Examination of Witnesses (Questions 20-39)
HM REVENUE &
CUSTOMS
10 OCTOBER 2007
Q20 Mr Touhig: So we were right to
say you were actually pay now check later.
Mr Gray: Sorry, can I just finish?
In relation to the way Tax Credits operate, as I think you are
aware, Mr Touhig, this is an annual system. The precise entitlement
at the end of the year depends on the claimant's overall income
over the course of that year and any change of circumstances that
they encounter, so there is a potential difference between us
paying the right amount of money at the point of claim in relation
to the information that we then have available, and the eventual
entitlement after the end of the year which, in accordance with
the Act—
Q21 Mr Touhig: I understand the point
you are making, so that verification check is nothing really,
is it, it does not mean anything?
Mr Gray: It does mean something.
What it does mean is that if there is any evidence of fraud at
the point of claim then we are making checks to seek to ensure
we are not paying out inappropriately.
Q22 Mr Touhig: If that is a bit belt
and braces it still has not stopped you overpaying £6.6 billion;
you need to pull your socks up a bit.
Mr Gray: For the reason that I
have sought to explain, as was indicated at the introduction of
the system, because of the Government's wish to have a very flexible
system that responded to people's changing circumstances it was
anticipated that there would be very significant overpayments.
Q23 Mr Touhig: Do you understand
the misery that you cause people when—I believe because
of errors on your part—you then seek to recover money?
Mr Gray: I seek to understand
their position. I am not a tax credit recipient myself.
Q24 Mr Touhig: Do any of your family
receive Tax Credits?
Mr Gray: They do not.
Q25 Mr Touhig: Any friends?
Mr Gray: Some other members of
my family do.
Q26 Mr Touhig: So you do have some
knowledge and experience.
Mr Gray: I have some knowledge.
Q27 Mr Touhig: If they come and tap
on your door and say: "Hey, you know, your office has really
mucked up my tax credit", you are face-to-face as we face
people daily with these problems.
Mr Gray: I seek to understand
that and, as you know, I very deliberately personally involve
myself in a large number of the cases that you and other colleagues
write to me about, so I seek to understand the position. What
we are aiming to do is to operate the recovery of overpayments
in the way in which the whole system was designed; I accept, as
I said to Mr Williams, that in a proportion—I believe it
is quite a small proportion—of cases we have not operated
this in the past as effectively as we should have done.
Q28 Mr Williams: There is no doubt,
there is no doubt.
Mr Gray: We have progressively
introduced changes to improve it, I am committed—
Q29 Mr Touhig: We have produced several
Reports and you have not really made a lot of progress since we
were producing these Reports. Mr Gray, the average income of in-work
families receiving tax credit is £22,000 a year; 48% of those
actually get £20,000 or less. Looking at your department's
accounts, I see that you have substantially more as your income,
£165,000-£170,000 a year, additional benefits in kind
of £33,900. Families who face having their Tax Credits cut
because of some problem which I believe is your fault can have
up to 30% of their income cut in a week; how do you think you
would feel if somebody cut your income by 30% in a week?
Mr Gray: The point you have just
made is the point I was seeking to address just now, that I seek
to understand the position of people in that situation. What we
are doing through this system is supplementing people's income;
if people's circumstances have changed such that their entitlement
to Tax Credits, in accordance with the parameters of the system
which Parliament laid down, has changed, then it is appropriate
for me within those parameters to make an adjustment to the net
amount of additional income that we are putting into that household.
Q30 Mr Touhig: You said earlier that
you did not think the Parliamentary Ombudsman had a great many
cases—I am paraphrasing what you said.
Mr Gray: That is not quite what
I said.
Q31 Mr Touhig: I have seen the report
that Mrs Ann Abraham produced, she says Tax Credits represent
26% of all the cases she handles.
Mr Gray: Yes, and that is too
high a proportion and I am interested—
Q32 Mr Touhig: You are telling me
it is too high.
Mr Gray: —in seeing it coming
down.
Q33 Mr Touhig: One key area of complaint,
she says, is the unreasonable recovery of payment system that
you have got; you make people's lives a misery; you harass them,
you harangue them and you make them almost desperate.
Mr Gray: I am not sure those are
quite the words that she used.
Q34 Mr Touhig: No, those are my words,
that is what happens when people come to see me when we cannot
get any sense or any positive response out of your office.
Mr Gray: I said just now I am
committed to introducing further improvements in the way in which
we do this. The particular issue that I know has troubled some
of your constituents and others is the operation of what we have
termed the reasonable belief test which we apply as to whether
or not we think people should repay overpayments to us. The former
Paymaster General announced to the House in June that we were
going to have another look at the definition of that test and
to seek to make it rather more objective, less reliant on, inevitably,
difficult judgments about what people could reasonably believe.
Following the consultation that is nearly completed on this exercise,
we will be introducing a revised approach to that test where we
will move away from reliance on judgments of reasonable belief
and we will be much more explicit in setting out a contract of
responsibility in which we will be very transparent about the
things we believe it is appropriate for claimants to check, but
equally we will be very explicit about the side of the contract
that we need to live up to, and in particular one change we will
be making in that is we will impose a maximum of 30 days. We are
still considering whether it should be a smaller period than that
in which case, if we have been given revised information by a
claimant and we have failed to act on it, we will accept the responsibility
is ours and we will not pursue the overpayment in those circumstances.
Q35 Mr Touhig: In Accountancy
Age on 8 March it said of you that you were a popular figure.
Advisers like your open manner and your willingness to solve problems.
I have asked you to come to Wales to meet some of my constituents;
will you come? I will pay your fare.
Mr Gray: I think I could even
manage to pay it myself.
Q36 Mr Touhig: You might even manage
to pay it yourself.
Mr Gray: Given the things you
commented on earlier. I certainly make it a practice to be out
and about in the country very regularly; I am very keen, as I
do on those occasions, both to meet members of my staff and the
people we are seeking to serve.
Q37 Mr Touhig: So you will come.
Mr Gray: If you are offering me
an invitation, Mr Touhig.
Q38 Mr Touhig: I wrote to you; I
have not had a reply, so I will take it now that you will come.
I have got one or two witnesses now.
Q39 Mr Williams: You could go on
a Celtic tour.
Mr Gray: Is this going to be a
kind of joint Welsh invitation?
Mr Touhig: Yes, you will find it very
polite.
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