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Social welfare amnesty

Aengus O Snodaigh (SF, Dublin SC) moved a Bill to amnesty social welfare recipients who, through no fault of their own, had been in receipt of overpayments (Dail Eireann, Debates, 18th January 2013, 962-987).   His party had presented a series of alternatives to government budgets and he urged members to read them or, if they were afraid of being contaminated by them, to read TASC or Social Justice Ireland reports.   There was an alternative, one that sought to protect the vulnerable.  He was acutely aware that social welfare payments were inadequate anyway, most were well below the poverty line, but an overpayment of €5 or €10 through human error might make a difference to their lives.  Despite screaming headlines about dole fraud and cheats and figures bandied about of €500m or €600m, the real figure was in the range of €20m to €25m.  The level of fraud and error was in the order of 3.4%.  

 

There was no denying, he said that a number of people received more than what they were entitled to, but they were afraid to put up their hands and alert the department, because they simply could not afford to pay it back.  They were caught in a bind because if they came forward, they will end up with less money and their children would suffer.  Technically it was correct that this was taxpayer money, but he pointed to other instances of an accidental overpayment in the HSE of €160,000, for which no attempt was made to recover: the state had one yardstick for the rich and another for the poor.  He cited cases of being approached by people in distress because they or the department noticed an overpayment, but suffered the consequences for reporting it.  We must remember that a reason for error is the complexity of social welfare schemes; another is that 20% of people have low literacy rates.  If error is not detected at an early stage, then overpayments mount up rapidly and he cited the case of a €10 overpayment which turns into more than €1,000 overall, which can be daunting for a welfare recipient to come up with.  

 

He was supported by Dessie Ellis (SF, Dublin NW), who argued that this was a once-off opportunity to declare overpayments, wipe the slate clean and have them corrected.    There had already been amnesties for people who earned vast sums of money and knowingly failed to properly declare their taxes.  We should afford the same opportunity to those who are struggling to survive, he concluded.  

 

Supporting him, Willie O’Dea (FF, Limerick city) contested the myth that social welfare fraud was widespread.  If we constructed a league table of OECD countries, we would probably be at the lower end.  Of the total overpayments taken back, only 30% were due to fraud, reducing because of technological developments and was only 1.2% of payments in 2010.  He was perturbed by section 13 of the Social welfare Bill, which was not even debated, which allowed deductions of up to 15% in the case of overpayments – but that was €27 a week for people on €188, or up to €48 for married people.  This might be alright for people who scammed the system deliberately, but was grossly wrong and unfair in the case of genuine errors.  The way to deal with overpayments was simpler welfare systems and technological development of the type undertaken in other countries. He did ask, though, if an amnesty was really justified at this time and he had argued against the tax amnesties, for they rewarded cheats.  Here, he questioned claims that as many as 10,000 people would come forward and he found it difficult to support a proposition that the state should not recover money from deliberate fraud.

 

Joan Collins (PBP, Dublin SC) supported the Bill.  She explained that people were reluctant to come forward because of the bureaucracy they would encounter and that their already low incomes would be cut further.  This legislation would permit them to come forward, alert the department to a possible overpayment and allow the department to investigate.  There had been five amnesties from 1988 to 1993, to the point that Ireland had been called ‘Amnesty International’ and one for the well-heeled for stamp duty as late as 2009.  Similarly, Richard Boyd Barrett (PBP, Dun Laoghaire) attacked a tax system in which the government would not tax the rich because if we did they would evade tax and leg it out of the country like Gerard Depardieu.  At the same time, it was cruelly taking 15% from weekly payments that were already miserable and left people on the poverty line.  

 

Responding, the Minister for Social Protection, Joan Burton, opposed the Bill because she said it would not achieve its desired purpose and would allow those who defrauded the state to escape scot-free.  Every cent of the social welfare budget must be protected for those who needed it and the Bill was a charter to raid the budget at the expense of those who really needed it.  There had been at least two amnesties before, but the number who availed of them was in the region of 500 and the department had already detected the bulk of them.  Rather than implement measures that would not work, it would be better to support the department’s anti-fraud initiative that was working.  Even a 1% fraud rate represented a cool €200m.  Social welfare fraud was not a victimless crime and working people who got up at 7am and went to work should not be paying for the person next door who abused the system: ‘that does not wash well with most working people and people are fairly knowledgeable about the state of the lives of others’.  In 2011, the department had prevented overpayments of €645m.  Despite their best efforts, there had been overpayments of €92.4m in 2011, of which €51.5m was recovered, a significant amount of money. 

 

The minister said that she questioned the use of the word ‘error’ because there were people who made claims who did not fully reveal their personal circumstances, either because they were genuinely mistakes or because they forgot to provide detail.  In some cases they were given the benefit of the doubt.  Last year, 300 cases of fraud had been referred for prosecution and it was important to send out a message that the state was not a pushover.  When evidence of an overpayment came to light, repayment was sought and she was of the view that this was the correct approach.  The two previous amnesties were hopeless and taxpayers would not thank them for increasing their PRSI and tax to provide €50m for an amnesty to failing to recover money through fraud and error.

 

Brian Stanley (SF, Laois Offaly) insisted that this was a constructive suggestion and not trying to take a shot at government.  He was aware of how low social welfare rates were and cited the case of a constituent on the back-to-enterprise allowance, in his 50s, paying all his own rent and trying to make a go of it.  He had only €3.40 a day to live on, which he used for food but could not afford heating.  Repayments caused major anguish.  Recoupment of anything other than a small sum can lead the whole family to become destitute.  This was a once-off opportunity to come clean without either punitive measures or being crippled by debt.  This proposal excluded identity fraud or multiple claims.  

 

Bernard Durkan (FG, Kildare N) disagreed with the Bill because it was indiscriminate and would have the effect of rewarding the fraudster as much as an accidental overpayment.  He acknowledged that people had great difficulty meeting their commitments and that austerity was awful.  Nobody was supporting it to punish people, but it called for good accounting, making savings and living within our means.  It was vital to protect the integrity of the welfare system.  Over recent years, there had been fairly widespread, consistent and deliberate defrauding of the system to receive payments to which one was not entitled and we need to deal with that.  In the case of errors, there was, notwithstanding the 15% system, a mechanism to accommodate individuals.

 

Terence Flanagan (FG, Dublin NE) welcomed the Bill: it was a worthwhile move that would generate further savings and consideration of the proposal should not be ruled out.  The minister should examine details of any amnesty that would deal with genuine errors, which would encourage them to be reported without fear of repercussions.  If a large number of people were to avail of this, then it would free up departmental personnel to focus on other priorities, such as deliberate fraud.  Hopefully the government would examine it further.  Frank Feighan (FG, Roscommon – South Leitrim) also welcomed the Bill and there was merit in it.  The state had introduced many schemes not only in social welfare but in every field of business and these were open to abuse.  The government had been working hard to stop over-spending: he came from a border area where there had been a lot of cross-border fraud, people not asked for identity documents, but this had all changed now.  He was concerned about the level of disability, which was far higher than other countries, with doctor’s letters sent in with no checks.  People who were in great health seemed to have a disability and people who deserved help had been diluted by people claiming payments who were not disabled.  The same thing happened to the disability grant or heating grant for elderly or disabled people, which contractors took advantage of and overcharged, part of the complete madness of that time. We had a department that for fourteen years dished out the money without checking.

 

Concluding the debate, Aengus O Snodaigh spoke of how he had circulated his proposal to a number of organizations and got back  constructive comments from groups like the Irish National Organization of the Unemployed and the Free Legal Advice Centres, although they had concerns.  He told of how people who found they had benefitted from an overpayment of €1,000 to €2,000 realized that this was too much to meet from their weekly payment – so they took a chance that the department would never find out.  Any amnesty could differentiate between those who deliberately defrauded and those caught up in error.  But he was proposing a ‘short sharp amnesty’ followed by a greater crackdown.  He acknowledged that the 1991 and 1993 amnesties were failures, but that was because they only absolved people of penalties, not of the amount owed, which was charged with interest.  They were only introduced to take pressure off the government for its other amnesties.  This was a different approach.  He contrasted it with the way in which the state had decided it could never recoup money from bankers and speculators.  Genuine errors could be made and he cited the example of the 63,000 errors by the department of issuing an additional week’s fuel allowance.  He was sorry that the minister was not willing to support it, for he had not put it forward to score political points.  He hoped she would consider it again in the future.  The Bill was lost 86-25.