Duncan Smith claims U.K. tax credits system’s abuse cost to reach £10bn

Iain Duncan Smith

This article was last updated on April 16, 2022

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Iain Duncan SmithThe work and pensions secretary, Iain Duncan Smith has claimed around £10bn of public money has been lost due to the abuse of U.K.’s current tax credit system put in place by Labour government.

Mr. Duncan Smith has criticized the welfare model developed by the last government and told tax credits were “not fit for purpose” as the system was “wide open to abuse” and “haemorrhaging money”. He told the reason to be carrying out lesser checks on tax credit welfare claimants by HM Revenue and Customs than other benefit claims, despite the estimates that one in 12 tax credit claims were incorrect or fraudulent, compared with fewer than one in 25 benefit claims.

Mr. Duncan Smith has said: “In the years between 2003 and 2010, Labour spent a staggering £171bn on tax credits, contributing to a 60% rise in the welfare bill.”

The government is confident of saving more than £300m over the next three years by tackling fraud and error, in addition to reclaiming £400m in unpaid debts.

In response to Mr. Duncan Smith’s tax credits criticism, Labour’s shadow exchequer secretary to the Treasury, Catherine McKinnell MP has called it a “cheap political attack”.

She has stated: “This cheap political attack on the whole tax credits system will not succeed in acting as cover for the government’s cuts to tax credits which will hit millions of striving working families next year.

“Iain Duncan Smith should start focusing on sorting out his new universal credit which even his own Cabinet ministers are warning is ‘a disaster in the making”.

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