Tax Credits

Part of the debate – in the House of Commons at 7:17 pm on 7th July 2003.

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Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions 7:17 pm, 7th July 2003

Sadly, many of us have found that the Inland Revenue emergency interim payments have not arrived to the timescale that many people have expected, and I shall give examples in a moment.

The social fund includes a mysterious provision for something called alignment loans. They are a special invention whose sole purpose is to tide people over when they are not receiving other benefits to which they are entitled. It is a sad reflection on our social security system that we have to have alignment loans to lend people money while they wait for other benefits. Indeed, alignment loans are an increasing proportion of all crisis loans made by the social fund. For the last year for which we have figures, alignment loans were £36 million of the £75 million paid out in crisis loans. So the social security system already contains provision to make loans to people who have not received money that they are owed by Government agencies. It would be right to use those funds in this situation.

I put that proposal to the Paymaster General, asking what discussions had been had with the Chancellor on that point. Her answer, in terms of sheer complacency, breaks even her record. She said:

"The Department for Work and Pensions is working with the Inland Revenue to ensure that there is a seamless transition"— a good, old seamless transition—

"to the new tax credits system and that there is good liaison between the two organisations to ensure that awards of both tax credits and social security benefits are made promptly to people in the most urgent need."—[Hansard, 18 March 2003; Vol. 401, c. 684W.]

That is what the Paymaster General claimed, but that is not the reality. If it were, we would not need the social fund loans. However, many people on low incomes have not received their money.