Milton Keynes Residents to Pay for Government Mistake

12.00.00am BST (GMT +0100) Mon 22nd Aug 2005

Parliamentary Campaigner Jane Carr and the Liberal Democrats say they won't give up on Milton Keynes residents who were hoping that the Government would write off the millions of pounds overpaid in tax credits. Over 7,000 families in Milton Keynes were overpaid on average £1,000 during 2003-04 as a result of a Government error.

Despite pressure from the Liberal Democrats and the Parliamentary Ombudsman to write off the debt, the Government has stubbornly refused to accept responsibility and has made it clear that it will be seeking to claw back virtually all the overpayments. Overpayments would only be written off following 'reasonableness tests' which demonstrated that a claimant could not reasonably have been expected to spot the overpayment.

Jane Carr said, "This is another example of Labour incompetence. Thousands of Milton Keynes families who have already spent their tax credits from 2003-04 on essential bills are now expected to pay the Government back. These families need more help, not be left paying for the Government's incompetence."

She added, "The reasonableness test is totally unreasonable, putting additional burdens on the most needy to find money they haven't got in order to return the overpayment."

The refusal to write off the overpayments as requested by the Ombudsman is evidence that the Government is unwilling to admit what many people know - that the tax credit system is illogical, complicated and a huge mistake.

Liberal Democrats are campaigning for a return to a system of fixed awards which would end the wildly fluctuating payments for many families and give them some much-needed financial stability.