Letter from Rt Hon Dawn Primarolo MP,
Paymaster General
Thank you for your letter of 20 January 2006.
You asked for three updates ahead of Wednesday afternoon's hearing.
First, the most recent data on levels of overpayments,
broken down by income group, is set out in Table 5, page 6, of
the enclosed National Statistics publication Child and Working
Payment Statistics, Finalised Annual Awards, 2003-04, Supplement
on Payments.
Second, the table below compares the numbers
benefiting from the Child and Working Tax Credits and the Family
Credit system that the Government inherited.
|
| | Numbers benefiting
(latest year for which data available)
|
|
| Families
| Children | People
|
| Current tax credits | 5.9 million
| 9.9 million | 19.4 million
|
| Family Credit | 0.8 million
| 1.6 million | 2.8 million
|
|
A comparison between take-up rates is below:
|
| | First year take-up rate
|
|
| Current tax credits | 80%
|
| WFTC | 65%
|
| Family Credit | 57%
|
|
In addition to a high number of people receiving tax credits
and high take up rates, the Child and Working Tax Credits provide
more generous support than previously. The table below shows the
amount of support that a two child family on half male mean earnings
(£15,400 a year) would receive.
|
| | Award (2006-07 prices)
|
|
Child and Working Tax Credit
(April 2006)
| £82 a week (£4,200 a year)
|
Working Families' Tax Credit
(April 2002)
| £53 a week (£2,700 a year)
|
Family Credit
(April 1999) | £18 a week (£900 a year)
|
|
In 1997, a one child family on average earnings received
just £11 a week and a two child family £20 a week. From
April 2006, a one child family earning less than £50,000,
which represents 80% of families, will receive nearly £28
a week, while families in the poorest 30% receiving nearly £62
a week. For a two child family, support will rise to nearly £40
a week for families with incomes below £50,000 and over £107
a week for the poorest.
Third, on the six points identified in my statement of 26
May 2005, I look forward to updating your Sub-Committee on the
most recent progress when I will be providing information on:
— improvements to the IT system;
— the early evidence from our pro-active contact
pilots to help people keep their records up to date;
— pilots working with the voluntary sector
to provide help to the most vulnerable claimants;
— progress in dealing with disputed overpayments;
— plans for publishing a revised Code of Practice;
and
— progress on implementing the measures announced
in the 2005 Pre-Budget Report.
31 January 2006
|
