08 July 2005
Ten notices have been sent to claimants for every tax credit that is actually awarded, Treasury figures have revealed.
In answers to parliamentary questions from Liberal Democrat shadow work and pensions secretary David Laws, the Treasury said that 65.5 million award notices had been issued since April 2003, even though only 6 million households receive the credits.
Overpayments, previously put by the Treasury at £1.9bn, were underestimated by £800m, Laws said, because of a government decision not to seek to recover this money unless a claimant's income had risen by more than £2,500 in a year.
Treasury answers revealed that the administration costs of the system rose to £403m in 2003/04, against only £136.7m in 2000/01.
Laws said: 'The Treasury needs to admit that the current tax credit system just isn't working. What we now have is a system that is complex and bureaucratic to administer and in which overpayments are endemic.'
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