Brown defends tax credits
The chancellor has defended the government’s new tax credits scheme in the wake of mounting criticism over the way it is handled.
Gordon Brown said the government had lifted a million children out of poverty in the UK, in part through the use of child tax and working tax credits introduced in April 2003.
His comments come the day after the influential public accounts committee (PAC) described the system as “frustratingly arcane” and warned millions of families were being “mistreated”.
Mr Brown admitted there are problems with the system, but said it involved six million people and was the “biggest change in financial support for children and families that we have seen”.
The government had effectively doubled the amount of support for the poorest children in Britain, he said, while the child tax credit income threshold of £58,000 meant that even the better off were benefiting.
“It is the government finally recognising that the costs of bringing up children are very high indeed and we have got to do more to support parents in the difficult task that they face,” he told Today.
He said the government had also introduced a childcare tax credit in order to help working parents, adding: “We want a system as flexible as possible responding to people’s changes incomes.”
Yesterday’s PAC report found that far from being simpler and easier to use than the old tax credits, the new system had failed to cut the number of errors and “routinely” overpaid claimants.
Responding to Mr Brown’s comments, shadow chancellor George Osborne said it was clear the chancellor “hasn’t a clue what’s actually happening in the real world”.
“He refuses to accept that thousands of low income families have suffered hardship because of his obsessions with complexity and meddling,” he said.
“Instead of this dogmatic stubbornness, he should acknowledge the legitimate criticisms of independent bodies like the Citizens Advice Bureau, the parliamentary ombudsman and the Public Accounts Committee and implement their recommendations immediately.”
In her report on tax credits in June, the parliamentary ombudsman warned that the number of overpayments meant the system could have “unintended harsh and unfair consequences” for vulnerable groups.
Ann Abraham recommended that excess and overpayments made during the first years of the system be written off, giving “much-needed relief to people who, in many cases, have been caused considerable distress and hardship”.
