A SUFFOLK MP today blamed 'government incompetence' for thousands of families in Suffolk being ordered to pay back millions of pounds of overpaid tax credits.

Figures released by the Treasury have shown that in Suffolk 21,800 families have been overpaid, and ordered by the Inland Revenue and Customs to repay, £17.2m.

Families in Ipswich are among the worst affected with 4,400 families having been overpaid.

More than 1.9 million claims nationwide were overpaid in 2004/5, up 120,000 from the system's first year when charities warned some families were being forced into poverty by repaying the debt.

Overpayments are a part of an IT system bedevilled by problems which was designed to be flexible to take into account changes in income of families during the course of a year. But the scale has been much higher than expected, forcing the Treasury to make changes.

Bury St Edmunds Conservative MP David Ruffley says he has dealt with two constituents from Stowmarket in the past month who have received demands for repayments between £1,000 and £2,000.

'The blame lies with Government incompetence. Tax credits replaced the perfectly good family credits system which was simpler, less confusing, and had fewer rules and regulations.

'It is not the software or the IT which is the problem, but the fact that tax credits were introduced with revenue officers not properly trained for this over complicated system.' said Mr Ruffley.
Chief Secretary to the Treasury Stephen Timms said: 'The Government has already taken action to improve the tax credit system in response to the lessons learnt in the first year of the system, 2003-4. Overpayments have now fallen by a fifth.'

Mr Timms insisted: 'The tax credit system has delivered three vital improvements: it has increased incentives to work; reduced the tax burden on low to middle income families; and helped to sharply reduce child poverty.

'Tax credits are benefiting six million families and around 10 million children and reaching far more low and moderate-income families than any previous system of income-related family support.'