Taking the credit

Faith owes thousands of pounds in tax credit overpayments

BBC Radio 4's Inside Money was broadcast on Saturday, 13 August, 2005, at 1204 BST.

The programme was repeated on Monday, 15 August, 2005 at 1502 BST.

Read the transcript

The tax credit system was hailed as a revolution in welfare payments, providing more generous benefits to working families, especially those on low incomes.

But for many, this complicated scheme has gone badly wrong.

Critics say a fundamentally flawed system, which is prone to overpaying claimants, has left some of the most vulnerable households in Britain facing huge bills.

They are being asked to repay money they never should have received; money which they believed was theirs to spend.

Causing hardship?

Figures from HM Revenue and Customs, the government department responsible for tax credits, show that almost two billion pounds was overpaid last year, equivalent to one pound in every six.

Charities and even the Parliamentary Ombudsman say the practice of clawing back the cash from future payments is pushing some families back into the kind of hardship the system was designed to alleviate.

Listener Faith Stanley is one mother facing a bill for thousands of pounds.

She joined presenter Lesley Curwen to find out what has gone wrong and whether the tax credit system needs to be redesigned.

Presenter: Lesley Curwen
Listener: Faith Stanley
Producer: Louise Greenwood