Improvement to tax credits administration vital to meeting Government targets on child poverty

Commenting on today’s publication of official data on tax credits overpayments and underpayments, Child Poverty Action Group’s Chief Executive, Kate Green, said:

“It is vital that families are paid the right amount at the right time. The uncertainty, underpayments and overpayment recoveries have left many families struggling with a reduced income.

“Tax credits are an essential part of the Government’s strategy to end child poverty and have undoubtedly helped keep many families out of poverty. The Government must get the system working properly and restore public confidence in it to meet the target of halving child poverty by 2010.

“Changes introduced by the Treasury last year should reduce the number of overpayments but are too recent to impact on today’s figures. But they still need to do more, such as putting in place an automatic pause before overpayments are recovered to allow people time to dispute them if they are the fault of poor administration, not of the claimant.”

Notes to Editors

• CPAG is a member of the Campaign to End Child Poverty
• In 2005/06 5.9 million families (10.1 million children) benefited from working Tax Credit and Chid Tax Credit – a slight increase on the previous year.
• Both the amount and the numbers of families affected by underpayments and overpayments went down between 2004/05 and 2005/06
• The majority of awards did not have either an underpayment or an overpayment (around 60% of awards)

Averages (estimated from figures):

• The tax credit system paid out £17,060 million in 6.5 million awards in 2005/06, averaging at £2,631 per award.
• It underpaid 886,000 awards (just over one in 10), at an average of £620 per award
• It overpaid 1,902,000 awards (just under three in ten) at an average of £827 per award.

For further information please contact:
Tim Nichols
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302
tnichols@cpag.org.uk