British government admits flaws in its tax credits scheme |
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Published
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Wed, 22 Jun 2005 15:05
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LONDON: The British government has admitted to flaws in its tax credits system. The scheme, which has mistakenly overpaid some £2 billion to low income families in the last two years, "has got to be much better", according to paymaster general Dawn Primarolo, whose office administers the system.
Two reports have been published in this regard -- one by a parliamentary ombudsman, Ann Abraham, and another by a voluntary group, Citizens Advice Bureau -- which say that mistakes made in the administration of the scheme have left families, especially poor families, in severe hardship.
Primarolo said "a significant number" of families have been victims of errors made by the IT-based system, introduced in April 2003. She said her officials would look at complaints and discuss on how to improve the program. She has already instructed some overpayments to be written off in cases where it was clear that her department had made a mistake.
Several voluntary groups, including Citizens Advice, have been alleging that poor administration of the system and the recovery of overpaid tax credits had left several families with little money to live by. It says the affected families have been threatened with repossession or eviction and in some cases even food parcels had to be arranged as these families had no money to buy food.
Tax credits as a system has been a means for low-income families to support children and help make working financially worthwhile. It is calculated for a particular year on the basis of current income and that of the previous 12 months. The calculation will be affected in case there is a higher wage or an addition to the family. Any delay in processing or in notification of a change would result in overpayments, which can run into thousands of pounds.
Citizens Advice says in 2004 and 2005, it had handled some 150,000 cases, some of which had put the affected families in deep financial crisis. Besides, there are other administrative complexities in the system that leave the common people perplexed.
In the first year of its implementation, as much as one third of all its awards - 1,879,000 - were overpaid by a total of £1,931 million, according to official figures.
Meanwhile, a Treasury spokesperson said, "Over six million families and 10 million children are benefiting from tax credits, and the vast majority have not experienced any problems with their claims or payments.
"While there were much-publicized IT and processing errors that occurred when the system was introduced two years ago, Her Majesty's Revenue and Customs now has a new IT partner and the system is stable."
However, Citizens Advice said changes are needed in the system, which should ensure a limit on adjustments to tax credit payments. There should not be any automatic recovery of overpayments and the concerned people should be notified and given a chance to defend.
The group's chief executive David Harker said, "Our report shows the system is failing the very families most in need of extra money, causing hardship it is designed to prevent."
Ombudsman Abraham has recommended benefits mistakenly paid to families under the system should not be recovered. She says the poorest families are the hardest hit and she has called for an overhaul of the system. "The majority of problems with tax credits seem to originate from the design of the system itself," she said in the report.
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