Work and pensions secretary proves 'factually challenged'

Claims about tax credit by Work and Pensions Secretary Iain Duncan Smith have been described as "discredited" by Channel 4 News 'Fact Check'.

Mr Duncan Smith launched an assault on the system introduced by the previous Labour government in an article in the Daily Telegraph (30 December 2012).

His motive appears to have been to deflect mounting criticism of his Universal Credit plans, the government's changes and cuts to welfare hitting the most vulnerable in society, and anticipated parliamentary rows in 2013 about poverty, jobs and benefits.

Many who disagree with the Secretary of State's approach to welfare are also critical of tax credits, seeing them as a subsidy for low-wage employers.

But Mr Duncan Smith's reasons for going on the attack seem to be rather different, and based substantially on the need to insinuate widespread benefit fraud in defence of his policies.

However the Channel 4 'Fact Check' team, headed by journalist Cathy Newman, reports that the most defensible claim in the minister's newspaper article would appear to be a 7.25 times exaggeration.

According to Mr Duncan Smith: “Tax credit payments rose by some 58 per cent ahead of the 2005 general election, and in the two years prior to the 2010 election, spending increased by about 20 per cent.”

But Her Majesty's Revenue and Customs (HMRC) produced figures which show an increase of just eight per cent, not 58 per cent. Likewise, in the two years prior to the 2010 general election, spending on tax credits increased by 8.8 per cent, not 20 per cent.

The Department of Work and Pensions, which has been criticised for operating as a spin machine for the government's claims in this area, has so far been unable to source the information which the minister used.

Mr Duncan Smith continued: “Between 2003 and 2010, Labour spent a staggering £171 billion on tax credits, contributing to a 60 per cent rise in the welfare bill. Far too much of that money was wasted, with fraud and error under Labour costing over £10 billion.”

But he has been shown to be in error on both counts. The first figure actually included £28.5 billion from the first year of the coalition government.

Extended over a similar period, that means the Conservative-Liberal Democrat coalition would have spent considerably more than the actual £147 billion (not £171 billion) spent by their predecessors, it can be calculated.

Regarding claimed fraud, the actual total of £1.27 billion amounted to just 0.7 per cent of the total amount spent on tax credits during the time the Secretary of State assesses.

Lastly, Mr Duncan Smith claimed in his Telegraph piece that "fraudsters from around the world targeted tax credits "for personal gain."

But HMRC said: “The tax credit system doesn’t record nationalities of claimants, so we don’t have those figures.”

* Channel 4 FactCheck: IDS tax credit claims discredited - http://blogs.channel4.com/factcheck/factcheck-ids-tax-credit-claims-disc...

[Ekk/3]