Thousands of Merthyr families repaying £2.7m of Tax Credits - Michael German AM

12.00.00am BST (GMT +0100) Thu 2nd Jun 2005

Mike German, AM for the South Wales East constituency, today slammed the Government over the administration of the tax credit system, following astonishing figures published on the number of over-payments made by HM Revenue and Customs. In total, a third of all awards for 2003/04 were over-payments, leaving nearly 2 million families repaying on average more than £1000 each.

In the Merthyr Tydfil constituency alone, of the 8300 tax credit claims 3000 were over-payments, with the average family paying back £900 each.

Commenting on the figures Mike German said: "These figures are unprecedented and reflect the serious problems not only with the computer system, but inherent within the new tax credit system.

"I have been inundated with letters from constituents concerned about this issue. There are many local cases where the tax credit office has attempted to claw back money that had often been overpaid as a result of internal administrative error rather than customer misinformation.

"Too many families are having their budgets thrown into chaos by the tax credit office causing serious problems and hardship especially for those on low incomes.

"What we do not yet know, however, is how many of these over-payments were a result of official error and how many the Revenue will write off.

"Last week Treasury Ministers signalled changes to the way over-payments are clawed back. The statement was an implicit admission that the Revenue have not been acting responsibly in the past. But new guidance alone will not solve this problem.

"The policy of reassessing income at the end of the award is flawed and a return to a system of fixed awards would end this bureaucratic nightmare for many families."

Mr and Mrs Cheeke, one of the families who contacted Mike German about their Tax Credits said: "It took us over 12 months to sort out our overpayment and as soon as we had, the Inland Revenue started making the same mistake again. We feel we are being penalised for something that is no fault of our own. The Inland Revenue don't realise they are tinkering with people's livelihood's. It's disgusting."