Tax credit chaos getting worse not better - Bruce

2.50.05pm UTC (GMT +0000) Thu 12th Jul 2007

Nearly £9bn of taxpayer's money has been lost through fraud and error in the tax credit system

The Gordon MP, Malcolm Bruce has today criticised the Government over the continued failure to reform tax credits after new figures revealed the full extent of fraud and error in the system.

New figures released by the HM Revenues and Customs (HMRC) and the influential Parliamentary Public Accounts Committee reveal that an estimated £1.7 billion was overpaid and £549 million was underpaid in 2005/06 financial year. The total debt in the tax credit system has reached £6 billion of which £700,000 has now been written off.

The Public Accounts Committee condemned the level of overpayments as "unacceptably high" and stated that there was no reason to believe that overpayment figures for 2006/07 will be any better.

Malcolm Bruce MP said:

"It is disgraceful that the government is still failing to sort out the mess in the tax credit system. With another £1bn lost in fraud and error in 2004/05, we are now well on course to see £9bn of taxpayers' money wasted through fraud, error and overpayment in the first three years of the scheme's existence.

"As the Public Accounts Committee has itself declared, the level of overpayments is "unacceptably high" and with no indication that the 2006/06 figures will show any improvement, the Government must take this issue in hand with a rapid and radical overhaul of the system. It needs to act now if it is to have any hope of regaining the public's trust in this over-complicated and fraud-ridden system."

ENDS