A year to fix tax credits glitch

Technical problems cancelling automatic deduction of overpayments

Paymaster General Dawn Primarolo says it will take a year to fix a software glitch on the troubled tax credits system that causes automatic recovery of disputed overpayments.

The system has caused problems for some low-income families since it first went live in 2003, with many claimants being overpaid. Because of the system’s design, all overpayments are automatically deducted, on an annual basis, from the following year’s entitlement.

Parliamentary ombudsman Ann Abraham has demanded that overpayments valued at £2bn be written off, because many recipients who did not realise they had received more than they were entitled to, cannot afford the repayments.

Primarolo told MPs last week that, subject to final testing, interim procedures will be put in place to prevent recovery where there is a dispute.

But attempts to change the software to prevent the automatic repayments have hit problems. Until they can be fixed, staff will be forced to use manual processes, and the extent of the software alterations will indefinitely delay any attempt to comply with the demands of the Ombudsman.

MPs on the Commons Treasury Sub-Committee are to hold an inquiry into potential solutions, with hearings expected to start early in the New Year.

They promise to be positive, and do not plan to rake over past administrative decisions and practices to apportion blame for any errors.

Her Majesty’s Revenue and Customs, the government department running the system, says its performance has improved. But as with any database, it says, improving the IT system remains an ongoing process.