Primarolo 'misled' MPs on e-portal fraud

Taxing questions

The Liberal Democrats have claimed the paymaster general knew about fraud on the tax credits system earlier than she acknowledged.

David Laws, the party's spokesperson on work and pensions, made the allegation after Dawn Primarolo had given evidence to Parliament's Treasury Sub-Committee on February 1, 2006.

Primarolo told the committee that her department took the decision to close the tax credits e-portal after it began to suspect organised identity fraud was taking place in November 2005. But Laws claims she had already said in a parliamentary written answer that the HM Revenue and Customs (HMRC) had detected organised fraud in June and possibly much earlier.

After an increase in fraudulent claims, predominantly via the internet, HMRC closed the tax credit e-portal in early December last year. Until then the service had been dealing with 500,000 claims each year.

Primarolo said that despite early problems with the tax credit IT the performance of the system is getting better and processing accuracy is continuing to improve.

Committee member Andrew Love highlighted evidence taken from the civil service PCS union and HMRC chief executive David Varney that the tax credit IT system was "fragile [and] unstable". In response, Primarolo said that since April 2005 there have been 300 improvements to the computer system.

"A significant new software release was introduced without a hitch in November. Although largely invisible to people outside, this exercise delivers real improvements in operational performance," she said.

A further major software release is planned for April 2006. It should enable HMRC to start issuing new tax credit award notices and more simplified guidance notices. But Laws described the tax credit system as "an organisational shambles".

"It's high time that ministers were held to account," he said. "If it turns out that she had misled Parliament on this issue, then her position as a minister will become untenable."

Tax credits were introduced by the government in 2003 as a way to tackle child poverty and encourage more people into work by providing income related support. But its computer systems, originally supplied by EDS and now run by Cap Gemini, failed to perform well from the start. In January 2006, a report from Parliament's Public Administration Committee criticised the scheme for its lack of "customer support".

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This article was originally published at Kablenet.

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