Incorrect tax credit payments criticised

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Nearly half of all payments under the Government's flagship tax credits scheme were wrong, ministers have admitted as figures showed that three million families received incorrect awards.

The Chancellor Gordon Brown was accused of plunging thousands of low-income families into debt because of chaos in the system.

Opposition parties said the troubled tax credits system was in "meltdown" and blamed Mr Brown for leaving more than half-a-million families facing repayments averaging £866 apiece. Experts warned that many low income families would face real hardship trying to repay thousands of pounds in overpayments.

Statistics released by HM Revenue and Customs revealed that of the 6.5 million tax credit payments made, 906,000 families received too little money while 1.9 million had to repay awards worth £1.8bn because they had been paid too much.

The Treasury said that the total overpayment had fallen compared with last year's figures, when overpayments reached £2.2bn.

But detailed statistics showed that 529,000 families faced repaying more than £1,000 in tax credits, while another 163,000 had been paid at least £1,000 too little.