Poorest families told: Pay back cash

About 18,600 of the poorest people in the district have been given an average of £1,038 too much working and child tax credit, totalling £19.3 million.

Around one-third of the city's 53,500 tax credit claimants received payments that were too high, according to figures released to the Telegraph & Argus by HM Revenue and Customs.

Working tax credit and child tax credit were launched in April 2003 in a bid to encourage people into work. Cash is paid directly to families and people with jobs and can top up earnings by as much as £5,500 a year.

Claimants have to predict their income for the coming year but must tell the Inland Revenue if it changes.

Cancer sufferer Sheila Sayles, of Clayton Heights, Bradford, was driven to despair when the Government demanded she repay more than £1,000 in what it claimed were over-payments of working tax credit last year.

Mrs Sayles said: "If I hadn't had the backing of my family and the help of my support worker Alison Rooks from Bradford Cancer Support I am sure I would not be here today to tell the story.

"I was desperate and had no idea where I would get the money from."

As a single parent she said the only thing that had kept her from contemplating suicide was the support of her 17-year-old son, Adam. She was working for Compass Catering, based at Fields Packaging in Clayton, when she was diagnosed with bowel cancer in September 2003.

She said: "I went on sick almost straight away and if you receive sick pay from the company, which I did, you are entitled to working tax credit."

The working tax credit payments ceased in April 2004 when she stopped receiving sick pay from the company.

"This was the correct procedure," said Alison Rooks of Bradford Cancer Support in Duckworth Lane. "Everything was as it should have been at this stage but then Sheila received a letter stating she had been overpaid in working tax credits between October 2003 and April 2004 and would have to repay £1,438.97."

Miss Rooks said the Inland Revenue said it would recoup the money by reducing Mrs Sayles's future child tax credit payments.

Mrs Sayles said: "It meant I was forced to live on £15 a week for four months. Bills were piling up and I had no way of paying them."

Miss Rooks contacted the Inland Revenue on her behalf and informed it of its mistake and it admitted there was a fault with its computer records and reinstated the full payments.

"But in October 2004 the payments were reduced again," said Mrs Sayles, "and I received a letter saying that this was again due to alleged over-payments of working tax credits highlighted by the computer system."

She said the Inland Revenue admitted the computer was wrong but said it could not put it right.

In February the Inland Revenue said it would write off the alleged overpayment due to hardship and refund it in full, but it continued to take money from Mrs Sayles's child tax credit payments until the end of the tax year in April. She finally received the refund this month.

Miss Rooks said: "What the Government needs to realise is that while its officials are sitting at their desks making these decisions about alleged over-payments real people's lives are being devastated."

Bradford South MP Gerry Sutcliffe: said: "There have been quite a number of cases of this type and we noticed a clear pattern. We have put a file together and forwarded it to the government minister. Now we will wait for a response.

"We hope the government will review cases where people can prove the tax calculations weren't correct. If it's been a mistake of the department they shouldn't have to pay.

"For those who have to pay, the government should take people's ability to pay over a reasonable amount time and it should not affect them too harshly."

Keighley MP Ann Cryer said: "I would ask the government to wipe out the repayments first and if it can't, they should be spread out over ten years. These people are already on the lower end of the financial scale so its going to cause enormous problems for them - and it's unfair because it's not their fault. The government needs to be patient now."

Shipley MP Philip Davies said: "If this happened in any other walk of life, for example with a bank or a private company, the mistake would have been admitted and the money wiped off. This is the government's fault and it should provide an amnesty for these people, who are in a financial trouble through a government blunder."

The figures also showed that in Kirklees 15,200 households were owing £15.1 million, in Calderdale 7,700 households were owing £7.4 million and in Craven 1,700 households were owing £1.8 million.

Greg Mulholland, Liberal Democrat MP for Leeds North West, where affected constituents must repay £1.6m, said: "I have been inundated with letters from constituents concerned about this issue. There are many local cases where the tax credit office has attempted to claw back money that had often been overpaid as a result of internal administrative error rather than customer misinformation.

"Too many families are having their budgets thrown into chaos by the tax credit office causing serious problems and hardship especially for those on low incomes.

"What we do not yet know, however, is how many of these overpayments were a result of official error and how many the Revenue will write off."

The Government is trying to claw back £2bn in overpayments nationally.

Working tax credit and child tax credit were launched in April 2003 in a bid to encourage people into work. Cash is paid directly to families and people with jobs and can top up earnings by as much as £5,500 a year.

Claimants have to predict their income for the coming year but must tell the Inland Revenue if it changes.

But the scheme has been heavily criticised.

Last year, a computer error meant 455,000 people - including Mrs Sayles - were overpaid and many had spent the money before being told they had to give it back.

A spokesman for HM Revenue and Customs said most overpayments were due to increases in income but admitted computer errors were also to blame.

He said: "The majority of these overpayments were caused by rises in family income and more people moving into work.

"When the overpayment is the result of our mistake and the claimant could reasonably have thought the award was correct then we can write it off."

Treasury minister Dawn Primarolo has unveiled a six-point plan aimed at tackling the crisis.

She said cash recovery will be suspended in "genuine cases of hardship" during disputes between HM Revenue and families have allegedly overpaid.

Concerned families can contact the Tax Credit Helpline on 0845 300 3900.