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Mr. Stephen Dorrell (Charnwood) (Con): The Chief Secretary's defence of the Prime Minister is based on the proposition that there is a long-standing definition of the concept of official error, which includes the implied terms to which the Chief Secretary refers. If the definition is so long-standing, can the right hon. Gentleman point to any previous example of a Government claiming that in their defence?

Mr. Browne: I am not in a position to do that, but I suspect that, in the context of decisions as to whether or not errors are official errors, these tests are regularly applied. I shall research the matter and if I am in a position to do so, I shall write to the right hon. Gentleman.

Mr. Dorrell: I am grateful to the Chief Secretary for at least being straight with the House. I give notice that I shall table a question to the right hon. Gentleman and give him the opportunity to set before the House the precedents that he is claiming.

Mr. Browne: I am grateful to the right hon. Gentleman for that opportunity, but I have already said that I would do that.

Mr. Laws: I wish to clarify the fact that the words "official error" were not part of the Prime Minister's response. He said that

"we will not seek to get the money back if the error is on the part of the Inland Revenue."—[Official Report, 22 June 2005; Vol. 435, c. 798.]

How does the Chief Secretary explain the statement that the Chancellor of the Exchequer made on 23 June to GMTV, when he said:

"Where there's been a mistake by the Inland Revenue and where we are to blame as a Government then we will not take the overpayment"?

There is nothing in that about official error at all.

Mr. Browne: I rest my case on the position as I have explained it to the House. I have made my position clear and I shall follow up with the further research that I have undertaken to conduct. In my remarks to the House this afternoon, I intend to answer each of the points made by the hon. Member for Tatton, the shadow Chancellor, but—

Rob Marris: Perhaps the situation is different in Scotland, but when I practised as a solicitor in England, there was the concept of mistake of law and mistake of fact. If someone was overpaid by some body, part of the test that the court would apply was whether they could
 
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reasonably have realised that that overpayment was an overpayment. That has been an inherent part of the English legal system for decades.

Mr. Browne: I am grateful to my hon. Friend for his contribution to this part of the discussion. I do not think other hon. Members would thank me for continuing it. I have made my position clear. I ought to be able to provide the information that the right hon. Member for Charnwood (Mr. Dorrell) seeks. I will try to do that, to support it. Having practised law in Scotland, I am very familiar with the sort of principles to which my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) refers.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): Will the Chief Secretary give way?

Mr. Browne: No, I think I have said enough on the matter. I intend to make some progress with my speech.

As I said, I intend to answer each of the points made by the hon. Member for Tatton, but I find it extraordinary that in the speech that we have just heard, there was barely any mention of the benefits that the Government's system of tax credits is bringing to millions of hard-working families right across Britain. Even when the shadow Chancellor was given the opportunity to comment on what is now accepted in relation to child poverty, he could not bring himself to concede that that progress had been made.

Six million families now benefit from tax credits. As a result, 10.5 million of the nation's 13 million children now receive more generous support—that is 10,000 families on average in each of my right hon. and hon. Friends' constituencies; indeed, in each right hon. and hon. Member's constituency. The shadow Chancellor is no doubt armed with figures from my constituency, as from everybody else's, about the number of overpayments or underpayments that may have been made, but the fact is that on average, across the United Kingdom, 10,000 families in each of our constituencies are benefiting from this policy.

In the first year of the new system, take-up of tax credits was around 80 per cent., compared with just 57 per cent. for the family credit system that we inherited when we came to power in 1997.

Mr. Clifton-Brown: As my hon. Friend the Member for Tatton (Mr. Osborne) pointed out, in many constituencies up to half of all claims are calculated wrongly and underpaid or overpaid. Does the Chief Secretary think that that level of error is acceptable and, if not, what level of error does he think acceptable?

Mr. Browne: The hon. Gentleman anticipates part of the speech that I wish to make. I do not accept that all those calculations are in error, and it should become clear to him, as I develop my remarks, why that is. On a pedantic point, the figure of 50 per cent. as regards the calculations involving overpayment and underpayment is not entirely correct—although it is not far short of correct.

As a result of the Government's strategy to make work pay and to provide financial support for families through tax credits, there are now 1.5 million fewer
 
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children in poverty, and 275,000 lone parents have been helped into work. Reforms since 1997 mean that by October this year families with children will, on average, be better off to the tune of £1,400 a year in real terms; and those in the poorest fifth of the population will be, on average, £3,200 a year better off. While it is right that we should debate the effectiveness of the administration of the system—I shall come to the specific points made by the shadow Chancellor in due course—the extent to which hard-working families have benefited from credits and the contribution that credits have made to tackling poverty is the proper context in which today's debate should be seen.

Before I deal with administration, I want to remind the House why we introduced the tax credits system and what it replaced. The family credit system that we inherited had several problems, as identified in the 1998 report on work incentives by Martin Taylor. In particular, four areas gave us considerable concern: first, it acted as a disincentive to finding work; secondly, it was an insufficiently generous award; thirdly, it was fundamentally inflexible and unable to take into account changes in circumstances; and fourthly, it gave too little assistance with the costs of child care provision.

I might point out that the Liberal Democrats accepted that analysis at the time, and it was further supported by their then spokesman, the hon. Member for Northavon (Steve Webb).

Mr. Laws: I presume that the right hon. Gentleman is going to describe the whole series of amendments that my hon. Friend the Member for Northavon (Mr. Webb) tabled, including on having a statutory test and dealing with the problem of overpayments.

Mr. Browne: I have no such intention, because most of those amendments were withdrawn after debate and explanation of the way in which the system would work, and after the hon. Member for Northavon had expressed satisfaction with those explanations.

At some stage, it might be useful to hear from the Liberal Democrats why they changed their minds on the analysis of the support that working families need, as reflected in their recent manifesto. It will be interesting to hear the reason for that change of heart.

We introduced the working families tax credit six years ago to deal with some of the issues that the Taylor report—and, indeed, the Liberal Democrats—raised. That was the start of the necessary process of reform. We tried to ensure that work paid more than being on benefits, that take-up increased and that we gave proper support for child care costs. Today, the child tax credit and the working tax credit continue that approach and deliver the desired outcomes more effectively.

The credits also offer the chance of paying the child tax credit directly to the main carer, mainly the mother. For the first time, tax credits can be adjusted to reflect changes in the number of children in the family, working hours, child care costs or family income. That means that we can provide the greatest support to families who need it most when they need it most.
 
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We need to acknowledge the value of tax credits and the help that they provide in people's everyday lives. Today's system replaces an inflexible and unfair approach that did little to incentivise people into work and little, if anything, to lift children out of poverty.

Despite the criticisms, support for the approach came not only from the Liberal Democrats but from the recent Citizens Advice report. Part of our disadvantage as Members of Parliament is that when we refer to such substantial documents, we cannot all read them, and they are capable of supporting different views. The first paragraph of the Citizens Advice report states:

"We firmly support tax credits as a vehicle for directing substantial extra money towards lower income families."

The Government share the organisation's ambition for the system to work effectively for all who are entitled to extra help.

Let me read part of the foreword to the health service ombudsman's report, to which the shadow Chancellor referred so freely. The third sentence of the foreword states:

"This report does not suggest that the new tax credit system is in general disarray; on the contrary it recognises that, given the scale of the undertaking, its introduction has been broadly successful".

Hon. Members might be surprised that that was the ombudsman's view, given the shadow Chancellor's deployment of selective quotations from her report.

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