Labour 'squandered £10bn' on tax credit blunders

Iain Duncan Smith attacked Labour's tax credits policy
Iain Duncan Smith attacked Labour's tax credits policy
Alex Stevenson By

Labour's tax credit system resulted in £10 billion being wasted on fraud and error, Iain Duncan Smith has claimed.

The work and pensions secretary used an article in the Telegraph paper to mount a sustained attack on the New Labour government's "sorry story of dependency, wasted taxpayers' money and fraud".

He said the total benefits bill had increased by 60% between 2003 and 2010, driven in part by a total of £171 billion on tax credits.

Labour only carried out 34,000 checks on high-risk payouts in the year before the 2010 general election, Duncan Smith revealed. He said his Department for Work and Pensions now carries out 30,000 such checks a month.


"The system I inherited punished hard-working taxpayers and was in need of reform," he wrote.

"This government is returning fairness to the welfare system. We are taking 2.2 million people out of tax and getting public spending under control, in a way that helps the poorest into work.

"Universal credit is designed to make work pay at each and every hour – 1.5 million people will keep more money as they increase their working hours, on average seeing an extra 14 pence in their pocket out of every single pound earned."

Shadow Treasury minister Catherine McKinnell said it went without saying that the government should tackle fraud and error in the tax credits and benefits system.

"Tax credits help ensure millions of families are better off in work and have lifted hundreds of thousands of children out of poverty," she said.

"This cheap political attack on the whole tax credits system will not succeed in acting as cover for the government's cuts to tax credits which will hit millions of striving working families next year.

"Iain Duncan Smith should start focusing on sorting out his new universal credit which even his own Cabinet ministers are warning is a 'disaster in the making'."

But the work and pensions secretary accused Labour of acting as irresponsibly in opposition as they had when in power.

"Hard-working people have felt the impact of an economic mess left by the last government, and do not deserve to be hit twice – having to pick up the bill for ever-increasing welfare spending at the same time," he wrote.

"The sad truth is that despite leaving Britain with its worst deficit in living memory, Labour is now voting against the measures this government is bringing forward to reduce our debts.

"Labour voted against the benefit cap, against reducing the cost of housing benefit, against universal credit and now Labour will vote against the uprating bill in the new year."

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