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Mr. Osborne: I was not giving the hon. Gentleman a lecture, but merely filling him in with the details about his constituency.

The Paymaster General gives the impression that the difficulties are teething problems that are on their way to being resolved. However, as we all know from our surgeries—this is probably as true in Chorley as it is in Tatton—the problems continue. We know of families who found that eligible children were simply deleted altogether from a tax credit award. We know of people whose repeated attempts to inform the Revenue of overpayments have been ignored. We know of mothers whose Sure Start maternity grants have been refused because the system said that they were not in receipt of child tax credit, although in fact they were. We know of people who have received multiple award notices on the   same day, each saying something completely contradictory.

When people try to get in touch with the Revenue to ask for help, what do they find? In the words of the ombudsman, their experience is a "very dismal one".
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People phone, write, complain and appeal, but they still fail to get a satisfactory response for months, despite the fact that, as I pointed out to my right hon. Friend the Member for West Derbyshire (Mr. McLoughlin), more than 3,200 people now work on the helpline and more than 400 people are dealing with complaints. That is the system today, not during the crisis of the initial launch or the computer errors that affected hundreds of thousands, but now, two years after the tax credits system was launched. It is all documented in the damning independent reports of the parliamentary ombudsman and Citizens Advice.

Mr. Austin: Will the hon. Gentleman give way?

Mr. Osborne: I gave way to the hon. Member for Chorley (Mr. Hoyle) and I now want to make progress.

How could the Paymaster General have possibly told Parliament:

The parliamentary ombudsman certainly found it puzzling. She says in her report:

by the Paymaster General

That is a devastating and, as far as I am aware, an unprecedented rebuke of a Minister by Parliament's watchdog. Why did the Paymaster General say that the system has been performing very well? Did she not see what every other MP sees in their surgeries, or did she choose not to tell Parliament the whole story? I hope that she gives a full account of herself today.

What hundreds of thousands of low-income families want to know is not how the Government got into the mess but how they are going to get out of it. That is the second issue. The Paymaster General told us on 26 May this year that she was taking steps to sort out some of the ongoing problems. It was at least a recognition that we were no longer dealing with teething problems. I welcome those proposals—for example, making the award notices more intelligible and improving the helpline service—but frankly the reforms go neither far nor fast enough.

Citizens Advice agrees with that, as the Paymaster General knows. It explains that even the modest proposed changes could take up to 18 months to implement. That is 18 months of poor information, more bad advice and more inadequate support. It is not acceptable. The Chief Secretary should confirm—I assume by his presence that he is now in charge of tax credit policy—that the Government are going to implement in full the 12 specific recommendations in the parliamentary ombudsman's report. They go much further than the changes announced by the Government and include clearer information about overpayments and additional tax credits, training for staff to recognise cases of hardship, and automatic payment of additional tax credits to overpaid families in receipt of income support.

Will the Chief Secretary also immediately suspend plans to move a further 800,000 of the lowest income families who currently receive their tax credits from
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Jobcentre Plus to the Treasury's chaotic systems until the problems are resolved? No one else should be subjected to yet more misery and hardship at the hands of this Treasury.

There is a specific recommendation on the recovery of overpayments that is particularly important. The ombudsman says that she does not consider that

That is why she suggests introducing a statutory test for the recovery of overpayments and a right of appeal to an independent tribunal—in other words, a test that puts the onus on the Revenue to get the awards right in the first place and that is consistent with that which has long been applied to social security benefits, which everyone but the Chancellor of the Exchequer knows are the same as tax credits.

I agree with the ombudsman on that statutory test. It is why it is part of the motion. So does the right hon. Member for Birkenhead (Mr. Field) who, with other Labour MPs, has tabled an early-day motion on the subject. Will the Chief Secretary confirm that the Government will introduce that statutory test and whether he is going to    implement the other recommendations in the ombudsman's report?

That brings us to the third issue. In the absence of a statutory test, what is the Government's position on reclaiming overpayments? We have finally discovered that, in the first year of operation, the Revenue overpaid an astonishing £1.9 billion to 1.9 million people. When my hon. Friend the Member for North Thanet (Mr. Gale) asked the Prime Minister about overpayments, he said:

That is what the Prime Minister said at the Dispatch Box. In case people think that it might have been a mistake, he repeated it a week later at Prime Minister's questions. That is not consistent with what the Paymaster General is telling us. She says that overpayments caused by errors by the Inland Revenue will only be written off if the claimant could not possibly have spotted the error themselves. Indeed, we are now told—perhaps the Chief Secretary can confirm this—that 98 per cent. of overpaid tax credits have been automatically reclaimed. Is that correct? If it is, it is very different from what the Prime Minister promised people from the Government Dispatch Box.

Mr. David Laws (Yeovil) (LD): It might help the hon. Gentleman if I say that I received a letter from the Prime Minister only yesterday confirming that, although the policy is to write off overpayments where there is an official error, he would like to clarify that this is only where the claimant should have reasonable cause for thinking that they were paid the right amount. In other words, it is not a change of policy but exactly as it was before.

Mr. Osborne: There we go. Perhaps the Prime Minister will be seeking an early opportunity to make that clear to the House. It seems like another battle between No.10 and No.11 that No.10 lost.

Rob Marris: The hon. Gentleman has misquoted my right hon. Friend the Prime Minister.
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Mr. Osborne: I did not misquote the Prime Minister. If the hon. Gentleman turns to column 798 on 27 June, he can read the Prime Minister's words, which I repeated in full. Perhaps the hon. Gentleman will join me in calling on the Prime Minister to explain why he misinformed the House not only on one occasion, but twice.

Dr. Julian Lewis (New Forest, East) (Con): Can my hon. Friend throw any light on why so many mistakes have been made by the Inland Revenue? Is there a common theme to this litany of error and what steps, if any, have the Government been taking to ensure a higher level of competence?

Mr. Osborne: My hon. Friend, with great prescience, brings me to the last section of my speech. He asks whether there is a common theme. There is a common theme in a number of different ways. For example, there is a common theme with the computer projects that the Government have introduced throughout Whitehall. There is a common theme with the various pet projects that the Chancellor has dipped his fingers into, such as individual learning accounts, stakeholder pensions or pension credit. One of my favourites—it is little known—is the link-up between Cambridge university and the Massachusetts Institute of Technology that the National Audit Office had to crawl all over. I can see that this is all bringing back happy memories for the hon. Member for Normanton.

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