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Mr. Geoffrey Robinson (Coventry, North-West) (Lab):
Is my right hon. Friend aware that she does not need the otiose commiserations of the Liberal party and that she should, as we do, repudiate entirely the politically motivated attacks from the official Opposition on her integrity? We on the Government Benches wholly endorse the principle of tax credits, which have brought enormous benefits to working families and low income families throughout the country. In the light of my right hon. Friend's statement on 26 May, will she consider again the possibility of a
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write-off and starting again so that we have a clean slate, but in no circumstances deviate from the principles that have done so much good to say many families?
Dawn Primarolo: I have not been attracted to a complete amnesty. Clearly excess payment has been made. If the claimant accepts that and is prepared to repay the money, there is no dispute. It is a question whether Her Majesty's Revenue and Customs was notified at the time of the change. It seems not to be a good deal for the taxpayer to say, "No thank you. Keep that extra money." That is when the claimant thinks that they should not have had it and we know that they should not have had it. The point that is made in the ombudsman's report and the point that my hon. Friend makesit is made also by many right hon. and hon. Members on both sides of the Houseis that in circumstances where there is a dispute or where hardship would be caused, I have said repeatedly that I want HMRC to suspend recovery while the dispute is settled. I have asked it to adopt that position, and to ensure that those in hardship are paid the additional payments that are already available in the system, and that they are made aware of the fact that those payments are available to them.
Sir George Young (North-West Hampshire) (Con): Does the Paymaster General accept that problems with tax credits have now displaced problems with the Child Support Agency as the single greatest generator of work for many Members? Does she recognise that those who man the MPs' hotline do a good job in difficult circumstances? Given the complexities of a system that Members and claimants find it difficult to comprehend, given the high percentage of mistakes that are made and given the ongoing problems with the system, does the right hon. Lady accept that many people have come to the conclusion that the present social security and tax credits system is simply unsustainable? Therefore, will she reflect on the suggestion that we should have a review of the financial interface between citizen and state to see whether we cannot come up with a simpler and clearer system than the present one?
Dawn Primarolo: I am always happy to listen to the thoughtful points that the right hon. Gentleman makes, and we had this discussion in the Adjournment debate. He suggests that there is a fundamental problem with the system, but I explained in the Adjournment debate on 7 June why that is not the case. I remind him that 20 million people are in the system and that take-up is still increasing. At the beginning of today's statement, and in all the other statements and debates, I have said that I accept the need for improvements, as hon. Members have acknowledged. I have pressed Her Majesty's Revenue and Customs to look at the award notice, as well as communications, explanations given to claimants and advice on their rights, and I have instructed it to streamline procedures. However, the statistics published by Office for National Statistics do not indicate a fundamental problem in the system.
Mr. George Howarth (Knowsley, North and Sefton, East) (Lab):
Does my right hon. Friend agree that any policy must meet two tests? First, it must be ambitious enough to address real problems. Tax credits, in seeking
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to address the problems of child poverty and making work pay, clearly pass that test. Secondly, when implementing policy, Ministers must acknowledge problems and devise strategies to deal with them. Given the way in which she has dealt with the statement and the questions put to her, my right hon. Friend has passed that test with flying colours.
Dawn Primarolo: At every point, I have been prepared to acknowledge that there are problems. Indeed, I gave a specific written answer in the context of a particular question about computer problems. Both before and since then, I have conceded that there were problems and explained their nature and extent. I explained the problems that were being caused as well as the need to address them and make changes in the system. Tax credits help the Government to reach their targets on eradicating child poverty, but of course there is substantial room for improvement. That is what the reports say, that is what I am responding to, and that is what I have kept the House informed on.
Will she make it clear that in all such disputed cases recovery proceedings will indeed be suspended? It is not just a matter of asking HMRC to consider suspending such proceedings. Can she clarify whether it is the Prime Minister's test or the Paymaster General's test that will be applied in cases of overpayment due to official error?
Dawn Primarolo: That is precisely what I am saying, and I have instructed Her Majesty's Revenue and Customs accordingly. In case the hon. Gentleman has not seen it, I am prepared to send him a copy of the statement of 26 May, which covers some of those points, and to write to him specifically about issues in Northern Ireland and the tax credits.
Mr. Robin Cook (Livingston) (Lab): May I invite my right hon. Friend to restore a note of balance to these exchanges by reminding the House that the Opposition trebled child poverty and the Labour party has reduced it by a quarter, largely through the tax credits system? As she looks at ways in which she can improve the operation of the system, I invite her to reflect on the cases that I and, no doubt, others have sent her in which her special requests for attention to hardship are plainly not being fulfilled by the Inland Revenue. The system is computerised, so why can we not set a decency threshold of income below which families should not fall, whatever the requirements on overpayment, so that no family suffers hardship as a result of a system that has lifted so many out of hardship?
As I announced on 26 May, there will be a review of the disputes procedure, the code of practice currently operated by the Inland Revenue and the way in which the system operates. All the recommendations in reports by the ombudsman, the adjudicator and the Citizens Advice Bureau will be considered in that context. Opposition parties do not want to address the success of tax credits, because that
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would require them to come to a decision on the fundamental question of how, in our economy, we ensure that we support families with children and eradicate child poverty.
Mr. Michael Jack (Fylde) (Con): In the standard form letters that I have received in response to representations made on behalf of constituents who received overpayments, there is a presumption that constituents should have known that they were being overpaid and should be able to demonstrate that to the Revenue in an appeal. Many people struggle with that, so what steps will the Paymaster General take to introduce a ready reckoner or an easy benchmarking system to enable people to identify whether an overpayment has been made? What is she going to do to remove the misery of uncertainty from people who are waiting months, if not years, for adjudication on their representations?
Dawn Primarolo: As an ex-Treasury Minister, the right hon. Gentleman will know that the tax system uses the reasonableness test. If there was an error, it considers whether it would be reasonable to have known about it. That issue is being addressed as part of the review of the code of practice. A point that hon. Members have repeatedly made is whether it was entirely reasonable, given the information from HMRC, and its frequency and complexity, for the claimant to assume that it was correct. That is part of the reviewI touched on it at the beginning of my statement today and dealt with it in greater detail in my statement on 26 May. The right hon. Gentleman will know from his experience at the Treasury how rights are explained by the Revenue, how information is played back by HMRC and how we ensure that the claimant knows what they should be telling HMRC and that HMRC is acting on it swiftly and correctly.
Mr. George Mudie (Leeds, East) (Lab): I urge and plead with the Minister to ignore the Opposition's synthetic concern about poor people in the community. The measure has helped more individuals out of poverty in my constituency than almost anything else we have done. I underline the ombudsman's view that it was broadly successful, but suffered from administrative and computer problems. As a member of the Select Committee on Treasury, I know that the Minister is working hard on those problems. I urge her to continue her efforts to deal with admin and IT complaints, but to leave the policy alone.
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