The Minister has agreed to attend the committee today to brief us on the pre-budget situation in the Department of Social Protection and to fulfil the programme for Government commitment that Oireachtas committees will engage with Ministers on a whole-of-year approach to the budget and the annual Estimates. I welcome, from the Department, Mr. O'Raghallaigh, who has remained with us from the previous session, Mr. Denis Moynihan, principal officer, and Ms Clare Conway, assistant principal officer.
Budget 2013: Discussion with Minister for Social Protection
I thank the committee for the invitation to consider the budget and Estimates process for 2013. I welcome this new initiative, which has been put in place on foot of a commitment in the programme for Government to enhance the role of Oireachtas committees in engaging with the whole-of-year budgetary process.
As I outlined at our meeting on 22 May 2012, the Department will spend approximately €20.5 billion on a wide range of schemes and services this year. These services and supports have some impact on the life of every person in the State, and the scope and scale of this expenditure plays a key role in the wider economy and helps to partially offset the effect of the downturn.
The Comprehensive Expenditure Report 2012-2014, published last December, provides for new expenditure reduction measures of €1.033 billion over the next two years in the Department's budget. This includes €540 million of new savings to be achieved in budget 2013. Reducing overall expenditure in 2013 and beyond, as required by these expenditure ceilings, while protecting the most vulnerable people in Irish society will be extremely difficult. A critical analysis of social welfare policy and expenditure will be required and the committee's input in this regard will be valuable in informing the budget process. My officials have provided committee members with briefing material, including a fairly detailed brief on expenditure in the Department, which I hope will assist in our deliberations today. I propose to quickly go through the key points in the briefing in order to inform and begin our discussions. I welcome the views of committee members and I look forward to their engagement on how the Department can achieve its expenditure ceilings in 2013 and 2014.
I would like to take this opportunity to briefly update the committee on some of the Department's key priorities. The Government's priority is to reduce the level of long-term unemployment and, in so doing, to ensure the overall level of unemployment will fall as the economy returns to growth. There are two major elements to the Government's response, namely, the action plan for jobs and Pathways to Work. The goal of the action plan for jobs is to create new jobs, while the goal of Pathways to Work is to help ensure that as many of these jobs as possible, along with other job vacancies, are filled by people on the live register.
As the committee is aware, the Department has established the new National Employment and Entitlements Service, which is central to the realisation of the Government's Pathways to Work policy. The first step in establishing the National Employment and Entitlements Service was integrating staff from FÁS, the community welfare service and the Department. This integration, which involved the transfer of almost 1,700 staff, was completed on schedule in January of this year. It will facilitate the delivery of a one-stop-shop service and greatly simplify the process, as people previously had to engage with three separate organisations for welfare and employment services.
The delivery of a one-stop-shop service is being piloted in four of the Department's offices and will be extended to a further ten offices by the end of the year. Development of this new integrated service is predicated on a case management approach which begins for the client from the moment he or she first contacts the Department.
This personalised response will monitor the client's progress towards the employment, training or education opportunities on an ongoing basis.
There is occasional public debate on whether people on the live register have a financial incentive to work and reference to the relatively high wages that would need to be earned to match or exceed that said to be available on social welfare. However, the great majority of people on the live register have a significant financial incentive to work. For example, some three quarters of people on the live register claim a weekly payment that comprises the personal rate only. The maximum rate is €188 per week. More detailed information on the incentive to work for people on the live register is contained in the committee's briefing material. As members will see, the amounts paid in some cases, for example, where rent allowance is paid to large families of two parents and a significant number of children, can be relatively large. This has been pointed out in many studies and is the basis for my discussions with the Department of the Environment, Community and Local Government with a view to transferring responsibility for rent supplement to that Department.
I am conscious that the people who turn to my Department for support played no part in causing this financial crisis and I will do my best to ensure that the burden of resolving the crisis does not fall disproportionately on their shoulders. One of my key priorities, therefore, is to ensure that the Department's reducing resources are targeted at the people who need them most.
Members will be aware that I had a particular interest in the area of fraud and control when I began in the Department. For this reason, I asked my officials to increase their efforts to combat fraudulent activity. Social welfare fraud is often perceived as a victimless crime, but it is not. It undermines public confidence in the entire system as well as being unfair to other recipients of social welfare payments and taxpayers. It is important at this point to state in the clearest terms that the majority of people on social welfare are claiming only the entitlements due to them. However, we must ensure that any fraudulent activity within the social welfare system is vigorously prevented and combated.
The Department is conscious of its obligation to protect public money and is determined to ensure that abuse of the system is prevented and dealt with effectively when detected, bearing in mind that taxpayers and people paying PRSI are carrying the cost of social welfare. The committee's briefing material provides members with some further information on the work of the Department's control division, including this year's control targets, information on the fraud initiative that I launched late last year and a summary of how control savings are calculated.
I will revert to our consideration of the 2013 Estimates. Table 1 in the briefing details the Department's expenditure on its various programmes in 2012. As can be seen, the largest block of expenditure relates to pensions and will amount to €6.2 billion, approximately 30%, of overall expenditure. Members may wish to note that expenditure on pensions, on a no policy change basis, will increase by at least €200 million in 2013 and increased by a similar figure this year. We have a demographic dividend, in that more older people are living for longer. As such, more people qualify for longer for the State contributory and non-contributory pensions. It is not atypical for someone entering pension age today to claim a pension for a further 25 to 30 years. The demographic challenges are increasing annually.
Expenditure on working age income supports, including jobseeker's and one-parent family payments, accounts for 28% of overall expenditure, some €5.7 billion. Expenditure on working age employment supports, including the community employment, CE, scheme, JobBridge, Tús and various employment supports, amounts to more than €983 million or nearly 5% of the Department's expenditure. This represents an increase of €122 million, some 14%, over 2011 and is a clear indication of my priorities in this area.
Expenditure provision for illness, disability and carer's payments will amount to more than €3.4 billion or nearly 17% of expenditure in 2012. These supports include carer's allowance and benefit, domiciliary care allowance and disability allowance among others. In total, payments to carers amount to more than €700 million.
Expenditure on children and families will account for nearly 12% of expenditure or nearly €2.4 billion, of which nearly €2.1 billion will go towards child benefit while €200 million will be spent on family income supplement.
Expenditure on supplementary payments, agencies and miscellaneous services accounts for €1.2 billion or nearly 6% of expenditure. This expenditure comprises four main elements, namely, rent and mortgage interest supplements of €487 million, the household benefits package of €335 million, free travel amounting to €77 million, and fuel allowance amounting to €214 million.
Members may also wish to note that three quarters of expenditure is incurred by a relatively small number of schemes. This is broken down on table 2 of the material. Other than expenditure on child benefit, members may wish to note that this expenditure relates to the cost of the weekly rates of payment for the recipients involved. It does not include the cost of supplementary benefits, for example, free travel and the household benefits package. As outlined in the table, 1.473 million people are in receipt of weekly payments in respect of 2.2 million people, a significant portion of the population. We pay child benefit to approximately 600,000 families in respect of nearly 1.2 million children. Social welfare's reach into every corner of the country, including the majority of households, is significant.
The sheer scale and scope of expenditure by my Department reflects the Government's commitment to protecting the most vulnerable in our society and recognises the role of welfare expenditure in the wider economy. However, we are in a difficult economic situation, which is reflected by the fact that we are still spending considerably more each year than we take in through revenue. Expenditure ceilings for my Department for 2013 and 2014 have been set in this context and, to be frank, achieving them poses the Government a major challenge.
Table 4 shows how social welfare expenditure increased significantly in the 2002-11 period. It is interesting to note that, in 2009 after the bank collapse and the guarantee, our expenditure increased significantly. Table 5 details the increase in weekly recipients and beneficiaries while tables 6 to 8 outline the payment rates during those years for various social welfare schemes. Those rates continued to increase after the crash.
One of my key priorities as Minister for Social Protection - the country's largest spending Department - is to bring some balance to our expenditure and funding, in particular by starting to put the Social Insurance Fund on a sustainable footing. This is important not only so that we can recover our economic sovereignty, but also to ensure that the social protection system is sustainable in future. The significant shortfall in the Social Insurance Fund, which is being met by the Exchequer, and the prospect of an acceleration of this deficit in future must be addressed. The committee considered this issue last week.
The Exchequer still makes the most significant contribution to social welfare expenditure in terms of resources, as it funds all assistance-based schemes and child benefit. However, employees, employers and the self-employed also make a significant and valued contribution to the social welfare system through the operation of the Social Insurance Fund. The Revised Estimates of expenditure for 2012 provide for social insurance income of close to €7.1 billion, but expenditure on social insurance will be almost €8.9 billion. The deficit of just over €1.8 billion will be financed by the Exchequer.
This is now likely to be exceeded in 2012. The recently completed actuarial review of the Social Insurance Fund was presented to this committee on 20 September last. I hope the committee found that presentation useful. It is hoped the review will inform the short, medium and long-term policy development in relation to the social insurance system generally.
On the budget for 2013 and beyond, €20.55 billion overall was allocated to the Department of Social Protection in 2012. During the period 2009 to 2012, inclusive, budget saving measures to the value of approximately €2.7 billion were introduced. The details of these measures are contained in table 3 of the pack provided for Members. This means that social welfare expenditure in 2013 would have increased by €2.7 billion more had these measures not been introduced. Achieving a further €540 million in expenditure reductions in the budget for 2013 as set out in the comprehensive expenditure report will be difficult. The scale of the reduction means my Department must continue its examination of all schemes and services, which was commenced as part of the comprehensive review of expenditure completed last year and informed the Government's consideration of the budget for 2012.
I hope I have provided members with a good overview of the Department's expenditure in 2012, the challenges ahead in 2013 and beyond and the wide variety of considerations which must inform the budget and Estimates process for 2013. I must stress that our system of social protection is a major piece of social investment and a major source of stimulus into the economy because our pensioners, carers and unemployed people who receive income support from my Department spend it in shops and businesses. It is an important part of economic demand and stimulus in an economy which has experienced a banking and construction industry bubble collapse.
I am aware Senator Power must leave for a vote in the Seanad. Would the Senator like to put a question to the Minister before she leaves?
I apologise to the Minister in advance if I do not return to hear her responses to members' questions. However, I will read the transcript of the proceedings.
I would like to raise a number of issues, the first of which is consistency across Departments in terms of the impact and cost on the social welfare programme as a result of changes being made in other Departments, in particular, the Department of Education and Skills. The Minister spoke at length in her opening address about options for young people, including Pathways to Work and so on. Last year, however, the Department of Education and Skills abolished postgraduate grants which resulted in a dramatic reduction, as outlined by the colleges over the summer, in the number of applications from young people from low income families to attend third level college. While the Minister is putting new options in place in her Department, other Departments are removing valuable options, the result of which is, in the short term, young people who would have gone to college being on the dole because they cannot get a job, and in the longer term, the unavailability, when there is a pick-up in the economy and new jobs are created, of people with third level qualifications. Was the Minister aware of that decision prior to its being announced and did she raise concerns about it from the point of view of her Department? What processes are in place to ensure similar decisions are not made this year and instead are thought through from a cross-departmental perspective?
My second question is in regard to the processing of claims, which has been an issue of concern for a number of years. I am aware there have been some improvements in some areas. A particular issue of concern is the waiting time between people finishing up on schemes and obtaining benefits. I have been contacted a number of times about waiting times in respect of illness benefit in particular as a result of the enforcement of the two year limit. I am sure Deputy O'Dea and others have received similar representations. People's illness benefit is being withheld while they wait for months on a decision in regard to whether they qualify for invalidity benefit. While the payments outstanding will be backdated, people are experiencing a lot of stress and uncertainty while waiting for a decision.
My final question is in regard to the progress being made in terms of the integration of the tax and social welfare systems. The Minister in her speech outlined the remit of the group and what it was set up to do. However, I am interested in hearing what progress has been made and the outcomes to date. While obviously this has implications in terms of child benefit and other issues, there is a real urgency to get those two systems working together.
I thank the Chairman and Members for the courtesy of allowing me to put my questions to the Minister first.
I thank the Minister for her presentation. The Minister stated that the targeted expenditure reduction for this year is approximately €540 million.
That is the figure for next year. We got it down to €485 million for this year.
The reduction for the next two years is approximately €1 billion. Given current projections for economic growth and so on, I am pessimistic about where we are going to get the money for the youth guarantee scheme, regardless of how much co-funding is provided by the EU. I was struck by the figure mentioned by the Minister in her speech in regard to the cost of pensions, which is currently in excess of €6 billion. I would have thought that the best approach for a country faced with a situation like this is to encourage people to provide for themselves. Rather than introducing pension levies and threatening reductions in tax relief for people who put money aside for pensions in order to look after themselves when, clearly, if the statistics are correct, the State will not be able to look after them in 20 or 30 years because the resources will not be available, the Government should be moving in the opposite direction in terms of encouraging people to provide for themselves.
I note what the Minister had to say about the Social Insurance Fund. I regret I missed the briefing last week on the fund, which I am sure was very interesting. I am a little confused as to the reason there is so much concern about the Social Insurance Fund. It seems to me to be a bit of an accounting exercise. The fact is that 60% of social welfare benefits are paid from outside the Social Insurance Fund. The only time the Social Insurance Fund washed its own face was during the period of high economic growth. I sincerely hope what the Minister said - she might give the committee some reassurance in this regard - was not code for saying PRSI will have to be increased. If the Social Insurance Fund is to wash its own face then the only way that can be done is for more people to get jobs. It appears ludicrous to be trying to balance the Social Insurance Fund through the introduction of measures which will increase the cost of creating those jobs.
I thank the departmental officials for their detailed brief, which I read last night. I was struck by a number of issues in it, especially the scale of the overall spend on social welfare and the key role it plays in the economy generally, including as a method of redistributing resources, as mentioned on page 5. It is also stated on that page that expenditure on social protection can play an important role in stabilising the economy by supporting the overall demand for goods and services in the domestic economy and mitigating the societal consequences of the recession. The Minister emphasised in her concluding remarks the benefit to the economy and demand in the economy of the amount of money being distributed through the social welfare system. The Minister will be aware that the Taoiseach and Tánaiste have given a commitment that social welfare rates will not be cut. I take it , in view of the importance of social welfare as a redistribution mechanism and its importance to the economy, where domestic demand is on the floor, that that commitment stands and social welfare rates will not be cut in the forthcoming budget.
The Pathways to Work scheme is referred to in the official brief. I understand it is being piloted in Arklow, Parnell Street in Dublin, Sligo and Tallaght. Does the Minister have feedback on how well it is working in practice? She referred to an evaluation report but surely the Department has received some feedback on whether it is working. I have spoken to people employed by the Department of Social Protection in the vicinity of the four places mentioned and they have told me they have not noticed any significant difference.
I do not know how many hundreds of thousands of social welfare officers are in the country but the pilot scheme is going on in four areas that will be extended to ten. How long will this take to function in the entire country? Is it making a difference on the ground where it is being piloted? What is being done about establishing links between employers and training providers?
There is an announcement on page 11 of the brief relating to rent allowance. This indicates that the Department currently provides rent supplement to housing authorities; it will begin using a new housing assistance payment, with the commencement date for the new arrangement being 1 January 2013. This means the current system of rent allowance will be replaced by a new housing assistance payment administered by local authorities. How realistic is the target of 1 January next, as it is approaching quickly? If we are talking about transferring this responsibility to the local authorities, there must be some idea of how it will work in practice. Are we still talking about houses in the private sector and will the local authority agree the rent? Will the rent instead be agreed by landlord and tenant, with the local authority charging what is deemed a differential rent?
The rent allowance scheme has caused mayhem from one end of the country to the other, particularly in urban areas, and I could spend the rest of the day citing instances of trouble. I even had e-mails related to the issue this morning from people in estates in Limerick. Will people go to the local authorities if there is a complaint about the conduct of somebody going into rented accommodation using rent allowance or the friends they tend to bring, who are often more troublesome? What role will the Private Residential Tenancies Board, PRTB, have in future? If somebody cannot get satisfaction from the local authority, will that person be forced to take a case to the Private Residential Tenancies Board, and against whom will the case be taken? Will it be taken against a landlord or a local authority?
What gets under my skin is the blatant lack of transparency. Some years ago there was a great deal of agitation in the Dáil and outside it because the EU Commission decided that farmers who got grants from the EU had to have their names and the amounts paid on a website. Perhaps Members recall that happening. According to a parliamentary question I asked recently, last year the Minister's Department paid €436 million in rent allowance to landlords whose identity we cannot get. By law, these people remain anonymous. If somebody came to me in the morning and told me a neighbouring house was rented to an undesirable person, with terrible trouble in the estate - this is not an imaginary example by any means - I could try to contact the HSE. Depending on whom I speak to, the person in the HSE might be very reluctant to say even if the renter is receiving rent supplement, and I will definitely not be told the name of the landlord.
This appears daft. The EU pays a certain amount to farmers and there must be transparency in that regard. Irish taxpayers are paying the guts of €500 million to landlords but there is no right to find out who are the people who receive the money. Some of the taxpayers are the people affected by anti-social behaviour, yet they have no right to find out the name of the person they are supporting through rent supplement coming from their taxes. It is ludicrous. Will we have transparency and will there be some arrangement to publish the names and addresses of landlords?
I can give a practical example. A person may not want to go to the PRTB - there are many reasons for this in Limerick - and let his or her name go public. It would be preferable if the landlord could be approached for a deal but this is impossible because we cannot get the names of landlords. Will the Minister address that?
Will the Deputy wrap up as he has been speaking for ten minutes.
I have one question relating to fraud. I may have misread the brief and the Minister can correct me if I am wrong. It indicates the target for 2012 is to review 985,000 cases.
I did not catch that.
The target for 2012 is to review 985,000 cases. Is that right?
Yes.
How many staff are allocated for the job? Does the Minister agree that much wastage of expenditure falling under the heading of fraud is in reality errors in the system, where somebody in the Department makes a mistake? What is the breakdown of errors and genuine fraud?
I thank the Minister and officials for the presentation, as it is a welcome move to have the opportunity to question a Minister before she starts her budgetary negotiations with other Departments. It is a good mechanism which recognises the role the committee can play in trying to tease out some of the issues and provide helpful suggestions.
There is a context, which has been stated by the Minister. The briefing made a good point at the beginning, which was partially quoted by Deputy O'Dea. It probably should be stated more often that when dealing with the Department of Social Protection, the primary role is to support people. In doing so, there is a contributory effect on the local economy and social consequences. The briefing made that point quite well.
Any changes in the Department can have consequences, which sets it apart from other Departments. The media and some commentators have an agenda because the Department is the biggest spender, with the idea that its expenditure must be cut as a result. The logic omits the fact that because of the recession, the number of people dependent on the Department has increased. Even if we remained at the current level of payments and allowances, the spending of the Department would increase, despite controlled savings or efficiencies within the Department. There is a job of work to be done. Our party, in its costed alternative budgets, has not increased payments but we tried to ensure that the status quo remains, even with the increase in prices facing people dependent on social welfare, including the price of gas and electricity. Those will have a greater impact on people in need of the Department's help.
The briefing also documents, in a table, the range of cuts implemented to date by this and the previous Government. It is quite stark, with the Minister mentioning that €2.7 billion has been taken from the system. The vast majority of the €2.7 billion has been taken from the pockets of people dependent on social welfare and has not come from efficiencies within the Department or controlled savings. That means the local economy has suffered the consequences, and children have also suffered when parents cannot put food on the table.
There is a list, as the Minister stated when we discussed the issue of youth unemployment. In the last year the level of unemployment has increased substantially. The number of long-term unemployed who have different needs has increased also. Even since the production of the Government's Action Plan for Jobs, there has been an increase in the number of job losses in the economy.
I will proceed to my questions. The Minister has stated in the past that the intention of the Government is not to cut social welfare rates. Is that still the intention? Does the Minister believe the reduction in the number of months for payment of the fuel allowance is a cut in social welfare rates? The changes she has implemented with regard to lone parents are the same as a cut in the rates. The reductions in rent and mortgage interest supplement are also cuts in the rates. So far, the Minister has been cutting but saying there is no cut in the rates. Is that commitment dead in the water at this stage?
My other question is related to the committee because it agreed on a report I produced on the single working age payment. One of the recommendations in that report was that in any social welfare reform the value of existing earnings disregards for secondary benefits and the means or capital allowance should be maintained. That was signed up to by the members of the committee. Is the Minister aware of this and will she have regard to it when planning changes to the social welfare payments in the forthcoming budget?
A review was due to take place of the cut to disability allowance which was announced last Christmas. We are now in the middle of what we are told are the budgetary negotiations before the next budget, but we still have not seen the review. Will the change the Minister intended to make simply be included again in the budget or will the review be published beforehand in order that we will have an opportunity to discuss it?
The briefing note states the Revised Estimates for 2012 provided for a deficit of €1.82 billion in 2012 but that this figure is now likely to be exceeded. Is there any indication of the amount by which it will be exceeded? This has major implications for future planning. Table No. 4 on social welfare expenditure appears to indicate there will be a drop in expenditure this year. The expenditure figure will be €20.547 billion, but if the deficit is to be exceeded by the figure given, how will that expenditure figure increase? Will it be the same as last year, which will mean there will be no overall saving?
I must ask the Deputy to conclude.
Table No. 11 indicates where potential savings could be achieved. It gives figures for children and families, people of working age and retired and older people. Children are affected by cuts not only in the first row but also if the Minister imposes a cut on people of working age. We did not have enough time to refer back to the proposal from the European Council, but one of the points the Minister has made in that regard is that she agreed with the Cypriot Presidency regarding income supports and the need to protect children. She will have to bear in mind that children will mainly be affected if she continues to cut without the other supports proposed.
I will reply first to Deputies Willie O'Dea and Aengus Ó Snodaigh.
On the issue of landlords and rent allowance, I share the concerns of Deputy Willie O'Dea. Everybody who represents constituencies where there is a great deal of rented accommodation available has experience of the same problems. As a result of this, when I entered the Department I changed the legislation in very important ways to give social welfare officials and inspectors more powers of investigation with regard to landlords. This was before the Deputy became his party's spokesperson. From May 2012, social welfare inspectors and higher executive officers, HEOs, have been given powers of inquiry to ensure rent supplement is being paid correctly. The types of inquiries to landlords that are considered necessary include confirmation that the person to whom rent supplement is being paid is the actual tenant. The Deputy made a very polite allusion to a phenomenon I know well. An individual receives rent supplement for himself or herself and, perhaps, his or her children. That person is fine, but he or she might have a hidden or undeclared partner and that person might not be so nice. In fact, it might be a problem for the first person. We are all familiar with this. Officials now have powers of inquiry which they did not have previously to find out if the person concerned is actually the person who is the tenant. Then there is a statement confirming that the person to whom rent supplement is or has been payable is or has been residing at that address for the period for which the rent supplement is or has been paid; confirmation of the duration or period of the tenancy; and any other relevant details that the landlord may have which may be relevant to the payment of rent supplement. A landlord who fails to comply with a request made by the relevant designated person or social welfare inspector shall be guilty of an offence. We took these powers in May because I share the concerns expressed. Deputy Aengus Ó Snodaigh and I have discussed this issue on previous occasions. It is a significant social problem.
The reason I would like responsibility for the payment of rent supplement to be transferred to the local authorities is very simple. The local authorities have housing departments. Since I came into the Department I have been working in conjunction with the Minister for the Environment, Community and Local Government and the Minister of State with responsibility for housing. A group of officials from both Departments is working together to develop a new payment which will be called the housing assistance payment. What are the difficulties and challenges in doing this? There are a couple which I have enunciated previously, but I will go through them for Deputy Willie O'Dea's benefit. The first is that local authorities have approximately 88 separate differential rent schemes and ways of charging for different types of accommodation, individuals and family circumstances. There has been very positive work ongoing for some time by officials in the Department of the Environment, Community and Local Government to have a more coherent and reduced number of schemes. That work appears to be progressing well from the regular updates I have received on it.
The second issue is that local authorities have a significant problem where there is a rental accommodation scheme, RAS, and ordinary traditional tenancies. In some cases people on social welfare may build up arrears by not paying the rent.
I am working with the Attorney General to develop legally the scheme people are familiar with, the household budgeting system, which is used in post offices. It was originally developed to prevent people getting into arrears on electricity and gas. When someone signs in after getting a tenancy, they cannot sign themselves off even though, under the legislation, they may do so. The consequence is that Dublin City Council, which operates in Deputy Ó Snodaigh's constituency, has a particular problem. There may also be a problem with a build-up of arrears in Limerick, with which Deputy O'Dea is familiar. We are working to change it because it is important that local authorities can have confidence in receiving rent and that people with a social welfare income commit to it. For women, it is the worst thing that can happen to a mother as it puts great pressure on the family. Getting out of arrears, which build up relatively quickly, can be very difficult.
I share the concerns of Deputy O'Dea in respect of rent supplement. I do not agree with the comments of Deputy Ó Snodaigh about rent allowance for landlords and the mortgage interest supplement. As the Minister for Social Protection, I am not in the business of seeking to enhance the income of landlords and banks. I want to make the two systems as efficient and effective as possible, with the best value for money. We carried out an exhaustive survey of rent around the country based on the data available within the Department and from external sources. We found that rents paid were in excess of average rents. I published this material before Deputy O'Dea became spokesperson and a member of this committee. That may have been a historical matter but we sought to achieve rents that reflected commercial rents. It is being done on a case-by-case basis.
Community welfare officers, who deal with rent supplement, were transferred to my Department in October. We are currently working with them to enhance their work in a range of areas. There is much debate in the public domain about the Croke Park agreement but the Department of Social Protection, enabled by the Croke Park agreement, is undergoing the largest transformation in its history. Some 1,700 staff transferred from the HSE, including 1,000 community welfare officers and 700 staff from the FÁS employment offices and community employment schemes. The integration of these staff members is a major job. Issues have arisen involving the industrial relations procedures under the Croke Park agreement.
That partially answers another of the questions posed. The Deputy asked how long this process will take. We had to take in the staff first. We launched Pathways to Work earlier and it is now operating on a pilot basis. The number of people interviewed so far this year, the activation referrals, amounts to 100,000, an increase of 37%. I can make available the table to which I am referring. People are called to an interview, a group interview in some cases, followed by a one-to-one interview. Some of this depends on the configuration of the local social welfare office. The number of interviews scheduled is 75,000, an increase of 50%. The attendance rate for the first scheduled engagement is approximately 75%. When we invite people to an engagement, a group interview or a subsequent one-on-one interview, about 10% of referred clients leave the register prior to the first engagement and another 10% leave the register by the date of the second session. These statistics were reviewed in June and July.
We are operating a two strikes system in terms of our approach to fraud. People are invited to meet officials in a group engagement or in a one-to-one engagement. Of the 20% of people who sign off before the first or before the second engagement, many of them may have found a job that week. In other cases, we are not quite so clear but there is a turnover on the register. The vast majority of people welcome the engagement, while others do not have time in their busy schedules to engage. The problematic element is the remaining 5%. Some 3% of referred clients are still scheduled to attend the second engagement and 2% fail to do so. We are particularly concerned about the latter 2% and they become liable for penalty rates in respect of reductions in social welfare payments. Since the introduction of the penalty rates in May 2011, some 1,374 customers have had penalty rates applied. With the two strikes approach, a number of people sign off and we have a core consideration about why the remaining people, who are liable for penalty rates, are not responding. It is a lengthy process because we want to give people the opportunity to respond. I stress that most people respond and in some cases they have recently signed off anyway. In other cases, for their own good reasons they may leave the register.
This is a new approach and is important when one thinks about pensioners and the Deputy's comments about our social insurance fund. We want to ensure our pensioners can look forward to an adequate pension, whether it is the contributory pension or the non-contributory, means tested pension. We must ensure the resources in Department of Social Protection are used as well as possible. The vast majority of people interacting with the Department are as honest as the day is long but a percentage of people have a difficulty. Through the approach of Pathways to Work, we want them to come in so that we can help them.
I launched the Tús scheme shortly after I came into office. It has 5,000 people and is operated by local community partnerships and local development groups and networks. It exclusively targets, on a basis selected by the Department, people who have been unemployed for more than one year. In its deliberations in respect of social welfare, the IMF was anxious to examine some of the people who were long-term on the register. Through the local employment services and local partnerships, there is a great amount of valuable work being done around the country. I thank the local partnerships, the local development companies and the Leader companies that have used Tús and built it up to 5,000 people. It involves people who are on the register for more than one year. Many positive and encouraging developments are taking place for people on the live register. They are desperately anxious to contribute and to go back to education or to work. Some €84 million was provided for Tús, which amounted to an increase in expenditure in order to provide opportunities.
Our spend on JobBridge, which again is an activation opportunity, was in excess of €65 million - almost €67 million this year. That expenditure represents the increase in the expenditure on labour support mechanisms. It is a very important spend and I am very grateful to the Departments of Finance and Public Expenditure and Reform for making extra resources available.
The Deputy asked about the scale of the adjustment. I remind him that in November 2010 his Government set out a four year national recovery plan and Fianna Fáil's targets for social welfare were even more daunting. In 2013, Fianna Fáil wanted a reduction in the four year plan - I am sure the Deputy has it and is very familiar with it - of €1.4 billion. In 2014, it wanted a reduction of €1.9 billion. That would have meant a reduction of €800 million in 2013 and further reduction of €500 million in 2014, so his Government, in calling in the IMF, had a series of situations to grapple with in terms of social welfare expenditure. That was its suggestion.
It was predicated on different rates of growth.
Yes, but those growth rates, unfortunately, turned out to be not very sustainable and, similarly, the numbers who were unemployed were far higher. That Government set many of those figures the previous September but it turned out the numbers on which they were predicated were optimistic, to use the kindest word, or extremely optimistic. I can understand why that may-----
Something like the present Government’s growth projections for the next three years.
I cannot understand, from the point of view of the Department of Finance, why that may have been so because that Government was obviously being optimistic about figures. It thought the bank guarantee would be an in and out job. The Deputy possibly had a much tighter take on it because I remember some of his contributions being very thoughtful. All I can say is that his Government was over-optimistic about that as well. Hence I have the problem of sorting out some of the legacy items which it left me.
Is the promise about not reducing the rates intact? Does the promise, solemnly made by the Taoiseach and the Tánaiste, that social welfare rates would not be reduced still stand?
Can I say what I said to the Deputy's predecessor and to Deputy Ó Snodaigh last year? No decisions have been made in regard to the budget in December. When the decisions are made on the budget, they will be made by all the members of the Cabinet around the Cabinet table. I am not at liberty to say anything because I do not have the information as no budgetary decisions have been made. Like last year, the final details about the budget will be made when the Minister for Finance stands up to announce it on budget day in December.
I asked about the Social Insurance Fund, the fall-out in that regard, the €1.5 billion we are lacking, what the Commission has to say about that and the effect that will have on people who are contributing to the fund. Will pensions be in place for them in the future?
There is a section in the Minister's paper called, Ensuring work pays, about which I have questions. Is there a cap on the number of social welfare payments for which a person can qualify? Has this been looked at and is it feasible? For example, a person could be in receipt of rent allowance, a medical card, free fuel, the back to school clothing and footwear allowance, the lone parent allowance, child benefit and maybe even half the jobseeker’s benefit. If one looks at that cumulative picture, what job could meet that in this environment?
I do not agree with the social welfare system in the way it is framed, with 64 schemes. Are we creating a system which is, in itself, mitigating against work? The Minister said three quarters of people are on the basic jobseeker's benefit. There is no issue there. I am talking about the cumulative picture that could be like a social welfare industry which is difficult to get out of. Has a cap on the number of payments going into a household been considered within fair limits?
Last week I spoke to the officials about the self-employed, a sector of society which has been forgotten. If we can bring them into the Social Insurance Fund by giving them the option to make a class A contribution, they would qualify for benefits. They have a number of benefits currently with the 4% contribution, but if they increased the percentage, when they fall on hard times, they could apply for illness benefit or jobseeker’s benefit.
The Minister asked us about ways to help to bring in an income. I have been thinking about the people who are signing on for credits. They are not getting a payment but are ensuring their entitlement to pension is kept up to date. To me, it is really a pension policy. I would be in favour of a small contribution - maybe €1 per week - from the people who are signing credits only. They are not getting money but are sending in sick certs to get a credit contribution and they are signing credits at the local office. This is like a pension policy for them and ensures their pension is in place in future.
I refer to something mooted in the general election campaign but which seems to have fallen by the wayside. It may be more under the Minister for Public Expenditure and Reform's remit than the Minister’s but I am talking about a central assessment unit which could assess people. People are being assessed for social housing, medical cards, social welfare and third level grants. There is a duplication of work by civil servants. There should be a central office where the housing department could ask for Marie Moloney’s assessment as could the medical card and the social welfare departments. I do not understand why something like that is not being worked on as it would do away with duplication of work.
I know the fraud officers are very active on the ground but we should adopt the policy that a person is innocent until proven guilty because some of the fraud officers are very aggressive, for the want of a better word, when they go to people's houses. They deem them guilty before they have proved it. It is unfortunate because it builds a barrier between the people and the officers.
I cannot get to the bottom of how many people were overpaid €20 in the fuel allowance.
Some 60,000.
I thank Deputy Ó Snodaigh. This was purely an administrative error by the Department and it should absorb that. It is grossly unfair, when Members and former Members of the Oireachtas owe money to the State but have not paid it, that this €20 will be deducted from those people's payments next month. It is grossly unfair that it can be taken from them. Will the Department absorb this on a once-off basis and ensure it does not happen again?
The Minister spoke about exceeding the cap for rent supplement. There is no comparison in the rent paid for a house in Killarney or one in Tralee. It is very expensive to rent a house in Killarney. People are finding it next to impossible to find accommodation at the social welfare rate. They are being driven out to the countryside where even there they cannot find accommodation. They have the problem of trying to get their children to school and getting into town or whatever.
It is another expense so the Minister must look at rent allowance by area, setting the cap according to local rents.
On rent supplement, the Minister told me the Department had given its officers extra powers of inquiry to ascertain who is being paid the rent, the person designated, the proper recipient. In Limerick, this does not seem to have made the slightest difference. The experience on the ground in Limerick is that social welfare officers are run off their feet and the last thing they want to hear about is rent allowance.
Regardless of whom the rent is paid to, there could be a problem about whether it is paid to the tenant or to the landlord, that is the wrong target, the target should be those taxpayers who fund the system who are being driven out of their minds by antisocial behaviour in many cases. They should have the right to know who the landlord is who is allowing this antisocial behaviour and collecting a social welfare cheque at the end of each week. Will the landlords, the recipients of this taxpayer largesse, be identified on a public list?
The Minister mentioned the Croke Park agreement and the 1,700 CWOs who have been transferred. This has been in gestation for a long time; the process had started before the Croke Park agreement was even dreamed of. The agreement provides for transfer from other Departments that are less overworked than the Department of Social Protection. How many have been transferred as a result of that provision? Talking to officials on the ground in the Clare-Limerick-Tipperary area, the experience is that they are still far too busy and could do with a lot of extra staff.
I asked the Minister how many people had been designated to investigate the 985,000 cases of fraud. The Minister mentioned €84 million had been spent on Tús, and I congratulate her on that, and €65 million on JobBridge. That underlines earlier concerns expressed by Deputy Ó Snodaigh and me about the cost of extending the youth guarantee scheme. It will be phenomenally expensive if we are to get anywhere near what we have been led to expect.
On the lack of incentive to go to work, I would be interested in hearing the reply to the question on the overall cap. As far as the general situation is concerned, there is an interesting section in the briefing document from the Department where it is estimated if someone is more than 70% as well off staying at home, that is what he tends to do. The Department has some interesting and helpful figures there, finding that in a recent analysis of the minimum wage, 90% of social welfare payments have a replacement rate that is less than 70% the minimum wage and 10% of claimants have a replacement of between 70% and 80% of the minimum wage, indicating that the social welfare system is not a powerful disincentive to those who want to go to work.
I am not trying to be politically contentious but the internationally recognised standard for the poverty line is 60% of the average industrial wage. In this country, there are 750,000 people living below that line, with 250,000 of those being children. The Minister will find the vast majority of those are found in the ranks of social welfare recipients. That is why I am anxious rates be protected as far as possible.
On rent supplement, when the caps are introduced this year, if a tenant was not able to renegotiate the rent with the landlord according to the new cap, there should be a service that a person could use to find alternative accommodation to ensure people do not fall through the safety net.
The Minister mentioned that the free travel schemes cost €77 million. Over the years, free travel has been viewed in a positive light, including in other countries. When looking at that, is the Minister looking at the social value? There is a subsidy to public transport providers and if that was reduced, it would affect their capacity to operate financially. Would the Department negotiate that?
FÁS failed to seek ESF funding from the EU for training courses, although the issue might have been resolved since then. In terms of the budget, is ESF funding being provided for programmes such as Tús?
I asked about the deficit and a second question about the disability review. The rent supplement issue has been teased out back and forth, even with the Minister's predecessor, particularly the payment of rent allowance to the tenant instead of the landlord. Can that be re-examined? There are benefits to the State; if it is paid to the landlord, it adds to the contract he has. Deputy O'Dea's point had been made repeatedly in the Dáil - that would allow the State to force the landlord to take his responsibility to the community more seriously. It would also properly provide the Revenue Commissioners with the information about the income the landlord was getting for a property and similar information about the household charge and the second home charge. That would be a step that could be taken so it should be compulsory for every landlord to be listed.
We do that now.
The Minister mentioned arrears with Dublin City Council. Some of the arrears in Dublin City Council are created by the council's own accounting process.
I am aware of that.
There is one simple step that could be taken. When a new rent is put out, the tenants should be informed and the rent should only happen from that date, rather than being backdated to the day the council got the documentation. That would help those in distress.
The key point on the cap is that the landlords have not reduced prices; under the counter payments are increasing, leading to people being under great stress. That is the problem, we end up with vulnerable individuals struggling for the sake of getting rent allowance and being in a stable home and could end up in crisis.
Senator Moloney mentioned forms. I had to recently fill in four separate forms, all to do with the same thing.
I had to fill in the exact same details on every single form, whether it was for the death grant or the household benefit package. That is madness. In the overall scheme of things it might save a few bob but if one has one's PPS number on the form, providing all the information once should be enough because it will be on the system and can be shared. I have raised this issue with departmental officials before. I believe the quicker we get to that point the easier it will be in the Department.
Does the Minister wish to reply to members before her concluding comments?
I will first respond to the Chairman's questions. She raised the question of rent supplement and the need for the tenant to seek advice on renegotiating the rent. We hope to make a major shift so that this service goes to local authorities, which after all have housing departments. The housing assistance payment, as the system is developed, should be able to address the issues that Deputies O'Dea, Ó Snodaigh and the Chairman raised. The community welfare officers have transferred from the HSE and are now part of the community welfare service in the Department of Social Protection. They are not necessarily expert in dealing with housing need and the setting of rent, whereas this has been part of the responsibility of the housing section of the local authorities. We must bring the different systems together. I am happy that we have made progress. I share Deputy O'Dea's concerns on the way some tenants, or people associated with them who are not declared, may cause great difficulties.
I will be able to provide the Chairman with data on the people who avail of free travel. At present, in approximate figures, about 745,500 social welfare recipients get free travel. This includes pensioners, people with a disability and carers. Some 85,700 persons have companion passes and another 361,200 are spouses of recipients, making a total of 1.1 million people who receive a free travel pass. The Chairman is correct in saying that the overall cost of the scheme was capped at €77 million by our predecessors in Government some years ago, simply because the numbers, and the number who were not pensioners, was rising significantly. I will provide the committee with these figures. It may be worthwhile for it to consider them more closely. The operators have raised issues on the schemes and have a number of queries. There is an inter-departmental group comprising the Departments of Transport, Tourism and Sport, Social Protection and the representatives of the National Transport Authority and so on dealing with it. There is a concern about some level of abuse, such as forged passes being used. People may have seen reports in the newspapers on an exercise that officials in the Department together with the operators of the trams carried out in Dublin. We have set up a hotline for transport operators, so that if inspectors who are checking tickets and passes believe the transport pass may be improperly used they can telephone and check the person has a valid pass number that is duly authorised. We started this a couple of months ago, so I do not have full outcomes. I will be happy to come back to the joint committee to discuss this when we have more detailed information in the Department. I know that Dublin Bus as well as other operators are concerned.
For the past ten to 15 years we have been speaking about changing the system in the Department so that a person is issued with a personal services card which has photo ID. This is a huge piece of work. We have started to implement it this year with the change to pathways and the introduction of the personal services card. In fairness to the staff, there are major ongoing changes, such as upgrading IT and changing to new systems. Unfortunately it takes time. I do not think there are any fraud problems with pensioners because everybody over 66 years is entitled to the free bus pass. I have never heard a suggestion of a problem with that scheme. The problem may lie with some of the other categories, for example younger people who may have counterparts who are entitled to free travel and they are enabled to use it. There are 99,000 on disability allowance who have a free travel pass. Many of them would be quite young. There is a problem. The operators have raised it as a problem.
The bulk of the allocation of €77 million goes to CIE as a subvention. Another amount goes to rural and community bus developments. Senator Marie Moloney would be very familiar with its operation in County Kerry. Some goes to private bus operators but they have raised their issues with the Department of Transport, Tourism and Sport.
Perhaps this may be an issue the joint committee might return to when I am able to give the secretariat a more detailed briefing. I share the Chairman's appreciation of the value of free travel for people, particularly pensioners. I spoke to a medical consultant in the area of caring for older people and I was told of the tremendous value of encouraging people to travel around. Senator Moloney can tell us of the value to the local economy of the golden years pensioners who travel to Killarney for a short break. It has very important social consequences and benefits for people individually and also it helps pensioners to travel around and see the country. That has an impact on tourism and leisure. I am very conscious of the value that older people and people with mobility issues derive from their free travel pass.
The spend in 2011 on rent supplement was €503 million. The estimate for this year is €436 million. Some people have had difficulties but the individual community welfare services are dealing with people on a one-to-one basis. New rents are being negotiated yearly or every couple of years. The estimated savings to the Department are about €67 million. In the context of the budget, achieving these savings is important. I will revert to Deputy O'Dea on his questions relating to identification. As I said, the new powers for inspectors should be of assistance. We might talk more about that.
In response to Senator Healy Eames, the increase in the deficit of the social insurance fund does not affect spending. The Government commits to a programme of spending on social welfare of €20.5 billion. Some of that spending, that is contributory old age pension, job seeker's benefit and so on is funded out of the social insurance fund but the Government has committed to that spending. If there is a shortage on the fund, the deficit is made up out of general taxation.
Deputy Ó Snodaigh also referred to this issue. The Government adopts an estimate for the year and where the social insurance fund falls short or the deficit is larger than predicted general taxation is used to make up the shortfall. This is currently the case in the period since estimates were done with the International Monetary Fund in September 2010 and confirmed in November, the number of people on the live register has increased by 40,000 more than anticipated. The good news is that the social insurance fund will balance itself as people return to work in a number of years but if we continue to have high levels of unemployment we will need to ensure the fund is resourced.
Members should also note in respect of the social insurance fund that the health levy-----
Has provision been made for such a scenario?
-----was originally an insurance based payment. The replacement levy, which the previous Government introduced, was described by the Economic and Social Research Institute in the original papers as a universal social contribution. However, when the then Minister for Finance, Mr. Brian Lenihan, presented it in the budget the levy had morphed into a universal social charge, in other words, a general tax to provide for a range of social spending as opposed to a contribution. One of the issues we need to address is whether we can rebalance the contributory element if the social welfare system. When Lord Beveridge developed the notion of modern social welfare 70 years ago he did so on the basis of an insurance based system. This is an extremely important concept because during their working lives people pay into an insurance based system from which they earn an entitlement to claim if they fall unemployed, become sick or retire. They can, therefore, look forward to some comfort from a fund into which they have paid. In that sense, it is important to keep the social insurance fund in balance.
On Senator Marie Moloney's query about bringing people who are self-employed into the social insurance fund, the actuarial review the joint committee studied last week showed that on an actuarial basis the self-employed, who pay a 4% contribution, do better from the fund than any other group. The 4% contribution gives a self-employed person who becomes unemployed an entitlement to an old age pension or a widow's-survivor's pension on a contributory basis. This represents extraordinarily good value for a 4% contribution. The actuarial review report notes that such a contribution would only fund a pension of around €28 if it were valued on an actuarial basis. The difficulty with regard to self-employed people, as highlighted in the programme for Government, is whether they can be brought into wider social insurance schemes. While this is possible, they would also have to make sufficiently large contributions to make the system viable as the deficit in the fund would otherwise increase.
Is it possible to do that?
No, the reason being that the scheme was designed for that purpose. It was extended to the self-employed purely for the contributory retirement pension and contributory survivor's pension and the 4% contribution covers only these pensions. The report on the social insurance fund shows that if an insurance company were managing such a scheme, a 4% contribution would probably only merit a pension of approximately €28 rather than full pension currently received by the self-employed.
That is not the issue. We are discussing people who fall out of employment.
The findings of the actuarial review are very important. It is an important social and national objective to sustain pensions into the long term. If, as members of all political parties and none agree, we are to achieve this objective, we must also ensure the fund is sustainable.
To clarify the issue, I asked about extending entitlements under the Social Insurance Fund to the self-employed on the basis of higher contributions. The self-employed should be given this option and if some choose to avail of it, they should be entitled to the relevant benefits. Those who choose not take this option would not have the same entitlements.
We have discussed this issue previously and I wish to make clear that people would have to contribute if they wished to claim a wider range of benefits. To cover unemployment, the contribution of the self-employed would have to increase to 15.9%. In other words, self-employed people would have to pay the employee contribution of 4.25%, the employer contribution of 10.5% and a small additional contribution to cover their entitlements on an actuarial basis. One of the proposals that has been made has been to provide such an option on an opt-in basis. The advisory group, to which several members referred, is working on this and other issues. It also had to await the outcome of the actuarial review, which was completed during the summer. The Department published the review at the earliest possible date and circulated it to the joint committee and Dáil in late August or early September before circulating it to the media in order that all the parties would have an opportunity to examine it. This is an area on which there is considerable common ground between the political parties in the Dáil and one on which we can move forward in a progressive manner. I do no yet have a report from the advisory group as it only recently received the actuarial review of the social insurance fund.
Senator Healy Eames referred to placing a cap on the number of payments. Our system does not work in this way. In Austria each family has an account in which all payments and benefits from the State, ranging across education, agriculture and health, are aggregated. It was interesting to study this system and the various benefits individuals and families received from the State but for reasons connected with information technology, it would be some time before we could have a similar system in place.
As I indicated, those who have a significant income from social welfare are households of two adults and more than three children. Such households receive two adult rates of payment and payments of €29.80 per week for each dependent child. A family renting in Limerick or Dublin city centres will also receive rent allowance of between €800 and €1,000 per month. If one compares the income of such a household with the minimum wage, it is easy to envisage that the family may have a social welfare package, including rent allowance, of between €29,000 and €31,000. One of the steps I took on becoming Minister was to reinstate the minimum wage to ensure a distinction between it and social welfare rates. The large number of people in receipt of the single rate of jobseeker's allowance, which stands at €188 per week, can see there is a large differential between social welfare and being in a paying job.
In talking about a family with two adults and more than three or four children, we are talking about a significant amount of income flowing into the house. If the family has a rent allowance, the income is higher again.
Committee members should bear in mind that in this country we have a large number of carers and these are doing a very important job. Therefore, if that family-----
The payment of a carer's allowance is not in argument.
No, but just let me explain how a family in profile might build up a significant income. The Senator mentioned she was concerned about this. If, for example, one of those children had a caring requirement, one would be talking about the domiciliary care allowance if the child was under 16 and about a disability allowance if the child is over 16. One of the adults might be the carer or half-rate carer.
A carer was one issue I did not mention, because carers work for their money.
No, but the Senator set out a concern. I want to be clear. The reasons people get different social welfare payments is because they have an entitlement or because they have particular needs within their family which generate additional payments.
In last year's budget, I looked at, and I will continue to look at, the issue of multiple payments. We had a situation, for example, where some people on CE schemes were getting double payments. The system could not afford that. Any cut is difficult and painful for the people concerned.
The Senator has emphasised her concern with regard to carers. This concern is shared by all parties. However, it must be borne in mind when looking at the statistics that some of the people who are getting a series of additional payments are getting them because within the home they are looking after children with a special need - which we want them to do - and the State is recompensing them for that work. Therefore, in discussing this issue, we need to be aware of the different categories of families receiving payments and supports from my Department. Carers do a great job for people who require a full-time carer, which is the criterion for getting a carer's allowance. It is important we have a knowledgeable discussion about how some families might have a profile of higher levels of payment. A big concern relates to the rent allowance and we have talked about how we might reform that. However, there are other additional payments some families get for special circumstances.
There is another question related to that. Has a cap on the number of payments going to any one household ever been considered?
As I said, some countries, such as Austria, have an account system for each family and household but this is not something that is under active consideration in the Department currently. The Department is trying to develop pathways and the personal services card. We are also attempting to get a lot of people back into work training, education and so on. This is our priority currently. In Ireland, we would need significant changes in IT technology to do as is done in Austria. However, the pathways process will look at the profile of what the family is earning, so the individual -----
It may not be a family in question at all, but a question of five or six people who are renting together.
In the case of five or six people renting together, it would be normal that only one of those renters would be in receipt of rent allowance. We have changed the system to require, from this year, that the person receiving rent allowance makes an equivalent contribution to what he or she would be paying in a local authority house. Therefore, we have addressed that issue. If the Senator is suggesting that four people sharing a house are undeclared, I request she provide that information to the -----
I am not suggesting that at all. I am talking about the cumulative social welfare intake into a particular household.
I remind the Senator that the Minister was making her concluding remarks. I will let Deputy Griffin in on this briefly now.
I have only recently become a member of this committee and did not receive notification of today's meeting. Therefore, I apologise for coming in so late and mean no disrespect by that.
With regard to child benefit, particularly for higher earners or households with incomes over €100,000, would it be possible to put in place a mechanism to ensure the obligatory return of child benefit? I understand that in the United Kingdom child benefit is paid, but there is an obligation on a recipient who earns over a certain amount to return that benefit to the exchequer. Are there any figures available on the possible savings for the Department here if child benefit to households earning over €100,000 was returned? Would it be possible to arrange for this and to ensure it works?
On the issue of free travel, a constituent who called to my clinic on Friday asked me whether I would ask the Minister whether she has considered allowing current recipients of free travel the opportunity to contribute to the cost of their travel. This person suggested her travel card should be replaced with a 90% discount card. Therefore, rather than getting a free train to Dublin, she would pay €8 return. She would be happy to do that and such a measure would have significant savings for the State. I would appreciate a response from the Minister on that.
Briefly, how many people in the Department are assigned to target fraud currently? How many are allocated to deal with the 985,000 welfare claims? Second, what, if any, role will the Private Residential Tenancies Board have under the new rent supplement regime?
Deputy O'Dea asked another question I did not answer, regarding how many staff from other Departments have come to the Department of Social Protection. I understand that in recent years approximately 200 staff have moved to our Department, but I will try to get more accurate details for the Deputy. These have come mainly from the Department of Agriculture, Marine and Food, the National Building Agency and the Property Registration Authority.
How many staff has the Department now?
We had 5,000 before we took in the extra people. We have approximately 6,700 now, but I need to get the whole-time equivalent figures for the Deputy.
Did only 200 of the extra people come from other Departments?
Yes. The whole-time equivalent figure is 6,744. On the number of people targeting fraud, the main focus in the initiative is on working smarter, with better on-the-ground co-operation. It must be borne in mind also that large numbers of the public have been very helpful to us in identifying areas where they believe there may be a risk of fraud or abuse. I will get the Deputy the figures with regard to contact from members of the public this year. We have some 600 staff whose duties include some aspect of control work, for example, social welfare inspectors. We have 200 officers within that number dedicated to control work and some 91 people work in the special investigations unit. This unit targets serious areas of fraud and has worked on a series of areas over the past year.
We have a new residency project in the special investigation unit, focusing on individuals who are suspected of not being resident in the State and there are targeted reviews ongoing in that area. In addition, in the Social Welfare Bill earlier in the year, I gave special powers to social welfare inspectors at airports to question people who are coming in and out of airports on a continuous basis, where there is a belief that they are coming into the State to claim payments but are not actually resident here. Members may have seen reports of a court case during the summer concerning an incident at Cork Airport. Those powers were activated under the Social Welfare Bill 2012.
I am sorry to interrupt, but what savings have accrued?
We also have a multiple claiming project as well as Operation Transport, which involves checking with the transport companies to ensure that the free travel arrangements are being used properly. Operation Lifestyle and Assets is a pilot project directed towards individuals whose lifestyle and displays of wealth or assets are not commensurate with social welfare dependency. In my own constituency, and I am sure in Deputy O'Dea's too, there are a number of individuals who, while claiming social welfare, seem to enjoy assets and lifestyles not consistent with that. That is being run with the support of the Revenue Commissioners. We have an operation in the taxi rental sector to ensure that taxi drivers are registered for PRSI and taxation.
Operation Narnia was an investigation, undertaken by the special investigation unit in conjunction with Customs and Excise, into an individual who has been in receipt of jobseeker's allowance and who was alleged to have been in receipt of the proceeds of significant cigarette smuggling. Operation Garden focused on garden nurseries to ensure that people employed in that industry are registered for PRSI and taxation and are not working and claiming at the same time. Operation Credit concerned self-employed people to see if there were any issues with regard to concurrent working and claiming. The townscape project involves feet on the street, where inspectors go into an area, for example a commercial street or an industrial estate, and check with employers that everybody in their employ is registered for PRSI and taxation. In a lot of cases, people will say that they only started work an hour ago and are not on the books yet. Nonetheless, it sends out a very strong message and has been very strongly supported, I am happy to say, by employers who are delighted to see the Department doing this. We have also been doing a special project in relation to people dealing in scrap metal and recycled materials because a number of concerns were expressed about that sector.
In the period January to August of 2012 a total of 13,228 reports were made by concerned members of the public. That compares with 10,300 reports for the same period last year. Members of the public are very anxious to support social welfare reform. People value, in particular, our payments to pensioners and they want to make sure that pensioners are not left at a loss because other people are scamming the system. There is a general social consensus on that.
The control savings target for 2012 is €645 million. We are reviewing 985,000 individual social welfare claims. We are writing to those in receipt of child benefit to check if they still live at the listed address and so forth. We have achieved about €401 million in savings to date. However, I wish to stress to all committee members that this refers to the prevention of expenditure which would have happened had we not got these systems in place. Unfortunately, I cannot present these as savings to the Minister for Public Expenditure and Reform, Deputy Howlin. I can only say that our expenditure levels are lower as a consequence. Some money can be repaid to the Department but because often the people involved have a social welfare income, we are limited by law in what we can make them pay back. This is an issue that my Department is examining, in consultation with the Office of the Attorney General.
Regarding Deputy Griffin's question on child benefit, the Revenue Commissioners are responsible for the issue of who makes tax returns. I have met them to discuss this matter. I am awaiting the final report by the advisory group on child benefit and am sure that group will have something to say on the matter too. The trend in Ireland has been that self-employed people use the Revenue on-line service, ROS, to file their income tax returns. Many people in the PAYE system do not file a tax return at all but I believe there is merit in their doing so. However, there are different views on the issue in the Revenue Commissioners and the Department of Finance, in terms of the administrative burden involved. In order to do what the Deputy spoke about, we would need a tax return to be filed by those in receipt of the child benefit payment.
The Deputy's constituent's suggestion of introducing a discount card for travel is one I had not heard of before. Earlier we had a discussion of the value of free travel. I mentioned to a colleague, Senator Moloney from south Kerry, that the fact that our pensioners can travel around the country is greatly appreciated by traders and hoteliers in places like Killarney. Those in the hospitality sector appreciate the value of the golden years travel and the business it generates. We must bear in mind that a scheme of free travel, particularly for pensioners, encourages them to be active, to be out and about in their own country and to enjoy some leisure breaks. People from Killarney may be in Dublin and vice versa. There are lots of clubs for older people who travel together and I value the scheme. However, as I explained earlier, we are reviewing various features and looking at some issues that the operators have with the scheme. Perhaps we can return to the issue at a later stage.
I thank the Minister and her officials for briefing the committee. We have had a very comprehensive and long meeting but it has been very worthwhile.
The joint committee adjourned at 1.10 p.m. until 10 a.m. on Wednesday, 3 October 2012.