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Public Accounts

The right hon. Member for Swansea, West (Mr. Williams) asked what the BBC had to fear from giving evidence to the PAC, but the reaction of certain civil servants shows that it has quite a lot to be afraid of. My first observation follows from the remarks made by the right hon. Member for Swansea, West and by the PAC Chairman, the hon. Member for Gainsborough (Mr. Leigh). It has been announced that the National Audit Office's remit will be extended to look in more detail at how savings can be made in each Department. Given that the BBC is going through a similar process, it would seem logical that it should be subject to similar scrutiny. I have never been a member of the PAC, but that is not necessary to appreciate its importance. I welcome the opportunity to discuss the Committee's prolific work since it was last debated in this House. The Government place ever greater focus on efficiency savings, so it is important that they continue to set ambitious targets, with delivery being scrutinised in great detail. When the House last discussed the PAC's work, the hon. Member for Gainsborough spent some time talking about the capability gap—whether public bodies can deliver public services. That question is now being considered by the Government, with Departments assessing their capability to deliver what is required of them. The PAC plays a very important role in that process, as is evident from the scope of the contributions made in the debate so far. One question in particular has emerged from the PAC's work over the past six months, and the hon. Member for Gainsborough touched on it his remarks: who is affected most keenly by the capability gap in the delivery of public services? Very often, the people who are most in need of help are most let down, and that is especially obvious in the tax credits system. It seems that the people who lose out by being caught up in overpayments are those at the margins, the ones on the lowest incomes who go in and out of work at different levels of pay. Ironically, they suffer most when their circumstances improve. We are considering various reports today, but I draw the House's attention to the one that shows the scale of the problems in the tax credits system. The PAC is not alone in investigating the matter: the recent ombudsman's report was also pretty damning, stating that HMRC"““took a very rigid approach and assumed high levels of understanding of the system in terms of whether or not it is 'reasonable' for someone to know they were being overpaid.””" Comments such as that contrast significantly with the Treasury minutes in respect of the PAC's conclusions, especially where they deal with the cost of some of the proposed changes to the system and their impact on expenditure. In particular, the Treasury minutes on the impact of the proposed changes to the disregard rules state that"““there are still some uncertainties surrounding the costing. In particular, it remains the case that while the overall cost of the package is not affected by the order with which the changes are modelled, these interactions mean that the costs of the individual elements of the package are affected by the assumed order with which the changes are modelled.””" The irony is that, although the Treasury is open about its uncertainty about the impact of the changes, it expects a sophisticated level of understanding among the people who are supposed to use the system. I am sure that all hon. Members have constituents who come to them for help with tax credits because they do not know where else to turn. Such people may have been thrown into debt after receiving a claim for overpayment that goes back over a number of years and runs into many thousands of pounds. One lady came to see me whose tax credit overpayment amounted to quite a few thousand pounds. She was doing everything that she could to meet the demand, and was even trying to save some money for her children. She told me that, for the first time, she was using for living expenses the money that every month she normally put towards child care and into a savings account. That is what tax credit overpayments can do to people even when they try to do everything right. It seems that the system has become more important than the individual. One constituent of mine completely changed his bank account, because that was the only way to get out of the tax credit system altogether. People are taking extreme measures, and it is very worrying that, in its response to reports such as the PAC's, the Treasury says only that it will ““take note”” of recommendations, rather than agree to them. I think that it should go back to first principles and agree to look at the system again, as the question goes beyond how the system is administered and what value for money is achieved. The important question posed in many reports produced by the PAC—and it is one that the Public Administration Committee looked into when I was a member—has to do with how systems are structured.