Öpik: Government Must Fix 'Tax Credit Chaos'

12.00.00pm UTC (GMT +0000) Wed 5th Jul 2006

In Parliament today, Lembit Öpik, MP for Montgomeryshire and leader of the Welsh Liberal Democrats, challenged the Government to 'get to grips with the malfunctioning tax credits system' warning that major errors in the system are seriously harming Wales' most vulnerable families.

Labour MP, Ann Clwyd brought up the subject in a session of Welsh Questions in the House of Commons. Lembit responded:

"The Labour Party raising the issue of tax credits is like the captain of the Titanic offering guided tours of the hole in his boat!

"In Powys last year, 1 in 3 tax credits awarded were overpaid, leaving nearly 5000 people to pay back £4.3m to the Revenue! These errors are seriously harming our most vulnerable families. When will the Government get to grips with this malfunctioning system?"

Commenting afterwards, Lembit said: "The tax credits system is meant to help our most vulnerable people. But because there are so many errors in the system, thousands of our poorest people are either being shortchanged or thrust into debt.

"Across Wales in 2004-2005, 48,000 people were underpaid by a total of £28m. At the same time 108,000 people were overpaid, and thrown into £91m of debt! It is absolutely unacceptable that the tax credit system continues to suffer errors on this scale.

"This credit chaos is placing huge pressures on some of the poorest people in Wales. The Government has got to sort it out."

ENDS

Notes

15,100 Child and Working Tax Credits were awarded to people living in Powys in 2004-2005.

4,900 (32%) of these awards were overpaid to Powys residents at a total value of £4.3m.

2,400 (16%) of the awards were underpaid.

In total 48% of awards in Powys were incorrect.

345,000 tax credits were awarded across Wales in 2004-2005.

95,000 of these awards were overpaid, while 48,000 of these award were underpaid.