social Protection which would allow the Minister for Social Protection to redeploy staff to front-line services and have a little more money for those who are in dire straits.


Maeve Sheehan, writing in the Sunday Independenton 24 June 2012, stated:

Joan Burton's "welfare police" are planning high-profile investigations into hairdressers, scrap dealers, couriers, clothes recyclers, taxi drivers, market stall holders, haulage firms and nursing homes in the crackdown on welfare fraud. According to a briefing document released to the Sunday Independent, the Special Investigations Unit will unleash inspectors trained by the garda fraud squad on the sectors in the coming months, after they were identified as high-risk areas for welfare abuse.
The Bill would ensure money was both repaid and also saved. The so-called welfare police could be redeployed back into social welfare offices to process claims. Then the public might have a decent service and not forced to wait weeks and sometimes months for their claims to be processed. In particular, disability allowance applicants are being forced to wait for 12 months or more to have their applications processed. I dealt with a case recently of a constituent who was dying of cancer. Her claim was refused and referred to the appeals office. We rang the appeals office in D'Olier Street about her claim and succeeded in having it processed months before she died. However, this is shocking and I ask the Minister of State, Deputy Joe Costello, who may not be familiar with the position, to bring the matter to the attention of the Minister.


The social welfare amnesty is just one proposal in Sinn Féin's reform agenda. The bulk of our agenda is based on the knowledge that social welfare spending is vital for local economies, families and job retention in the retail and services sectors, in particular. Our amnesty proposal targets this group. It would provide them with a one-off opportunity to come clean without fear of punitive measures being taken or being crippled by debt. It would allow the Department to draw a line under these cases and also to save money. Identity fraud has been deliberately excluded from the amnesty proposal. For example, the amnesty would not cover anyone who was making multiple claims in multiple names and locations, nor would it cover someone who was collecting the pension of a deceased person. We estimate that it would give rise to a once-off spike in controlled savings of approximately €55 million. It would be followed by a intensification of the Department's standard anti-fraud and control measures for two months. Public awareness of the Department's intentions in this regard would help to enhance the take-up rate of the amnesty. It would provide the incentive for people to come clean.


The amnesty would involve the Department forgoing the repayment of overpayments. However, this would be significantly outweighed by the size of the controlled savings. In reality, the Department only ever recoups a tiny fraction of the overspend. In some cases this is because the person no longer receives a social welfare payment. In others the recoupment of anything more than a negligible sum would cause the whole family to become destitute. In the majority of cases there is simply no way to establish when the overpayment commenced.


The Bill puts it up to the Government by providing a solution. If, like Sinn Féin, the Government wants to find a solution, it should support and vote for the Bill.

11:40 am

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I call Deputy Bernard J. Durkan who will be followed by Deputy Terence Flanagan. There is 15 minutes in this slot.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Fifteen minutes is a long time.

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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It will be no bother to the Deputy.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I am delighted to have the opportunity to speak on the Bill, with which I do not agree because it is indiscriminate. It would reward the deliberate fraudster in the same way as the person who accidentally received an overpayment. It does not propose any means by which they can be differentiated. The person who deliberately sets out to defraud the system would benefit dramatically by way of achieving a satisfactory conclusion to his or her deliberate attempt to defraud the system. It is sometimes suggested in this House during expressions of concern for persons who are, unfortunately, out of work and dependent on social welfare payments that they all come from one part of society or the political divide, but that is not the case. We must always be concerned about the people who elect us to whom we are responsible. We have a responsibility to ensure their welfare.

It needs to be stated categorically that we are all concerned about those who are dependent on social welfare payments. During these very difficult times we are particularly concerned when there is downward social pressure, including on those at work and those in receipt of social welfare payments. People have great difficulty in meeting their commitments. In this regard, we must recognise the needs of those who depend on social welfare payments whose needs are already determined under the system for means-testing entitlements. Those legitimately in receipt of social welfare payments and those at work are concerned about the person who is working while also being in receipt of a social welfare payment. This is also a cause for concern among employers. If one employer is able to access employees who, wrongly, have the backup of a social welfare payment, a competitor is placed at a significant disadvantage in that one worker is being subsidised by the State, while the other is not. More important, it is unfair on the person who is completely dependent on social welfare payments who does not have the benefit of a backup payment.

Not everyone in receipt of a social welfare payment while in employment is a fraudster. Such a person may be working a three-day week or in receipt of a disability payment which at a certain stage permits employment to ascertain if it is possible for him or her to return to the workplace. Something is not always what it seems or is perceived to be. Therefore, the person in receipt of a social welfare payment may not be working illegally.

A problem exists in that there is a difficulty transferring from unemployment assistance to employment, and vice versa. The transfer procedure is difficult and laborious and it takes considerable time. Consequently, there is a tendency for one to feel encouraged to defraud the system. An individual who gets a job for a week or two may not sign off for the duration of the work owing to the associated difficulties. This is the danger. It is a danger to the social welfare recipient, his family and the integrity of the social welfare system. It is certainly a danger to the Exchequer because if everybody neglected to sign off in the aforementioned circumstances, we would have a serious problem.


I am sure the Minister of State, Deputy Joe Costello, is as familiar with the social welfare system as any of the rest of us. We need a new system of the kind made possible by the use of readily achievable credit card-type authentication. We need a system such that a person who obtains short-term employment for a week or two can leave the social welfare system and return to it after work without a break in continuity. This is not as difficult to achieve as it was some years ago because of modern technology. I ask that a special effort be made to achieve it. It would be of benefit to all recipients of social welfare and would indicate that everybody is being treated equally. It would indicate to legitimate prospective employers and illegitimate employers that there is a system of verification. We should strive to achieve this, particularly at a time when budgets are squeezed annually.


During my time in public life – I have been in it for a few years, as has the Leas-Cheann Comhairle – I have always noticed that the Opposition is usually very flaithiúlach in its proposals to spend money.

11:50 am

Photo of Brian StanleyBrian Stanley (Laois-Offaly, Sinn Fein)
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To save money.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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To spend money, in local authorities and elsewhere. I spent years on a health board. Usually, very innovative proposals were made by people in opposition to spend money. They were not so eager to impose the taxes required to raise the revenue required for expenditure. While I acknowledge this is a common failing of humanity, I note there has been a tendency on the part of some – sometimes those in Sinn Féin although not necessarily – to advocate that austerity is awful. We know it is. Nobody is supporting austerity in order to punish people. It is bad but it is a reality. It is called good accounting, making savings, good housekeeping and living within our means. Only a fool would impose austerity on anybody if it were not necessary. Those in opposition put forward alternatives but, sadly, they are misleading the public because the country is in dire straits administratively, governmentally and in the wider economy. Seriously difficult decisions have had to be taken. Those who suggest Government parties enjoy making such decisions and punishing people by raising taxes and introducing cuts to public services are incorrect. Nobody enjoys taking these steps. It is just an unfortunate and tragic reality that we face.

We are always told by those on the opposite side of the House that we have options. Of course, we have options. One option is to do nothing, in which case the problem will become immeasurably worse and the difficulties now faced by the people will be multiplied manyfold. Alternatively, we can do something about the problem and control it by bringing the public finances back into line with reality. I am not blaming previous Administrations. It is up to those who are to blame to accept blame. However, there is no use in avoiding the issues as they now present themselves to us. These issues are stark.

Refusing to pay some bank, for example, is not the answer to our problems. We have a current budget deficit that must be dealt with. If we do not deal with it, somebody else will do so harshly, and much more harshly than at present. We need to get away from the notion that the Government is a big, bad wolf out to punish the people indefinitely for crimes they did not commit. This is not so. People may well say that there are perpetrators who got away with it. We do not know whether they did; we are not so sure about that yet. I would not dine out on that belief for too long. Time will tell.

It is very important that we preserve the integrity of the social welfare system for those who are dependent thereon, those out of work, carers, those with special needs and the vulnerable. Vulnerability is magnified by the current economic difficulties. I have always been very conscious of the need for those in public life to engage with people individually to determine their exact circumstances. One should not remain aloof from the electorate. We need to operate, particularly at this time, in a more personable and personal way than in the past such that we may know how the economic climate is affecting individual households. We must do our best to assist and advise people, including the Government, regarding the circumstances that may emerge from time to time. We must do so in the national economic interest and in the interest of those who depend on social welfare. If we achieve this, we will achieve savings at least of the magnitude proposed in this Bill.

It is fundamentally wrong to suggest that we should avoid the collection of arrears that are the result of deliberate fraud. I acknowledge this is not the intention of the Bill. Over recent years, there has been fairly widespread, consistent and deliberate defrauding of the system to receive payments to which one is not entitled. We need to deal with that. We should not reward people who have defrauded the system.

There will always be those who inadvertently receive an overpayment. It is sometimes the fault of the Department and sometimes the fault of the applicant. Notwithstanding the 15% referred to, there is already a mechanism in the system to accommodate individuals who find themselves in this position. I would always support strongly the fair treatment of these individuals. This is what the legislation is supposed to do in any event. The Department should recover moneys according to the recipient's ability to meet repayments.

The fundamental issue with which we must deal is the ability of the person dependent on social welfare to opt out of the social welfare system when he becomes employed and to opt in again, as necessary, without losing for a long time the benefits to which he would ordinarily be entitled. I ask that this be addressed as a matter of urgency.

We did these things in the 1980s. We had schemes that offered provision for transition for people. It is increasingly more important that this be done when economic recovery becomes a reality. Otherwise there is a danger that people who could avail of that economic recovery would remain in one or other position without realising their full potential for the benefit of themselves and the economy.

12:00 pm

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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Undoubtedly the problem of social welfare fraud is a huge issue in Ireland as shown by recent figures provided by the Minister for Social Protection and the Department, which set a target of reviewing 985,000 individual welfare claims last year with the aim of achieving €645 million in control savings. We know that at the end of July more than €400 million in control savings was reported and more than 650,000 reviews had been carried out. We also know from the Comptroller and Auditor and General's report that the Department is owed more than €343 million in welfare overpayments due to fraud and to error.

I am confident the Department is addressing the issue and making progress in reducing the amount of money being lost by the State as a result of benefit fraud. We are all ware of the various initiatives that have been introduced such as the new Facebook software which will help deal with this issue. In 2011 the Department was successful in recovering €50 million of the €92.4 million made in overpayments, €35 million of which was due to fraud.

I welcome Deputy Ó Snodaigh's Bill. The introduction of a social welfare amnesty period is a worthwhile move that would generate further savings for the Department and the Exchequer, particularly if its introduction is needed to address overpayments in genuine cases. The Minister and the Department should not rule out consideration of this proposal. The Minister should examine the details of any proposed amnesty that would deal with some of the genuine errors that are not deliberative that are made either by the Department or by the claimant. Such a move would encourage claimants who have received overpayments to report them to the Department with fear of any repercussions. Subsequently, a claimant would not have to repay any overpayment made but the necessary changes would be made to his or her payments in the future.

Anyone who would not avail of such an amnesty period and was later found to be receiving an overpayment should not receive any concessions for repayment and should have to repay the amount in full or be treated as having committed fraud. I agree that if a large number of people were to avail of such an amnesty and their cases were in the system that would free up Department personnel to focus on other priorities, including the intense period ahead in dealing with fraud investigations and deliberate fraud.

Is it envisaged that additional staff would be required in the Department if a large number of cases were involved in any proposed amnesty or would the Department have the capacity to accommodate their processing? I am aware the Deputy has introduced the Bill with a view to increasing savings by the Department and recouping moneys lost by the Exchequer and that is the reason I very much welcome what is being proposed.

I am also aware there would be objections to this proposal by some people who believe such a scheme would allow people to get away with committing fraud. However, if savings of up to €55 million can be made, this proposal should be examined. The move would be welcomed by genuine welfare claimants who have received overpayments due to an error and they are afraid to talk about having received them because they do not have the means to repay those overpayments to the Department. Should an amnesty be declared it would be important that it be widely publicised and that people would be in no doubt as to its duration and that they would be required to report their overpayments or otherwise would face strong repercussions if their overpayments were later discovered following the period covered by the amnesty. It would be important that in the case of those who would report any discrepancies that proper proofing would be given by the Department that they have done that to ensure that people could not come back and say they had reported the overpayment and their circumstances and they would not be obliged to make a full repayment if that had not been adequately recorded adequately by the Department. The Deputy might comment further on how he would envisage that process working.

I welcome the Deputy's Bill and very much agree with the spirit in which it has been proposed to assist claimants who find themselves in a difficult situation where genuine errors were made. Hopefully, the Government will examine this proposal further and it could provide capacity to improve the country's finances which is very much needed at this time.

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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I welcome Deputy Ó Snodaigh's Bill. Anything that can be done in this Chamber and Parliament with cross-party co-operation to secure the best possible return for the taxpayer and to target the people who need to avail of help from the State should be done.

The Bill proposes to provide social welfare recipients with an opportunity to voluntarily disclose and report irregularities in their existing social welfare payments and to have their rate of payment regularised. We have to examine this proposal from both sides. There is merit in it but having regard to work that has been done by the Department during the past 25 years resources are very scarce. The Deputy has also done a great deal in recent years to tackle welfare fraud.

One finds that in many cases people who defraud the welfare system are not in a position to avail of social welfare but they seem to understand how the system operates. As a politician I have gone into homes and talked to people about the welfare system and the way they have been able to tell me how the system works has been a revelation. I know from having talked to people that the large number of different schemes introduced under the term of the previous Government during the past 14 years is mind-boggling and one would need to be a barrister or an accountant to understand the range of help that is available, but unfortunately they were not monitored. At that time we thought we had full employment, an the economy in which we were effectively selling houses to one another and the State seemed awash with money but unfortunately many schemes not only in the area of social welfare but in every other area of business were open to abuse. The State did not look after taxpayers' money as wisely as it should have.

The introduction of social welfare amnesties have been tried in this country in the past and from I have heard from the Department they have been deemed not to have worked very well. There are many issues to be considered in this respect.

Overpayments have been a factor over the years and the Department saved €400 million last year. When a recipient was overpaid by, say, €30,000 or €40,000 in the past a very meagre payment of €10 a week or €20 a month was offered and sometimes people were under pressure. When the penalty does not match the crime it is in anybody's interest who wants to defraud the social welfare system to take the chance to do so. What we as a Government have to do now with the minimum of resources is to legislate against people abusing the system.

A total of €51.5 million in overpayments was recovered in 2011, which is an increase on the €34.5 million figure for 2010. The figure for 2012 will be available in the coming months and I suspect it will be much higher. On the issue of whistleblowers, over 28,000 reports were received in 2011, an increase on 13,000 in 2010. Many people are very angry. They see their next door neighbours, members of their extended family or people with whom they socialise getting social welfare payments to which they are not entitled. There is a great deal of anger that the money is not targeted at the right people.


I thank Deputy Ó Snodaigh for his work. We all agree that social welfare fraud is a serious matter which, along with other fraud, must be tackled. The Government is working extremely hard to check overspending. I come from an area near the Border and there has been a great deal of cross-Border social welfare fraud by people who are not entitled to claim in this State. The system seemed to be very laissez faire. No person was asked for passports or identity documents. That has changed now and I welcome the fact that there will be a new passport-type card with a photograph. One will not be able to go into nine or ten different social welfare offices and claim social welfare to which one is not entitled.


I am concerned about the level of disability in this country, which is far greater than in any other country. It seems doctors' letters were sent in and there were no checks. People who appear to be in great health seem to have a disability. I do not know what the problem is but it is obvious that this matter went unchecked. Unfortunately, over the years the disability payments of people who deserve and need help from the State have, effectively, been diluted by people claiming disability payments who are simply not disabled. I believe doctors took the easy way out.


The same thing happened with the disability grant or the heating grant, as it was called. This grant was provided to elderly or disabled people to allow them to install a shower or build an extension to the house to make it habitable for them. People called it the windows grant or the heating grant, and everybody applied for it. People who did not apply for it were probably seen as not availing of something to which they were entitled. However, it was put in place for one reason: so that elderly people could have mobility and remain in their homes. Builders and contractors took advantage of this. They saw €20,000 on the table from the grant and said they would charge €25,000. It was part of that complete madness at the time. Six or seven years ago the local authorities had three systems. The letter from the doctor would say whether one was disabled, had a moderate disability or could wait a little longer. There was a spiral effect because money was available and everybody decided they would carry out work regardless of whether they needed it. There are many houses, some of which are probably derelict now, on which €20,000 to €50,000 was spent installing heating, building extensions and so forth. It was not always to provide for the grandmother, grandfather, mother or father, as it should have been, but was spent because the house would be worth more with those additions. That 14 years of complete madness and waste had to be brought to a halt.


I pay tribute to the Department on the work it has done. As a man told me, over the years every diocese organised a trip to Lourdes and every year the diocese would look for five or six people from the parish who wanted to go on the trip. A collection was held for them. The joke now is that many people who are on disability payments will not go to Lourdes in case they are cured. It is an anecdote, but if one looked through the figures over the years, one would see that the level of disability in this country meant that either we were very unfortunate in having many accidents or, as I believe, we had a Department that for 14 years just dished out the money without checking. People are human. If somebody has a sore back or sore leg and is encouraged to apply for the benefit, he or she will do so. Unfortunately, however, it affects the people who greatly need it. We have not done a service to the many disability organisations that have fought for their members because we have extended it too far. The people who need and deserve the benefit are the people who should get it.


Again, I thank Deputy Ó Snodaigh for introducing this Bill. A great deal of work has gone into it. Members are busy in their daily political lives dealing with the issues and with constituents. Deputy Ó Snodaigh's constituency is a marginalised one and he works extremely hard there. The Bill serves to remind us that we are national legislators and regardless of whether I agree with the Bill, Deputy Ó Snodaigh is trying to do something that will make it easier for the Department to address the issue. Overall, however, the introduction of an amnesty would be inconsistent. The policy direction in the last two and a half years has been very good and I thank the Minister, Deputy Joan Burton, for the work she has done. I know people who work in the Department and people who have retired from the Department and they have told me it is about time somebody addressed the issues that were waiting to be addressed for the previous ten or 14 years. Many people in the Department are delighted that the Minister has stood up to be counted. She is delivering to the people who need it most, as well as dealing with welfare fraud. She is ensuring that the taxpayers' money is well spent and targeted at the right areas. I am delighted to have had the opportunity to speak on this Bill.

12:10 pm

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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I compliment Deputy Ó Snodaigh on his introduction of this Bill. It is a useful proposal. I am aware of the Deputy's interest in dealing with social welfare fraud, and it is important that we discuss how we might best deal with a matter of this nature. The effective investigations that took place last year resulted in the identification of €645 million in overpayments of one type or another from a budget of over €20 billion. Clearly, it is a matter of considerable importance that social welfare fraud is examined carefully from time to time in this House.

I compliment the Department on the establishment of the fraud initiative 2011-13, which has made great strides in dealing with the matter. I thank all the other Deputies, including Deputy Brian Stanley, Deputy Durkan, Deputy Terence Flanagan and Deputy Feighan, for their valuable contributions. The Minister for Social Protection, Deputy Burton, has already indicated that she will not be accepting this legislation and she had outlined the reasons. I will to some extent go over them again and add some comments.

One of the Government's key priorities is to ensure that the State's reduced resources are targeted at and available to those most in need of State support. The Minister, Deputy Burton, referred earlier to how income and support services impact on the lives of almost every person in the State with some 1.4 million people receiving a social welfare payment each week. When qualified adults and children are included, a total of over 2 million people, almost half the population, benefit from weekly payments. Social welfare expenditure accounts for some 40% of gross current Government expenditure. It is imperative, therefore, to ensure that the right person is paid the right amount of money at the right time and that any abuse of the social welfare system is tackled in an effective and robust manner. I am aware from my work as a public representative that social welfare fraud undermines public confidence in the entire system and that it is unfair to other recipients of social welfare payments and to ordinary taxpayers who pay their ongoing dues.

Against this backdrop the current policies to tackle fraud and reduce error are set. Tolerance of welfare fraud in society generally or through peers leads to an acceptance of fraud. If sanctions are believed to be weak or if persons engaging in welfare fraud believe they will get away with it, then an increase in the incidence of fraud is possible. However, I believe that there has been a significant change in attitudes and culture in Ireland in recent years with regard to social welfare fraud and abusing public services generally and this has been a change for the better.

A key aspect of the control policy of the Department of Social Protection is to ensure that appropriate sanctions are applied in instances where social welfare fraud has been detected. Effective debt recovery is seen as an integral part of the deterrent approach. It creates a climate whereby people who have been overpaid know that they have a responsibility to repay the moneys concerned and know that the Department will take appropriate steps to effect recovery of the moneys involved. Every effort must be made to prevent overpayments, but if they occur they should be regarded as a debt to the Exchequer and every effort will be made to recover the payments through all available means.

The Bill suggests that there are persons knowingly in receipt of social welfare payments in excess of their current entitlement. If this is the case and the persons are not deliberately committing fraud, then they should come forward to the Department to regularise their positions and payments as soon as possible. This is a catch-22: if they know they have been overpaid they are committing a fraud by not coming forward and repaying money they are not entitled to retain, but if they do not know they have been overpaid then an amnesty is irrelevant because an amnesty will not make them aware of the overpayment. This is the crux of the matter.

In general, the recovery amount proposed would be the maximum repayment that the person could afford to repay as quickly as possible. When deductions from social welfare payments are being considered regard is had to the value and nature of the overpayment debt, that is, whether it is fraud or non-fraud, and the person's circumstances and his ability to increase the level of deduction by reference to whether he has other income or means. The Department is always willing to talk to people who wish to regularise their position. Up to 15% of a person's personal rate can be deducted under new arrangements. Any deductions to be applied will take account of a person's circumstances, that is, whether he has other income or means, and whether overpayment is due to fraud or non-fraud.

It is the Department's policy to consider for prosecution cases of fraud against the social welfare system. The Department ensures that cases which merit prosecution are forwarded for consideration of legal proceedings and that all necessary evidential proofs are available. In considering cases of social welfare fraud for legal proceedings, the Department applies defined and recognised best practice standards. This includes consideration of the duration of the fraud, the amount overpaid, previous incidences of social welfare fraud etc. Criminal prosecutions may be taken against persons who defraud the social welfare payments system and employers who fail to carry out their statutory obligations. A person who is found guilty of abusing the social welfare system may be fined or imprisoned.

The Minister, Deputy Burton, has outlined previously that there is clear evidence that social welfare amnesties of this nature do not work. The two previous amnesties had only a small degree of voluntary disclosure and, in the end, cases that the Department had already detected had to be offered the amnesty. This was counter-productive and cost that State money that it would have collected anyway. The amnesties were also costly and difficult to administer.

This Bill, which incorporates debt forgiveness, would effectively create a twin-track approach. On the one hand some people would be paying back overpayments in accordance with departmental procedures, and on the other hand people who availed of the amnesty would effectively get away without having to repay any of the moneys that were overpaid. I do not believe this is an acceptable way to proceed.

While I recognise the worthy and commendable concerns of the Deputy, I oppose the passage of the Bill. The Government is satisfied that rather than save money for the State in terms of welfare expenditure, the proposal would be costly to administer. Further, it would be ineffective in the fight against welfare fraud and undermine public confidence in the existing systems. As I stated at the outset, total social welfare expenditure in 2013 will account for some 40% of gross current Government expenditure. Protecting the integrity of this expenditure must be a top priority of the Government and central to this aim is tackling fraud and abuse within the social welfare system. This will continue to be done.

12:20 pm

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I take this opportunity to thank all the Deputies who contributed. This has been a useful exercise, as it always is when we put our minds together without the argy-bargy that sometimes comes with some of the debates in the House, and helpful in examining the issues. Some constructive points were made and I will address them. Deputies Ellis, O'Dea, Terence Flanagan, Joan Collins, Boyd Barrett, Stanley, Durkan and Feighan and the Minister of State, Deputy Costello, and the Minister for Social Protection, Deputy Joan Burton, have all contributed to the debate. It is a useful system for those of us in the opposition. All Deputies can put time and effort into a proposal and present it to the House and have it debated in this way.

I wish to thank some others, go háirithe mo comhairleoir parlaiminte Miriam Murphy, atá ar sos mháithreachais. Is mór an trua nach raibh sí anseo chun éisteach leis an díospóireacht mar rinne sí a lán den obair sa chúlra. I also wish to thank the library service. When I first began work on the Bill I carried out a quick search but I did not come up with even half of what the staff there managed to produce as examples from other countries. This system has not been used as frequently as I had thought. The state of Colorado had an amnesty and recently the state New South Wales had an amnesty relating to rent reviews. We have heard mention of the amnesties in this State and I will refer to them. Although amnesties have not worked in other jurisdictions most of them have been of a different format to my proposal and it does not mean we should not try it.

Initially when I thought of the idea, we put together the heads of the Bill and circulated them to many organisations and asked for observations. The comments we got back were constructive. In particular, those from the Irish National Organisation of the Unemployed, INOU, and the Free Legal Aid Centres, FLAC, were supportive, but they had some concerns.

It is the sort of thing that is usually thrashed out on Committee Stage, which is why I have always urged Ministers to allow it to go before a committee where it can be examined and changed if necessary. That does not seem to be on the table today.

Many people find themselves in stressful circumstances having become aware of an overpayment. They are afraid to put up their hand and face a debt of perhaps €1,000 or €2,000 which it would be too much for them to meet from their weekly payment. They take a chance and continue in that position in the hope that the Department will never find out. In many cases, the Department does not find out or, where it does, cannot identify when an overpayment occurred. We could consider how an amnesty could differentiate between those who deliberately defraud the State and those who are caught up in error. It is a difficult concept, with which the Department is even now finding it hard to deal. I propose a short, sharp amnesty lasting a month followed by a greater crack-down.

I acknowledge the work of the Department's fraud initiative and have asked in the past that more social welfare inspectors be deployed. It has been shown that it is cost-effective to allocate more social welfare inspectors because the money comes back to the Department. If the Minister is not willing to go down the road of an amnesty, I urge her to deploy more inspectors. The overpayments represent taxpayers' money which, if it were in the social welfare pot, would be redirected to those most in need. It is a pity that the opportunity has not been taken to make the Bill part of a whole package of fraud initiatives. A short amnesty initiative for a month could be followed up by the belt-and-braces approach to those who are deliberately defrauding the State with the fraud initiative, social welfare inspections and the courts. Notwithstanding that, there are those who would be caught up in the net who are not involved in deliberate fraud. To be fair to the Department, it has often looked at those people sympathetically, but on other occasions it has not. Often the latter cases are the ones which are notified to Deputies and we end up arguing the case for a reduced payment for those people. While the Department is technically entitled to recover money at a rate of €2 per week, it has often persuaded or cajoled people to make repayments at an accelerated rate.

The primary aim of the Bill is to provide for those people caught in a bind with a one-off opportunity to come clean without fear of punitive measures or of being crippled by debt. The Bill would allow the Department to draw a line in the sand. It would involve a write-down for people of moneys that potentially could have been owed because you cannot measure it. The primary thing is it would create savings. We came up with a figure of 10,000 applicants and there has been some criticism of it in the debate. An amnesty would be followed if accepted with two months intensification of the Department's standard anti-fraud and control measures. While the amnesty would involve the Department forgoing payments, those would be significantly outweighed by the size of the control savings. The Department only ever recoups a tiny fraction of an overspend. Sometimes that is because a person is no longer in receipt of social welfare payments and is not pursued unless he or she goes back into the system and sometimes it is because to take anything greater than a negligible sum at the 15% rate would cause an entire family to become destitute. In the majority of cases it is simply difficult to establish when an overpayment commenced. Those are issues to consider.

It has been argued that a social welfare amnesty would reward benefit cheats. Similar to all amnesties, whether offered by the police or other authorities including the tax and knife amnesties, this is about drawing a line in the sand and improving matters into the future. Governments have offered many amnesties over the years and should consider this one. It is about exceptional cases and not something that can be replayed over and over again. Deputy Joe Costello's constituency is similar to mine and he will understand how often those in receipt of social welfare will fail because they lead such chaotic lives to inform the Department of Social Welfare or even their partners of changes in circumstances. I acknowledge that others chance their arm while others are caught in a moment and find themselves stuck in it and fearful. There are others who may have been involved in some defrauding of the State at an earlier point but who have now genuinely lost their jobs. While as a matter of technicality they owe the State the money, they have no capacity to pay it. To demand anything of them would cause chaos in their families and exacerbate things.

There were two previous social welfare amnesties, one in 1991 and one in 1993, both of which were unmitigated failures. At least one was proposed by a Fianna Fáil-Labour Party Government.

12:30 pm

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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That is the reason we are very reluctant to go down that road again.

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I understand, but there is a key difference. The previous amnesties failed to provide guarantees on anything other than penalties. People had to pay the full amount back with interest. There was no carrot being dangled other than a promise not to impose penalties. This amnesty proposal is substantially different. Earlier amnesties were an afterthought designed more to take pressure off a Government offering a tax amnesty to the rich. Amnesties were pitched mainly at the self-employed and employers. Interestingly, the retired Labour Party Deputy and then leader of Democratic Left, Prionsias De Rossa, said the amnesty was designed to give a bogus veneer of equity to a tax amnesty and was intended "to salve the consciences of the Labour Party Ministers who so meekly went along with Mr. Albert Reynolds's proposal to wipe the slate clean for major tax cheats". In 1991, only 17 people applied for the amnesty even though there were 500 inquiries. In 1993, more than €1.25 million was recouped with 600 applicants dealt with who, as the Minister of the day explained, were not forthcoming themselves but were identified by the Department and jumped at the chance to take advantage of the amnesty.

This is a different approach and would involve the State foregoing, as it foregoes in many other instances, money it is owed. In the case of the banks and many of the speculators, the State has decided it will never recoup much of the money from those who have left us in the circumstances in which we find ourselves. We ask that those at the other end of the system should have some prospect of having their slate wiped clean and their position regularised. In doing so, the State would save money. If the amnesty happened this month, the State would see approximately 10,000 seeking to avail of it. On top of the other control savings, that would lead to a saving of approximately €50 million. It could be €70 million or it could be less but it would be of that scale. It deserves serious consideration. If the proposal comes back before the House in another format, I will have no problem with it. I have not put this forward to score political points.

That is the primary difference. I am sorry the Minister is not willing to support it. I expected it but I listened to the debate and was interested in some of the contributions from Fine Gael Members who saw merit in the proposal, particularly for those caught up in error. At the very least, the Minister should look at that. The Bill as laid out ruled out any amnesty for serial fraudsters, such as those involved in ID theft who claim in the name of a person or several persons or in several parts of the country or those involved in violence or threats of violence against social welfare inspectors and others in the system.

12:40 pm

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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The Deputy has two minutes remaining.

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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That definition of who could avail of the amnesty could be broadened as it would require a very simple change in the definition to allow those who are genuinely stuck and who are afraid of facing a bill from the Department to avail of an amnesty and get themselves out of a situation that is eating away at them because they cannot afford it. Very genuine people are caught in many cases. Genuine errors are made by applicants and the Department. For example, earlier last year, the Department made an error where 63,000 people received an extra week's fuel allowance. The Department moved quickly to recoup the money from those people in the first week. That is the scale of a small error that happens day in, day out. Sometimes it is not spotted, while at other times, it is an individual case.

I thank all those who took part in what has been a useful discussion. Hopefully, the Minister will consider it again in the future in any of the social welfare miscellaneous provisions she might be undertaking.

Question put.

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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In accordance with the Order of the Dáil yesterday, the division is postponed until immediately after the Order of Business on Tuesday, 22 January 2013.