Lib-Dems vow to end Merseyside tax credits misery

Sep 19 2007 by Rob Merrick, Liverpool Daily Post

THE Liberal Democrats have vowed to end Merseyside’s tax credits misery by shaking up the system they have branded a “disgrace”.

Their plans would stop the immediate adjustment of payments once a claimant’s income changes – a policy blamed for many of the delays that have dogged the system.

Instead, claimants would be promised fixed payments for six months, to rebuild confidence in Gordon Brown’s flagship scheme to cut poverty.

And the Lib-Dems pledged claimants wrongly overpaid would no longer have to pay the money back if tax credits staff were responsible for any mistake.

The proposals, unveiled at the party’s Brighton conference, follow the revelation that £55.8m was overpaid in tax credits across the region last year. Blunders meant around 67,500 families in Merseyside, North Cheshire and West Lancashire were paid too much in working tax credit and child tax credit in 2005-6.

Under current rules, around two-thirds of that £55.8m will be claimed back, threatening families who may have already spent the money with financial hardship.

Danny Alexander, the Lib-Dems’ work and pensions spokesman, said: “Payments can fluctuate almost on a daily basis – and the system can’t cope with that. We would introduce stability with fixed payments for six months, so people don’t get any trouble with overpayments when their circum-stances change. People are also being forced to pay money back for mistakes that are no fault of their own. We would reverse the burden of proof.”

The tax credits system has made many claimants more than £6,000 a year better off, but has been dogged by poor administra-tion. The parliamentary ombuds-man warned information on award notices was poor, while customers seeking help with claims had their letters ignored, or encountered engaged telephone lines. A further 29,000 people in Merseyside, North Cheshire and West Lancashire were underpaid in 2005-6, according to figures.

The threshold for payments would also be lowered. At present, families earning up to £60,000 can claim tax credits.

The package aims to save £3bn annually, to be redirected to hike child benefit by £5 a week for every family and fund a £1.5bn “pupil premium” for disadvantag-ed youngsters. The premium would be paid to schools accepting those pupils, raising spending on them to private-school levels with-in five years, say the Lib-Dems.

MANY of Britain’s estimated 600,000 illegal immigrants would be offered an amnesty, under controversial plans backed by delegates.

Home affairs spokesman Nick Clegg said it was “fantasy politics” to suggest all those in Britain illegally could be deported – at a cost of £11,000 a head.

Instead, they could earn citizenship after 10 years, if they passed a language test, demonstrated a long-term commitment to Britain and had no criminal record.

But Labour insisted an illegal immigrant was being deported every eight minutes and warned the plans would be “a strong pull for waves of illegal immigration”.

ROB MERRICK: PAGE 11