Doubling of fraud and errors highlight Tax Credit shambles

8.07.00am BST (GMT +0100) Mon 24th Jul 2006

Commenting on the HM Revenue and Customs revised figures on fraud and error in the tax credit system for 2003-04, Liberal Democrat Shadow Work and Pensions Secretary, David Laws MP said "These new figures are much worse than expected and show that tax credit fraud and error could be as high as £1.28 billion."

"Tax credits now have the highest rate of fraud and error out of all benefits and credits, pushing the total cost in Britain's welfare system to over £4.3 billion, or £180 per household. The statement from the Paymaster General is grossly complacent and clearly shows the Treasury is in a state of denial about these problems.

David continued "The Paymaster General should be sacked, allowing the Chancellor to take personal responsibility for sorting out the problems affecting one of his flagship policies."

NOTES

The National Audit Office (NAO) report contained within the HMRC 2005-6 accounts also shows that these problems of fraud have got much greater since these figures were compiled, with £130 million lost to organised crime alone in 2004-05.

The NAO has also confirmed that the level of fraud and error and the level of overpayments are not likely to fall for either 2004-05 or 2005-06. This means that in just 3 years since tax credits started there will have been £5.8 billion worth of overpayments and around £2.4 billion lost in fraud and error.