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

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of public Accounts)

Déardaoin, 20 Samhain, 1986

Thursday, 20 November, 1986

The Committee met at 10.00 a.m.

Members Present:

DEPUTY D. FOLEY in the chair

Mr. P. L. McDonnell (An tArd Reachtaire Cuntas Agus Ciste) called and examined.

VOTE 46 SOCIAL WELFARE.

Mr. J. Downey called and examined.

264. Chairman.—Paragraph 58 of the Report of the Comptroller and Auditor General reads:

Subhead E.—Payment to the Social Insurance Fund under Section 122(9) of the Social Welfare (Consolidation) Act, 1981.

Disability benefit is payable to all persons meeting the prescribed contribution conditions who furnish medical certificates establishing incapacity for work. One of the conditions under which benefit is paid is that the claimant may be required to submit to an examination by a medical referee employed by the Department.

Payment is made by means of a computerised system and in October 1982 a procedure was introduced whereby the computer file records of all claims made after that date would include a code denoting the nature of the claimant’s incapacity. Under the coding system a standard limit is fixed for the duration of each type incapacity and any case in which a claimant continues to submit claims after the expiry of the precribed time limit is automatically listed by the computer for referral to a medical referee. A central section of the Department is responsible for the referral of cases to the medical referees and the cases to be referred are notified to it by the benefit payment sections of which there are 15. Pending the receipt of the referee’s report, benefit continues to be paid to claimants referred for examination. Where the medical referee finds the claimant to be incapable of work but wishes the claimant to be re-examined the date specified for reexamination is entered on the claimant’s record.

In the period 1 July 1983 to 30 June 1984, 81,069 disability benefit claimants were referred for examination by medical referee. Of these 38,474 were found to be incapable of work, 2,252 were certified as medically unfit to attend, 13,683 were found to be capable of work and were disqualified from receiving further benefit and 26,660 failed to attend for examination and were also disqualified from receiving benefit except where they were able to show good cause as to their failure to attend.

In the course of a review carried out by my officers of the system for referring disability benefit claimants for medical examination a limited test check disclosed a number of cases where claimants did not appear to have been referred for re-examination although the medical referee’s original report indicated that this should have been done. It was also noted that in some cases notified by benefit sections for referral there was no evidence that they had in fact been referred as no medical reports were received.

I sought the observations of the Accounting Officer and I requested information as to what measures were proposed to ensure that all claimants listed for referral are referred for medical examination or re-examination without undue delay.

Mr. McDonnell.—The first paragraph in my 1984 Report on Social Welfare deals with the referral of disability benefit claimants for medical examination in order to confirm or refute their claim that they are in fact in capacitated. The committee will see from the paragraph that a system was devised to bring to the surface cases in which there was prima facie evidence that they should be referred for medical examination. The committee will also see that of approximately 80,000 cases referred it transpired that there were grounds for discontinuing benefit in some 40,000 cases, approximately 50 per cent. I could not put a money value on these cases. The paragraph also refers to the fact that not all cases listed for referral were being referred and that some cases in which the medical referee had agreed that incapacity existed, perhaps, at the time, but had asked that the case be referred again if the incapacity continued, were not in fact being resubmitted. Since the date of my report the Accounting Officer has told me that some 100,000 cases were processed yearly for potential medical referee examination and that more than 80,000 of these are actually summoned for examination. He also explained that the present system for referral is mainly clerically based with computer assistance and that within the limits of the staffing resources and the computer facilities then available it was considered to be a very effective control mechanism. He also explained that significant improvements had been made to the system in recent years and all cases referred had been selected with a view to maximising the savings achieved. Nevertheless, it had not been practicable, having regard to the staffing constraints and the level of development, to ensure that all cases requiring re-examination by the medical referees were referred exactly when requested. The vast majority were resubmitted on or about the dates when the medical referee requested them to be re-submitted. The Accounting Officer also said that the only feasible check at present to ensure that medical examinations have in fact taken place when the cases are referred, is a manual one. That is carried out when specific claims are being examined. He did make the point that at all stages full complements of cases were being and are being referred for examination by all medical referees available. He went on further then to say that the Department plan to implement a totally new computerised system as soon as resources permit this and this would be specifically designed to meet the requirements of the medical referral system and it would operate as part of the overall disability benefit system. That would ensure that no claim would be overlooked at any part of the referral process. He said it was also the Department’s intention to develop the best administrative structure to complement these facilities and that this would ensure optimum concentration of resources on the referral system.

265. Deputy McGahon.—I would like to prelude my remarks by stating that anything I say today, or indeed in the past, has not been said with the intention of hitting at or getting at the vulnerable section of the community — the social welfare recipient, the genuine social welfare recipient, but has merely been to try to highlight the extent of fraud that is prevalent in this country and to ease the burden on the taxpayer and possibly provide a little extra in the years to come for those genuine social welfare recipients. I would like to ask you do you agree that these figures are alarming, that almost 50 per cent of the people in the disability area were found to be not valid claimants, that 26,000 people failed to attend for examination and that 13,000 were found to be capable of work? Do you accept that that is a reflection of the extent of the fraud in this country?

Mr. Downey.—I do not think I could accept the broad conclusion the Deputy is drawing from this because many of these people would have been going back to work anyway. We have no way of knowing. The fact is that they are called up and some go back to work. A truer indication is the numbers who were examined and found capable of work.

266. Deputy McGahon.—Do you not accept that it is highly suspicious that 26,000 people actually failed to attend for examination?

Mr. Downey.—We have found down the years that very often we have called people and at the time we were calling them it may well be that they had just resumed work. This sort of thing does happen. It is worth bearing in mind that none of these people is receiving payment of benefit unless than have submitted certificates by a doctor certifying that they are incapable of work.

267. Deputy McGahon.—Could that be a weakness in the system? Is there an abuse of the medical certificates? Surely 26,660 is an army of people. The fact that many of those did not attend for examinations is suspicious. I accept that there would be extenuating circumstances in some of the cases but not in the case of 26,000.

Mr. Downey.—It is very hard to say. You could well have a situation in which as you say, there could be suspicions about some people. We have no way of knowing that. This is part of a system that has been devised for keeping track of these people. That is why we have the medical referee system.

268. Deputy McGahon.—On a broader question, could I draw your attention to the fact that the Comptroller and Auditor General in the years 1982 and 1983 expressed concern about the amount of internal fraud in social welfare? Can you tell us what was the situation in 1984? Did you suffer from that problem and to what extent?

Mr. Downey.—Yes, it has been a continuing problem, particularly at a time when we were under a lot of pressure both as regards claims and shortage of staff to deal with them. There was an embargo very actively in force at the time. In any cases that came to light we picked them out and the people have since left.

269. Deputy McGahon.—Could you confirm that in the North Cumberland Street area there was a major fraud, in the region of £357,000?

Mr. Downey.—Certainly there was not at the time of this report. In the past 12 months or so irregularities have come to light in Cumberland Street.

Deputy McGahon.—To the extent of over £250,000?

Mr. Downey.—I could not put a figure on it. I have not the information with me.

Deputy McGahon.—My figure is £357,000. How many people were involved in that fraud?

Mr. Downey.—Again, I have not the figures with me. Maybe half a dozen or so. I would not be sure now.

Deputy McGahon.—It is very alarming that such people would engage in a major fraud. Was there a senior official involved?

Chairman.—Is this external or internal fraud?

Deputy McGahon.—Internal.

Chairman.—We are on external at the moment. However, I will allow you pursue it.

Deputy McGahon.—I accept that. At the same time, this fraud is very alarming. It pinpoints the lack of controls that have been in existence. A figure of this proportion is very alarming. Between external and internal frauds Mother Ireland and the taxpayer have a heavy burden to carry. The Comptroller and Auditor General in the previous two years has expressed his concern about frauds that had been occurring in the Department. Last week this committee got up-tight about a figure of £1,100 that had been misappropriated in the Attorney General’s Office and here we have a fraud of £250,000 occurring in a Dublin office. Does that suggest that the controls that the Comptroller had asked to be implemented were in fact implemented?

Mr. Downey.—First of all, could I say that as the matters to which the Deputy is referring are outside the period of this account I am not fully briefed to be able to deal with it.

Chairman.—I accept your point, but I am leaving Deputy McGahon to pursue his point. It will come up at a later stage.

270. Deputy McGahon.—Could I ask you, Mr. Downey, have you had any indication, from the consultants that were called in, about the level of fraud in the country and does it bear out the committee’s claims and my own claims, or does it bear out your own Department’s claims of £4 million?

Mr. Downey.—We have nothing specific from the consultants as yet. The consultants’ assignment will be pretty much an ongoing one. I expect that it will be next March or April before we get final results from them.

Deputy McGahon.—Have you no idea of the way it is going?

Mr. Downey.—I know it is throwing up matters like public perception and that sort of thing, which we know about already, but the problem there is to try to arrive at some firm conclusions on that and actualities as it were.

Deputy McGahon.—It is likely to bear out the claims that the social welfare frauds are in the region of £150 million to £250 million a year?

Mr Downey.—No, I would not expect it to do that.

Deputy McGahon.—But it is likely to be greatly in excess of your own figure of £4 million?

Mr. Downey.—It will depend what they come up with, what their figures will be and how it is formulated, as it were, whether it will be a perception as it were, or whether it will be hard facts. This is the problem.

271. Deputy McGahon.—Finally, could I refer to an investigation which was carried on in Dundalk as a result of the highlighting of social welfare abuses by North of Ireland people? Are you aware of the conclusions of that report? Can you confirm that people from 180 North of Ireland cars were found to be signing in Dundalk from your own investigation, a three-day exercise that you carried out in the Border region?

Mr. Downey.—I can tell the Deputy that in the investigations that were carried out a number of suspicious cases were observed at the employment exchange in Dundalk. The numbers identified as claiming were 115, the number of persons who signed off as a result of the investigation was 42 and the number of cases submitted for disallowance was 16.

Deputy McGahon.—That resulted in saving of £2,514 per week, which over a year is £110,000. Would you agree with that figure?

Mr. Downey.—That would be fairly close to it.

Deputy McGahon.—That exercise, which was undertaken as a result of disclosures in the Sunday Independent and, indeed, revelations made here, saves the taxpayer £110,000 in one employment exchange. Would you agree that these are horrifying figures?

Mr. Downey.—The investigation unit and their staff are on this work all the time. I think it is probably fair to say that if they were not doing it there they would be doing it somewhere else. I would not like to isolate one particular spot and say——

Deputy McGahon.—But you do. The figures speak for themselves, £110,000 of a saving. If the same thing was done along the border, in Monaghan, Castleblayney, Lifford, Clones, right along the Border, how much would be saved?

Mr. Downey.—I really could not say. First of all the same numbers of people are not claiming in Monaghan and places like that. Dundalk is quite a big employment exchange, the others are relatively small.

Deputy McGahon.—Will you accept, Mr. Downey, that there was large-scale fraud along the Border perpetrated by North of Ireland people? They came in and have taken an almighty sum of money out of this economy. Would you accept that?

Mr. Downey.—We have always accepted and recognised that the Border poses special problems. This is why we have been giving it particular attention down the years. The indications were and, indeed, the exercise carried out in Dundalk would not point to anywhere near the huge figures that had been mentioned.

Deputy McGahon.—You must accept, because you know that I know, that the Dundalk exchange in the last two year period has been defrauded of more than £300,000. You would not deny that.

Mr. Downey.—We have been talking about £110,000 a year.

Deputy McGahon.—Yes, but in a two year period £300,000 has been taken from Dundalk. Do you not accept that, from the evidence of your own officers to the effect that 180 cars pulled up outside the Dundalk exchange, that it is reasonable to assume that because of the highlighting of the matter in the “Today Tonight” programme, and the publicity that these frauds got, that there could have been up to another 200 cars parked in different areas of Dundalk? It is widely known, and surely you must accept, that the level of fraudulent extortion by Six County citizens is horrific along the Border area. These people are bandits who are coming in and taking money out of the pockets of ordinary working people in this country. Ultimately they are denying genuine social welfare recipients money that in many cases they badly need. Do you not accept that this is alarming and that it is also disturbing that your Department should be unaware of or unable to cope with this problem? I know it is not an easy problem to cope with. I do accept that you are as concerned as we are to uncover the depth of fraud in the country. Was there not a certain amount of complacency in your Department?

Mr. Downey.—I would not accept that there was complacency. We have all the time been very concerned about fraud all over the country and this is why we set up the procedures we did set up, and have strengthened them year by year as the opportunity afforded. I would not accept that there is complacency. In 1978, the special investigation unit was set up in answer to that concern and we developed it and strengthened it in the intervening periods.

Deputy McGahon.—You do accept that there is a problem in the Border area and that the figures that I gave early in the year, of, on one occasion, up to 600 North of Ireland cars was basically correct?

Mr. Downey.—In relation to Northern Ireland, everybody accepts that it poses special problems and we have always accepted that but all I can quote for you is the results of the exercise which did not show anything near 680 cars.

272. Chairman.—Before calling the next speaker I would ask the Members to adhere to the paragraph 58 which deals with the medical referee system and the method of abuse.

273. Deputy M. Ahern.—Back to more mundane matters than newspaper headline stuff. I understand there is a coding system in your Department to show up extraordinary demands for disability benefit. For example, that if a person is suffering from one ailment he would have a two week claim, if he had some other type of ailment he would perhaps have a four weeks claim and if it goes outside those time limits he would be marked as a person to be examined. How is that system working and is everybody who goes outside the code brought up for examination? Is the system working satisfactory?

Mr. Downey.—First of all, the Deputy is quite right in saying there is a coding system. At the time when this query was put down by the Comptroller and Auditor General the coding system was not very sophisticated — it was in fairly broad bands. Since then we have introduced new computerised systems, relatively recently — I think last October or a couple of months ago at the most — and the coding system is much more refined, as it were. It is working very well. But, could I say in relation to the coding system, any coding system is only one element in the criteria we use for calling people for medical referee examination. We also have to have regard to other urgent cases that crop up without warning — for example, appeals cases, something comes to notice, special attention is drawn to some particular case that has to be fitted in, therefore something else has to drop out. On the whole, all the people who are code listed and coded are covered in the long run. The Comptroller and Auditor General himself made the point that we call about 80,000 people a year. Full schedules are maintained all the time, so that, if a person is not called from the coding sequence, it does not mean that somebody is not examined. Somebody else has gone in as a matter of priority, where it has been considered that they should go in first.

274. Deputy M. Ahern.—I am disturbed that, as Deputy McGahon has said, for the period July 1983 to 1984 almost 50 per cent of the people who were called for re-examination did not turn up. In addition, I would like to ask if there is a signalling system within the Department to show people who come back on to the system on a regular basis and how is that working and is it successful? What is the view in the Department with regard to a person who is called back a second time for a medical examination in connection with the cedical referee, is it the same medical referee that examines them a second time? As has happened in a number of cases of constitutents of mine, they feel, when they have been called back and meet the same medical referee, that they are not getting a fair crack of the whip. Is there any policy within the Department to have a different medical referee exmaining a person the second time around?

Mr. Downey.—The Deputy has raised two points there. First of all, in relation to people who are knocked off and come back on the system we pay particular attention to those, and they would be sent to medical referees to be examined again to ensure that the claim was genuine. The second point as regards which particular medical referee will examine them, in the normal course where appeals are concerned we get a lot of this. A person is knocked off and he appeals, we will always as far as is humanly possible appoint a different medical referee to examine that person. The Deputy referred to cases where the same medical referee examined the person twice. If a person is knocked off benefit and reclaims in three or four months’ time, it might be the luck of the draw that he might come up before the same referee again.

275. Deputy M. Ahern.—In fairness, I know that when I got on he got a new medical referee. I was wondering if there was any particular system to make sure that it does not happen. That is fair enough.

276. Chairman.—Out of the 81,000 that were referred for medical examination, 40,343 were found to be knocked off. What was the saving to your Department as a result of 40,000 being knocked off on a weekly basis?

Mr. Downey.—If you take an average payment of £60 per week, I think that would represent it.

Chairman.—Yes. £2.4 million per week of a saving?

Mr. Downey.—Yes.

Chairman.—As a result of that spot check you saved the taxpayer £2.4 million per week. Assuming that may be far-fetched, but on a yearly basis it would be over a £100 million?

Mr. Downey.—No, I do not think you have drawn the right conclusion, Chairman.

Chairman.—Certainly, on a weekly basis you saved £2.4 million as a result of the spot check?

Mr. Downey.—It means that so many people go off the system. In the normal course of events, for one reason or another many of those would have gone off anyway and we have no way of knowing what the duration might be.

Chairman.—I accept that, but as a result of carrying out a spot check on 81,000 people in receipt of disability benefit you saved £2.4 million per week?

Mr. Downey.—It depends entirely on what you are counting and what you take into account. It would hardly be correct to call it a spot check, as you referred to it. We are doing this every week. We are calling these people up every week.

Chairman.—I accept that.

Mr. Downey.—If you added all the figures up like that you could finish up with an astronomical figure.

Chairman.—I would accept that, Mr. Downey, but the point is that the Comptroller and Auditor General has highlighted the situation here that, between 1 July 1983 and 30 June 1984, 81,000 people in receipt of disability benefit were referred for examination by a medical referee, as a result of which your figures were reduced by 40,343. Based on an average, which you mentioned yourself, of £60 per week, it is a saving of £2.4 million. The point I am coming to is this. In other categories of social welfare benefit did you carry out any further checks as a result of highlighting this situation?

Mr. Downey.—I think this medical referee system of examination——

Chairman.—Do not misunderstand me. I congratulate you on the fact that you did bring this point up and that, as a result of carrying out this examination, you saved the taxpayer £2.4 million. What I want to get at is that in regard to other categories of social welfare benefit did you do any further investigation as a result of this situation?

Mr. Downey.—I am not quite clear on your question, when you refer to other categories of social welfare benefit. These are people who are sick and who are receiving sickness benefit. The check that was carried out on them was by medical referees who are doctors. In regard to other categories of social welfare beneficiaries, such as unemployment benefit and unemployment assistance, etc., the same criteria would not apply; it would be a different approach. We have various means. We have the special investigation unit that Deputy McGahon was referring to, and other means, of checking on those. That is going on all the time.

277. Chairman.—What about the invalidity pensioners?

Mr. Downey.—Invalidity pensioners are controlled in the same way as the sickness people, but it is not as likely to get so many people because they are certified by doctors as permanently incapable in the first instance.

278. Chairman.—As a result of that did you increase the numbers attached to the special investigation branch?

Mr. Downey.—Yes, in the last 12 months or so we have increased the medical referee cadre by about seven.

279. Deputy Naughten.—Over the past number of years we have examined a number of different types of abuse within the social welfare system here at this committee varying from children’s allowance, where in one particular case people were withdrawing for up to 80 children and where people were signing a number of times. In fact, people were drawing disability benefit and obviously working, judging from the amount of stamps that they had at the end of the year. That, together with internal fraud within the Department, caused a massive haemorrhage of taxpayers’ money. Could you inform the committee what steps have been taken to eliminate this type of fraud? I am rather stunned at the figures mentioned by Deputy McGahon of internal fraud exceeding £250,000 in one labour exchange. That is certainly my interpretation of what he said.

Mr. Downey.—I think, Chairman, when you are talking of large sums of money such as we have to pay out —£2.5 billion this year — which is made up of an awful lot of small transactions, it is always a big problem trying to exercise control. It is very difficult to ensure 100 per cent accuracy in these matters. We have talked here of a number of things, like the matter to which this particular audit query gave rise — the control of the sickness benefit scheme. We have controls in the same way on unemployment benefit and assistance. Internal fraud is a matter of which we are very conscious. We have been continually trying to improve our controls in that regard. We have special control units who are continually reviewing these matters. It is as a result of their activities that these things come to light.

280. Deputy Naughten.—What is the level of internal fraud in any one year on average?

Mr. Downey.—I really have not got figures for a yearly average because some years you might have nothing and other years something could come to light. I do not have figures on average.

281. Deputy Naughten.—Is it a sizeable proportion? Are there many officers queried over this type of thing each year? Are we talking about two officers; are we talking about 100 per annum?

Mr. Downey.—You are not talking of anything like 100 per annum. It is a small number in relation to the total activities of the Department. If you are talking of two or three it is as much——

282. Deputy Naughten.—You did speak earlier on about six in one particular case. I will get back to the paragraph, Chairman, but it is relevant to this whole discussion. What we are talking about would appear to me to be a sizeable number of people drawing sick benefit and the minute they were called before a referee ceased signing. That to me indicates a level of fraud. I do not know what level. I would like to ask Mr. Downey what number of people would be on disability benefit/sickness benefit in any given week?

Mr. Downey.—There would be something between 75,000 and 80,000 per week.

283. Deputy Naughten.—You mentioned earlier on that there is up to 80,000 called before a medical referee each year, is that right?

Mr. Downey.—Yes.

284. Deputy Naughten.—In 1984, 50 per cent of those called before the medical referee either did not turn up or were found to be no longer eligible to draw. Have those percentage figures changed since 1984?

Mr. Downey.—I think, first of all, the figure would have been nearer 40 per cent in one way or another when they disappeared from the scene. I would say on a regular basis that would probably be reasonably accurate as regards the numbers that go off the picture in relation to the medical referee system.

285. Deputy Naughten.—The figure I see here is 40,000 out of the 81,000 in the 1984 report. Does it not strike you as rather amazing that 26,000 people did not turn up for examination before the medical referee?

Mr. Downey.—I think one has to bear in mind, as I mentioned earlier on, that it is very difficult to know what the position was in relation to these people; how many of them would have gone off anyway if they were never called before a medical referee. The figures that we are talking about are an indication of the fact that we have targetted in on what we regard as the suspicious cases. If we had adopted a less selective approach and called people at random, irrespective of what their records were, you might get nothing like those figures of people crying off.

286. Deputy Naughten.—What lapse of time exists between the time somebody is called before a medical referee and the date set? Is two weeks’ notice given, three weeks or seven days?

Mr. Downey.—At present, as a result of computerisation, it usually takes about three weeks to get people up for medical referee examination. It was much longer before.

287. Deputy Naughten.—How many medical referees are operating in the Department of Social Welfare?

Mr. Downey.—At present the cadre is 25 medical referees.

288. Deputy Naughten.—Can I take it that they are mostly employed in the area of disability benefit?

Mr. Downey.—Yes, that would be correct.

Deputy Naughten.—What other work do they carry out for the Department?

Mr. Downey.—They would also review disablement claims under the occupational injuries scheme. They would have miscellaneous duties in one way or another in relation to examinations for other purposes.

289. Deputy Naughten.—What percentage of fraudulent claims have you in that particular section? For example, I notice in further paragraphs — I am just drawing the distinction that fraudulent claims are mentioned as a percentage of the overall misappropriation of moneys in that Department. What percentage of fraudulent claims have you here in this sickness benefit?

Mr. Downey.—I think in any one year what we would regard as fraudulent claims would be about a dozen or so.

Deputy Naughten.—A dozen out of 80,000?

Mr. Downey.—In these particular cases that we are talking about here, these are all cases where the payments are made on foot of medical certificates given by people. We cannot reject those medical certificates until such time as there is a second opinion. In other words, the medical referee comes along and disallows the claim.

290. Deputy Naughten.—But there are situations where it was discovered that, for example, at the end of a year somebody ended up with 64 or 65 contributions whether credited or otherwise, which would more or less indicate that they were getting credit stamps as well as working. Would that be correct?

Mr. Downey.—That is not an absolute indication because very often overlaps occur because of things such as payments made by occupational pensions schemes for which credits would have been allowed.

291. Deputy Naughten.—What is the total number of people in receipt of benefit or payments from the Department of Social Welfare each week?

Mr. Downey.—If you will bear with me for a moment, I will get that figure. There would be something like 750,000 claims being paid each week.

292. Deputy Naughten.—Three quarters of a million people receiving payments from your Department each week?

Mr. Downey.—Yes.

293. Deputy Naughten.—That is all types of payments, varying from old age pensions, sickness benefit, unemployment assistance, unemployment benefit?

Mr. Downey.—Yes.

294. Deputy Naughten.—With regard to medical certificates to which you referred earlier, you said that all payments were based on the receipt of a medical certificate. Have the Department carried out any survey which, for example, would indicate that for a particular type of illness certain doctors are prepared to give certificates for a much longer time? Have you carried out any check in that regard?

Mr. Downey.—We look at the incidence of certification and that arising from the medical referees and we have discussions every year with our doctors and we use that as an indicator of the type of controls which we would exercise if there was any particular area that we would regard as more suspicious than another.

295. Deputy Naughten.—So in other words, for example, if somebody applying for benefit has a certificate from a particular doctor he may be called before the medical referee earlier than somebody having a certificate from another doctor. Is that correct?

Mr. Downey.—We do not target doctors as such, what we target is the illnesses that are certified.

296. Deputy Naughten.—The General Medical Services Payments Board carry out a survey of the number of calls each doctor made on medical card patients. Do you carry out a similar system with regard to certificates for disability benefit, or whatever?

Mr. Downey.—We would have statistics per doctor from the amount of payments, because doctors are paid for certificates.

297. Deputy Naughten.—With regard to the 26,660 people who failed to turn up for examination before the medical referee, if they applied again would it be recorded on their file that they were called before a medical referee and did not turn up? Is there a check on recurring applications from disability benefit patients?

Mr. Downey.—Yes, it would be noted on their records that these people had been called before a medical referee before and they would be put in the category I mentioned earlier, where we would pay special attention to them if they reclaimed.

Deputy Naughten.—What action is taken in a situation like that?

Mr. Downey.—They are sent before another medical referee.

298. Chairman.—Just to define what fraud is, Deputy Naughten’s interpretation of fraud is where a person is in receipt of disability benefit and is fit for work; your interpretation, I take it, of it is where a person is in receipt of disability benefit and working at the same time. Is that correct?

Mr. Downey.—Yes, we would look upon that as a fraud.

299. Deputy Naughten.—Would you not have looked on the other as a fraud, that for example somebody was deliberately getting certificates from a doctor and was fit for work?

Mr. Downey.—Yes.

300. Deputy McGahon.—Would you not take a look at the doctor too?

Mr. Downey.—We would not really be in a position to say that a person was capable of work until such time as we got medical evidence rebutting it and it would be at that stage only that one could legitimately say that the person was capable of work.

Chairman.—Such as the exercise that you carried out between July 1983 and June 1984. That highlights the position as far as you are concerned.

301. Deputy S. Treacy.—With regard to the large numbers who are referred to appeals officers annually — in the year under question over 81,000 were referred for examination by medical referees — were all those medical referees medical doctors qualified in medicine?

Mr. Downey.—Yes, they are.

302. Deputy S. Treacy.—Are there any instances in regard to an appeal by a claimant to disability benefit where the case on appeal is determined by, say, a layman, a non-qualified medical person?

Mr. Downey.—All appeals are decided by appeals officers who are laymen, but are decided with the help and advice of medical opinion and evidence.

303. Deputy S. Treacy.—That is the aspect of the matter that concerns me. We have a situation, therefore, that in the initial stages a claim for disability benefit is disallowed by a medical referee on the grounds that an applicant is capable of work but on going to appeal against that decision the arbitrator can be, and invariably is, a layperson. Is it fair and just that a layperson can determine the medical condition of that claimant and clearly determine whether he or she is capable of work? This is an aspect of the procedure which is a cause of much concern, that a layperson can decide whether I am fit for work or not, whether I am in fact a malingerer or not.

Mr. Downey.—The decision in that case is not made solely by the appeals officer. He will have before him the medical evidence of the person’s own doctor, a first medical referee, a different medical referee on the occasion of the appeal and if necessary the appeals officer will look for specialist evidence. It is decided by the appeals officer but on the basis of evidence before him. I think it is fair to draw an analogy there. There are matters affecting medical judgments etc., decided in the courts by a justice who is not a doctor but at the same time he decides on the basis of medical evidence before him.

304. Deputy S. Treacy.—Far be it for me to argue this case — this is not the proper forum to argue the pro and con of it — but it seems to be patently unjust that at the highest form of appeal in this country in a medical matter of this kind the decision is made by an arbitrator who is a non-medical person, totally unqualified for that purpose despite whatever evidence he may have available to him in respect of reports of various doctors and specialists. The fact is that he is a non-qualified medical person who is not in a position to judge the health condition of the claimant before him at that time. We might look at this aspect of procedure at a more appropriate time. In respect of all cases going to final appeal the decision to allow or disallow the appeal is made by an ordinary officer of the Department of Social Welfare who is invariably not a doctor or qualified in any way in the profession of medicine. With regard to the numbers who fail to attend for examination, which were in excess of 26,500, I would like to disabuse my colleagues of the notion that all these people may be treated as malingerers and guilty of fraud. There can be genuine cases and, indeed, it is a coincidence that this week in the Dáil I was obliged to table a question to the Minister for Social Welfare asking why a claimant to disability benefit was disallowed benefit because he failed to turn up before a medical referee. The Department take the view that he was notified to attend before a medical referee on a particular date. My constituent states, and will state on oath, that he did not receive any such communication or instruction from the Department of Social Welfare. Nevertheless, that man has been disallowed payment of benefit. That was confirmed to me in a Dáil reply yesterday. Here is a clear case where my constituent received no official notification to attend before a medical referee. The Department presumes he received the notification and has proceeded to disallow him. So, you can exaggerate when you say all these people who failed to attend are guilty of fraud and are malingerers. That is not necessarily the case.

305. Deputy Naughten.—I think it would be very unfair, certainly as far as I am concerned, to interpret that 40,000 people were deliberately and wilfully drawing benefit that they should not be drawing. I appreciate that a number of those people, when they got called before the medical referee, may have gone back to work. What I am saying is that it underlines a serious situation where upwards of 50 per cent or 26,000 of those who were called back were found that it was not necessary for them to come in. I believe there is an element of fraud there. I am not for a moment saying that 26,000 were involved.

306. Deputy Crotty.—Basically this paragraph relates to the failure of the Department to call people for examination in the due time. That is referred to by the Accounting Officer. The Accounting Officer mentions that he has not the facilities — either staff or computer-wise — to carry out this exercise. Could I ask the Accounting Officer to elaborate on that?

Mr. Downey.—I think I did mention that at that time there was a lot of pressure. We were operating a mainly clerical system. So there was no way we could be assured that we would 100 per cent cover all the people that the medical referee noted for referring again at a particular times. They were all covered in one way or another at some stage but not necessarily at the particular time. I also mentioned that, in deciding what priority we would give to the people who would be examined, we looked at a number of things and this was one of them. There were other priorities as well. At any particular time we would take what we thought were the most suitable people to be examined by a medical referee. We were limited, of course, in the numbers we could send for medical referee examination. Sometimes some people who may have been noted by the medical referee for re-examination would have to be pushed back to make way for others whom we regarded as of greater priority.

307. Deputy Crotty.—Are you limited by the availability of medical referees? You mention that you have 25 medical referees to deal with 80,000 claimants?

Mr. Downey.—At the particular time we are talking about, we had 18 medical referees. We would of course be limited by the number of medical referees at any particular time. At all times medical referees would be given full schedules. When the schedule is full, that would be the limit.

308. Deputy Crotty.—Has a cost/benefit exercise been carried out on the benefit of appointing more medical referees?

Mr. Downey.—It was as a result of an examination of that kind that we got another seven medical referees.

309. Deputy Crotty.—What is the total cost to the Department of Social Welfare of disability benefits payments for the year 1984?

Mr. Downey.—About £172 million.

310. Deputy Crotty.—In that year you had 18 medical referees to check on the expenditure of £172 million. Would you feel that that was adequate?

Mr. Downey.—This is an ongoing situation that we look at. As a result of our examination we felt that more would have beneficial results. That was why we got seven more medical referees.

311. Deputy Crotty.—What was the cost of disability benefit for 1985 or would you have that figure?

Mr. Downey.—I would think it is around £200 million.

Deputy Crotty.—£200 million. What is the cost of paying your medical referees for 1984?

Mr. Downey.—The figure for disability benefit in 1985 was about £211 million.

Deputy Crotty.—£211 million paid out in disability benefit in 1985. What was the cost to your medical referees for 1984? You had 18. What did their salaries cost you?

Mr. Downey.—It costs about roughly £50,000 to keep a doctor in the field for a year. That includes salary, travelling etc.

Chairman.—£900,000.

312. Deputy Crotty.—Yes. You mentioned you had not computer facilities. Why were computer facilities not made available to this Department? Are there generally computer facilities available in the overall control of the Department? You are handling something like £1.2 billion a year?

Mr. Downey.—We did have computer facilities at that particular time, but it was in the early stages of it, so that the system was mainly clerical. It has since been developed to where it has been more fully computerised.

Deputy Crotty.—What do you mean that it was in the early stages? Surely it was not in the early stages of computerisation? We have had computers now for many years.

Mr. Downey.—It produced listings at that stage. That is all. It is in the last couple of months that the system has been developed fully. The operation is virtually totally computerised. What we have been doing since in the last five years: we have been computerising the Department branch by branch. It is not possible to undertake it all at the one time. The operation is a huge one. It is something that has to be done gradually.

313. Deputy Crotty.—There would appear to be a lack of attention to matters drawn to the attention of the Accounting Officer by the Comptroller and Auditor General. That is what is behind this paragraph. Could the Accounting Officer inform the committee why these matters, which had been referred to by the Comptroller and Auditor General in previous years, had not received attention?

Mr. Downey.—I am not quite sure what particular aspects the Deputy has in mind. I can say that we have been developing these procedures all the time, year by year, and improving them as best we can.

314. Deputy Crotty.—What I am saying is that it is the Accounting Officer’s duty to see that the funds, which are voted to the Department are spent in the manner for which they were voted. It would appear that there is not proper control here.

Mr. Downey.—I am not quite sure how the Deputy can maintain there is not proper control. The medical referee system provides a very effective method of control. It is an intensive system. It is a system that we have been improving as the years go by.

Deputy Crotty.—The situation is that the people are not called for re-examination. In too many cases there is not control of examination and the general running of the disability benefits system and section.

Mr. Downey.—In fact, people are being called. We have had the figure of roughly 80,000 a year being called. Full complements are being called every week by every medical referee.

Deputy Crotty.—I feel, Chairman, that if the problems pointed out by the Comptroller and Auditor General had been adhered to and attention given to them this paragraph would not have arisen. I hope that in the future we will not have a recurrence of this, particularly in relation to disability benefit.

315. Deputy G. Mitchell.—From the figures given to us by the Accounting Officer one in every 4.5 citizens in the State claim social welfare benefit or allowance of some kind. That is probably one in every three adults claiming some sort of benefit or assistance from the State. Could the Accounting Officer tell the committee — in view of the fact that they are now spending £2,500 million per year — how many accountants are employed in the Department of Social Welfare?

Mr. Downey.—We have no accountant employed at present but one is being recruited. We expect he will be taking up duty shortly.

316. Deputy G. Mitchell.—I think this is a frightening problem. I am going to come specifically to the paragraph but I think we are going to have to end up by looking at the systems in your Department. I could not imagine any enterprise spending £2.5 billion. For Smurfit or somebody to spend that sort of money, they would have raised perhaps £10 billion. Expenditure of that kind does not come on a small turnover. Are the referees you mentioned permanent pensionable employees?

Mr. Downey.—Yes, they are.

317. Deputy G. Mitchell.—Would many of them be in the service for a number of years?

Mr. Downey.—We recruit them at a variety of stages of their careers. Normally, before they would come to us they would be required to have certain experience and certain qualifications. They could have been in the service or otherwise. It would be most unusual for them to transfer to us. They would mainly come from outside.

318. Deputy G. Mitchell.—Do they keep up to date on current diseases and problems?

Mr. Downey.—Yes, they do.

319. Deputy G. Mitchell.—I accept there are people in the system claiming disability benefit who should not be claiming. I sometimes suspect, however, that the medical referees take every third one and turn him down. I had a case recently of a constituent, a young man with a young family, who was turned down by the medical referee. The decision that he was being turned down came through while he was in hospital. He was discharged from hospital and it resulted in the young man taking an overdose of sleeping tablets because of the pressures he was under. There was a man who was not fit for work who was turned down. Yet, there are other people who are fit for work who are not turned down. I am wondering what sort of system is used. Do you use a purely medical system or do you take one in three and just turn down every third one, or is each case gone into in great depth?

Mr. Downey.—Recommendations by the medical referees are made directly as a result of the medical examination which they carry out. It is medical criteria that are applied.

320. Deputy G. Mitchell.—In the case of the young man concerned, there was no medical criteria applied until I got onto the Department of Social Welfare and then he was restored to the benefit to which he was obviously entitled. Whereas there are people in the system who should not be there, there are people pushed out of the system who should not be pushed out. Can we be certain that the decision is made on medical grounds only? What about the appeal procedure? Is the medical man put under pressure at any time either to make a decision on medical grounds or to make a decision not on medical grounds?

Mr. Downey.—There is no pressure on the medical referees. They make the decision themselves and in the light of their own judgment what the medical conditions are.

321. Deputy G. Mitchell.—You are the largest spending Department of State and you are in a difficult position because we, the very people who call you to account, are the people who write to you every day asking you why Mrs. Murphy’s benefit has not been restored, because the first thing she will do is to write to her TD. I am a bit concerned about your systems. Your Department, whether justified or not, is somehow getting itself into Irish folklore. There is the story of the two men working on the roof of the Garda station who come down to collect their benefit from the guards and then go back up to do the work. It is known in folklore as “the fiddlers on the roof”. Your Department, Mr. Downey, is getting a name for having systems which are easily abused. Everything you said so far would indicate that that is correct. You do not have one accountant for an expenditure of £2,500 million. Who chases up the audit function within your Department? What qualifications or training has that person?

Mr. Downey.—On the system of controls, we have talked here at length at different times about the various systems of control that exist. The medical referee is one system of control. In other words, if people are knocked off the system, that is a system of control. The same thing applies with the special investigation unit of the outdoor staff. They are a system of control. We have systems of control all along the line. As regards the audit function, certainly if we make any mistake in that direction, it is very quickly picked up by the Comptroller and Auditor General and his staff.

322. Deputy G. Mitchell.—No, it is not. The Comptroller and Auditor General only does spot checks in your Department. It would be impossible for him to audit the number of transactions in your Department. What internal control do you have of the spending? Mr. McDonnell’s job is to come along and check your systems and do spot checks here and there, but he does not have the power of the staff. That is something else we are working on. What do you do internally to control? I will quote to you from a paragraph:

In the course of a review carried out by my officers of the system for referring disability benefit claimants for medical examination a limited test check disclosed a number of cases where claimants did not appear to have been referred for re-examination although the medical referee’s original report indicated that this should have been done.

Where are the checks and balances? Who is in charge? Do you specifically have somebody in your Department in charge of internal audit?

Mr. Downey.—Yes, we have an internal audit section.

323. Deputy G. Mitchell.—Who is in charge of that section?

Mr. Downey.—They report to me.

Deputy G. Mitchell.—What rank is the man in charge of that section?

Mr. Downey.—The people who are heading it are two assistant principals.

Deputy G. Mitchell.—They are not accountants?

Mr. Downey.—No.

Deputy G. Mitchell.—Are they up to date on modern audit functions?

Mr. Downey.—Yes, they are. We have sent them on courses dealing with internal auditing and that sort of thing.

324. Deputy G. Mitchell.—It seems to me, Chairman, that we need to get our new APO of this Committee to comb through, not just this report, but previous reports, and come back to the Committee with a report so that we can look at the systems within the Department of Social Welfare.

325. Deputy McGahon.—Could you confirm, Mr. Downey, that in relation to internal fraud, 26 people——

326. Chairman.—We are coming to that later on. We are dealing with external fraud here in paragraph 58. Before we leave that paragraph I want to say that the members of this committee are very concerned because what is coming through in this paragraph and also in the paragraphs for 1982 and 1983 is that there is massive fraud within the disability benefits section. That is unfortunate for the people that are genuinely in receipt of disability benefit. If the people responsible for this fraud were uncovered it would mean that there would be a bigger slice of the cake for the people genuinely in receipt of this benefit and possibly would be getting a far greater sum than they are getting at the moment. That is the concern of the committee. Do you agree, that there is a serious problem?

Mr. Downey.—We were talking earlier about what do you mean by fraud. The committee is assuming that people when they are called before a medical referee and as a result they declare off the system, that that is fraudulent. We have no way of knowing. They are all on the system by virtue of valid medical certificates. It is a question of what interpretations you put on that.

327. Chairman.—I do not wish to pursue this paragraph. All the members made points and it is a question of what interpretation of what fraud is. Your interpretation of fraud is where a person is in receipt of disability benefit and is working at the same time. The concern of the members here with relation to this paragraph is that when there was a check carried out between July 1983 and June 1984, it was found that 13,883 people were found to be capable of work. There was a further 26,600 people who did not turn up. Those figures indicate a massive fraud. It does not mean that those 26,000 cases were all fraudulent, but there is no doubt about it that there were 13,000 highlighted as a result of the examination. That is why we, as members of this committee, are concerned about the fraud within Social Welfare. It is the one point that has been highlighted in the appropriation accounts for 1982, 1983 and 1984. It is something that will come up later.

Mr. Downey.—I think, Chairman, one has to bear in mind that what we are doing there is that we are making these payments under the legislation which exists at present.

Chairman.—I accept that. But you must also accept the fact that there were 13,000, and there is a saving, according to yourself, of £2.4 million per week as a result of that check carried out between July 1983 and June 1984 which resulted in round figures in £60 per week. You made the point yourself that £60 per week is £2.4 million. If it is five weeks, it is £10 million.

328. Deputy Crotty.—Just a couple of figures that I want to ask the Accounting Officer. How many people would be on disability benefit in any particular week? The average weekly number?”

Chairman.—That was asked already.

Mr. Downey.—It is about 75,000 to 80,000.

329. Deputy Crotty.—How many people qualify for disability payments through contributions from employment? The overall number who would qualify for disability benefit?

Mr. Downey.—There would be something between 250,000 to 300,000 claims to sickness benefit every year.

330. Deputy Crotty.—No, that is not what I am asking. If everyone claimed disability benefit who was entitled to it, how many people would be applying? How many people qualify to claim disability benefit?

Mr. Downey.—There are about 1,000,000 people in the insured population covered for disability benefit.

331. Deputy G. Mitchell.—I do not think we should move on. We should mark this section for further consideration.

Chairman.—We are doing that. We will go on to the next paragraph, paragraph 59.

Mr. McDonnell.—If I might make a suggestion, the Chairman might, perhaps consider taking paragraphs 59, 60 and 61 together. I know that is a fairly large block, but I think it would be feasible to do it.

332. Chairman.—Is that agreed. Paragraph 59 of the Report of the Comptroller reads:

Subhead H.—Children’s Allowances

Reference was made in paragraph 60 of the 1976 Report to the level of control over the preparation, custody and issue of children’s allowance books and the disposal of unused books returned to the Department. The Public Accounts Committee in its report dated 26 April 1979 welcomed that a number of important security improvements relating to the handling of children’s allowance books had been introduced. The Committee nevertheless requested that controls over the printing, delivery, storage, issue, return, encashment and accounting for allowance orders should be such as are exercised over the handling of cash. The Department of Social Welfare examined the implications of this request and concluded that a cash-type security system over orders would not be practicable but that some measures which were being implemented on a gradual basis would improve security. Furthermore, it was felt that full scale computerisation would afford greatly enhanced security potential.

With a view to computerisation of the children’s allowance payments system, a feasibility study was undertaken by the Department and an outline design for the system was completed by November 1982, at which stage the existing manual records had been converted to computer file. Due to the lack of resources required to implement this system, an alternative one was developed which omitted some of the control features of the system as originally designed. This system became operational in January 1984 and the computer master file had meantime been updated to incorporate changes to claim details which had taken place since November 1982. This file was to be used as the basis for the annual issue of allowance books, but initially, in the July 1984 issue, was used only in 25 per cent of cases.

In the course of review by my officers it was noted that the system as designed did not alter the situation which existed under the manual system in that it did not provide for the reconciliation of cashed allowance orders with authorised issues. In these circumstances, where the Department has apparently decided that it would be impracticable to provide for such a reconciliation, full reliance is being placed on control procedures which can be implemented prior to the issue of allowance books.

The examination carried out by my staff into the effectiveness of these controls revealed a number of serious deficiencies:—

(a) inadequate departmental checking of data converted from the manual system to computer file which led to duplication of issues and failure to terminate allowances—see paragraph 60

(b) failure to effect timely detection of duplicate claims—see paragraph 61

(c) the procedures governing the delivery, custody and control of stocks of allowance books and the return of unused books by claimants did not appear adequate to prevent the misappropriation of allowance books

(d) access to computer file data was not adequately restricted so as to ensure that unauthorised records could not be set up.

I have asked the Accounting Officer for his observations.

333. Chairman.—Paragraph 60 of the Report of the Comptroller and Auditor General reads:

The new computerised file of children’s allowance payees was, as stated in the previous paragraph, used as a basis for the issue of approximately 25 per cent of the 1984/85 renewal allowance books in July 1984 and was intended as a trial run for its general use in 1985/86. The task of converting the manual records to computer data was carried out by a commercial data preparation firm. The Department’s checking of the accuracy of the data conversion had commenced in September 1983 and was confined initially to those cases intended to be used in the trial run in July 1984. Between July 1984 and December 1984, 391 renewal books issued in the course of the trial run were returned to the Department because in each case an allowance book had been issued to both a post office and a bank in respect of the same claim. A further 580 books were returned in cases where entitlement had terminated prior to the issue of the renewal books.

I have asked the Accounting Officer

—how the records which led to these errors came to be set up on the computer file and why they were not detected by departmental checking of the accuracy and completeness of the data which had taken place prior to the issue of renewal books.

—what additional checking of computer records was undertaken as a result of the reported errors in order to detect any other invalid book issues which may have occurred in the trial run and to ensure the accuracy of the records intended to be used for the general renewal issue in 1985.

—whether any other instances of duplicate book issues involving post offices and banks and of books issued in terminated cases had come to light since December 1984, and

—what overpayments, if any, occurred as a result of the incorrect issue of books in these cases.

334. Chairman.—Paragraph 61 of the Report of the Comptroller and Auditor General reads:

I referred in paragraph 67 of the 1982 Report to the fraudulent claiming of children’s allowances.

When a claim which purports to be a first claim is made for children’s allowances there is no procedure for ensuring that an allowance is not already being paid for the same child. However, it was recognised that on the computerisation of children’s allowance files, referred to in previous paragraphs, the Department would have the opportunity to identify possible cases of duplication by reference to a child’s name and/or date of birth. In March 1983 a computer programme designed to detect duplicate claims listed a total of 1,256 apparently duplicated records. On subsequent investigation it was found that 382 of these were not duplicates but, coincidently, showed the same name and date of birth. A redesigned version of the programme run in February 1985 was capable only of identifying cases of duplication within the same claim number i.e. the same child being paid for twice on the same claim. It disclosed 87 such cases. In order to detect all duplications the redesigned programme had to be further revised in May 1985. This brought to light some 3,000 apparently duplicated claim records. I understand that these are still being investigated. I have asked why no computerised checking procedure was carried out from March 1983 to February 1985 and the extent to which it is intended to implement this form of control in the future, given the absence of a procedure for detecting duplications when claims are being initially authorised.

I have also sought details of any over-payments resulting from the submission of duplicate claims which have come to light.

From a test examination carried out by my staff it was noted that among the duplicated records on the February 1985 computer listing were four records which had already been detected as duplicates by the March 1983 programme; nevertheless renewal books had been issued in the interim. It was also noted that a claimant shown by the March 1983 programme to have received two allowance books from 1981 onwards under different claim numbers and who was under investigation for fraud, continued to receive duplicate books up to 1984. I have sought the observations of the Accounting Officer.

Mr. McDonnell.—These paragraphs which come together here are dealing with various aspects of internal control in the payment of children’s allowances. Paragraph 59 mentions four points at the end. In two of the paragraphs there was evidence that some shortcomings in internal control had had some effect. These are expanded on somewhat in the next two paragraphs. That is why I am suggesting that perhaps you could take the three of them together. In the other two points mentioned at (c) and (d), while there was no evidence that anything untoward had taken place, I was concerned that opportunities for irregularities should not exist because of inadequacies in internal control. Paragraph 59 outlines the process leading up to the introduction in 1984 of a computerised system for the issue of childrens allowance books. I need hardly say that, in converting from a manual system to a computerised system, it is obviously essential that the manual records would be accurately transferred to the computer. If not, there is the obvious danger of continuous incorrect payments being made. This was an area in which problems arose. That is what is referred to at point (a) of the summary at the end of paragraph 59. Some of the effects of what appears to have been some inaccuracies in the transfer of data are dealt with more fully in paragraph 60. The second point at the end of paragraph 59, which is point (b), concerns the use of the computerised system to detect cases of duplication. This is explained more fully in paragraph 61. Interestingly, you will see that point (c) is the same as that which concerned the committee some years ago. That is spelt out in some detail at the beginning of paragraph 59, that is to say, the previous reference by the committee to this problem of the control of the actual stocks of social welfare books or childrens allowance books and warrants within the Department. Point (d) at the end of paragraph 59 was concerned with the danger of unauthorised records being set up. That is always a problem with computerisation. Again, I would like to say that we did not, in fact, come across any instances, in the case of childrens allowances, of unauthorised records being set up. It is vital that internal control procedures be able to prevent this being done. The committee has in the past been concerned with this problem of unauthorised records on some other aspects of the Department on the unemployment benefit side. There have been difficulties, as we saw it, in regard to the control of stock of allowance books and orders. There had been some problems in ensuring the accuracy, the overall reliability, the completeness and the security of the computerised book issue system. Because that is what it was: it was a system for issuing books. I would have to say that information furnished to me by the Accounting Officers since the date of my report outlines some improvements which have been implemented. It also indicated that, while there were some problems, the extent of overpayments which actually were discovered had not been all that great, because in some cases the Department had been able to prevent the actual issue of duplicate books, even though there were some duplication in the records. You will see in paragraph 60 that in the initial stages of computerisation duplications in the issue of allowance books did arise and were brought to the attention of the Department by the payees. While I said there were not any overpayments to any great extent, it is fair to say that, if the payees had chosen to cash the orders, the extent of the overpayments might have been somewhat greater. It is obviously unsatisfactory that a situation should exist where this is brought to attention by the payees. It would obviously be much more desirable that the Department itself should have the means of detecting duplication throughout the operation of its own internal control procedures within the computerised system. The Department has been trying to do that and the efforts made to devise and operate such procedures are referred to in paragraph 61. I will conclude by saying that my concern, and I am sure it would be the committee’s concern also, is that a high degree of priority should be given by the Department to continuing to examine critically its internal control procedures and urgently to take whatever action might be found to be necessary to eliminate deficiencies in internal control which could provide opportunities for internal or external irregularities. I would like to say that the Accounting Officer in the course of his replies to me — and there have been some long replies to the queries — has said it is recognised that some improvements are necessary in some areas and the Department is, in fact, working on improvements all the time in this area of the control of the issue of childrens allowance books. I know, Chairman, that I have gone on at some length, but we are trying to deal with three paragraphs together.

335. Deputy Ahern.—Mr. Downey, again we have the Comptroller and Auditor General referring specifically to the problem of internal control within the children’s allowances section. One hundred and seventy-two million in 1984 was the expenditure for children’s allowances. That is a large sum of money. I believe there is no reconciliation between the payment slip — that is, the children’s allowance pay sent out to the parents — and the pay demands from An Post to the Department. Is it proposed within the Department of Social Welfare, now that computerisation is reaching a sophisticated stage, to set up a system where you can do a bank reconciliation or a reconciliation between the children’s allowance pay slips and the amount demanded back from An Post?

Mr. Downey.—Yes, the Deputy is quite right. We are doing that. In fact, we have invited tenders for new types of orders which will be personalised orders. There will be an electronic means of reconciling each order.

336. Deputy Ahern.—I am glad to hear that because the system that existed was wide open to abuse. I am sure that you have been looking into that over the years. Another question with regard to internal control which I would like your comment on is with regard to the access to computer file data. For example, if we have a person within the system who has access to the computer files, would it be possible for him to set up a children’s allowance payment book for a fictitious person and put down the name of any post office and he could cash it without any identification being necessary? What is the system of controlling the access to the computer file? Are you satisfied that it is foolproof?

Mr. Downey.—We have given a lot of attention to the point raised by the Deputy. First of all, we have user identification codes whereby any transaction entered into the computer must have a user identification. It can be traced back to that person. Secondly, if somebody puts in a fictitious claim it will come out on the transaction list which will be checked by somebody entirely different. It will have to have documentation to support it. These checks ensure that anybody trying to enter a fictitious name would be cut out.

337. Deputy G. Mitchell.—In 1983, I think it was, we discovered that a person was claiming for 87 children. What is the largest number of children that a claimant is claiming for?

Mr. Downey.—I am not sure what the largest number is at the moment. I would think it would be about 12 or 13.

Deputy G. Mitchell.—They are not quite as philoprogenetive as last year. How many are claiming for one child, how many for two children, how many for three children, how many for four children? Do you have a breakdown on that?

Mr. Downey.—I do not have a precise figure here. There are roughly 200,000 onechild families. It would reduce by 50 per cent after that for each child.

Deputy G. Mitchell.—We could say 100,000 for two children, 50,000 for three children, 25,000 for four, 12,500 for five children and so on. Would that be fair?

Mr. Downey.—Roughly.

338. Deputy G. Mitchell.—With regard to the change from a manual system to computers, you still did not put in the control features you had originally contemplated would be necessary. Have they been put in since?

Mr. Downey.—Yes, most of the control features that were suggested by the Comptroller and Auditor General have been put in.

339. Deputy G. Mitchell.—The Comptroller and Auditor General’s paragraph sets out a number of serious deficiencies, (a), (b), (c) and (d). Have those deficiencies been remedied?

Mr. Downey.—Yes, all of these have been attended to. The last one, (d), was the one I dealt with in relation to Deputy Ahern’s query.

340. Deputy G. Mitchell.—So all of them have been dealt with. In relation to No. 60 and the points which the Comptroller makes about over-payments, have they been attended to?

Mr. Downey.—Yes. I think it would perhaps explain the position better if I mentioned that this was a sort of once-off operation in which we were converting from a manual system to a computerised system. We were dealing with a half a million claims and in the process, as a result clerical mistakes were made.

Deputy G. Mitchell.—A number of inaccurate records?

Mr. Downey.—Exactly. But they have all been cleared up.

341. Deputy G. Mitchell.—“In March 1983 a computer programme designed to detect duplicate claims listed a total of 1,256 apparently duplicated records. On subsequent investigation it was found that 382 were not duplicates but, coincidentally, showed the same name and date of birth.” Could you explain that?

Mr. Downey.—It would simply be children with the same name and maybe the same date of birth. But when you check it through you find different fathers and mothers.

Deputy G. Mitchell.—What about the balance of the 1,256?

Mr. Downey.—In the whole exercise fewer than 90 resulted in over-payments. Of that, roughly £6,000 was involved. All of that has been recovered with the exception of £500 odd.

Deputy G. Mitchell.—What about the 3,000 apparently duplicated claim records? Were those people who fraudulently duplicated or who accidently duplicated? How did it arise?

Mr. Downey.—These would have been mistakes that arose in the process of converting from the manual to the computerised system.

Deputy G. Mitchell.—They were not claims. They were claim records within your Department. They would have been duplicated within your Department. Did they result in any duplicate payments?

Mr. Downey.—The whole exercise, as I mentioned earlier, resulted in something less than 90 over-payments.

Deputy G. Mitchell.—That would include the 3,000 duplicate records?

Mr. Downey.—Yes.

342. Deputy G. Mitchell.—It was also noted that a claimant shown by the Department in the March 1983 programme to have received two allowance books from 1981 onwards under different claim numbers and who was under investigation for fraud, continued to receive duplicate books up to 1984.” What was the reason for that?

Mr. Downey.—What happened there was that it was scheduled for deletion from the records but inadvertently it was not done. No order were cashed.

Deputy G. Mitchell.—But if you did not delete somebody who was under investigation for fraud already and continued to issue duplicate books to them, then surely people who are not under investigation for fraud are more likely to be continued to be issued with duplicate books. Is there not a check system that would automatically delete this.

Mr. Downey.—Yes, systems have been introduced in the meantime for checking these through means of computerised checks.

343. Deputy G. Mitchell.—Do you know the total number of transactions carried out by your Department in a year?

Mr. Downey.—I mentioned earlier that there are roughly three quarters of a million fresh claims made——

344. Deputy G. Mitchell.—Claims, but transactions. Would it be millions?

Mr. Downey.—Yes, it would have to be in millions.

Deputy G. Mitchell.—Millions of transactions. And you do not have one accountant?

Mr. Downey.—We have one coming.

345. Deputy Mitchell.—So is Christmas. This is something which has been going on and on. This committee has now had you in on four different years’ accounts. Last year it was one woman claiming for 87 children. Year after year there are continuous frauds and abuses being shown — £2,500 million of expenditure and you do not even have one accountant in your Department. Mr. Downey, leaving aside the payments, your systems, section after section, are falling down and are in need of examination. It is something, Chairman, we are going to have to conclude with here today. The committee is going to have to have a look at the systems.

346. Deputy Crotty.—Security over actual paying orders or books is mentioned in paragraph 59. This was referred to in two previous years, in 1976 and 1979. To me, a childrens allowance order would equate to cash. What security has the Department to control these orders which may be returned or which could go astray?

Mr. Downey.—I mentioned in reply to the opening question by Deputy Ahern that we have, in fact, received quotations from specialist printing firms for personalised orders which it will be possible to reconcile electronically. It has not been possible, needless to say, to do that up to now because we were depending on clerical methods. That will take care of that aspect of it.

347. Deputy Crotty:—In paragraph 61, the last sentence, the Comptroller and Auditor General mentioned: “I have asked why no computerised checking procedure was carried out from March 1983 to February 1985 and the extent to which it is intended to implement this form of control in the future” . . .Could we get an explanation why there was no computerised checking from 1983 to 1985?

Mr. Downey.—In the initial stages a child benefit programme was first run in April 1983, but there were technical difficulties with it and it was not until the computer system was upgraded that the programme could again be run successfully. We now have since May last a duplicate child listing programme produced and that is able to check all claims as they come in. You can go to the programme and see if there is a claim for a particular child.

348. Deputy Crotty.—Who devised the internal control in this particular section — childrens’ allowances?

Mr. Downey.—The branch itself devise it and then it is also looked at by the internal audit section.

349. Deputy Crotty.—The Comptroller and Auditor General is not satisfied with the internal control. He stated this in his remarks today. Could the Accounting Officer give his reply to this remark of the Comptroller and Auditor General?

Mr. Downey.—What the Comptroller and Auditor General was doing was drawing attention to the situation as he found it at the time when we were changing over from a manual to a computer system. Most of the controls that we have been talking about have been implemented in the meantime.

350. Deputy Crotty.—Is there any guidance available from the Comptroller and Auditor General’s Office to your Department in relation to what he would feel would be necessary and would be adequate?

Mr. Downey.—These particular series of questions are an indicated of that. The Comptroller and Auditor General did produce a report in which he outlined what he thought should be done.

Deputy Crotty.—Was this report acted upon?

Mr. Downey.—Yes, it has been acted upon.

Deputy Crotty.—In full?

Mr. Downey.—There may be one or two things where it has not been possible, as yet, to do them, and in other cases events have overtaken some of the recommendations made because it is no longer necessary to do them.

351. Deputy Crotty.—A final question, Chairman. When will the computerisation of the Department of Social Welfare in general be completed?

Mr. Downey.—That will very much depend on the resources made available to us. Most of the Department has been computerised by now, with the exception of the local offices of the Department. There are proposals which, given certain resources, could be completed in a period of three to four years.

Deputy Crotty.—What do you mean by the local offices — employment exchanges?

Mr. Downey.—Employment exchanges, branch employment offices around the country.

Deputy Crotty.—That these need to be computerised to tie up the system?

Mr. Downey.—A start has been made with the computerisation of those local offices but to complete it, say, in a period of three years, would require additional resources above what we have at the moment.

Deputy Crotty.—Would it be possible when they are computerised to make payments from the local offices such as disability benefit?

Mr. Downey.—We have not drawn up detailed plans as yet for that but we would envisage certainly a very strong flavour of regionalising the services of the offices. That could well include payment being generated at local level for virtually all of the schemes, certainly for disability benefit.

Deputy Crotty.—What is the projected cost of the finalising of computerisation?

Mr. Downey.—I am afraid I do not have that figure with me.

Deputy Crotty.—Could you supply us with that?

Mr. Downey.—I certainly can.

352. Deputy McGahon.—Could you outline for us, Mr. Downey, how payment is set up? What is the system when claims are put in for children’s allowance?

Mr. Downey.—A claim is submitted to the Department with appropriate certificates and it is decided upon in the children’s allowances branch, and it follows from there: the book is issued to the post office from which it is collected by the claimant.

353. Deputy McGahon.—Having set up the claim are there any other further checks as to the veracity of the claim?

Mr. Downey.—The main area that we concentrate on in checking is what we call the 16 to 18 year old claims. This is for people who claim because children are at school. It is an area that is more exposed than the others, because in the other cases if you can ensure that a claim is properly put into payment there is no great problem.

354. Deputy McGahon.—Again, I refer to the lady with the 83 children who came from my unhappy town. It was very fortuitous that she was discovered. The alarming thing is she was not discovered by your Department; she was discovered by a young policeman on routine police check. Yet 13 books were being sent out to accommodation addresses for her. She is not likely to have been alone in this ingenious ploy. Is it not possible that many other people were engaged in this type of fraud? Surely, at some stage there should be some type of spot check.

Mr. Downey.—We do, in fact, do spot checks by our people going to the general register office and check there.

Deputy McGahon.—Are you aware that there is a black market in forged children’s allowance books? Can that happen?

Mr. Downey.—What can happen, and what has happened, is there have been lots of robberies of post offices, mail vans and this sort of thing and books have been used in that way. They have usually been detected.

Deputy McGahon.—Do you think it is desirable that children’s allowances books should be used to negotiate loans? There are cases of people who have gone to moneylenders and have used them with shops and supermarkets. Do you think that is desirable rather than have them cashed directly by the person to whom it is payable?

Mr. Downey.—I think it is totally undesirable and, in fact, illegal.

Deputy McGahon.—You are aware that it does happen?

Mr. Downey.—I have seen reports of it, yes.

355. Deputy McGahon.—I welcome what you have suggested because I suggested it earlier in the year. Would a system, whereby the local exchange would pay out money, not be more helpful, more beneficial and more likely to eliminate fraud rather than have them centralised and paid out from Dublin? Would it not be more beneficial to have them handed out by the local exchanges in a county?

Mr. Downey.—That is a very big issue. It would certainly be far more costly to do it in the way you are suggesting, because it is a scheme that lends itself to centralised payments. The question that is likely to arise is that the additional cost of administration would be far greater than any possible savings you might achieve.

356. Deputy McGahon.—How prevalent is fraud in this area? Is it a very high category in your estimation?

Mr. Downey.—We have very little fraud in this area. In 1984 the over-payments which we attributed to fraudulent claiming of children’s allowances was in the region of £100,000.

Deputy McGahon.—In what area do you attribute the highest degree of fraud? Is it the working and signing?

Mr. Downey.—I would think so, because it is the most difficult one to control.

357. Deputy McGahon.—We read in the newspapers that your Department were going to take on board extra staff. Have those people been appointed and to which area of fraud have they been assigned?

Mr. Downey.—We have got extra staff in recent times but it was mainly for the purpose of the implementation of the equal treatment provisions. Earlier on, additional staff were recruited. There were over 60 staff in the benefits area. We have put extra staff into local offices with special responsibility in the larger exchanges for co-ordinating fraud controls. We have set up a central control section in headquarters to co-ordinate that.

Deputy McGahon.—These are appointments of administrators. Have any appointments been made to the special investigation unit?

Mr. Downey.—Yes, an additional seven have been appointed in the last year.

358. Deputy McGahon.—Could I take the opportunity to refer back to what I was asking you initially in relation to internal fraud? Could you confirm that in the recent past 26 people have been sacked, suspended or compulsorily—

Chairman.—You raised that already.

Deputy McGahon.—I did not get an answer. Could you confirm that one of the people who were sacked, claimed in a statement that he was acting under extreme duress and provocation?

Mr. Downey.—I am certainly not aware of the last instance you referred to.

Chairman.—It will be coming up on other paragraphs.

359. Deputy Naughten.—It has been established that £2.5 billion was paid by your Department to 750,000 applicants per annum. How much will be paid in 1986 under the children’s allowance scheme?

Mr. Downey.—At existing rates it will be about £207 million.

360. Deputy Naughten.—A recipient goes into a post office to collect children’s allowance, they give in the slip and get whatever amount of money they are entitled to. Does the post office at the end of the month send in a demand for X number of millions to your Department together with those slips?

Chairman.—Deputy Ahern asked that question.

361. Deputy M. Ahern.—Just one point. With regard to claims by parents for children is there any system to cover forged claims between the Department and the local register office? If there is not, are there plans to incorporate this in the new system that is being devised?

Mr. Downey.—Yes. Forged certificates is what the Deputy has in mind. These are watched very carefully to see if there are any abnormalities about the certificates that are sent in. We are also looking for full birth certificates and getting away as far as possible from baptismal certificates. That is a fairly comprehensive check in the system.

Deputy Ahern.—Is there any way that it can be computerised between the Department and the register offices?

Mr. Downey.—Yes. We do spot checks with the general register office.

Chairman.—Could I ask Deputy Ahern to take over from me? I want to be excused. I have an appointment at 12 o’clock.

Deputy M. Ahern took the Chair.

362. Deputy Naughten.—In view of the fact that it is birth certificates rather than baptismal certificates that are used for determining children’s allowance, if you do not apply within three months you lose out. Is that correct?

Mr. Downey.—Yes. This is the normal thing. If a claim is not made within three months it is paid from the date of claim.

Deputy Naughten.—It is much more difficult for people to get birth certificates than the old baptismal certificate. In view of that, would the Department consider extending three months to six months?

Mr. Downey.—We will certainly look at that. In the normal course of events a person can send in a claim without a birth certificate and let the certificate follow.

Deputy Naughten.—I know this is creating hardship in certain cases where there are difficulties getting birth certificates as distinct from baptismal certificates. I would ask that it be considered to see what can be done to alleviate hardship.

363. Acting Chairman.—Paragraph 62 of the Report of the Comptroller and Auditor General reads:

Subhead K.—Miscellaneous Grants.

The Supplementary Welfare Allowance Scheme was introduced in July 1977 under the provisions of the Social Welfare (Supplementary Welfare Allowances) Act, 1975 (later re-enacted as Chapter 6 Part III of the Social Welfare (Consolidation) Act, 1981). The scheme, which is administered by the Health Boards and financed partly by grants paid by the Department of Social Welfare and partly by funds provided by the Local Authorities, provides that subject to certain exclusions provided for in Chapter 6 of the Act, every person in the State whose means are insufficient to meet his/her needs and those of his/her dependants is entitled to supplementary welfare allowance. Determination of entitlement to the allowance is a matter for the Health Boards. Payments to Health Boards by the Department of Social Welfare are based on the Boards’ estimated expenditure, taking account of the Local Authorities’ contributions, and are subject to final adjustment on the basis of the Boards’ audited accounts. The total charges to the subhead in 1984 in respect of these allowances amounted to £24,133,198.

While audited accounts of Health Boards are available for some of the years subsequent to 1977 (see paragraph 65), the Department of Social Welfare has not to date been provided with the accounts and consequently has not carried out any adjustments of grants on the basis of such accounts.

Mr. McDonnell.—This paragraph refers to the operation of the supplementary welfare allowance scheme by health boards. This scheme was funded by the Department along with the local authorities. My concern was that the Department’s contribution had not been adjusted as apparently it should have been done since the inception of the scheme in 1977. I do not know what the extent of the adjustment is likely to be, if anything. I do not know if it is an upward or downward adjustment. I understand that it has not yet been done although some of the accounts relating to the expenditure on the scheme have come to hand for earlier years. This will be funded fully by the Department for 1986. It is a question of adjusting the earlier operation of the scheme, adjusting the contributions from each side.

364. Deputy Naughten.—This scheme no longer applies the way it applied in 1984. I find it difficult to understand why there has not been a balance done since 1977.

Mr. Downey.—The difficulty was something that related to the furnishing of accounts by the local auditors. The system that was introduced in 1977 provided that the local authorities would bear the cost of what they were paying at that particular time, plus 40 per cent of any increase after that date, the Department bearing the remaining 60 per cent of the increase. It is being operated on an estimating basis in the meantime because before we could calculate accurately the exact amounts we had to get the audited accounts from the local authority auditor. We did not get those, which is why it was not done. We have got some accounts in the past number of weeks, but there is still some material outstanding.

Deputy Naughten.—Why did you not get those?

Mr. Downey.—It was something outside our control. It was a matter for the local government auditor. It was the auditors who were responsible for the local authorities who had to provide those and they did not provide them.

Deputy Naughten.—Despite the fact that the Department requested them?

Mr. Downey.—I can understand that they probably had staffing problems or something of that nature.

Deputy Naughten.—Surely when the audits of those bodies had been done, one would imagine that the accurate amount would be assessed and forwarded on to the Department of Social Welfare? Or was it that the Department of Social Welfare had overpaid?

Mr. Downey.—No. We have been in continual contact with the inspector of audits with a view to trying to get these accounts, but we have not got them yet. We got some of the accounts in the last three or four weeks.

Deputy Naughten.—The fact that there was a High Court action taken by the two county councils vis-à-vis the amount of moneys that they had contributed under this particular scheme, had that any bearing on the delay in having the accounts balanced?

Mr. Downey.—No. In my opinion that would have had nothing to do with the question of auditing. That was simply a question that certain county councils considered that they should not have been liable to the extent that they were liable under the law as it stood at the time.

Deputy Naughten.—That would be accurate enough in so far as their percentage had changed out of all proportion over the ten years?

Mr. Downey.—Yes, this was the real problem that arose with us and this is why it was rectified from the beginning of this year on.

Deputy Naughten.—How come the Department of Social Welfare let that system operate for so long without having taken corrective action?

Mr. Downey.—It was not a simple matter. It involved a whole lot of people. It was as a result of consideration of the issues as they emerged that we put up proposals to have it changed.

Deputy Naughten.—But there was a gross injustice being done to every county council in the west as a result of this situation dragging on for so long?

Mr. Downey.—Certainly, I would agree that the application of the thing turned out to be uneven in practice.

Deputy Naughten.—Is there any proposal in the Department of Social Welfare, even at this late stage, to rectify that situation which existed for long and which so adversely affected that whole western region?

Mr. Downey.—I do not think it is something that the Department of Social Welfare can rectify in itself. It is a matter that has to be considered in a wider context by the Department of Health, the Department of the Environment and, possibly, the Department of Finance.

Deputy Naughten.—But simple justice would dictate that it should be done?

Mr. Downey.—That matter is under consideration. It is a question of dealing with something that has a statutory base.

365. Deputy G Mitchell.—What about the audited accounts since 1977? Are they all in now?

Mr. Downey.—Not entirely. Most of them are in.

Deputy G. Mitchell.—What years are not in?

Mr. Downey.—I am not quite sure. The overall accounts are in, but accounts of individual local authorities are not complete yet.

Deputy G. Mitchell.—Which years? Are we up to 1979, 1980, 1983? Where are we?

Mr. Downey.—Our problem really is to get the base figures — in other words, the 1975 expenditure. This is the figure we are looking for because without that we cannot calculate Exchequer liability.

Deputy G. Mitchell.—This is 1986 and we are heading for 1987. When can we expect to have this concluded?

Mr. Downey.—We hope it will be concluded fairly soon. We have got figures in the last three or four weeks. We expect that we will get whatever is outstanding shortly, that the auditors will be able to give us these.

Deputy G. Mitchell.—Can we take it that it will be brought right up to date in the early future? We are talking now about the next two or three months — right up to date?

Mr. Downey.—Yes, we would hope so.

Deputy G. Mitchell.—I would ask, Chairman, that we seek a note on that. It may be necessary to recall Mr. Downey. This is 1986 and this thing cannot be let go on any longer.

366. Acting Chairman.—Paragraph 63 of the Report of the Comptroller and Auditor General reads:

Social Insurance.

I have been informed that 4 employers were prosecuted for failure to comply with the provisions of the Social Welfare Acts and convictions were secured in all cases. 111 cases were referred to the Chief State Solicitor for the institution of civil proceedings for the recovery of arrears of contributions due by employers who failed to comply with the provisions of the Social Welfare Acts before the introduction of the PRSI system in 1979. I have also been informed that civil proceedings were completed during the year in 70 cases and that decrees in favour of the Minister for Social Welfare were obtained in all cases, the total amount of decrees being £36,505. A further 58 cases were disposed of when arrears totalling £25,668 were paid on issue of civil bills.

Mr. McDonnell.—Paragraph 63 is really for information. It is a fairly standard paragraph in my report over the last few years. It refers, firstly, to four cases of employers being prosecuted. I understand that two of those cases involved refusal to co-operate with officers of the Department in their investigations. The other two cases involved employers being prosecuted for making false declarations which enabled employees to claim unemployment benefit and assistance. The paragraph also refers to cases in civil proceedings for the recovery of arrears of contributions which were taken against employers who had failed to pay over the contributions. You will note that the number of cases finalised in the year was slightly greater than the number referred — the total finalised was 128 as against 111 referred. You will also note that these cases relate to employers who defaulted in the period prior to 1979, because after that it became the responsibility of the Revenue Commissioners.

367. Deputy G. Mitchell.—Could the Accounting Officer tell me for the year in question how many registered employers there were for social welfare purposes?

Mr. Downey.—I do not have a precise figure, but it would be something of the order of 70,000 to 80,000.

Deputy G. Mitchell.—How many of those would be errant?

Mr. Downey.—Our inspections would show about 3,000 people deficient in one way or another.

Deputy G. Mitchell.—Three out of 40?

Mr. Downey.—Out of 70 to 80?

Deputy G. Mitchell.—So, a relatively small number? What about the problem of employers in that year who set up limited companies, deducted social welfare contributions, did not pay these over to the State, went into liquidation, started again in another limited company? Of course, there are the subsequent problems that that would create for the employees who would want to claim benefit if the company went into liquidation. What steps has the Department taken to discourage people from creating companies and doing this, leaving employees without entitlement?

Mr. Downey.—Since 1979 this area of collection of contributions from employers has been the responsibility of the Revenue Commissioners rather than my Department.

Deputy G. Mitchell.—Since 1979. That would not have applied, then, in the year 1984 in any case?

Mr. Downey.—I beg your pardon? Which would not have applied?

Deputy G. Mitchell.—The question of social welfare contributions being collected by a company being relative to your Department?

Mr. Downey.—No, that is quite right.

368. Deputy Naughten.—What is the backlog at present and how long will it take to clear it? Is it going to be possible to have it cleared?

369. Acting Chairman.—And how much is involved, moneywise?

Mr. Downey.—Up to 1979, when the responsibility was assumed by the Revenue Commissioners, over £1 million was outstanding. On the question of when it will be recovered, it is not possible to say that because it will depend on legal proceedings. Many employers die or go backrupt.

Acting Chairman.—Does the Statute of Limitations apply in this case?

Mr. Downey.—The Statute of Limitations would apply but if we have initiated legal proceedings it would not apply.

370. Deputy G. Mitchell.—With regard to those companies in liquidation who defaulted in their contributions and then went on to set up another company on a regular basis, how many people claiming entitlement would have been affected by that sort of activity?

Mr. Downey.—Well, if you get down to the baseline as it were nobody would be affected because in situations of that sort there is statutory provision to treat contributions as having been paid if an employer defaults and there was no blame attributable to the employee.

Deputy G. Mitchell.—After what period has passed? It would not be given in week one or month one?

Mr. Downey.—Yes, it would.

Deputy G. Mitchell.—In every case when people claim?

Mr. Downey.—Yes, that is so.

371. Acting Chairman.—Coming back to the Statute of Limitations, have you commenced proceedings for that £1 million?

Mr. Downey.—These are all cases that are with the Chief State Solicitor.

372. Acting Chairman.—Paragraph 64 of the Report of the Comptroller and Auditor General reads:

Overpayments of Social Insurance and Social Assistance

I have been furnished with the following information regarding overpayments of Social Insurance and Social Assistance.

Social Insurance

76 individuals were prosecuted for irregularly obtaining or attempting to obtain benefits and convictions were obtained in all cases. Of the £2,156,806 recorded for recovery in 1984 the Department attributed £1,023,876 to fraud or attempted fraud by claimants.

Social Assistance

43 individuals were prosecuted for irregularly obtaining or attempting to obtain assistance. Convictions were secured in 41 cases. Of the £1,666,252 recorded for recovery in 1984 the Department attributed £1,388,177 to fraud, or suspected fraud by claimants.

Mr. McDonnell.—Paragraph 64 is a standard paragraph. It is for information and it summarises, as you see, the position at the end of the year in regard to the over-payments of social insurance and social assistance which have been detected by the Department. A year-end figure for the total under each heading is given at the end of each table. The figures have increased somewhat over those at the end of the previous year. The committee discussed similar figures last year.

373. Deputy G. Mitchell.—Are we to take it from this that there is a build up of £7.3 million in expenditure which should not have been paid and which is not being refunded to the State?

Mr. McDonnell.—Yes, that is the cumulative total of the overpayments which have not been disposed of at the end of the year. You will see that it comprises the opening balance and the over-payments actually covered in 1984 and then the sums recovered. That is the position, £7.3 million.

374. Deputy G. Mitchell.—Let us take the £5.8 million. How far back does the £5.8 million in over-payments not disposed of on 1 January 1984 go?

Mr. Downey.—That goes back to January 1952.

Deputy G. Mitchell.—You overpaid £2.156 million in 1984?

Mr. Downey.—Yes, that is the amount of over-payments recorded.

Deputy G. Mitchell.—And you recovered only £643,000 of that in the year?

Mr. Downey.—That is correct.

Deputy G. Mitchell.—What about the balance of that? How much of that is recoverable and what steps have been taken to recover it?

Mr. Downey.—Recovery can take place in a variety of ways. We try to recover in cash wherever possible, we recover by withholding payments as they become due subsequently, we take civil proceedings where that is possible. It is an ongoing situation which is dealt with in a variety of ways.

Deputy G. Mitchell.—Of the £2.15 million which you overpaid in 1984, will you recover all of that?

375. Acting Chairman.—In connection with Deputy Mitchell’s question, these are payments that have been discovered. Is there the danger that there is a lot of undiscovered over-payments?

Mr. Downey.—Yes, of course.

Acting Chairman.—That is the real problem?

Mr. Downey.—Yes. In reply to Deputy Mitchell, there is certainly no way in which 100 per cent will be recovered. People will die, people leave the country. You may be up against problems where people are no mark for recovery.

376. Deputy G. Mitchell.—What percentage do you think you will recover?

Mr. Downey.—I would not know.

Deputy G. Mitchell.—How did the over-payments arise? How would £2.2 million of known overpayments arise in one year?

Mr. Downey.—The greatest percentage would be in relation to fraud, claiming benefit, working and signing, working and claiming sickness benefit.

About £2 million worth of fraudulent claims, that we know of, were overpaid in 1984.

377. Acting Chairman.—I note that further on in the paragraph £1 million of the £2.156 million was attributed to fraud. Tying that in with the total over-payment, what has been the trend over the years regarding the over-payments? Have they been going up and up? Has the fraudulent element been increasing or decreasing over the years?

Mr. Downey.—Inevitably, in monetary terms it would be increasing because of the very substantial increases in rates and things like that. Numbers would have been increasing also because of the increased numbers we are dealing with.

Acting Chairman.—And the relationship between the over-payment and fraudulent element? Do you have statistics on that?

Mr. Downey.—I am afraid I would not have anything I could say off the top of my head.

Acting Chairman.—You may be able to provide us with some note on it.*

378. Deputy G. Mitchell.—There are £2.156 million social insurance and £1.66 million social assistance. In fact, the known over-payment for that year is £3.8 million. Is that correct?

Mr. Downey.—Yes, that is correct, the sum of the two.

Deputy G. Mitchell.—So £3.8 million would be the known over-payment for the year concerned?

Mr. Downey.—Yes.

Deputy G. Mitchell.—And the lion’s share of that would be due to fraudulent claims?

Mr. Downey.—Yes, £2.4 million roughly.

Deputy G. Mitchell.—How many claims would have been involved in that £3.8 million?

Mr. Downey.—The total number is about 7,000 cases.

Deputy G. Mitchell.—Seven thousand discovered cases?

Mr. Downey.—Yes.

Deputy G. Mitchell.—How many of those 7,000 cases would involve fraud?

Mr. Downey.—I thought you were inquiring about fraudulent cases?

Deputy G. Mitchell.—There were 7,000 fraudulent cases discovered. How many others would there be?

Mr. Downey.—There would be roughly the same number.

Deputy G. Mitchell.—How would they come to be discovered?

Mr. Downey.—They would come to light as a result of checks, of one kind or another, on claims — that a claim was incorrectly paid for one reason or another.

379. Acting Chairman.—I note that 43 individuals were prosecuted under the social insurance side of it in 1984. In taking the figure of 7,000 people involved in fraud, why are there so few prosecutions? What happened to the rest of them?

Mr. Downey.—The big difficulty here is getting evidence which will be acceptable and which will stand up in court. In this matter we will always be guided by the Chief State Solicitor’s Office. Regarding what happens the remainder, as I said earlier, we follow them in one way or another. Some of them will make repayments by instalments, in other cases we will recover from payments. In other cases if we cannot sustain the proceedings we make a note of them and come at them again if they claim from us.

380. Deputy Crotty.—Could we get a breakdown of how these frauds arose. In which particular area?

Mr. Downey.—The frauds arise throughout all the schemes — unemployment assistance, unmarried mothers’ allowance, old age pensions, deserted wives allowance, childrens allowances. They are all the assistance schemes; disability benefit and unemployment benefit, on the benefit side; deserted wives benefit and a small number in places like old age pensions.

381. Deputy Crotty: Is there any particular scheme in which there is a greater number of frauds showing up on a regular basis?

Mr. Downey.—Yes. As I said earlier, I would think that the biggest area where you would get this sort of thing would relate to unemployment payments.

382. Deputy Crotty.—Unemployment assistance?

Mr. Downey.—And benefit.

383. Deputy Crotty.—There is £2,156,000 in social insurance, that is unemployment benefit and disability benefit overpayments in 1984. How much of that actual £2 million of that year’s overpayments were recovered?

384. Deputy G. Mitchell.—Could I just clarify one thing while they are looking that up? Social insurance and social assistance, is that unemployment benefit and assistance and disability? What is covered by that?

Mr. Downey.—Unemployment benefit and assistance are the unemployment payments. We have no disability assistance scheme.

385. Deputy G. Mitchell.—Under these headings, social insurance and social assistance, does disability come under the social——?

Mr. Downey.—No, that is social insurance.

Deputy G. Mitchell.—It is purely unemployment benefit?

Mr. Downey.—Yes.

Deputy G. Mitchell.—I want to get this clear. Of the payments made on the social insurance and social assistance, did it just relate to unemployment or was there sickness disability benefit paid from that fund as well?

Mr. Downey.—The social insurance schemes. I can read out a list of them if you want to. Insurance schemes are: unemployment benefit, disability benefit, deserted wives benefit, old age contributory pension, invalidity pension, widows contributory pension etc.

Deputy G. Mitchell.—And the assistance schemes?

Mr. Downey.—The assistance schemes are: unemployment assistance, old age pensions, non-contributory; unmarried mothers’ allowance, children’s allowances.

Deputy G. Mitchell.—Fine, thank you very much.

386. Deputy Crotty.—I requested information on the recovery of funds for 1984. There were overpayments of £2,156,000 in that year. How much of this was actually recovered up to date?

Mr. Downey.—You will see in the Comptroller and Auditor General’s Report that the sums recovered were £643,360. That would include previous years, but a large share of it would be 1984.

Deputy Crotty.—I am asking a specific question: what was recovered of the 1984 overpayments?

Mr. Downey.—We have not got the figure. I doubt if we could get it for you, Deputy, because what we do record on a yearly basis are the amounts of money we recover; we do not attribute it to different years.

Deputy Crotty.—I see. What would the estimated recovery be in that £643,000? How much of that would be for 1984?

Mr. Downey.—I would be guessing very much, but I would think about half, probably.

Deputy Crotty.—So you are talking of something between £320,000 to £350,000 being recovered?

Mr. Downey.—Yes, say about £300,000.

Deputy Crotty.—Why is the sum so small that you are able to recover?

Mr. Downey.—I think basically it is due to the type of people you are dealing with, that you simply are not able to get the money out of them — they have not got it. People go away and that sort of thing; and, when it comes to the people who are a mark in legal proceedings it takes quite a while to get that sort of thing going.

Deputy Crotty.—I see. Of those overpayments, there was £1 million due to clerical errors in your Department?

Mr. Downey.—Some of it would be due to clerical errors; others would be due to genuine mistakes of one kind or another by claimants.

Deputy Crotty.—Genuine?

Mr. Downey.—Yes, misunderstandings.

Deputy Crotty.—These are usually recovered in full, I would imagine?

Mr. Downey.—Mostly.

Deputy Crotty.—Is there any surcharge for officials who make overpayments?

Mr. Downey.—No, there is not; but, if a person’s record is bad enough, disciplinary action can be taken.

Deputy Crotty.—Has disciplinary action be taken and, if so, how many times?

Mr. Downey.—No, I am not aware of any case where that has happened. This is spread over the whole Department. Many different factors come into play — a person’s previous record, the circumstances in which the mistakes were made, etc.

387. Deputy Crotty.—I see. Thanks.

Acting Chairman.—We will move on to the Vote itself, Vote 46.

388. Deputy G. Mitchell.—On subhead A.2 — Consultancy Services — could the Accounting Officer tell us what the £½ million was spent on?

Mr. Downey.—The consultancy provision is mainly related to the ongoing computer developments and planning in the Department. We do not have enough technical expertise on our own account to deal with putting in the various systems and we very often hire consultants.

Deputy G. Mitchell.—Was the work put out to tender?

Mr. Downey.—Yes, it was.

389. Acting Chairman.—On subhead A.1 — Salaries, Wages and Allowances — I notice the figure was £½ million under the estimate. Was there any particular reason?

Mr. Downey.—Well, yes. That was at the time when it would have been difficult to foresee the exact outturn due to embargoes and that sort of thing.

390. Deputy G. Mitchell.—On subhead C. — Post Office Services — the cost was £14.1 million. Has your Department examined other ways of transferring cash? Is it possible, for instance, to use this electronic transfer to people who have bank accounts? Does it not seem to be a very large amount of money to use on Post Office services. Have you looked at other possible systems?

Mr. Doweny.—Yes, we are very conscious of that, because, it is a serious problem nowadays from a security point of view as well as everything else. We are looking at the whole question of electronic fund transfers.

391. Deputy Crotty.—On subhead Q. — Commission on Social Welfare — what does that cover?

Mr. Downey.—The Minister set up a Commission on Social Welfare to report on the social welfare system and it reported, in fact, a few months ago. This was for the expenses of the commission.

392. Deputy G. Mitchell.—What does subhead S. — Losses — mean? I see there is a note on it. That is fine. Expenditure in the Department has nearly doubled from 1984, is that right?

Mr. Downey.—The grant figure given there is the Exchequer expenditure, it does not include the contributions of employers and employees.

Deputy G. Mitchell.—It is not included there, that is just a departmental estimate?

Mr. Downey.—The Exchequer contribution.

Deputy G. Mitchell.—What would the figure for 1984 have been?

Mr. Downey.—The income from contributions in 1984 was roughly £830 million. I will be adding that on to the other figure.

Deputy G. Mitchell.—Why is that not shown as an appropriation-in-aid in the account? What happens to that money? Where does it go?

Mr. Downey.—It goes into the Social Insurance Fund. It is not appropriated-in-aid of the Vote.

Deputy G. Mitchell.—And that goes into the Government’s general accounts?

Mr. Downey.—No, it goes into the Social Insurance Fund of the Department of Social Welfare.

Deputy G. Mitchell.—That is what was voted last year.

Mr. Downey.—Yes.

Deputy G. Mitchell.—So you spent about £2,000 million in that year.

Mr. Downey.—Yes. What happens that is that separate accounts are produced of the Social Insurance Fund and the money in that.

Deputy G. Mitchell.—Where are they audited?

Mr. Downey.—The Comptroller and Auditor General audits them.

Deputy G. Mitchell.—When are they presented?

Mr. McDonnell.—The accounts when audited are presented to the Oireachtas by the Department.

Deputy G. Mitchell.—What happens to the expenditure in those accounts? What are the headings of expenditure?

Mr. Downey.—The money in the Social Insurance Fund is part of the overall finances that make up what is necessary to pay the benefits system, the social insurance payments. The contributions of the Social Insurance Fund are never enough to meet the full cost so the Exchequer has to make a contribution every year. This is why we have the Estimates, the voted moneys.

Deputy G. Mitchell.—I have to say that I thought I knew quite a lot about public finances but I am totally confused by this. Would Mr. Downey send me a note on how it operates?

393. Acting Chairman.—I notice the family income supplement was very small for that year. Did it increase in 1985?

Mr. Downey.—It started last year and it has been increasing in the meantime.

Acting Chairman.—Thank you, Mr. Downey.

The witness withdrew.

The meeting adjourned.