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September
2006: Private Eye reports on tax credits (p.3):
'Gordon
Brown's tax credit policy isn't just driving claimants mad:
it's thrown his own staff into a state of gibbering confusion
too.
'After
reporting changes in her childcare arrangements, one Eye
reader had the temerity to question a demand for repayment
of a tax credit overpayment. Not only did HM Revenue and
Customs' customer support unit respond that "it is
not possible to explain how the figure of [£x] per
week was calculated", but she was also told the demand
would stand as "we do not think it was reasonable for
you to expect that your payments were correct."
'Quite
right, too. Anyone who knows anything about tax credits
would never believe they were being paid the right amount
.......'
1st
June 2006: the Financial Times reports tax credits
problems:
On
the 1st June the Financial Times reported:
'The
tax credits system came under renewed attack after fresh
figures showed that for a second year running low-income
families were overpaid by almost £2bn. Revenue &
Customs revealed yesterday that almost 2m families received
£1.8bn more than they were entitled to in 2004-05.
Campaigners warned many would face hardship as they were
forced to repay the money.
'The
chancellor's £15bn-a-year scheme to top up the wages
of the low-paid is intended to encourage the unemployed
back into work and has been credited with reducing child
poverty, but it has been plagued with computer problems,
causing delays and errors in payment, and by a lack of communication
between staff and claimants, many of whom find the system
bewilderingly complex. Last year the parliamentary ombudsman
condemned the automatic recovery of overpayments by reducing
a claimant's tax credit with little or no notice as "systemic
maladministration".
'Yesterday's
data showed 44 per cent of the awards were either too low
or too high, with the thousands of complaints flooding in
to advice centres and MPs' surgeries suggesting the Revenue
was struggling to cope. Although the Treasury welcomed a
20 per cent drop in the value of overpayments in 2004-05,
the figures also showed that overpayments in 2003-04 were
higher than previously recorded at £2.2bn rather than
£1.9bn. The government assumes it will be unable to
recover £1bn of the overpaid credits from 2003-04,
with 150,000 payments written off by September 2005 due
to official error.
'Critics
say the fundamental problem is one of design rather than
implementation. The child tax credit and working tax credit
introduced in 2003 were conceived by the Treasury to rise
and fall according to income, either month-by-month if claimants
kept the Revenue informed of each change of circumstance,
or at the end of the tax year. The Treasury argues that
a flexible system is better able to help those whose incomes
deteriorate during the year. But from the outset experts
warned that it would impose a big administrative burden
on the Revenue, with potentially large corrections to awards.
'Stephen
Timms, chief secretary to the Treasury, said flexibility
was a "great strength" of the current system,
but added that the government would keep it "under
review". However, David Laws, the Liberal Democrat
work and pensions spokesman, said the system was "in
chaos". Teething problems could not account for a second
year of big overpayments, since the Revenue should be using
more reliable income estimates than in 2003 and claimants
should be more familiar with the system, he said.'
Saturday
19th November 2005:
Convoluted
benefit system loses £2.6bn a year, says auditors
The
Guardian reports on the national Audit Office's report that
errors in the benefit system have been so substantial for
the past 15 years that it has been obliged to issue annual
qualifications of the accounts of the responsible departments.
To
see the article, click
here.
On
the 18th August 2005 The Times published the following article:
Citizen's
pension 'has not been ruled out'
By Christine Seib
DAVID
BLUNKETT has not ruled out the idea of a citizen’s
pension, the Government insisted yesterday, denying claims
that the Pensions Secretary had dismissed the £105-a-week
benefit.
On
Tuesday Mr Blunkett angered pensions experts by appearing
to suggest that the pension — based on British residency
rather than national insurance contributions — would
turn Britain into a Costa del Sol for benefits tourists.
The Pensions Secretary was accused of pre-empting the Pensions
Commission’s long-awaited report on the future of UK
pensions, due out on November 30.
Several
influential groups, including the National Association of
Pension Funds (NAPF) and the Pensions Policy Institute (PPI),
have championed the flat-rate citizen’s pension as
the best replacement for the complex state benefits system.
They have always insisted, however, that recipients should
spend at least ten of their twenty years before retirement
living in Britain to be eligible for the flat-rate payments.
A
spokeswoman for the Department for Work and Pensions said
yesterday that the comments attributed to Mr Blunkett were
taken out of context from a hypothetical discussion he had
three weeks ago at an Age Concern forum.
“We’ve
not ruled anything out,” she said.
At
the forum Mr Blunkett said that Britain “can't give
people a pension automatically who have not earned it”.
“We’d
have the reverse of the Costa del Sol — instead of
everybody going to Spain in retirement, they’d all
come to Britain,” he said.
The
NAPF said yesterday that it believed Mr Blunkett was open
to the idea of a citizen’s pension.
The
Stuttgarter Zeitung for the 2nd July published an interview
with Goetz Werner: 'Germany needs a Basic Income'. To read
the article, click
here.
Europ
inform,
a newsletter of the Regional Office for Europe of the International
Social Security Association, has published some editions
which might be of interest to readers of this website. The
December 2004 edition suggests that 'social security must
be seen not simply as reactive but as a proactive instrument
of economic growth and a force for change. In a globalized
economy it is essential, in terms of national competitiveness,
to have a healthy, educated and motivated workforce. Existing
models must be moved beyond and new and creative solutions
must be found'.
The
declaration of the 28th General Assembly of the International
Social Security Associaton, summarised in the newsletter,
emphasises the role which social security plays in economic
and social development.
A
paper which might be of interest to readers of this website
is:
Distributive
justice and the argument for an unconditional basic income
by
Almaz Zelleke
in
the Journal of Socio-Economics
Volume 34, Issue 1 , February 2005, Pages 3-15
Abstract
The defense of selective work requirements depends in part
on a belief in the fairness of the capitalist economic system,
in which property can be acquired, concentrated, and handed
down in ways that lead to vast economic inequality. This
belief supports the enforcement of work requirements on
recipients of redistribution. But a problem inherent in
theories of distributive justice, the inability to apply
the same criteria of fairness to subsequent generations,
undermines the legitimacy of this belief. I argue that an
unconditional basic income is preferable to work-conditioned
income support on distributive and political grounds.
To
read the paper, click
here
14th
April 2005
The
Economist reports on Estonia's flat tax on personal
and corporate income. There is a uniform rate of 26%, and
there are no deductions - and the Economist's view
is that this has helped the economy to flourish. The see
the article, click here.
29th
December
The
Guardian carries news of the Secretary of State's intention
to establish a Citizen's Pension.
'Before
unveiling his department's five-year plan - the first installment
of which is due next week - Mr Johnson told the Guardian
that he is opposed to "patching up" the existing
state pension system.
Instead
he wants the cabinet to accept a radical shift to a non-contributory
citizens' pension, similar to a Liberal Democrat scheme,
though more ambitious. "I am very interested in getting
a consensus around a solution," he says.'
To
read the article, click
here.
Daily
Telegraph, Saturday 13th March 2004
Alice
Thomson talks to David Willetts, the Opposition spokesman
on work and pensions.
'Old
age is becoming increasingly frightening: many are terrified
they will barely be able to afford a packet of digestives.
So what did Mr Willetts do? He came up with an idea so far
to the Left that even Barbara Castle thought it was impossible.
He has promised that his party will restore index-linked
state pensions and abolish means testing.
You
can find the whole article at:
http://www.opinion.telegraph.co.uk/news/main.jhtml?xml=/news/2004/03/13/nwilly113.xml
You
will need to register with http://www.opinion.telegraph.co.uk
and log in before clicking on the link.
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