Iain Duncan Smith launches scathing attack on tax credit abuse

 

More than £10 billion of public money has been lost in fraud and error under the tax credit system put in place by Labour, the Work and Pensions Secretary has claimed.

In a scathing attack on the welfare model developed by the last government, Iain Duncan Smith said tax credits were "not fit for purpose" but had been extended ahead of the 2005 and 2010 general elections in a pitch for votes.

The system was "wide open to abuse" and "haemorrhaging money", he wrote in an article for The Daily Telegraph.

"In the years between 2003 and 2010, Labour spent a staggering £171 billion on tax credits, contributing to a 60% rise in the welfare bill.

"Far too much of that money was wasted, with fraud and error under Labour costing over £10 billion."

Mr Duncan Smith said HM Revenue and Customs conducts checks on far fewer tax credit claims than suspected benefit fraudsters. That is despite about one in 12 tax credit claims being incorrect or fraudulent, compared with fewer than one in 25 benefit claims.

Payments are based on estimates of income for the coming year, and after 2008 HMRC did not attempt to reclaim overpayments of less than £25,000. That is set to be reduced to £5,000 under the coalition, alongside moves to require proof of payments from those claiming for childcare or that children aged between 16 and 19 are in full-time education.

The Government hopes to save more than £300 million in the next three years by reducing fraud and error, and also wants to recover more than £400 million in unpaid debts.

Mr Duncan Smith is overseeing a fundamental overhaul of welfare which will see tax credits rolled into a new Universal Credit which is meant to simplify the system and better incentivise work.

"Even for those in genuine need of support, tax credits were not fit for purpose," he said.

"The system was haemorrhaging money while at the same time trapping people in a system where those trying hard to increase the amount of hours they worked weren't necessarily better off."

Mr Duncan Smith said tax credit payments had risen by 58% in 2005 and by more than 20% in the two years before the 2010 election.

"At the most basic level, Labour used spending on tax credits as an attempt to gain short-term popularity. They knew what they were doing - it was a calculated attempt to win votes," he said.

PA

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Web Developer - Junior / Mid Weight

£15000 - £25000 per annum: Recruitment Genius: To support their continued grow...

Recruitment Genius: Marketing Data Specialist

£22000 - £25000 per annum: Recruitment Genius: They are the go-to company for ...

Recruitment Genius: Search Marketing Specialist - PPC / SEO

Negotiable: Recruitment Genius: This is an opportunity to join the UK's leadin...

Recruitment Genius: Sales Administrator

Negotiable: Recruitment Genius: This caravan dealership are currently recruiti...

Day In a Page

Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

Twins have a mountain to climb during Tour of duty

Yates brothers will target the steepest sections in bid to win a stage in France
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy