COMPREHENSIVE SPENDING REVIEW:THE DEPARTMENT of Social Protection overpaid claimants by €81.2 million last year, including €25 million in fraudulent overpayments, according to its comprehensive review of expenditure.
Departmental error accounted for €5 million of the overpayments, while the remainder was due to claimant or third-party error, the document states.
The 268-page review sets out the areas where cuts could be made to the department’s €20 billion annual budget. Some of the proposals in the suggested menus of cuts have been included in this week’s budget while others could form part of future budgets.
According to the review, the department is exploring the recovery of overpayments from other payments made to a person by the State, such as student grants and redundancy payments, as well as pursuing overpayments from other EU states in cases where foreign nationals have gone home leaving debts behind them.
It also wants to remove the restriction on the recovery of overpayments and is examining whether it can withhold tax rebates from its debtors. Last year, over 200 cases of social welfare fraud were referred to the courts.
Fraud and error is higher in the jobseeker, one-parent and disability allowances and much lower with pension payments. One survey of the jobseeker’s allowance found a 3 per cent fraud rate while errors were made in another 12 per cent of cases.
The incidence of multiple claiming and identity fraud is increasingly prevalent, according to the review. In the first six months of the year, 136 cases were detected involving €1.9 million. Frauds are becoming more organised and sophisticated and no longer involve two claims but “multiples of that”.
The document sets out options for change for each scheme operated by the department, including scaling back expenditure and outright abolition. The first set of options envisages reductions in the rates of payment, tightening of eligibility criteria and the introduction or alteration of means-testing.
The review stresses the complexities that would arise if schemes were abolished, including people simply migrating to other payment schemes. It also warns that withdrawing payments may be perceived as unfair, even by those who accept the need for policy change.
Some of the proposals have been announced in the budget, such as the reduction in the back-to-school clothing and footwear allowance, the abolition of special grants for twins and other multiple births, and increased contributions for rent supplement.
Other items were not included in the budget, but appear on a menu of possible cuts and are therefore likely to be considered in future years. The abolition of the free travel and free television licence schemes would save €136 million, for example, while the abolition of the bereavement grant would save €13 million.
While reductions in social welfare payments for new claimants are mooted, the review warns of the possibility of a legal challenge where one person is paid less than another in the same circumstances, simply because of the date of the claim. The legal advice received on this issue has been redacted from the document.
Attempts to taper payments to the unemployed after a year or two could face the same problems, the review warns. It says reducing jobseeker’s allowance by €10 after 12 months would save €150 million a year and bring Ireland more in line with other European countries.
Proposals to transfer the cost of sick pay to employers for the first month of illness were sent to the Department of Public Enterprise as long ago as last May as an “early win”, the document reveals. The plan was mooted by Joan Burton but failed to get Cabinet approval before the budget.