By Anika Bourley Parliamentary Correspondent

Published at 11:36, Wednesday, 30 April 2008

THE government must act immediately to sort out problems with the tax credits fiasco aimed at helping thousands of families in Cumbria, according to a damning report.

The number of complaints about the complex tax credit system has continued to rise, making up more than a quarter of issues raised with the Parliamentary Ombudsman. Last year a total of £8.7m was overpaid in tax credits to 11,100 families in Cumbria.

According to a report published today, Ann Abraham said the system was a matter for government and Parliament to consider and warned families had experienced such problems that many claimed they would never reapply.

Ms Abraham said: “In such instances, the impact on those concerned, typically those on the very lowest incomes who are the most vulnerable in society, is huge and highly distressing. As one complainant put it: ‘Tax credits are supposed to help families, not cause them money worries.’ It is essential, therefore, that these matters are addressed as quickly as possible.”

The government’s flagship tax credit system – which tops up the income of low-paid workers – was designed to help people into work and tackle poverty.

Under current rules, around two-thirds of the £8.7m overpayment will be claimed back – threatening families, who may have already spent the money, with financial hardship.

The report makes six recommendations, including an overhaul of the application, more training for staff and for “proper” consideration to be given to families who have been overpaid when trying to claw back the cash.

Published by http://www.cumberlandnews.co.uk