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Mr. Michael Howard (Folkestone and Hythe): First, may I thank the Paymaster General for her courtesy in allowing me prior sight of her statement and in responding to the call for a statement, which I made in the letter that I sent to the Chancellor more than 10 days ago?

Can the Paymaster General respond to the following three areas of concern? First, on the numbers involved, can she confirm the astonishing claim reported in the press this morning that even now, almost one month after the new system was introduced, 300,000 people have not had their benefits paid despite submitting their application forms by the January deadline? Is not that problem about to get worse? Those who have opted to receive payments on a four-week cycle are now due to receive their money. How many of those families will fail to receive their payments on time?

Secondly, in view of the fact that Ministers have already withdrawn the old structure of financial support, which the new system was meant to replace, does the Paymaster General accept that the onus is on them to make sure that no one is out of pocket? What plans does she have to compensate those families who have lost out? How many families have received the emergency interim payments; what are the criteria for those payments; and what has been done to advise others who may be eligible of the availability of those payments? Will she now respond to the call from the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Havant (Mr. Willetts), for an emergency extension of social fund loans to those in need as a result of this crisis?

Thirdly, what of the advice that claimants are meant to receive? Can the Paymaster General tell the House more about the current state of the so-called telephone helpline and why that effectively collapsed despite costing £53 million to set up? When will it be fully operational again? What would she say to those such as the man who reportedly made more than 2,400 attempts to get through on the helpline, only to be put on hold for a quarter of an hour and told that the form that he needed would take 15 days to arrive? What efforts are being made to contact those who are eligible for help but have not applied for the credits?

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On take-up, the right hon. Lady gave the numbers of those who have applied. Can she give the number of those families who are eligible who have not applied? Is it not the case that that figure is in the region of 1 million?

Is it any wonder that even before this shambles the Government Chief Whip told The Scotsman that the Chancellor's flagship system of tax credits is not appreciated or understood by the low paid? Is it any wonder that even before this shambles, as recently as last December, the Secretary of State for Trade and Industry said that

"the tax credit system has not had the transforming impact we thought it would have and should have"?

These tax credits were the Chancellor's brainchild. He was happy to boast about them at the time, but he has since gone rather quiet on the issue. He said in his Budget just three weeks ago that the system would allow parents to balance work and family life so that they can make "real and effective choices". So how would he answer my constituent, Mr. Bridges, who said:

"I am now facing the decision as to which bills to stop paying . . . to ensure I am able to feed our children",

and that

"getting help from their helpline is like picking the six winning lottery numbers—nearly impossible"?

Another of my constituents says:

"I cannot begin"—[Interruption.]

Labour Members ought to listen to this—it is their constituents, as well as ours, who are suffering. My constituent says:

"I cannot begin to tell you how frustrated I am, and how concerned I am about the state of my finances . . . How do I feed my children? How do I pay my rent?"

Are not hundreds of thousands of families as worried as they are? As one claimant told us,

"being on a low income I need the money when it is due, which is why I applied five months ago".

Is it not the case that this shambles is entirely the Chancellor's responsibility? Is it not the Chancellor who, since October 1999, has introduced five new tax credits for families, scrapped four of them and then introduced two new ones? Is it not the Chancellor who was warned by the then shadow Chief Secretary that the scheme carried the risk of leading to

"even greater bureaucracy and complexity in our tax system and of it failing to be able to deliver to the needy when they are particularly in need of support"?—[Official Report, 10 December 2001; Vol. 376, c. 608.]

Is it not the Chancellor who should be at the Dispatch Box today, accepting responsibility and apologising to the hundreds of thousands of families who have needlessly been caused distress and dismay because of his incompetence?

Just three weeks ago, the Chancellor decided to call his Budget Red Book "Building a Britain of economic strength and social justice". Has a Red Book title ever been so inappropriate? Independent commentators have been queuing up to say that the Chancellor has got his figures on the economy wrong again. So much for economic strength. Will not the families caught up in this tax credit shambles view his promises on social justice as another sick joke?

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Ministers said that with this new system there would be one point of claim. Is it not clear that there is in fact one point of blame, and does it not reside in the person of the Chancellor? Once these immediate problems have been resolved—if they are resolved—is there not a need for an urgent inquiry to look both at the administrative problem and at the Chancellor's policy decisions which brought them about?

Dawn Primarolo: Let us take this nice and slowly for the right hon. and learned Gentleman. I am greatly encouraged that he and members of his party who said that this would be a disaster and that nobody would claim are now backing off from that allegation. To suggest that the system is a shambles is a travesty. Some 5.7 million families may benefit from the new tax credits; 3.2 million are in payment or about to be in payment. If we add to that the 1.3 million families, included in the 5.7 million, who are on income support and jobseeker's allowance and who have received their extra money, the right hon. and learned Gentleman can see immediately that although he may wish that millions have not applied, that is not the case.

The right hon. and learned Gentleman asked a series of questions. With regard to the claims made before 31 January, as I said in my statement, the current position is that those families are receiving payment or are about to receive payment, or there are outstanding inquiries that we are rapidly trying to conclude.

With regard to those families who did not receive the payment when expected, who felt that they would experience difficulties or were already doing so, as I said in my statement, the Inland Revenue will make an interim payment, and those payments are being made. There is no need to resort to the social fund—an interim payment can be made. With regard to compensation, as I have told the House repeatedly, if there are circumstances in which people did not receive the service that they were entitled to expect I shall certainly look very closely at that.

The right hon. and learned Gentleman also asked about the helpline. I have explained to him that 700 extra staff were put on to the helpline to help with the enormous demand, at the height of which there were 2 million calls. Those staff are now in place. We are meeting 2 million claims this week, so calls will start to decline, and are already doing so. If the Inland Revenue received an application from a family by last Friday it will pay the family by next week unless there are outstanding queries to which we are awaiting a reply from the claimant. That does not spell a system in chaos. Millions of families are already receiving payment and millions more are about to receive payment this week. By the end of next week, the remainder who have replied will either receive payment or will have been contacted by the Revenue for further clarification.

Mr. Harry Barnes (North-East Derbyshire): A good scheme is in danger of getting a bad name because of a number of problems that claimants are experiencing. The credits may be coming through soon for a number of people but, nevertheless, there are masses of problems. The MPs need the helpline for exceptional cases—it is something that we are obliged to push and argue for on behalf of scores of people in our

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constituencies. They may represent only a small percentage of cases but are important in getting this right.

Dawn Primarolo: I entirely agree with my hon. Friend that it is important to get this right and ensure that people receive payment when they expect it. Many people rang the helpline asking for confirmation of when the first four-weekly payment would be made. Such payments will be made today and throughout the rest of the week. The MPs' helpline is there to assist Members in any way that Members feel is appropriate. The number of staff working on that helpline has been tripled and, as I have told the House, to assist MPs, an additional helpline will be made available to cope with any queries about payment. However, I stress again that 3.2 million families are already receiving payment or are about to do so, and 1. 3 million families on income support or JSA are already receiving their money, which means that over 4 million families—5 million nearly—are in payment. That is a success story, but it is vital that all those families who want to receive the money get it speedily and, where there are difficulties, an interim payment is made.

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