John Thurso (Caithness, Sutherland and Easter Ross) (LD): I am delighted to have secured this debate and to be able to highlight problems that are causing misery and hardship not only in my constituency but, judging from the number of Members in the Chamber, in all constituencies. Citizens Advice Scotland sent me a briefing earlier this week saying that the problem is causing real hardship. It also said that the problem is working against both the Government's policy of social inclusion and against the Scottish Executive's policy on debt relief and debt help in Scotland. Citizens Advice has also produced a leaflet; I do not have a copy, but I understand that it is entitled "Debt Problems and Tax Credits".
I start by stating what it is that I seek to achieve this morning, and what it is that I do not seek to achieve. I say immediately that I do not seek to question the policy of tax credits. Indeed, I welcome the real help that the policy has given to many of my constituents; many hard-up families are undoubtedly better off for it. I appreciate the help that the system has given them. No; I seek to highlight what I believe to be a serious deficiency in the administration of the policy, which is causing severe hardship to a small but significant number of my constituents. That small number of people have just as much right to be properly treated by the system as those for whom there has been no problem.
I shall focus on the question of overpayment. I am not speaking of overpayments that have come about through any fault of the claimant, nor those that have resulted through fraud or attempted fraud. I speak only of overpayments caused by Revenue error. Overpayments can come about in a variety of ways. For instance, income might have risen by more than £2,500 during the tax year, but the claimant did not inform the Inland Revenue; or the claimant did not inform the Revenue of a change of circumstances; and the information supplied by the claimant could have been incorrect. Lastly, it could be caused by official errora miscalculation on the part of the Revenue. It is on that last point that I shall focus.
I draw attention to two points. The first is that when claimants have done everything in their power to advise the Revenue of a change of circumstance or have said that they think something has been done badly or incorrectly, the system, like some Orwellian photocopier, keeps churning out awards and demands and completely ignores the contact that the claimant has made. The second is the sheer volume
David Taylor (North-West Leicestershire) (Lab/Co-op): I do not want to anticipate the hon. Gentleman, but I wonder whether he would include in that list of
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examples the steady stream of families that return money that they are pretty certain they are not entitled to, only to be reassured that it is part of their entitlementand then, to their chagrin, they are landed with an overpayment assessment at the end of the year. Such circumstances are difficult to understand.
John Thurso : The hon. Gentleman puts his finger on one of the main problems that I seek to address today. I have confined myself to three examples, but I suspect that hon. Members on both sides of the House will have 20, 30 40 or even 50 examples in their caseload. The problem is that people have recognised that they have been overpaid and have sought to give the money back. In one of the cases to which I shall refer, a lady tried to repay the money by cheque and was told that there was no facility for receiving it. Ultimately, after having insisted and been told that the money was hers, she eventually spent it. Such people find themselves in hardship and debt as a result.
The second point is the sheer volume of errors, either human or computer, that now seem to occur within the system. I begin by asking the Minister some simple questions. First, is not the credit system designed to help those who are worst off and most dependent on help? Secondly, are not those people, by the very nature of their circumstances, among the most challenged? They often live in the most difficult circumstances, and the system should be a lifeline, rather than a torpedo. Thirdly, is it reasonable to expect such people to second-guess a system whose complexity is such that even trained accountants and Revenue personnel find it difficult to understand the problem at the heart of each case?
The problems first started to come to my attention several months into the 2003 financial year. There was a steady stream of complaints from those who had previously received working families tax credit. As a result of the migration from that credit to the working tax credit and the child tax credit, one or other of the two entitlements was getting lost and families were suffering. At the time, I put that down simply to a change in the system and I did my best to deal with the problems, as I am sure that other hon. Members did.
At this point, I must pay tribute to those who work on and service the hotline for MPs, because my office and I have had a phenomenal service from them. They have taken tremendous care and made a great effort. Sometimes, they have been on the telephone with my office for more than an hour at a time, and they have worked hard to make corrections and issue emergency awards to relieve hardship. In a way, it is a testimony to the difficult nature and depth of the problem that, notwithstanding their effort, I have had to refer so many cases to Ministers.
Over the past year, the issue of overpayment has come very much to the forefront of my work. In the overwhelming number of cases that have been brought to my attention, the error has occurred when claimants' circumstances have changed. For example, one partner has gone back to work, or the wife has come off maternity leave. The claimants have notified the changes to the Revenue, which has noted the additional income for the spouse who has gone back to work, but it has somehow deleted the income for the spouse whose circumstances have remained unchanged. That seems to be one of the root causes of the problem.
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"how many (a) working and (b) child tax credit award notices issued to couples in 200304 omitted the earnings of one of the partners resulting in an overpayment which the Revenue is now seeking to recover".
"The Inland Revenue is aware of a small number of occasions in 200304 when a tax credit award notice omitted the earnings of one partner. No separate records are available of precisely how many cases were involved."[Official Report, House of Commons, 1 March 2005; Vol. 431, c. 1064W.]
"By the end of December 2004 about 78,000 taxpayers had returned Form TC846, or had otherwise been recorded as requesting the write-off of their overpayments on grounds of official error. About 41,000 requests had been decided by that date, and about 1,600 families had their overpayments written off for that reason."[Official Report, House of Commons, 10 January 2005; Vol. 429, c. 129W.]
"This error occurred when staff did not follow the correct procedure to update the tax credits computer system with more recent information".[Official Report, House of Commons, 4 April 2005; Vol. 432, c. 1176W.]
That was the critical part of her answer, which changes the nature of the problem, from a software or computer problem, for which the Revenue had agreed to waive the overpayment, to a human error, for which the Revenue will not make payment. That might explain why, of the 78,000 taxpayers returning the form and the 41,000 requests decided, a mere 1,600 people had their overpayments waived.
David Taylor : Does the hon. Gentleman endorse the view of a number of organisations campaigning on the issue that the right to recover overpayments resulting from official error ought to be ended and, rather wider of that point, that there ought to be statutory tests for recoverability, which should not operate in a framework that owes too much to the discretion of the individual assessing the case?
John Thurso : I agree with the hon. Gentleman. One of the things that strikes me most when comparing the social security system with the tax credit system is that in each case the social security system has a proper appeal procedure, ending in an almost judicial process, whereas there is no such process in the credit system. Each decision is entirely down to the choice of the particular official dealing with the case. It would be much more helpful if there were at least a proper set of guidelines or, at best, a formal system.
I asked the Minister another question. The Paymaster General referred to "a small number of people", but what is a small number? If my case work is anything to
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go by, the number may be small to the Treasury, but not to those who are affected by itin fact, the issue is the biggest in my case work. I have to deal with the full range of issues, right across the spectrum, as, I am sure, does every hon. Member. However, tax credits has more files than any other item. Why are the details not being kept? I have experience of being a non-executive director of a plc and if we behaved like that, we would be brought to book by the authorities, because we would be required to keep such details and information. At the very least, we would be lambasted by a consumer organisation, and no doubt the Government or this place would be seeking to legislate.
I shall refer to the three cases that I have chosen as examples. I shall not use the names of the constituents, because I have not had an opportunity to ask them about that, and it would not be fair to use their precise names. However, I am in correspondence with the Paymaster General in connection with all three cases, and would be happy to give the Minister the names afterwards if he so wished. I was going to call the cases Mr. and Mrs. S, and so forth, until I discovered that the first two surnames both began with S, so instead I shall refer to them as case A, and so on. I also thought of referring to them as Mr. and Mrs. Caithness, Mr. and Mrs. Sutherland, and Mr. and Mrs. Easter Ross, but I shall stick with case A.
In 2003, the husband was in work. The wife notified the Inland Revenue of her return to work following the birth of their baby. Both their P60s, and seven payslips for the two of them, were handed in to the Inland Revenue office. The wife's earnings were recorded but, unbeknown to the couple, the husband's earnings were deleted. The couple took on a new housing commitment: they bought a house, and took on a mortgage based on their income as calculated in the light of the award. They did not enter into that commitment lightly, and it is not something that they could get out of lightly.
In 2004, the couple were told by the Inland Revenue that there had been an overpayment of £2,444. The Revenue admits the error, but the Paymaster General told me in a letter of 10 March that the Inland Revenue did not think that it was reasonable for the couple to believe that their award was correct when only one income was shown on the form. I have here the actual form from which it is supposed they should reasonably have deduced that there was a mistake. It has the wife's name quite clearly on one side, and underneath it says that she works 16 hours a week. The husband's name is underneath, and the form says that he works 40 hours a week. Under "total income" they have given the correct total for the two of them.
The form asks the couple to tell the Revenue if their annual income gets above a certain amountand a figure of £7,560 is given opposite the section filled in by "Mrs. Sutherland"as they may receive too much tax credit and may be asked to pay back the amount awarded. There is nothing in the form or in its layout to suggest that that figure refers to the combined total of the two incomes, which is stated on the form and which is, in fact, correct. The couple were, in my view, reasonably entitled to feel that they had been given a correct award. As I said, they took on a mortgage as a result of that reward, and are now in severe difficulties in attempting to deal with the situation that has come
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about. I do not believe that the ordinary literate and numerate man or woman on the street can reasonably be expected to find their way around a system with that degree of complexity.
The second case is of a husband who was made redundant in 2003. He informed all the relevant authorities, and he received jobseeker's allowance and a tax credit award. In May 2004, he started a new job, and all the authorities were informed of the change of circumstances. A steady flow of letters arrived from the Inland Revenuein fact, he received seven in one day. He came to a clinic that I held in a village hall near where he lives, and produced a paper bag, from which he tipped a phenomenal pile of papers. I thought that I had problems filling out and dealing with my own tax demand, but when I saw the sheer complexity of his case, I thought to myself, "One would really need to employ an accountant to go through all of that."
The situation went on from there. It culminated, on 21 September 2004, with the couple receiving a demand for repayment of a child tax credit of £2,248.71 and of a working tax credit of £1,528.99. In a subsequent telephone call to the Inland Revenue, the couple were informed that the overpayment now stood at some £3,800nearly £4,000for the one tax credit, and at £2,300 for the other. Again, the Paymaster General has received details of this case. The couple are still awaiting a full explanation and clarification of their position. Between 5 February and 7 February this year, the couple received a further nine different award notices from the Inland Revenue, and on 26 February a further eight award notices were received. If the test is one of reasonableness, is it really reasonable that a constituent should be expected to deal with that volume of paperwork coming through their letterbox?
David Taylor : All this seems so familiar to those of us who were practising accountants when self-assessment was introduced. Eventually, the Inland Revenue got on top of that, and I hope that it will do so in this case. However, is it not unreasonable that of the 7 million families in the country, the 3 million that receive tax credit to the extent that it wipes out their tax liability should be provided with such impenetrable statements and that there should be no obligation to calculate separately and notify any alleged overpayment?
John Thurso : The hon. Gentleman again makes the exact point about the sheer complexity of the system. Let us not forget that that system is designed to help people who are most disadvantaged and on the lowest incomes. Although I do not for a moment suggest that they are of any less intellectual value than anybody else, such people, by their very nature and the circumstances in which they find themselves, are least likely to have either access to the professional help that is needed or the time to deal with such problems.
Mr. John Burnett (Torridge and West Devon) (LD): The hon. Member for North-West Leicestershire (David Taylor) made the point that the accountancy profession mastered self-assessment. The private sector is involved in that, because it is financially worth its while. However, in this matter, as my hon. Friend implies, there is little incentive for the private sector to
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give assistance because the people involvedthe claimants who have been wrongeddo not have the money or resources to pay for the relevant advice.
John Thurso : My hon. Friend has again put his finger on the button. Before I come to the third case, I should like to refer to what the ombudsman said to the Public Administration Committee on 2 December 2004:
"If you have six different award notices and you have no real idea which of those, if any, is right, having a debate about whether you reasonably believed that that was the right figure is not helpful in those circumstances."
I shall touch on the third case. It involves a couple, one of whom has knowledge of the tax credit calculations through his employment; he works in a citizen's advice office. At the end of November and the beginning of December 2003, he started to telephone the tax credit office to say that he believed that an error had been made in the calculation. No adjustment was made.
On 12 January 2004, he confirmed in writing to the tax credit office his belief that the calculation had been wrongly made. He was particularly concerned not to build up overpayment, and he made five subsequent telephone calls. In the first, he was told that the case would be looked at. In the second, he was told not to worry, that the matter would be sorted out in April and that the Inland Revenue would treat it as a loan. In the third call, he asked whether he could repay by cheque, but was told that there was no facility to enable him to do that. The official responding to the fourth call said that there was no knowledge of any difficulties with the case at all. During his fifth call, made in April 2004, he was told by the Inland Revenue that it would now update its records.
It finally transpired that a zero had been mistakenly left off his recorded earnings. In August last year, the Revenue admitted that error, but informed my constituent that it did not think it reasonable for him to believe that his award was correct. In fact, he had spent five months asking the Revenue to check the calculation. Last month, he received notice of a new award and, at the same time, a demand for an overpayment of £4,779.29.
I have given only three examples, but I suspect that all of them could be replicated in the casework of other Members here. The examples that I have given represent only the tip of the iceberg of what I have in my office; some 25 or 30 other cases are currently under way, and they have three things in common. First, the claimants did everything by the book. Secondly, the error, whether human or computer, was with the Revenue and thirdly, the resulting stress and hardship has achieved the diametric opposite of the intention of the policy.
The Minister might wish to tell me how many of my constituents have benefited from the policy; I am happy to accept that and will not dispute it. He can, if he wants to, blame it all on the claimants. However, because I suspect that he is in politics for pretty much the same reason that I amto help those who need it mosthe could accept that there is a real problem causing genuine hardship for a small but significant number of our citizens, and use the power of his office to deal with it.
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The test is reasonableness. Is it reasonable to award desperate and hard-up families life-giving succour one day, only brusquely to withdraw it at a later stageso increasing their difficultiesall through administrative incompetence? Is it reasonable to issue forms so complex that trained accountants and the Revenue's own staff have difficulty dealing with them, and is it reasonable to operate a system with a fault level that would not be tolerated in any other organisation? I would say no to all three of those questions; it is not reasonable.
I end with the case of a young mother who was so desperate because of the circumstances that she found herself in that my office staff feared for her life. Finally, in desperation, they phoned the officials involved to say that that was their belief. The hotline responded magnificently; emergency aid was given and all was well. However, I wonder how long it will be before somebody in such desperate circumstances does resort to desperate measures. I hope that the Minister, having heard the cases that I have described and the examples given by other hon. Members, will realise that the problem may be small, but it is very significant for those whom it affects. Please will he think about what can be done to put right the appalling problem of overpayments and seriously consider waiving the payments in those cases in which the fault is clearly not on the part of the claimant, but has arisen from an error in the system, be it human or computer?
Mr. Kevan Jones (North Durham) (Lab): I think that my second or third contribution to a debate in the House was on Second Reading of what became the Tax Credits Act 2002. I supported it then as good policy, and it is nice to see the difference that it has made to many families in a short time. I concur with the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) about the assistance that it is givingcertainly in North Durhamto many hard-working families, taking away the stigma of claiming benefit and allowing them to go to work. Along with the record increase in child benefit and other policies of this Labour Government, it has made a real difference in my constituency and everywhere else. I make no apology for the policy. We should be proud of it, and should champion it from the rooftops.
I am annoyed, however, when a flagship policy such as this, which is making so much differenceI meet people every day who have benefited from it, especially young women who would not previously have been able to go to work, but who now canis damaged by administrative incompetence. When I was in local government, I was always annoyed when people got sent round the system. People such as those who have just been described should not have to go through so many difficulties to claim a benefit that should be their right.
I wish to raise four cases. When I asked for examples, my office staff said, "How many do you want?" The other issue, which I am sure many hon. Members have realised, is that officers are inundated with inquiries. They spent a lot time dealing with these cases, some of which involve desperate people. We are not talking
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about people who can accept that one week their income will drop by £10 or even £20. They live on tax credits and rely on them for budgeting their family income. It is unacceptable for people to be treated in this way.
David Taylor : Does my hon. Friend agree, as I do, with the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) that the staff who support the MPs' hotline are top quality people with good communication skills who deal with these issues accurately? Is it not a pity that those characteristics are not more widely shared among the operational staff in the Inland Revenue?
Mr. Jones : I do, but it is sad that constituents have to come to their MPs to get an answer to these problems. When they ring the Inland Revenue they do not get the same service as we get, which is not right. They should be able to get answers to their questions and be dealt with properly. I shall give examples of people who are still waiting for replies to letters several months down the line.
The hotline has been useful, but both the Inland Revenue and the Department are not very good at replying to Members' letters about these cases. It makes it difficult for MPs because, as the hon. Member for Caithness, Sutherland and Easter Ross said a few minutes ago, we are dealing with people who want help. They cannot wait for two or three weeks. I have an abhorrence of debt, which is shared by most people in working-class communities. It is wrong that such people, through no fault of their own, end up thinking that they owe the system money. I shall make a suggestion in a minute: the Minister might find it controversial, but it needs to be considered.
I want to focus on four cases, which touch on similar issues to those raised by the hon. Member for Caithness, Sutherland and Easter Ross. I also want to describe how these people have been treated by the system before my office became involved. The first case is that of Mark McGough and Victoria Kerry of Catchgate. They contacted me in December 2004 when their payments suddenly stopped without explanation. They contacted the tax credit office, which told them that it was because there had been an overpayment. On further inspection the tax credit office explained that the overpayment had occurred because the calculation assumed that Mr. McGough and Miss Kerry had no income. That was totally incorrect, as they were both in work.
Their award notice clearly stated their correct income and so they assumed that the tax credit that they were receiving was correct. The information on that form was used by the tax credit office to calculate their tax credit. A mistake was made by the Inland Revenue and my constituents were not responsible for the overpayment. It could be argued that they should have raised the matter. But how could they? The notice they received was correct and stated their correct income.
I am pursuing this case because I believe that in such cases the money should be written off. My constituents were in no position to suggest that their payments were incorrect. The people who I have been dealing with are simple, hard-working and honest individuals. They have been honest with the Inland Revenue in terms of providing information. They have not tried to
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manipulate or hoodwink the system. They have been open and honest and have got into these situations through no fault of their own.
The second case is that of Mr. and Mrs. Hall of West Pelton. They have had a difficult time with the tax credit office. They originally contacted me in July 2004. They had received numerous conflicting claim notices, which led on two or three occasions to the withdrawal of credits with no explanation. I asked the tax credit office to investigate and in August I received a reply, stating that everything had been resolved, and that the Halls would receive regular payments from then on. However, there was no explanation of the mistaken stopping of the other payments. All that was said was thatI hate this explanation, as I did when I was in local governmentthe system had a failure in it. That is not acceptable. I want to know the reasons for the payments being stopped, and I think that the people concerned deserve to know them.
That state of affairs continued until December and January, when the Halls suddenly received an overpayment notice, although they had been receiving regular payments for the previous six months. The tax credit office appears confused about how that happened. It is another instance in which Mr. and Mrs. Hall have been entirely honest and up-front, and have provided the system with all the relevant information, but have been given no explanation for the overpayment. That is another matter that I am still pursuing by letter, although I have yet to receive a reply.
The next case that I want to mention concerns Miss Julie Simm, of Perkinsville in my constituency, who contacted me to say that the tax credit office said that she had been overpaid. She had supplied all the correct information about her income and her partner's income, and therefore could not understand why she had been told that an overpayment had been made. Again, the cause was error on the part of the tax credit office.The remarkable thing about the case is that, before Miss Simms received the notice, she realised that she was being overpaid and contacted the tax credit office to inform it of that. Nothing was done; it took 42 days to reduce the payments, so an overpayment was accrued.
I wrote to the Paymaster General on 19 January and received a reply last week, which is, I think, unacceptable. Her letter really just supported the system, stating, in effectthis is the traditional response from the tax credit office"Yes, we did make a mistake, but you should have noticed it, so it is not now our fault." Well, my constituent recognised the mistake and told the tax credit office, which did nothing about it. She thus accrued an overpayment, whereas if the office had acted when she contacted it she would not have done. I do not think that she should have to pay the overpayment, just because of the inefficiency of that office. I have written to my hon. Friend the Economic Secretary and look forward to a replywhich I doubt will arrive this side of the election, but may possibly come later in the year.
The next case I want to mention concerns Mr. and Mrs. Armstrong, of the Gardens, Chester-le-Street, and it is another extraordinary one. The couple have been honest with the Inland Revenue; they received their regular payments, and realised that in one month they
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received two payments. They contacted the tax office and said that they thought that they had been paid twice. Mrs. Armstrong was told that the two payments were correct, because of an underpayment earlier in the year owing to the birth of their fourth child.
Mrs. Armstrong accepted that explanation and used the money in good faith as part of the family budget, as, I think, anyone else would in the circumstances. Subsequently, the tax credit office contacted the couple to say that there had been an error and, therefore, an overpayment. It sent an overpayment notice, telling them to pay the money back. The hon. Member for Torridge and West Devon (Mr. Burnett) raised the issue of professional advice; Mr. and Mrs. Armstrong obtained such advice from Hazel Tindale of Book Keeping Services Ltd., who acted on their behalf. She wrote on 20 August 2004 and, lo and behold, is still waiting for a reply to her letter. So the Inland Revenue still ignores individuals, even when they contact professional services.
That is unacceptable, particularly as the tax credit office admitted to the Armstrongs in the same letter that they were paid twice. Clearly this was the tax credit office's mistake. Mrs. Armstrong told the tax credit office that she believed that she was not entitled to the money, so I do not know how it can reject her appeal.
I wrote to the Inland Revenue in October 2004 and again received a letter in Decembertwo months laterfrom Barrie Rushton, the assistant director of customer relations at the tax credit office, who promised to have the case reviewed. However, the overpayments team refused to review the case when he referred it to them, reiterating the point that was made earlier.
Despite several phone calls from my office to the MPs' hotline to try to secure a review of the case, the tax credit office continues to say that the overpayment is the Armstrongs' responsibility, and continues to reduce their monthly payments to recoup the money. As I said, the Armstrongs did everything in their power to tell the Inland Revenue that they thought that they had been overpaid, so I repeat that the money should simply be written off in such cases.
I said at the beginning that I am proud of the tax credit. I am because it has genuinely helped many poor and hard-working families in my constituency. These cases discredit the system, even if they are in the minority, although I have lost count of the number of cases that I have in my office. I strongly suggest to my hon. Friend the Minister that we write off the money in cases where people have been totally honest and up front and have given all the information to the Inland Revenue that it requires. Overpayments have been made through no fault of their own. If we do not write this money off for these people, they will have the hardship of having their monthly incomes substantially reduced to recoup the overpayments.
As I said, these people have already suffered a great deal of heartache and frustration. They have had to ring the Inland Revenue constantly and have sometimes had to employ people to do that on their behalf, but they
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have got nowhere and have simply been sent around the system. It always makes me angry when one gets sent round the system time and time again.
Mr. Peter Luff (Mid-Worcestershire) (Con): I have consulted my right hon. Friend the Member for North-West Hampshire (Sir George Young), and I believe that only two Back-Bencher speeches remain to be made. We have agreed how much time he needs, so I hope that I comply with his requests and needs.
I genuinely wish to congratulate the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) on securing this important debate and on the manner in which he introduced it. I express my appreciation for the remarks of the hon. Member for North Durham (Mr. Jones). This is a matter of pressing importance to far too many hard-working, decent and honest families.
My wife is my constituency secretary, and hardly a day seems to go by without a telephone call from another family in desperate circumstances. It is interesting to note that so many of these cases are dealt with on the telephone because their sheer complexity is overwhelming. They would overwhelm me; I cannot cope with my tax return, and I certainly could not cope with the working families tax credit if it got into the sorts of difficulties that my constituents have so often experienced. It also takes a considerable amount of time to sort out these difficulties.
I do not know what the problem is, but I am more sceptical about the whole tax credit system than the hon. Member for North Durham. I am not sure whether the problem lies in inadequate systems, particularly in information technology, or in the poor training of staff. It has been suggested that it might simply be because the Inland Revenue is better at taking money from people than giving it away, and that it is "a culture thing". That is quite a plausible explanation. Could it be that personal lifestyles are too complex to enable such a system to function at all? We have had problems like this in the past: there was a disability issue in my first Parliament1992 to 1997when I was overwhelmed by complaints about the way in which that system worked, but that could be sorted out because disability can be measured relatively objectively. We also wrestled to get the Child Support Agency right. The problem is that the sheer complexity of people's lifestyles cannot comply with carefully written statutory instruments, Government guidelines and codes of conduct.
Mr. Kevan Jones : I accept that that may be true in some cases, but in some of the cases to which I referred, people's circumstances did not change at all; I agree that there may be complex changes in some cases that make things difficult for the tax office, but these are just administrative mistakes.
Mr. Luff : As it happens, most of the cases that I wish to raisecoincidentally, like the past two speakers I also
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have four cases to discuss, if there is timearise from simple maladministration by the Inland Revenue. I was disappointed that the document, "Tax credits: reforming financial support for families", which was published at the time of the Budget, appears to make no mention of the problems associated with the implementation of tax credits. It is a Panglossian document. Tax credits may have benefited many families, but they have brought nothing but heartache in these four cases.
In the first case, that of Julie Brown, there has been a phantom overpayment. She has not received an overpayment but the computer thinks that she has. The result is that she received no money at Christmas or Easter. It is an absolute scandal for the poor woman. We have spent so much time trying to sort out her case, but she is at her wits' end. We are told that another emergency payment has been sent to her, but she had not received it this morning. There is also the problem that emergency payments have to be repaid, which will further confuse the system. I desperately fear for the future of Julie Brown's case. We shall chase it up in three week's time. We have been advised to do so then because no giros can be issued for the next two weeks: apparently the computer is busy issuing new schedules of payment for the next tax year, so there is no prospect of any money for Julie Brown.
Although many members of the hotline staff are excellent, and tribute has been paid to them, we sometimes find it difficult to persuade some of them that they are dealing with real human beings who are in desperate financial circumstances. I am not surprised, as they must be a bit battle weary by now with all the cases that they have to handlewe all get case hardenedbut one of them suggested that Mrs. Brown should go to the Worcester tax office to sort things out. She does not have the money to go to the Worcester tax office. She survived Easter with a £10 note kept for emergencies, just in case. She could buy nothing else: no petrol, no bus fares and no train fares. It shows how out of touch some of those people are that someone should suggest that she should travel from her town to Worcester to try to get her justice, which she deserves. She has received no overpayment, but the computer still thinks that she has.
The next case that I want to raise is that of Mrs. Georgina Gadd, who received an overpayment because of an unrecorded change of circumstances, which the Gadds desperately tried to tell the Inland Revenue about. In view of the time, I shall not weary the Chamber with the details of her case, but she has kept meticulous records since February 2003, when she first applied for tax credits. She quickly became aware that there was a mistake and on 25 June 2003 she called the Inland Revenue and expressed her greatest concern that she was receiving payments to which she was not entitled. Her notes state:
"I was then reassured that the payments I was receiving were correct and that I was fully entitled to the working tax credit. I was even told that quite a few people had contacted them thinking that the payments were too much but that it was a very good tax award for families with young children. I was told to expect a further tax form in the next few days."
So a PR spin was put on what Mrs. Gadd knew was an overpayment. I have the details here: there was a succession of telephone calls, letters and formal complaints running through to 15 January 2005.
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Mrs. Gadd's notes state that around that date she received a telephone call from the Inland Revenue apologising that she had not yet received a reply to a letter from September and that it was trying to sort out the complaint. The issue is to do with the nature of her husband's employment and earnings. The Inland Revenue also told her, "Why don't you get in touch with your MP? If you get your MP involved, you might actually get it sorted out." That is why she wrote to me. In a letter to me she saidand I think that she is right:
"until they have recouped the £1000 overpayment despite the fact that according to their own code of practice, which they have admittedly failed to meet, and which I have proved to have made substantial effort to ensure that they held the correct information, they should look into waiving some if not all of this overpayment".
That is the point that I want to make to the Minister. These people, who have striven to be honest with the Inland Revenue, deserve an amnesty. Mrs. Gadd points out that she has had no tax credit since June 2003. That is devastating for a family with one wage earner, a small baby and a two-year-old child.
A letter from another constituent arrived this morning. It is on a topical subject, but I do not have permission to name its author, so I will not do so. She is a single mother earning £14,500 a year and she has two children, one at university and the other at sixth-form college. She is struggling to keep them in education, but she hopes to send her second child to university shortly. She has pointed out time and again that the Revenue is paying too much, and she wants to know how much she is overpaying so she can accurately budget for that, but the Inland Revenue will not tell her. Her letter states:
"I did receive a reply saying I would hear in 6 to 8 weeks, then a further letter telling me that the amount I was receiving was right, but I know fine well it's not because they still had all my details wrong and had me working for the NHS on £10,384 which I was three years ago. I despair."
However, I have been onto them again after 4 hours of trying today, to be advised that their computer is not working correctly and that, although on every occasion I have advised them of my change in circumstances, my old details are stuck in their system and that the computer is not accepting my new details, so until the computer is fixed I will still be getting a payment of £267 per month which I know is too much for one child. I am very worried about all this".
We have talked about cases of overpaymenta phantom overpayment, and two actual overpaymentswhere people have behaved with absolute honesty and integrity, and been determined to sort things out, but where they have not received the level of service from the Inland Revenue that they are entitled to expect. However, it is also important to remember that some people are not getting the money to which they are
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entitled. A constituency case of mine involving Sheila Christian Brookes highlights that we have worked hard on that, too. Many interventions and telephone calls have been made, and it was shown that she was owed substantial arrears:
"they can't try to re-issue the cheque as the computer is working on the new schedule of payments for the next two weeks and then there will be a backlog of cheques waiting to go out . . . and the Hotline assistant asks if we can remember to chase her again after two weeks!"
Although I am more sceptical about the whole tax credit system than the hon. Member for North Durham, I entirely agree that for many families it is working well and brings great benefits. However, I am desperately worried; these are four random cases, one of which happens to be in today's post. Along with civil service pensions, it is undoubtedly the biggest issue in my telephone call logalthough not in my postbag as, typically, these cases are not made in writing. We must have a better system.
The Minister must not just boast about the families that are benefitingalthough I am happy for him to do that, as an election is coming up, after all. He must also explain how the Inland Revenue will improve its systems, so that the decent, hard-working families that have been referred to today get the justice and the money to which we all believe they are entitled.
Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow my hon. Friend the Member for Mid-Worcestershire (Mr. Luff), who has spoken so movingly on behalf of his constituents. I also commend the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) for his choice of subject and the reasonable and analytical way in which he spoke to it. I want to add a brief footnote to the excellent speeches that have been made.
At the beginning of this Parliament, the single biggest generator of constituency casework was the Child Support Agency. That wooden spoon has now been transferred to the Inland Revenue, for all the reasons that have been mentioned in this debate. There is no disagreement about the principle here; nobody wants to go back to the old days, when people on supplementary benefit or income support received a range of payments, but when they moved into work that life-support system immediately fell away, which created the "Why work?" syndrome. The working families tax credit was introduced before 1997 in order to address that syndrome. However, we now have a fiendishly complicated system, and many of the cases that we have been talking about involve not only the Inland Revenue as it is often firefighting with other agencieshaving a dialogue about housing benefits, for example. Therefore, the Inland Revenue tax credit issue is frequently but one of a range of problems that people living in difficult circumstances are trying to confront.
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The debate has focused on what happens when things go wrong. I want to refer only to one case. Mrs. P, who lives in Andover, had her payments stopped. She came to see me, I took her case up with the Revenue, and I received a letter saying:
"We have decided that although the overpayment was due to a mistake on our part it was not reasonable for you to think that your award was correct . . . The award notice asks you to check all the information and contact us if any of the details are wrong. The overpayment will be recovered from you."
Not only has the income stream stopped, but she now apparently owes the Inland Revenue £10,763.17 because of an overpayment due to a mistake on the part of the Inland Revenue. I see that those letters are all printed with "Investor in People" at the bottom. I wonder whether that award will be revisited.
I think that I am right in sayingperhaps my hon. Friend the Member for West Suffolk (Mr. Spring) can confirm thisthat my hon. Friend the Member for Havant (Mr. Willetts) said in a speech a few weeks ago that were our great party to be returned in the general election, we would write off overpayments that had been made by the Inland Revenue, save for those cases where there was evidence of fraud. I hope that my hon. Friend is able to confirm that, and that the Minister will then respond to the challenge of matching that commitment as we approach the general election. Clearly, many people have an interest.
In the next Parliament, we need to stand back and look at the financial interface between citizens and state to see whether there is a better way to achieve the principle to which we all subscribe. Can the interface be reduced by raising the tax threshold? Can we do more on the universal benefit front? Can the system be simplified in some way? Is there a better way of addressing the issues when things go wrong that does not involve all the palaver that we have heard about this morning? Clearly, we are not going to address these matters in the remaining stages of this Parliament. However, at the beginning of the next Parliament we all ought to stand back and look at the top-heavy, complex system and ask the basic question: is there a better way to achieve the goals that we all want to achieve?
Mr. John Burnett (Torridge and West Devon) (LD): I congratulate my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) on securing the debate. It is a measure of its importance that so many Members have turned up and spoken, notwithstanding the imminence of a general election.
As my hon. Friend said in his excellent speech, we support the tax credits policy, but the administration of the policy is often incompetent and occasionally cruel.
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Many hon. Members have spoken of particularly heartbreaking constituency problems, and I shall refer to just three from my constituency. Before I do so, I should like to pay tribute to the citizens advice bureaux[Interruption.] I am glad that many hon. Members concur with what I have just said. The bureaux in my constituencythe Bideford, Holsworthy, Tavistock and Okehampton officesare doing excellent work.
One case that has been drawn to my attention by the citizens advice bureaux involves an utterly honest individual, who I will call Mr. F. I have known him for some time. The CAB tell me that by the time that the credits were awarded, Mrs. F had decided to stop work in order to care for her husband. However, in the tax credit award it was stated that both Mr. and Mrs. F were working 40 hours a week. Mr. F immediately wrote back to say that neither he nor his wife were working. The letter was not acknowledged, but working tax credits were nevertheless paid to Mr. F's account. Mr. F automatically assumed that the contents of his letter had been taken into account and that the payments were his due entitlement. He received another letter from the Inland Revenue and he again wrote back saying that he was not working.
Mr. F has also made it clear that he is suffering from depression. The Inland Revenue has said that he telephoned, but the CAB, which took up the case, has said that that is erroneous. It has said that Mr. F is unable to make telephone calls to official bodies because of his depression; that is why he consulted the CAB in the first place. Referring to the most recent telephone call that Mr. F is alleged to have made, the Inland Revenue claims that he had no intention of repaying any overpayments. Although it is instituting an inquiry into the matter, that false allegation has put Mr. F under renewed stress and may hamper his prospects of returning to work.
"I appealed against this and the response was that even though they admit they made a mistake it was not reasonable of me to think that what they said I was entitled to was correct . . . They say the overpayment was from 2003. They have never said how much I owe. I am now living on £24 per week less than the government say I can live on."
We must take up the gauntlet for our hard-pressed constituents. As my hon. Friend the Member for Caithness, Sutherland and Easter Ross made clear, it is usually people who are already suffering hardship who are the beneficiaries of this policy.
The Economic Secretary and I have debated many financial, economic and Inland Revenue matters, and he knows only too well that I have often praised Inland Revenue staff for their expertise, integrity and conscientiousness. The MPs' hotline is working well, and I am grateful to those who staff it. Nevertheless, there are inherent problems with these tax credits, and they must be resolved.
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I do not want to go over matters that have been discussed, and I have already alluded to cases of innocent overpayment, in which honest taxpayers make their circumstances quite clear, but are paid too much through no fault of their own, and the demand for repayment causes considerably greater hardship. However, I do want to say a few words about repayments.
I believe that that is a direct quote from the Inland Revenue because I am quoting from a letter dated 20 January 2005, which was sent to me by Christine Nurse, the customer relations group manager at the Preston tax credit office. One of the points on which we look to the Economic Secretary for a response is what the Revenue considers to be its mistake.
Mr. Kevan Jones : Not one of the cases that I mentioned involved a mistake on the part of the individuals, who were honest and up front. Does the hon. Gentleman agree that it is about time the Inland Revenue applied the policy to which he has just referred?
John Thurso : I am grateful to my hon. Friend for his support. Is not the critical point the definition of reasonableness? Any reasonable human being, such as all of us here, would say, "The Revenue has made a mistake; it should waive the payment." However, the definition of reasonableness at the Revenue somehow involves it saying, "They ought to have spotted it on our form."
I want a response to that particular pointa practical point on which so many thousands of our constituents want a response from the Minister. I should also like to know what preparation there was leading up to the introduction of tax credits, including what trials were made of the IT systems and especially whether the software was validated before introduction.
My third question is about what training was given to hard-pressed Inland Revenue staff before introduction. My fourth is about when the consumers' hotline will be improved. Finally, when will this system of tax credits function reliably?
Mr. Richard Spring (West Suffolk) (Con): I also warmly congratulate the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), who
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presented his speech dispassionately, comprehensively and effectively. The hon. Member for North Durham (Mr. Jones) gave powerful illustrations of situations in his constituency and my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) made a powerful speech. My right hon. Friend the Member for North-West Hampshire (Sir George Young) made a good supporting speech and underlined the importance of the situation and how it needs to be resolved. I also pay tribute to the hon. Member for Torridge and West Devon (Mr. Burnett). Sadly, I understand that he is leaving this place. He has made important and sensible contributions to the life of Parliament on many occasions, and I wish him well for the future.
So much legislation results in unintended consequences. However, it is fair to say that one of the legacies on which the Government will be judged is the sheer complexity and micro-management that are their hallmark: a benefits system that relies on more and more means-testing and complicated tax credits. Since October 1999, the Government have introduced five new tax credits for families, scrapped four of them and introduced two new ones. That averages out at a new tax credit for families every six months.
One result of that complexity has been the fiasco of overpayment that we have heard graphically discussed this morning. The saga began in April and May 2003, when computer system failures were responsible for overpayments to 455,000 households, and totalled £94 million. The damage has been twofold. Not for the first time, taxpayers' money has been wasted: only £57 million of the £94 million that was overpaid was recoveredthe rest was written off. Administratively, the cost of dealing with the error was estimated at £10 million. As we have heard movingly and importantly, recipients of tax credits faced financial and emotional suffering as the overpayments were clawed back.
A number of organisations have criticised the Inland Revenue for both its timing and the severity of the rate at which the money is being paid back. The National Association of Citizens Advice Bureaux has protested and demanded action to protect poor families. Barnardo's has said:
"We are concerned that it's causing hardship for the poorest families when credits should help the Government in its fight against poverty. Coming in the run-up to Christmas, it is a difficult time for families."
"These problems have resulted in many low-income families suffering hardship. Many claimants have seen awards adjusted automatically to recover overpayment . . . without any explanation of how the overpayment arose, leaving some with weekly incomes substantially below income support levels".
"The Revenue is under pressure from Treasury ministers to prevent a repeat of the overpayments fiasco in the four years before 2003 when officials allowed claimants to keep up to £2bn of overpaid tax credits. Under the new system, based on working
Such reports are alarming and I hope that the Minister will confirm that they are simply not true. It is regrettable that I need to ask for that confirmation, but the Government's recent record does not fill me with confidence.
That record is demonstrated in the statistics, and the experiences of those working with victims of the overpayments fiasco on the ground. First, there are the statistics. By the end of December 2004, the Inland Revenue had received 78,000 complaints about the recovery of overpayments. Most said that the Revenue should reconsider on the grounds of official error, but in the 41,000 cases so far decided, only about 1,600 families have had their overpayments written off.
Secondly, there are the experiences of those on the ground. The hon. Member for Torridge and West Devon alluded to Citizens Advice, which has been hard pressed on the issue. It has said that attempts to claw back the cash are continuing to push low income families into debt. Advice, the independent advice network based in Northern Ireland, claims that it has uncovered
It is all very well noting that the Government have made a mess of the overpayments. After all, they are ultimately responsible. The overpayments should not have been made in the first place, and they should not have been clawed back in such a draconian manner. Given that my and the Minister's positions may be reversed on 6 May, what would we do differently? I should like to suggest some constructive ways to deal with the problem.
First, and most importantly, we would offer an amnesty to all families in respect of their child tax credit repayments for 200304. Unless the overpayment was caused by fraud on the part of the claimant, efforts by the Inland Revenue to reclaim overpayments will cease. That will lift an enormous anxiety hanging over hundreds of thousands of families, and follows the recommendation of the Work and Pensions Committee that
We would then implement a co-ordinated strategy to make the tax credit system simpler and fairer. I have three points on that. First, we would ensure that award letters explain more clearly how tax credits have been calculated. That would make it easier for people to judge whether the calculations were correct and to spot errors. I agree with the point about the sheer complexity and bureaucracy involved in trying to understand and find a path to resolve this problem.
Secondly, we would make the Inland Revenue's code of practice fairer in respect of the recovery of tax credits overpaid owing to an official error. Claimants would
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still have to repay erroneous tax credits if the Inland Revenue felt that it should have spotted the error in the first place. That implies that all claimants have a firm grasp on how to calculate their tax credits, which is an unreasonable proposition.
Thirdly, echoing the point made by my right hon. Friend the Member for North-West Hampshire, a tolerance limit would be introduced so people do not suffer severe financial hardship as a result of previous overpayment. Will the Minister commit himself to a strategy similar to the one that I have outlined?
Whatever happens, this debate has been most useful in airing something that has gone terribly wrong and had heartbreaking impacts on thousands of our fellow citizens. Whoever happens to be in power after the general election has to reorganise this system, because it cannot continue in its present form.
The Economic Secretary to the Treasury (John Healey) : I genuinely congratulate the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) on securing this debate and on the way in which he has consistently pursued questions on the tax credit system and problems, including overpayment, faced by his constituents. He introduced the debate in a measured way and set out genuine concerns about the administration of the system. I appreciate the tribute that he paid to those in the Inland Revenue who work on the MPs' hotline. I will pass his comments to them and know that they will be welcome, because those people try their best to help all hon. Members sort out the problems that arise with our constituents.
I appreciate also the comments made by the hon. Member for Torridge and West Devon (Mr. Burnett) on the same subject. I pay tribute to his contribution to the proceedings of the House over the past eight years. I am sorry to see him go and will miss the debates that we have. I will also miss the combination of fair-mindedness and well-informed criticism that he always brings to bear on the scrutiny of the work of the Government and the Treasury.
As my right hon. Friend the Paymaster General has said consistently to all hon. Members who have contributed to this debate, I invite all of them, if they have not already done so, to let me have the specific details of the cases that they have raised this morning. I do not want to pick up on individual cases, but will respond to some of the points that have been made this morning.
On the point made by the hon. Member for Caithness, Sutherland and Easter Ross, cheques will be accepted by the Inland Revenue in cases of overpayment. In the very early months there were a few cases where that was not taking place, but that is not so now.
I say to my hon. Member for North Durham (Mr. Jones) that, in general terms, where a claimant is concerned that their payments are wrong and they are reassured by the tax credit office that they are correct, any subsequent overpayment should be remitted. We will go back and check such caseswe are doing soincluding checking the tapes from telephone conversations that such claimants had with the Inland Revenue. Where claimants have been wrongly advised that their award is correct, I would expect any overpayment to be waived.
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In respect of the point made by the hon. Member for Mid-Worcestershire (Mr. Luff), the Inland Revenue computer is being updated at the moment, as it normally is at the end of the financial year. However, payments can still be made.
It may help the right hon. Member for North-West Hampshire (Sir George Young) if I say that the Inland Revenue is simplifying the ways in which it handles claims regarding disputes on overpayments. I will say a little bit more about the new measures that are being put in place. In general, however, I say to all hon. Members, including the hon. Member for Mid-Worcestershire, that if they will give me specific case details that have not already been submitted to my right hon. Friend the Paymaster General, I shall ensure that they are carefully examined,, and undertake to check the progress that is being made.
Mr. Luff : I am grateful to the Minister for the way in which he has responded. It is very important if people who have been told that they cannot, at present, receive cheques can receive them. Obviously, from what the Minister has said, they are being misadvised by the Inland Revenue, and the MPs' hotline is misadvising Members' offices, too. How can those cheques be issued? What can we do, practically, to ensure that the money is available to our constituents?
John Healey : The point that was raised by the hon. Member for Caithness, Sutherland and Easter Ross was that one of his constituents tried to repay an overpayment to the Revenue by cheque, but was told that that was not acceptable to the Revenue. I am making clear that it is acceptable.
Mr. Kevan Jones : I am grateful for my hon. Friend's commitment to examine the cases in question, but I have raised them with the Inland Revenue and my right hon. Friend the Paymaster General, and the letter that I received back from the latterwhich took six monthswas just the usual civil service flannel, upholding the decision about repayments. Something needs to be done urgently about those cases. I shall certainly send my hon. Friend details not only of the four cases that I mentioned, but all the rest of them that I have in the office.
John Healey : If my hon. Friend checks the record of the debate, he will see that I said earlier that I shall check the progress of any of the individual cases that he and other hon. Members raised, or any whose further details they want to submit, and reply to the hon. Members.
The hon. Member for Caithness, Sutherland and Easter Ross, to whose continuing work on the matter I pay tribute, has raised half a dozen cases relating to overpayment with Ministers and the chairman of the Inland Revenue. He suggested that I might be keen to tell him how many families in his constituency benefit from tax credits generally. The figure is 3,800. The hon. Gentleman has tabled two parliamentary questions about the numbers affected throughout Scotland, and I can tell him that 375,000 families benefit from the child tax credit there. I appreciate the welcome that he gave to what he described as real help to many families in his constituency.
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The debate arises from genuine concerns about the administration of specific overpayment cases. The hon. Member for Caithness, Sutherland and Easter Ross was at pains, in initiating the debate, not to make it party political, although the hon. Member for West Suffolk (Mr. Spring) ranged more widely and did not take such pains, so that I want to respond briefly to a couple of his points before engaging with the detail.
Nearly 6 million families with 10 million children now benefit from a tax credit system introduced since 1997, which was not in place before then. Tax credits are central to Labour's social commitment to support the efforts of hardworking families, to our moral commitment to reduce and eradicate child poverty, and to our economic commitment to make work pay. My hon. Friend the Member for North Durham said that he is proud of the tax credit system, and all Labour Members are proud of it. I am proud, too. As a result of the Government's reforms to the tax and benefits system since 1997, families with children will be on average £1,400 better off in October. The poorest fifth of families will be, on average, £3,200 better off.
As a result of Labour's anti-poverty programmes since 1997, almost 2 million children have been lifted out of absolute poverty. As a result of the Chancellor's successful management of the economy and labour market policies, including tax credits, 2 million more jobs have been created. The employment rate among lone parents has risen from 46 per cent. to 56 per cent. and the number of children living in households without work has been reduced by nearly 300,000.
Although the debate is about problems that sometimes happen, and the personal distress that is caused by overpayments, the wider context for the debate is a tax credit system that has brought substantial increases in income to families that are on low incomes; that has contributed to a large reduction in the number of children living in poverty; and that has helped to create the highest ever employment level in the British economy.
I do not underestimate the problems caused by overpayments. I have dealt with cases of overpayment myself as a constituency MP. However, it is important to examine them with a full appreciation of the way in which the tax credits system is designed to work. Some of the problems are the legacy of the well documented trouble experienced when the system was introduced in 2003. For instance, because of the early difficulties, the Inland Revenue made a large number of emergency manual payments to claimants. As it took a long time to get the manual payments on to the system, some cases resulted in overpayments at the end of the year, which now have to be recovered. There were also the much publicised early IT problems. However, most overpayments arise because a claimant's income has risen.
The new tax credits, unlike earlier systems of support, are designed to respond to changes in families as they happen. They can be adjusted to reflect changes in the number of children in the family, in working hours, in child care costs or in family income. That flexibility has clear benefits for families and for claimants. For example, the Inland Revenue can increase a child tax credit award in year when told that a new baby has
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arrived. That is why 230,000 families each year have their tax credit award revised in year following the birth of a child.
The system is based on annual income, just like income tax. Therefore, whenfor whatever reasonchanges in income during a year have not been reflected in changes in the tax credit award, an adjustment may need to be made after the end of the year, just as it is in the income tax system. That might be to correct an overpayment or an underpayment, just as in the income tax system. If the Inland Revenue discovers an underpayment after the end of the tax year, it will pay it immediately in a lump sum. If there has been an overpayment, the Revenue will collect it from a continuing award, subject to automatic limits that are applied after a claimant's award for the coming year has been calculated. That is set out in the Inland Revenue's code of practice on tax credit overpayments under the heading "What happens if we have paid you too much tax credit?"
Some of the problems associated with the recovery of overpayments have arisen because of unfamiliarity with the system. The Revenue has a responsibility for that, and is trying to fulfil it, to ensure that people have adequate information and there is strong publicity about the way in which it works. However, it is inevitable and right that adjustments in either direction will need to be made in a system based on annual income. It would not be fair to those who have received the right amount of tax credit if we did not try to recover money from those who have received too much.
I have to say to the hon. Member for West Suffolk that a call for a sweeping amnesty has more to do with scoring points before the election than a serious proposal for Government. An amnesty across the board is not an appropriate way of dealing with overpayments.
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To say that the Inland Revenue should not be making overpayments in the first place is to show a comprehensive failure to appreciate the nature of the system and to undermine the principle of individual claimant responsibility.
John Healey : No. Forgive me. At the heart of the many points that have been raised this morning is the question of reasonableness. The test of reasonableness is important. People need to take responsibility for checking their tax credit awards, just as they should check their PAYE code, and they should let the Inland Revenue know if anything is wrong. However, I accept that there have been particular problems in the past year while people have come to terms with the new system.
When it became clear that the Inland Revenue was, as hon. Members have said, having difficulty in dealing with requests for official error relief within an acceptable time, my right hon. Friend the Paymaster General asked it to consider the scope for streamlining the process that is used to decide whether official error relief is due. It has reviewed the procedures, in the light of a few months' experience, and I can confirm that it will change the targeting of the checks that are made to applications. That will reflect a better assessment of the types of award given in cases in which it was unreasonable to expect people to understand and to check the detail.
We estimate that that will allow the Inland Revenue to clear more than 50 per cent. of the cases quickly, and the backlog is expected to be cleared by the summer. I am sure that hon. Members will welcome that. I repeat my invitation to hon. Members to let me have details of the cases that they have raised. I trust that they will watch closely for the impact of the new arrangements over the next few months and I have no doubt that we will return to the debate if matters do not improve.
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