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Computer Misuse

Mr. Tom Harris accordingly presented a Bill to amend the Computer Misuse Act 1990; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 2 December, and to be printed [Bill 42].

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Opposition Day

[5th Allotted Day]

Tax Credits

Mr. Speaker: I inform the House that I have selected the amendment in the name of the Prime Minister.

3.42 pm

Mr. George Osborne (Tatton) (Con): I beg to move,

That this House commends the Parliamentary Ombudsman and the Citizens Advice Bureau on their reports on Tax Credits; notes with concern their conclusions that many thousands of low income families are suffering financial hardship as a result of the serious problems with the administration of tax credits; further notes the huge cost to the taxpayer of these problems; calls on the Government to implement as soon as possible all the Ombudsman's recommendations to improve the tax credit administration; in particular calls on the Government to adopt the Ombudsman's recommendation to set up a statutory test for recovery of excess payments of tax credits consistent with the test that is currently applied to social security benefits, with the right of appeal to an independent tribunal and calls on HM Revenue and Customs to suspend all recovery of tax credit overpayments until this reform has been completed; and calls on the Chancellor of the Exchequer to explain the Government's failure to provide low income families with the service they deserve; and requests that he conduct a fundamental review of the structure and administration of tax credits, as recommended by the Ombudsman.

This is my first opportunity in the House to express my sadness and sorrow to the victims of last week's murderous bombs, and to the injured who continue to suffer. I have just seen pictures on the television news of those who died. That brings home in a very graphic way how many lives have been so cruelly snatched away from us. I think that is an appropriate opening to an Opposition day debate, as democratic debate must continue undaunted.

Today's debate is about people like Mr. Crow and his family, from Dover. They have two kids, a mortgage and no spare cash. Mr. Crow recently took a job as a carer and became entitled to tax credits. When his pay rose, he did what he was supposed to do and informed the Inland Revenue. He was told that the increase in his pay was to be disregarded. A year later, he has been told that he has been overpaid and that he now must pay back the difference. His working tax credit has been reduced from £35 a week to £2.44 for the entire month. That family has been forced to go into debt or lose their home.

This debate is also about people like my constituent Helen Thompson, a single mother. She contacted the helpline and was told that she could keep an overpayment of £3,000, even though she had offered to pay it back immediately. Out of the blue, the Revenue demanded that money back, with the result that she could not meet her child care costs. She faced losing her job, and only the intervention of my constituency office caused the Revenue to change its position.

This debate is also about people like the lone parent in the report by Citizens Advice, who received no tax credit payments whatsoever for the last few weeks of the financial year. She had to resort to Salvation Army food parcels to feed her children.

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Every Member of the House knows that, sadly, those are not isolated examples. Citizens Advice handled 150,000 cases in the last year alone. The parliamentary ombudsman now spends a quarter of her time on tax credit cases, and the Revenue has recently admitted to me in writing that it is dealing with 51,000 complaints, 9,000 of which were referred to it by Members.

The blunt truth that the Government have to confront is that the tax credit system

Ed Balls (Normanton) (Lab): Will the hon. Gentleman give way?

Mr. Osborne: I am delighted to give way to the architect of tax credits, as I have just read out a quote from Citizens Advice.

Ed Balls: Tax credits have helped to reduce child poverty by a million since 1997, and the Government are committed to the goal of halving child poverty by the end of the decade. Does the Conservative party share that goal?

Mr. Osborne: I am absolutely delighted that the hon. Gentleman intervened; I suspected that he might be in the Chamber today. In his constituency, 4,100 of his constituents received the wrong award, which was 41 per cent. of the people who applied. In his constituency alone, £2.9 million was overpaid to people he represents. If he is happy with that record, so be it; I do not think he should be. On child poverty, I know that he likes to do his homework so perhaps he should read the report from the Institute for Fiscal Studies, "Poverty and Inequality in Britain: 2005", produced earlier this year, which states that owing to the administrative problems with the new tax credits there was an increase in child poverty by 90,000 after housing costs and 80,000 before housing costs. I am not sure whether the hon. Gentleman has read that document, but I suggest that he does so before he intervenes again.

Ed Balls rose—

Mr. Osborne: Oh, the hon. Gentleman has already read it.

Ed Balls: I am grateful to the hon. Gentleman for giving way again. I shall rephrase my question. Child poverty rose by 4 million between 1979 and 1997. As a result of the working families tax credit and the introduction of child tax credit, child poverty has now fallen by a million since 1997 and, because of tax credits, is forecast to fall further. The Government are committed to halving child poverty by the end of the decade and to abolishing it in a generation. Is the Conservative party committed, like the Government, to the abolition of child poverty and to halving child poverty by the end of the decade? It is a simple question: yes or no?

Mr. Osborne: We are committed to policies that reduce child poverty. We are not committed to policies
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that have increased child poverty. As the IFS said, the introduction of the new tax credits has led to an increase in child poverty by about 90,000 after housing costs and 80,000 before housing costs. The hon. Gentleman says that the system has helped all those families, but he has obviously not read the reports that we are debating today—for example, the CAB report, which states that the tax credit system has plunged many below the breadline and into mounting debt; or the parliamentary ombudsman's report, which talks of families having to borrow money from family and friends to support their children, using up their life savings or running up credit card debts to pay for child care costs, buy food and get to work.

Ed Balls rose—

Edward Miliband (Doncaster, North) (Lab) rose—

Mr. Osborne: I will happily give way to the other Ed, the other architect of the tax credit policy. Is the hon. Gentleman proud of a system that has plunged many below the breadline?

Edward Miliband: I am grateful to the hon. Gentleman for giving way. We are asking for simple intellectual honesty from him. Under the tax credit system, child poverty has fallen by about a million. Does he acknowledge that, and does he acknowledge the responsibility of tax credits in cutting child poverty? It is a simple question—yes or no?

Mr. Osborne: No, I do not acknowledge that the present tax credit system has helped in the reduction of child poverty, because I have in front of me the IFS report, which states that the administrative problems with the new tax credits led to an increase in child poverty by 90,000. That is in the document.

Edward Miliband rose—

Mr. Osborne: Unless the hon. Gentleman has read the document—[Interruption.] He has? Then I will give way.

Edward Miliband: The hon. Gentleman says that the present system of tax credits has not helped to tackle child poverty, but One Parent Families said in its Budget submission in 2005:

That organisation is saying that we have helped to tackle child poverty through tax credits.

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