Billions 'lost in tax credit fraud'

More than £10 billion of public money has been lost in fraud and error under the tax system put in place by the previous Labour government, according to Work and Pensions Secretary Iain Duncan Smith.

Labour defends tax credits after Duncan Smith criticism

Catherine McKinnell MP, Labour's shadow exchequer secretary to the Treasury, said Iain Duncan Smith's tax credits criticisms were a "cheap political attack".

It goes without saying that the government should tackle fraud and error in the tax credits and benefits system, just as they should tackle the billions lost each year in tax avoidance and evasion.

Tax credits help ensure millions of families are better off in work and have lifted hundreds of thousands of children out of poverty.

This cheap political attack on the whole tax credits system will not succeed in acting as cover for the government's cuts to tax credits which will hit millions of striving working families next year.

Iain Duncan Smith should start focusing on sorting out his new universal credit which even his own Cabinet ministers are warning is 'a disaster in the making'.

– Catherine McKinnell MP

Government 'to save £300 million in tax credits'

The Government is hoping to save more than £300 million in the next three years by reducing fraud and error in the tax credit system, and also wants to recover more than £400 million in unpaid tax credit debts.

Work and Pensions Secretary Iain Duncan Smith said the current system, set up by the previous Labour government, was "not fit for purpose." Writing in today's Daily Telegraph he said:

Even for those in genuine need of support, tax credits were not fit for purpose. The system was haemorrhaging money while at the same time trapping people in a system where those trying hard to increase the amount of hours they worked weren't necessarily better off.

At the most basic level, Labour used spending on tax credits as an attempt to gain short-term popularity. They knew what they were doing - it was a calculated attempt to win votes.

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Tax credit system 'open to fraud and error under Labour'

Work and Pensions Secretary Iain Duncan Smith
Work and Pensions Secretary Iain Duncan Smith Credit: Press Association

Work and Pensions Secretary Iain Duncan Smith has hit out at the tax credit system put in place by the Labour government, saying it was too vulnerable to "fraud and error". In an article in the Daily Telegraph he said:

"In the years between 2003 and 2010, Labour spent a staggering £171 billion on tax credits, contributing to a 60% rise in the welfare bill."

"Far too much of that money was wasted, with fraud and error under Labour costing over £10 billion."

Mr Duncan Smith said HM Revenue and Customs conducts checks on far fewer tax credit claims than suspected benefit fraudsters, despite about one in 12 tax credit claims being incorrect or fraudulent, compared with fewer than one in 25 benefit claims.

'£10 billion lost in fraud and error' under Labour tax system

Iain Duncan Smith claims more than £10 billion of public money has been lost in fraud and error under the tax credit system put in place by Labour.

In a scathing attack on the welfare model of the last government in today's Daily Telegraph the work and pensions secretary said tax credits were "not fit for purpose", and that the system was "wide open to abuse" and "haemorrhaging money."