Further supplementary memorandum submitted
by the Public and Commercial Services Union
Further to our submission of written evidence
and presentation of oral evidence on 25 January 2006, please find
below some concerns we have relating to the compliance issues
of tax credits, ahead of Sir David Varney's appearance, before
the committee to respond to some of the concerns raised through
the inquiry. The Public and Commercial Services Union (PCS) believe
the inquiry has strengthened our case highlighted in our submission,
that properly resourced compliance teams are crucial if the tax
credits system is to operate effectively.
To illustrate the point the information below
has been provided by Claimant Compliance Officers (CCOs) many
of which worked in the Department for Work & Pensions (DWP)
and have many years experience interviewing fraudulent claimants.
In June 2003 PCS was made aware by the former
head of Inland Revenue (IR), Nick Montague that there was already
at least 30% fraud in the New Tax Credit (NTC) system. The Claimant
Compliance Teams (CCT's) in Britain dealt with 0.6% of the NTC
take-up in the year 2003-04, meaning that 29.4% was still in the
system. Subsequent official figures show that £13.8 billion
is paid out annually in Tax credits, meaning that at least 29.4%
of the claims are estimated by the CCO to still be incorrect—a
figure that equates to £4.05 billion.
In that first year of NTC investigation the
CCT s returned £5 for every £1 spent on them.
Since then however, PCS believes CCO role has
been eroded so much that rarely carry out an interview in a claimant's
home about a possible fraudulent claim. Instead they have been
dealing with cases they believe should never have been raised,
where common sense could have been applied to solve the problem
and this has been coupled with a dramatic move away from face-to-face
interviews for Living Together As Husband and Wife (LTAHW) cases.
These are one of the most common areas of tax credit fraud and
failure by HMRC in deploying adequate resources exposes the tax
credit system to continued abuse and undermines public confidence
in it.
PCS also fear there are further plans to erode
the work by less experienced grades (former IR band E1) undertaking
this work and working in sections managed by a former IR band
D, the grade that originally undertook this work with the impressive
results as stated above. Additionally PCS are aware of a project
in Northern Ireland where possible LTAHW cases were dealt with
soley by correspondence—but have never seen any published
results. We would ask for these results to be made public.
In December 2005 a profile was run on the system
to look for other adults at claimants' addresses. This profile
raised in excess of 800,000 possible addresses. We have since
been advised that of this 22,000 are "good" cases where
there is a real possibility of LTAHW.
PCS believe that the main thrust of a LTAHW
examination/enquiry is the interview and they firmly believe in
order to ensure an effective compliance system these interviews
need to be maintained at the appropriate grades and ought to be
increased in number. PCS believes that these interviews need to
be completed by skilled civil servants of band D level. For example,
one LTAHW result can save the department between £5,000 and
£15,000 (in some cases far more). A band D, CCO can save
the department the equivalent of a year's wages with two successful
LTAHW cases.
The Chancellor rightly presses the importance
of closing the tax gap at every opportunity and we believe the
solution is obvious—in the field of LTAHW where major fraud
exists.
PCS believe that we must retain sufficient band
D CCO's in order to interview claimants face-to-face and resolve
more fraudulent tax credit claims.
We also believe that while more band E1s should
be recruited into Claimant Compliance Centres (CCC's), they should
not replace bands D—but enhance and aid CCO's, as well as
taking on some of the examination/enquiry work.
We have three concerns we would request the
Committee ask Sir David:
1. Will he give an assurance that Claimant
Compliance Officers will remain at band D level and continue with
the face-to-face investigation of tax credit fraud, especially
LTAHW, for the reasons outline above?
2. Will he give a commitment that the move
to primary and satellite offices will be put on hold until meaningful
discussion has taken place over the future of Claimant Compliance,
which will include members of staff at all grades within the Claimant
Compliance set up?
3. Will he give an added commitment that
senior management in the Tax Credit Office will adhere to the
jobs protocol agreement and consult with the trade union side
over any proposed changes to CCC?
March 2006
| 
