Chancellor attacked over tax credits reform

MPs have warned chancellor Gordon Brown his plan to save hundreds of millions
from reform of the tax credits system is flawed.

The House of Commons Treasury committee was broadly supportive of the scheme
announced by Brown in his pre-Budget report, but said it appeared to contain
hidden costs.

Brown changed the ‘earnings disregard’ from £2,500 to £25,000 allowing many
families to retain money overpaid to them in a series of mistakes by the HM
Revenue & Customs, which administers the tax credits system.

This will be costly the committee warned in its report on the PBR and may not
be off-set by a clampdown on claimants who fail to notify the HMRC of changes in
financial circumstances, the Financial Times reports.

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