New social welfare legislation would save €55 million – Ó Snodaigh

The Sinn Féin spokesperson on social protection Aengus Ó Snodaigh has today launched the draft heads of the Social Welfare (Amnesty Bill) 2012.

Speaking about the bill Deputy Ó Snodaigh said:
“The level of fraud and error in the Irish social welfare system is estimated to account for nearly three and a half per cent of expenditure (3.4%)

Less than one third of this is as a result of fraud and this figure is dropping every year. The other two thirds of overpayments are accounted for by customer and departmental error.

“This draft bill seeks to implement a social welfare amnesty which would offer social welfare recipients the opportunity to report irregularities in the payments made to them. The Department would then correct the payments. Those that avail of the amnesty would not be penalised and the Department would not seek repayment of past overpayments.

“The objective of the social welfare amnesty is to offer the many social welfare recipients who suspect they are receiving an overpayment, whether as a consequence of their own or the Department’s error, to come forward and have the situation rectified. And to enable them to do so without fear that they will be forced to pay back what maybe an unaffordable sum.

“The amnesty would be a one-off amnesty, lasting one month and would be succeeded by a two month intensification of anti-fraud and control activities by the Department. It would be held in the first quarter of the year, ideally February, to maximise the benefit of the control saving to the Department’s budget for the remainder of the year.

“We estimate that the amnesty would give rise to a one-off control saving hike of €55 million. It will also free-up the Department’s inspectors to focus on other priorities.

“This is a common sense proposal and one which doesn’t unfairly penalise or scapegoat the least well-off and I call on the government to look closely on these proposals and take them on board.”

ENDS

Heads of draft Social Welfare (Amnesty) Bill – followed by explanatory memo

Short title

Social Welfare (Amnesty) Bill 2012

Long title

An Act to introduce a temporary amnesty with respect to social welfare overpayments

Head 1 – Definitions

Definitions

In this Act,

“benefit” means any financial transfer under a scheme administered by the Department

“the Department” refers to the Department of Social Protection

“end of the amnesty period” means the day 30 days after the amnesty commences or such other day as may be prescribed by the regulations

“fraud offence” means an offence relating to improperly obtaining a benefit from the Department, other than an offence that involves violence, a threat against a person or identity fraud”

“the Minister” refers to the Minister for Social Protection.

Head 2 - Commencement

Commencement

(1) The Minister shall by order appoint a day to be the establishment day for the purposes of this Act and the day will be no more than two months following the passage of the Act.

(2) The Minister shall by order appoint a day upon which the amnesty shall commence.

Head 3 - Regulations

Making of regulations

(1) Where regulations are proposed to be made under this Act, a draft of the regulations shall be laid before both Houses of the Oireachtas, and the regulations shall not have effect until a resolution approving the draft has been passed by each such House.

(2) The Minister may propose such regulations as are necessary for the purposes of the amnesty.

Head 4 – temporary social welfare amnesty

Temporary amnesty

(1) The purpose of the amnesty is:

(a) to encourage a person to notify the Department if the person is incorrectly or improperly obtaining a benefit from the Department,

(b) to encourage a person to notify the Department of any change in the person’s circumstances that removes or reduces the person’s entitlement to a benefit from the Department, and

(c) to protect any such person from prosecution or civil proceedings in respect of the matters notified before the end of the amnesty period.

(2) A person cannot be prosecuted for a fraud offence in respect of any conduct that would constitute such an offence if the person notifies the Department of the person’s conduct:

(a) before the end of the amnesty period, and

(b) before the Department has commenced an investigation into the conduct.

(3) If a person notifies the Department in accordance with subsection (2), no action or proceeding may be brought by the Department to recover any penalty, damages or other monies from the person in respect of:

(a) the conduct constituting the fraud offence that occurred before the notification, or

(b) the benefit that the person incorrectly or improperly obtained, as a result of that conduct, from the Department before the notification.

(4) A person may notify the department in person, by recorded post or email and shall be issued with a receipt of this notification by the department.

(5) The onus of proving that a notification took place for the purposes of this section is on the person who made the notification.

(6) This section does not apply to any prosecution or to any action or proceeding commenced before the commencement of this section.

(7) Nothing in this section prevents the Department from varying, cancelling or refusing to grant any benefit as a result of any notification given under this section.”

Head 5 - Report

Report

(1) As soon as may be after the end of the amnesty, but not later than 6 months thereafter, the Department shall make a report which shall be referred to the Oireachtas Joint Committee on Education and Social Protection and the Minister on the outcomes of the amnesty.

(2) This report shall include:

(a) The number of people who made a notification under section 4,

(b) The number and value of irregular benefit payments identified as a consequence of such notifications,

(c) The estimated control saving arising from the amnesty, and

(d) Any other information that the Department considers relevant.

Background note / Explanatory memorandum

Fraud, error and control savings

The level of fraud and error in the Irish social welfare system is estimated to account for less than three and a half per cent of expenditure. This figure is broadly in line with international comparisons.

Out of this three and a half per cent, just one third is a result of fraud and this amount is dropping all the time. The other two thirds of overpayments are as a result of either customer or departmental errors.

The Department undertakes control activity in the form of case reviews on an on-going basis. In 2011 983,000 cases were reviewed giving rise to an estimated control saving of €645 million.

Control savings are an estimate of what the Department’s overspend would be overtime if the overpayments identified by the control activity had not been identified and rectified.

Control savings as a proportion of spending and relative to the number of social welfare customers have tended to remain relatively constant year to year.

One-off social welfare amnesty

The social welfare amnesty would offer social welfare recipients the opportunity to report irregularities in the payments made to them. The Department would then correct the payments. Those that avail of the amnesty would not be penalised nor would repayments of past overpayments be sought.

The objective of the social welfare amnesty is to offer the many social welfare recipients who suspect they are receiving an overpayment, whether as a consequence of their own or the Department’s error, to come forward and have the situation rectified. And to enable them to do so without fear that they will be forced to pay back what may be an unaffordable sum.

The amnesty is to be broad in its application; only overpayments arising from violence, threats or identity fraud are excluded. It would be a one-off amnesty, lasting one month and would be succeeded by a two month intensification of anti-fraud and control activities by the Department. This is to promote the highest possible take-up of the opportunity which both increases the control saving arising from it and enhances the integrity of the system into the future.

The amnesty is to be held in the first quarter of the year, ideally February, to maximise the benefit of the control saving to the Department’s budget for the remainder of the year.

If the amnesty is widely availed of this will also free-up the Department’s inspectors to focus on other priorities.

We estimate that the amnesty would give rise to a one-off control saving hike of €55 million.

This figure is based on an estimate of 10,000 people (less than 1% of total social welfare recipients) coming forward to avail of the amnesty 7,500 of whom would be in receipt of an over-payment giving rise to an average control saving of €7,290 per case.

This is a best estimate. The type of amnesty that we are proposing has not been conducted anywhere in the world. The closest equivalent was conducted in Colorado at the end of 2011 but neither ourselves nor the Oireachtas Research Service have been able to obtain any evaluation results for that yet. The Colorado Amnesty also differed in that it offered immunity only from penalties and was therefore likely to attract fewer applicants than our own. Our control savings estimate is derived from figures in the C&AG report on 2010, the Department’s 2011 annual report and the Department’s 2012 fraud and error survey reports.

ends