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Tax Credits

Thank you very much, Mr. Speaker. I was merely quoting from the ombudsman. It would be interesting to know whether the hon. Member for Blyth Valley (Mr. Campbell), who may make a contribution later, agrees with the ombudsman and the CAB. The Paymaster General expresses regret for the mistakes that have been made, but she said this morning that for a huge majority of families the system is working. But will she confirm that, of the 6 million families receiving tax credits in 2003–04, 1.9 million were overpaid almost £2 billion and that a further 713,000 were underpaid half a billion pounds. That is more than a third of all the families claiming tax credit, so how on earth can she say that the system is working well for a huge majority of families? How can she say that when in her own constituency in Bristol almost half the 9,200 people who claimed tax credit received an incorrect amount and the taxpayer has had to pay out £3.7 million in her constituency alone in overpayments? I have five specific questions about the future operation of the system. First, the ombudsman says that from the evidence she has seen the Revenue has yet to adopt a model for dealing with low-income families that takes full account both of the complexities of tax credits and of the vulnerabilities of their lives. Does the Paymaster General agree with that key recommendation of the report? Indeed, will she introduce a human face in the system so that judgments about clawing back overpayments are made by an individual, not a computer? Secondly, will the right hon. Lady accept the recommendations in the report that families should be made aware of what is happening to their credits, told how they can appeal and informed about the hardship payments available to them, not because they go to their local MP or CAB but as a matter of right, as part of the tax credit system? Thirdly, will the Paymaster General consider writing off all excess and overpayments caused by official error, not just in the past but as part of the system, so that Ministers do not have to come to the House announcing amnesties every year? She should make that part of the system so that low-income families do not suffer due to the Treasury’s mistakes. Fourthly, will the right hon. Lady suspend with immediate effect plans to move a further 800,000 of the lowest income families who currently receive their tax credits from Jobcentre Plus to the Treasury’s chaotic systems? My right hon. and learned Friend the Leader of the Opposition specifically asked the Prime Minister about that point; he did not respond, but it is of enormous interest to every MP. Will the Paymaster General respond and make it clear that she will delay the migration of those 800,000 people to the Revenue until the problems are sorted out? Fifthly, I turn to the Paymaster General’s accountability to the House of Commons. On 7 February, she said of the tax credit system:"““The system has been stable and performing very well in terms of availability and speed for well over a year.””—[Official Report, 7 February 2005; Vol. 430, c. 1245W.]" Yet the ombudsman says that"““the cases I have investigated lead me to the conclusion that such reassurances did not give a complete picture of what has been happening.””" Is the right hon. Lady saying that the ombudsman is wrong? She did not say that in her statement but if that is so she should say it in her response to me. Finally, will the Chancellor, who dreamt up the tax credit system, with all its complexities, respond to what the ombudsman calls"““the fundamental question as to whether, for people on modest incomes . . . such inbuilt instability or uncertainty really works””?" The ombudsman says that needs ““very careful consideration”” by Parliament and the Government. Is not it time that the Chancellor responded to what the ombudsman said today by setting up a far-reaching independent review of tax credits? The chaotic system of tax credits is having a devastating impact on the lives of some of Britain’s poorest families. Do not they and Britain deserve better?