Lib Dems criticise loss of £220m tax credits for poorest families

Around 200,000 mostly poor families will lose more than £1,000 each in tax credits before Christmas because they failed to fill in forms on time.

Around 200,000 mostly poor families will lose more than £1,000 each in tax credits before Christmas because they failed to fill in forms on time.

Child tax credits worth £220m will be lost to families who failed to inform the Inland Revenue of their annual income by the end of September.

The decision to withhold the money was condemned yesterday by the Liberal Democrats, who said it would lead to many families facing a "cold winter" without money they deserved.

Steve Webb, the party's work and pensions secretary, called on the Chancellor to extend the deadline to allow more families to claim the credits. "Up to 200,000 hard-working families on tight budgets in the run-up to Christmas face having nothing at all. This is the latest farcical twist in the tax credits roller coaster. The Government has to extend the deadline and give families a chance to get their cash," he said.

An average family is entitled to £21.15 a week in tax credits. But in a reply to Mr Webb, Dawn Primarolo, the paymaster general, said under the new rules they would be required to "report changes in both income and circumstances".

Yesterday the Government said those who had failed to fill in their forms would have their cash docked. But it said the Inland Revenue had made strenuous efforts, including a national advertising campaign, to warn families of the September deadline. It said the families claiming the credits were not always on low incomes and accused the Liberal Democrats of exaggerating the problem.

"This is irresponsible scaremongering. Over six million families are continuing to benefit from tax credits," said a spokesman. "We want everyone who is eligible to receive their money. Anyone who is entitled to tax credits and hasn't renewed their claim should contact the Revenue straightaway, and they won't lose out"

* Charles Kennedy, the Liberal Democrat leader, challenged Tony Blair yesterday to "spend the political capital he has amassed with the Bush administration" to get the US to sign up to the Kyoto treaty on climate change.