Tax Credit chaos still failing East Dunbartonshire families

2.50.42pm BST (GMT +0100) Thu 1st Jun 2006

Tax Credits: "New ministerial leadership is now needed" - Jo

Jo Swinson MP has called for a total overhaul of the way tax credits are awarded, after new figures revealed that 2,100 families in East Dunbartonshire are still being forced to pay back over £1.7 million worth of tax credits, due to overpayments made by HM Revenue and Customs.

Jo commented:

"It is totally unacceptable that in East Dunbartonshire, tax credits are still being overpaid in almost one-third of all cases. Families affected are being forced to pay back an average of £809 in overpayments.

"Last May, Paymaster General Dawn Primarolo claimed that the system was working well for the vast majority of families. But these new figures show that the Minister is clearly in denial - in fact, nationwide 44%, over 2.8 million people, received incorrect tax credit payments.

"Too many hard working families on low incomes are being plunged into debt and poverty by the very system which the Government claimed was designed to help them. More families are being hit by the clawback of overpayments than ever before.

"The Minister has known of the systemic failures in the tax credit system for years and these figures are yet more evidence that too little has been done to rectify them. Recent modifications to the system are too little too late. New ministerial leadership is now needed to introduce a radical overhaul of the way tax credits are administered.

"The Liberal Democrats have published a Five Point Plan for reforming tax credits, setting out the most urgent steps to take to sort out the current chaotic system.

"The plan is easier to administer and simpler to understand than the current tax credits system, and takes into account the first-hand testimony of constituents who have faced serious hardship because of the failures of the Government's tax credit policy."

Figures released by HM Revenue and Customs yesterday show that for 2004/2005:

-1.958 million individuals had their tax credits overpaid at a cost of £1.696 billion

-906,000 individuals had their tax credits underpaid at a value of £556 million

-Out of 6.458 million tax credit awards made, 2.864 millions (44%) were incorrect

-Out of 906,000 underpayments made, 654,000 (72%) were to individuals earning less than £20,000

-Out of 1.730 million overpayments made, 899,000 (52%) were to individuals earning less than £20,000

Across East Dunbartonshire constituency in 2004/05:

-7,700 tax credit awards were made

-2,100 (27.3%) of these were overpaid

-Overpayments amounted to £1.7m

Related Link:

Full Tax Credit statistics released by HM Revenue & Customs