We store cookies on your device to make sure we give you the best experience on this website. I'm fine with this - Turn cookies off
Switch to an accessible version of this website which is easier to read. (requires cookies)

Dundee LibDems hit out at Tax Credit chaos - 6200 Dundee families asked to pay back £4.8 million in overpayments.

June 4, 2006 3:57 PM

Dundee City Council's Liberal Democrat Finance Convener, Cllr Fraser Macpherson, has today (Sunday 4th June) called for a total overhaul of the way tax credits are awarded, after new figures revealed that 6200 families in Dundee are still being forced to pay back over £4.8 million worth of tax credits, due to overpayments made by HM Revenue and Customs.

Cllr Macpherson said that, following the news last week that around £1.7 billion of tax credits paid nationally last year had been overpaid, he had sought detail of the situation affecting people in Dundee.

He said that news that over 6000 families in Dundee were being asked to pay back tax credits was a "shocking indictment" of the administration of the Tax Credits system, and he echoed the views of Dundee Anti-Poverty Forum who last week said the overpayments were an "unnecessary worry" for families already suffering hardship.

Cllr Macpherson said, "It is totally unacceptable that in Dundee, tax credits are still being overpaid in almost one-third of all cases. Families affected in Dundee are being forced to pay back an average of £774 in overpayments.

"Last May, Paymaster General Dawn Primarolo MP claimed that the system was working well for the vast majority of families. But these new figures show that the Minister is clearly in denial - in fact, nationwide 44%, over 2.8 million people, received incorrect tax credit payments.

"Too many hard working families on low incomes are being plunged into debt and poverty by the very system which the Government claimed was designed to help them. More families are being hit by the clawback of overpayments than ever before.

"The Minister has known of the systemic failures in the tax credit system for years and these figures are yet more evidence that too little has been done to rectify them. Recent modifications to the system are too little too late. New ministerial leadership is now needed to introduce a radical overhaul of the way tax credits are administered."

The figures released by HM Revenue and Customs show that for 2004/2005:

-1.958 million individuals had their tax credits overpaid at a cost of £1.696 billion

-906,000 individuals had their tax credits underpaid at a value of £556 million

-Out of 6.458 million tax credit awards made, 2.864 millions (44%) were incorrect

-Out of 906,000 underpayments made, 654,000 (72%) were to individuals earning less than £20,000

-Out of 1.730 million overpayments made, 899,000 (52%) were to individuals earning less than £20,000

Across Dundee East & West constituencies (combined) in 2004/05:

-20 300 tax credit awards were made

  • 6 200 (30.5%) of these were overpaid

-Overpayments amounted to £4.8m

Cllr Macpherson concluded, "There is a need to urgently reform tax credits. A system that is easier to administer and simpler to understand than the current tax credits system must be implemented. It is very clear from the first-hand testimony of constituents who have faced serious hardship because of the failures of the Government's tax credit policy, there is a clear need for the government to act now."

Related Links