Labour shambles as they overpay one in three claims for tax credits in Southampton Test - Sollitt

3.14.24pm BST (GMT +0100) Sun 5th Jun 2005

Labour Shambles over Tax Credits exposed

Steve Sollitt, Liberal Democrat Parliamentary Spokesman for Southampton Test, today slammed the Government over the administration of the tax credit system, following astonishing figures published on the number of overpayments made by HM Revenue and Customs. In total, a third of all awards for 2003/04 were overpayments, leaving nearly 2 million families repaying on average more than £1000 each.

In Southampton Test alone, of the 7400 tax credit claims 2500 were overpayments, with the average family paying back £1120 each.

Commenting on the figures, Steve Sollitt said:

"These figures are unprecedented and reflect the serious problems not only with the computer system, but inherent within the new tax credit system.

"During the General Election, I was contacted by many people worried and annoyed about the present system. These overpayments have often been overpaid as a result of internal administrative error rather than customer misinformation.

"Too many families are having their budgets thrown into chaos by the tax credit office causing serious problems and hardship especially for those on low incomes.

"What we do not yet know, however, is how many of these overpayments were a result of official error and how many the Revenue will write off.

"Last week Treasury Ministers signalled changes to the way overpayments are clawed back. The statement was an implicit admission that the Revenue has not been acting responsibly in the past. But new guidance alone will not solve this problem.

"The policy of reassessing income at the end of the award is flawed and a return to a system of fixed awards would end this bureaucratic nightmare for many families."