£14bn lost in tax credits

12.00.00am UTC (GMT +0000) Mon 14th Jul 2008

Almost £14bn has been lost though overpayments, fraud and error in tax credits since their introduction in 2003, analysis by the Liberal Democrats has revealed.

Tax Credits fraud and error statistics released today show that over £4bn was lost in the last two years, taking the total lost through overpayments, fraud and error to £14bn.

Commenting, Liberal Democrat Shadow Work and Pensions Secretary, Jenny Willott said:

"The tax credits system is so complex that it is abused by fraudsters, misunderstood by claimants and mismanaged by officials.

"The amount lost through overpayments, fraud and error is now over £13bn and likely to keep on rising if changes are not made.

"Not only are costs spiralling, but families are riding a financial rollercoaster when they are forced to pay for mistakes made by officials who can't understand the system themselves.

"Tax credits must be made simpler - we need to return to fixed awards which are easy to administer and ensure families aren't burdened with overpayments."