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Mr. Laws: I would not want the Chief Secretary to mislead anyone about what Citizens Advice has said. I presume that he has seen its latest briefing note to hon. Members, which states that it is misleading to claim that Citizens Advice was strongly in favour of moving to a more responsive system of tax credits and that it was concerned that overpayments would be made under the new system. Does the Chief Secretary agree?

Mr. Browne: I have not seen the document to which the hon. Gentleman refers.

Mr. Laws: It was circulated.

Mr. Browne: It was not circulated to me. I do not know whether that was deliberate or an error.

Mr. Speaker: Order. I am reluctant to interrupt the proceedings. However, although I appreciate that, so far, the word "misleading" has been used for documents, I ask hon. Members to be careful about using the term when it relates to an hon. Member. I am just firing a warning shot at this stage.

Mr. Browne: Thank you very much, Mr. Speaker.

The hon. Member for Yeovil (Mr. Laws) asked me whether I agreed that the quotation that he read out from a document from Citizens Advice that I have not seen was correct. I have no way of knowing, but I trust him, and I do not think that he would read it incorrectly. So I accept that he has read it correctly, if that is the answer that he is seeking from me. He has achieved what he was seeking to achieve.

Ed Balls : Does my right hon. Friend agree that, far from misleading the House, the shadow Chancellor
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made very clear his unwillingness to commit the Conservatives either to halving child poverty by the end of the decade or to continuing with the tax credit system in order to achieve that? Will my right hon. Friend confirm that the Government remain committed to halving child poverty by the end of the decade and to maintaining the tax credit system as the best way to achieve that?

Mr. Browne: I have no difficulty in agreeing with my hon. Friend on that. As he knows, that is the mainstay of our social policy. I shall explain in a moment why it is significant that the shadow Chancellor is unprepared to commit himself or his party to that objective, which might help us to understand why he is so critical of the system.

The House will be pleased to know that my right hon. Friend the Paymaster General has recently had meetings with the authors of the reports that I have just quoted, namely, the office of the ombudsman and Citizens Advice. She has also had a meeting with the adjudicator who also prepared a report. They all reiterated their support for our policy of supporting working families and children through the tax credit system.

In an economy in which people move between jobs more often, and in which their circumstances change more quickly, our challenge is to adjust child tax credits to respond to changing income patterns as quickly as possible. I should like to put that challenge into context. Three million people shift jobs each year in the United Kingdom labour market, and their income changes are often substantial. In addition, some 700,000 children are born each year, each of whom receives a rate of tax credit in accordance with their individual family circumstances. This fast-moving environment requires a balance between flexibility and certainty, while avoiding undue complexity and information overload.

That is why one of the decisions that we took at the outset—after consultation, I might say—was to set a disregard for increased income up to £2,500. Claimants do not have to tell Her Majesty's Revenue and Customs if their income rises in one year by less than £2,500 and, importantly, if their award is not affected by such a change. This allows a cushion, provides incentives and spares people who see some changes in income unnecessary paperwork. It has been suggested—I think that the hon. Member for Yeovil has encouraged the suggestion—that the disregard represents a written off overpayment. That is a bit like describing the personal tax allowance as a failure to collect income tax. It is simply not the case.

Our families need flexible support such as this to help with the demands of the modern globalised labour market. Tax credits have made a real contribution to halving child poverty by 2010, and to the successful performance of our labour markets, which are the envy of the world. Because of this contribution, those who criticise tax credits need to make clear whether they actually support the stated policy. They must make a choice between a less responsive system that cannot respond to changes in income—which admittedly would be easier to run—or the current approach, which can respond but generates greater complexity.

We still do not know whether the Opposition are supportive of working through those challenges, or whether they share our aim to lift more children—
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indeed, all children—out of poverty through the use of tax credits, among other things. We do not know whether they will continue to refuse to face up to the difficult decisions required to achieve that aim, or whether that is their aim at all. It is really quite simple. If they believe that the idea of tax credits is wrong, they should say so. We could then debate the positive and negative impacts of that policy along appropriate lines. If they think that tax credits are right, our purpose today should be to work constructively to improve their administration, not to undermine a programme that has benefited many people, and particularly many children.

John Bercow (Buckingham) (Con): Much of the debate so far has focused on the incidence and consequences of overpayments. We should not, however, neglect the issue of underpayments. Given that in the hundreds of thousands of such cases there has necessarily been an increase in hardship and indebtedness, will the Chief Secretary confirm that in each and every case, when people get their due, the payment of commercial interest on top will be included as a minimum and, better still, the payment of a substantial sum in compensation for distress and anxiety caused?

Mr. Browne: I cannot give the hon. Gentleman that undertaking, although I accept entirely why he should ask for it and think that that payment should be made to those who have been underpaid. Underpayments are much rarer than overpayments, however. People are much more likely to report changes in circumstances that they think will result in an increase in their tax credit than it appears that they are to do the opposite. That is why the retrospective balancing needs to be done at the end of the year. My information is that the system reacts quickly to such claims of changes in income circumstances, and that there is no necessity for us to build into it a system of compensation when the Revenue already has a compensation mechanism that can be triggered as appropriate.

John Bercow: I shall have a second stab at a different aspect of the issue. The Chief Secretary had a spat earlier with my hon. Friend the shadow Chancellor and the hon. Member for Yeovil (Mr. Laws) on the issue of the responsibility of the claimant to know if he or she was being overpaid. Does he agree, as he is part of the architect team for the policy, that there is a difference between someone who, by computer error, finds that he is paid £20,000 for the year rather than £2,000, and someone who is paid perhaps a few hundred pounds more? Does not he accept that it is not the responsibility of the citizen to be able to work out the complex minutiae of what goes on in the Chancellor's mind?

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Before the right hon. Gentleman answers, may I say to the hon. Member for Buckingham (John Bercow) that I live in hope that his stabs will become progressively shorter?

Mr. Browne: We would all be the less entertained were that the case, but that might be an objective that the hon. Gentleman would seek to achieve. The fact is that he makes an important point. I accept entirely that we
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ought to share an objective in terms of the administration of the system achieving his desired outcome. I will come in due course to the implementation of the proposals made by my right hon. Friend the Paymaster General on 26 May. There is a recognition that communication between the Tax Credit Office and the claimant is important, and we are taking steps to improve that. I accept that there are circumstances in which the onus ought to fall more on the Tax Credit Office than on the individual, but since the likelihood of underpayment more probably arises from a reduction in a person's income, that information is more likely to be known to the claimant than to the Tax Credit Office, and the onus ought to rest firmly on the claimant to report that change of circumstance. I am sure that he understands that this is not a straightforward matter, and that it is yet another one of the complexities that flexibility generates. We need to get to grips with those complexities if we are agreed—as I suspect that he might be—that flexibility in the system is important.

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