FIVE THOUSAND SUTTON FAMILIES REPAYING OVER £1000 OF TAX CREDITS - BRAKE & BURSTOW

12.01.00pm BST (GMT +0100) Fri 3rd Jun 2005

Local MPs Tom Brake and Paul Burstow today slammed the Government over the administration of the tax credit system, following astonishing figures published on the number of overpayments made by HM Revenue and Customs.

Across the London Borough of Sutton almost a third of the tax credit awards were overpaid, with the average family having to pay back £1,100 each.

The two MPs will table a parliamentary motion as soon as the House of Commons reconvenes after the Whitsun break to register their concerns about the failures of the current tax credit system.

Commenting on the figures, Tom Brake, Member of Parliament for Carshalton and Wallington said:

"These figures are unprecedented and reflect the serious problems not only with the computer system, but inherent within the new tax credit system.

"I have been inundated with letters from constituents concerned about this issue. There are many local cases where the tax credit office has attempted to claw back money that had often been overpaid as a result of internal administrative error rather than customer misinformation.

"Too many families are having their budgets thrown into chaos by the tax credit office causing serious problems and hardship especially for those on low incomes.

Sutton and Cheam MP, Paul Burstow added:

"What we do not yet know is how many of these overpayments were a result of official error and how many the Revenue will write off.

"Last week Treasury Ministers signalled changes to the way overpayments are clawed back. The statement was an implicit admission that the Revenue have not been acting responsibly in the past. But new guidance alone will not solve this problem.

"The policy of reassessing income at the end of the award is flawed and a return to a system of fixed awards would end this bureaucratic nightmare for many families."

ENDS

Notes to Editors

1. The new figures are available at http://www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-pyts_geog0304.pdf

2. In the London Borough of Sutton 4,700 of the 15,100,000 tax credit awards were overpaid, with the total overpayment figure reaching £5.2m.

£5.2m / 4,700 families = £1106.38 average amount to be paid back.

3. Paul Burstow and Tom Brake's Parliamentary motion will read:

That this house is alarmed at statistics recently published by Revenue and Customs showing that a third of all tax credits are overpaid; finds this level of overpayment to be unacceptable and calls on Revenue and Customs to clarify what proportion of overpayments were due to official error; further notes that this has resulted in nearly 2 million families having to repay on average over £1,000 each; is particularly concerned at the detrimental effect this will have on low income families trying to manage a budget; believes that the policy of reassessing income at the end of the award should be revised; calls on Revenue and Customs to improve both its communication with families involved and its procedure for recovery of overpayments when this is necessary.

4. Overpayments arise for a variety of reasons such as a delay in reporting changes of circumstances; or when the 2003-04 income was more than £2,500 higher than the 2001-02 income but no estimate was reported before the end of 2003-04 (or not soon enough to prevent an overpayment. They can also arise through official error.

5. The new guidance and approach to tax credit overpayments was announced by the Paymaster General in a written statement last week: <http://www.publications.parliament.uk/pa/cm200506/cmhansrd/cm050526/wmstext/50526m01.htm#50526m01.html_sbhd3>