Changes to tax credits welcomed by CPAG
05.12.05

The Child Poverty Action Group (CPAG) has welcomed changes to the way the tax credits system will operate, announced in the Chancellor’s Pre-Budget Report today.

A detailed package of measures includes a rise from £2,500 to £25,000 in the disregard for increases in income between one tax year and the next. Recovery of in-year overpayments will also be subject to new limits.

In October, CPAG sent an action plan to the Treasury - ‘First Steps to Reform Tax Credits’ - calling for improvements in the way the tax credits system works.

Paul Dornan, Head of Policy at CPAG, said:

“Tax credits are key to tackling child poverty so we’re very pleased that Gordon Brown has listened and recognised that they must be made to work much better. The devil will be in the detail, but we warmly welcome this package of measures, as it will hugely reduce the scope for overpayments.

“CPAG will be watching closely to see how the changes are implemented in practice, but we hope that the new system will make life easier for claimants, reduce the scope for errors and restore confidence in tax credits.

“However, we urge the Revenue to stop automatically clawing back overpayments and give claimants a breathing space in which they can challenge the recovery. The Revenue should also introduce a right of appeal.

“While we welcome the announcements that have been made, the clock is ticking away on the Government’s ambitious target to halve child poverty by 2010. Gordon Brown must use next year’s spending review to do much more to help the 3.5 million children still living in poverty. If he fails to seize that opportunity, Labour’s targets will be in serious danger of being missed.”

For further information please contact:
Alex Belardinelli
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302
abelardinelli@cpag.org.uk