Liberal Democrats call for Primarolo to resign

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The paymaster general, Dawn Primarolo, is facing calls for her resignation amid warnings that tax credits were continuing to be overpaid by billions of pounds each year.

David Laws, the Liberal Democrat work and pensions spokesman, said the troubled tax credits system remained a "nightmare" and lambasted Ms Primarolo for complacency.

He called for the current system of assessing the benefit to be abolished, warning that figures to be released today were expected to show little change on last year, when overpayments to families nearly reached £2bn. Mr Laws warned that low-income families were being plunged into debt by being paid too much in tax credits, only to face large sums being clawed back at the end of the tax year.

He said the complexity of the system made it too difficult for families to check whether they were receiving the correct payments and left the Government open to fraud. The system has been targeted by organised criminal gangs using stolen identities and has also been dogged by computer problems.

Mr Laws attacked the Treasury for retreating into a "bunker mentality" and said it had failed to act on recommendations of the parliamentary ombudsman, after she published a report on the system last year.