Committee Reports > List of Committees > Dáil > 1988 > Committee of Public Accounts > Report - Appropriation Accounts 1984

APPENDIX 13

SOCIAL WELFARE FRAUD

13 March, 1987

Clerk of the Committee,

Committee of Public Accounts,

Leinster House,

Dublin 2.

At the Committee hearings on the Appropriation Accounts for this Department for recent years certain additional information was requested by individual members of the Committee concerning social welfare fraud.

I enclose a note setting out the information requested.

J. Downey,

Secretary

An Roinn Leasa Shóisialaigh,

(Department of Social Welfare).

NOTE FOR THE COMMITTEE OF PUBLIC ACCOUNTS ON FRAUD IN THE SOCIAL WELFARE SYSTEM

1. In 1985 the most recent year for which complete statistics are available, overpayments of benefit and assistance made by the Department amounted to £5.7 million. This represented 0.25 per cent of total expenditure (of £2,291 million) by the Department in that year. Of that amount, £4.074 million (0.18 per cent of total expenditure) is attributed to fraud on the part of recipients.

2. The statistics of fraud uncovered and recorded by the Department in the course of the delivery of the social welfare services are the only quantifiable indicator available of the extent of social welfare fraud. While it may be generally believed that this does not represent the true extent of fraud in the system — and it would be disingenuous to suggest that the Department is capable with limited resources to uncover every instance of fraud — other figures purporting to show the extent of fraud have to be based on specualtion.

3. Any instance that comes to the attention of the Department is recorded and published; other fraud that might exist outside this is obviously unquantifiable. Fraudulent overpayments arise for a variety of reasons. A substantial volume of overpayments arise in the Unemployment Schemes where the commonest cause of fraud is concurrent working and signing. Other factors giving rise to overpayments are unnotified marriages in the case of the Unmarried Mothers Allowance Scheme, cohabitation in the case of that scheme and Widows Pensions and Deserted Wives Schemes and non-disclosure of means in the case of Assistance Schemes generally. Tables showing the level of overpayments arising in the various social welfare schemes administered by the Department are attached.

4. Every effort is made to recover fraudulent overpayments, where possible by direct recovery by cash, by withholding future payments that might become due or where appropriate by legal proceedings. Recovery is slow and difficult however because the people involved would be unemployed, deserted etc. and have no independent source of income outside of the social welfare system.

5. The trend in the overall level of overpayments attributed to fraud for recent years is shown in the following table:—

The overpayment figures show a small percentage upward trend. Over the same period however the volume of the services both in terms of the cash value of payments and the number of recipients has increased substantially.

6. The upward trend in the amounts known to have been lost from the Social Welfare Budget through fraud is possibly due to a number of factors:—

(a)A growing tendency among many people to regard the State as “fair game” not only in regard to social welfare but in regard to taxation also. The recession has obviously played a large part in spreading the attitude, not only among Social Welfare recipients, that basis moral standards somehow do not apply in those areas.

(b)The cash values of weekly rates of social welfare payments has on average more than doubled since 1980. Even if there was no change in the annual number of cases of known fraud since then the cash amounts involved would show an increase.

(c)There has been a large increase in the number of people who depend on the Social Welfare system for basic weekly income maintenance — over 700,000 beneficiaries on average per week in 1986 in respect of approximately 1.3m people. Even without any increase in the incidence of fraud this is tending to drive up the absolute number of cases.

(d)The investigation, control, review and audit activities across the various services of the Department have been strengthened and improved significantly in recent years. Computer techniques are used to aid these processes where feasible. This has naturally given rise to an increased rate of detection of past frauds while at the same time limiting the scope for the perpetration of further frauds.

7. The whole question of Social Welfare fraud has received much publicity in very recent times. While the level of fraud recorded is on the increase for the reasons quoted above, the concept of abuse and fraud of the Social Welfare system is not new. Long before the present publicity the Department had been aware of the need for vigilance and control of the systems to restrict abuse and fraud and measures to contain abuse have been an inbuilt part of the schemes. The Medical Referee system for example has always been a feature of the Disability Benefit Scheme providing the Department with its own independent check of a claimants incapacity for work, thereby eliminating the scope for malingering and abuse of that scheme.

8. In relation to the unemployment payments schemes the huge increase in the numbers of unemployed persons receiving payments in recent years without a corresponding increase in the resources to deal with this volume of claims has strained the capability of the Department to maintain the delivery of services. The staff of the Department both indoor and outdoor would as part of their normal day to day operations be concerned with the prevention and detection of abuse. However the scope for abuse which this increase in numbers gave was recognised. In 1978 the Special Investigation Unit was set up with a mandate to detect and prevent abuse and fraud in relation to unemployment benefit and assistance. Initially the unit consisted of 19 outdoor officers. In 1983 these numbers were doubled and in 1986 a further 6 officers were added to the staff of the unit.

The work of the Special Investigation Unit consists in the main of investigating allegations or complaints of concurrent working and signing by individuals or groups of people. Other irregularities such as personation or multiple signing are also dealt with. Investigations involve surveillance, inspection of premises and records of employers, interviewing employers and employees (including the taking of statements after legal caution) and making whatever enquiries are necessary so that all the information and evidence required for deciding whether any payments made should be disallowed, overpayments set up and recovered and legal action instituted and prosecuted is obtained and presented. Where there is any allegation or suspicion of abuse in particular enterprises or sectors careful advance planning and enquiry is necessary so that a successful outcome is not prejudiced by collusion or concealment of vital evidence.

9. An important aspect of the work of the Special Investigation Unit is investigating cross-border fraud. This aspect of the work of the Unit received much publicity last year arising from allegations of massive fraud by residents of the Six Counties at the Dundalk Employment Exchange. An intensive investigation was carried out by the Unit in Dundalk involving over 250 cases resulting in 42 people siging off the Register and a further 16 cases being submitted for disallowance. The outcome of this investigation, while confirming the need for extreme vigilance in the matter of potential cross-border fraud, did not disclose a level of fraud anywhere near approaching that stated in the media. Also it must be said that this problem was peculiar to the Dundalk area and the results of the exercise there could not be used to estimate the level of fraud in other border areas. In fact an earlier investigation of fraud in a border area in 1984/85 failed to establish any fraudulent claiming by cross-border residents.

RECENT DEVELOPMENTS

10. The problem of Social Welfare fraud has always existed to some extent but the huge increase in the numbers claiming in recent times and the increase in the size of cash payments has exacerbated the problem with the resulting need for even more intensive control procedures. Because of the massive amount of State funds involved the need for such control measures is recognised by the Department — the many recent improvements attest to this. At the same time it must equally be recognised that the dividing line between legitimate investigation of fraud and harassment of clients is thin. There are hundreds of thousands of claimants who are in genuine need of the services provided by the Department and who have a statutory entitlement to those services. A balance must be kept between providing those families with a speedy accessible service and ensuring that the service is not easily open to abuse. That balance must be constantly adjusted in the light of changing needs.

The resources available to the Department to deliver the services and for control purposes are limited. Any additional resources devoted to control procedures are not, consequently, available for the delivery of services. In determining whether extra resources are allocated to fraud control it is first necessary to ensure that the deployment of such resources will be cost effective.

Internal Audit

11. There is an Internal Audit section in the Department and this has been strengthened considerably in the past twelve months or so. This section on an ongoing basis reviews the systems of internal control in the various branches of the Department with a view to ensuring that they are both adequate and also are functioning effectively. Where deficiencies are identified remedial action is taken. The continuing activities of the section are aimed at ensuring on an overall basis an improvement in the level of efficiency of the administration of the various schemes.

New Controls on Disability Benefit Scheme

12. A series of measures designed to improve greatly control of abuse, and fraudulent claiming, of disability benefit were introduced last year.

Among the steps taken were:—

the appointment of 67 additional control staff (including 5 extra medical referees who, added to the 2 additional ones sanctioned in 1985, increase the medical referee cadre from 18 to 25 in the space of less than a year).

legislative changes; one extending the period of disqualification from benefit for failure to attend a medical referee examination without good cause from 6 to 9 weeks and the other providing that disability benefit cannot be claimed concurrently with paid holidays.

a series of new and improved computer facilities to assist with speedy identification and retrieval of irregularly cashed cheques and streamlining the referral of claimants to the Department’s medical referees.

new computerised procedures and other improvements were implemented in regard to the selection of cases for referral for medical examination.

Control of Personation and Multiple Claiming in Unemployment Payments.

13. As part of the normal process of determining whether a new claimant is entitled to payment or not, a number of checks are applied which serve to pinpoint claims of doubtful validity that can be earmarked for further investigation.

New procedures have recently been introduced in the Department’s local offices which require clients as a matter of course to produce authoritative evidence of identity before claims are put into payment. In addition, a designated officer has now been appointed at each employment exchange to co-ordinate action on suspected cases of personation or multiple signing and to ensure that the followup is both speedy and complete.

Extra Staff For Control Work In Employment Exchanges.

14. Apart from the activities of the field staff of the Special Investigation Unit, there is also a need to have some clerical staff at employment exchanges fully engaged on an ongoing basis on the task of reviewing whether claims are genuine and to liaise with the SIU and other State agencies, such as the National Manpower Service and AnCO. It was, therefore, decided that each of the 13 largest Exchanges should be given an extra officer to be dedicated full-time to fraud control work.

In addition, a new Headquarters team of 6 officers was set up to carry out similar work in the smaller Exchanges and branch offices, as well as to monitor and co-ordinate control work generally in the Exchanges and local offices. A key function of the new team is to heighten fraud-awareness among exchange staff and, to assist them in this, special training videos are used.

Personalised High Security Payable Orders for Pensions and Child Benefit.

15. The Department issues about 2.2 million books of payable orders each year for pensions, child benefit and other entitlements. The present orders have not got the name and details of the client and of the office of payment on each order.

Those details are found only on the covers of the books. There have been cases where books of orders have been stolen and the orders have been bound into forged covers. New high-security payable orders in which each order will have imprinted on it personal details of the authorised payee and details of the correct office of payment will be introduced later this year.

The orders will have the very best available security features and built-in controls. In effect each order will itself be a high security document, very difficult to counterfeit and very difficult to cash fraudulently in a Post Office.

FRAUD OVERPAYMENTS AS A PERCENTAGE OF THE TOTAL EXPENDITURE ON “BENEFIT SCHEMES”

FRAUD OVERPAYMENTS AS A PERCENTAGE OF THE TOTAL EXPENDITURE ON “ASSISTANCE SCHEMES”